In GEICO General Insurance Co. v. Mukamal, No. 3D15-2750, 2017 Fla. App. LEXIS 12031 (Fla. 3d DCA Aug. 23, 2017), the insurer challenged two final summary judgments entered on claim for declaratory judgment.  A motor vehicle accident resulted in a wrongful death suit against Lacayo.  The vehicle Lacayo was driving was owned by his mother and insured by GEICO. GEICO sent a reservation of rights letter to Lacayo because he was not listed as a driver under the GEICO policy.  Lacayo fled and GEICO subsequently sent a reservation of rights to Lacayo based on a failure to cooperate with GEICO’s investigation. GEICO retained counsel to represent Lacayo in the lawsuit, and the jury ultimately returned a verdict in favor of plaintiffs.  After final judgment was entered, GEICO sought to deny coverage based on the coverage defense of breach of cooperation.

The Claims Administration Statute provides:

(2)    A liability insurer shall not be permitted to deny coverage based on a particular coverage defense unless:

(a) Within 30 days after the liability insurer knew or should have known of the coverage defense, written notice of reservation of rights to assert a coverage defense is given to the named insured by registered or certified mail sent to the last known address of the insured or by hand delivery; and

(b) Within 60 days of compliance with paragraph (a) or receipt of a summons and complaint naming the insured as a defendant, whichever is later, but in no case later than 30 days before trial, the insure

1. Gives written notice to the named insured by registered or certified mail of its refusal to defend the insured;

2. Obtains from the insured a nonwaiver agreement following full disclosure of the specific facts and policy provisions upon which the coverage defense is asserted and the duties, obligations, and liabilities of the  insurer during and following the pendency of the subject litigation; or

3. Retains independent counsel which is mutually agreeable to the parties. Reasonable fees for the counsel may be agreed upon between the parties or, if no agreement is reached, shall be set by the court.

§627.426, Fla. Stat.

On appeal, GEICO sought reversal of the two final summary judgments entered in favor of the plaintiffs.  The Third District held that there was no genuine issue of material fact that GEICO failed to comply with the Claims Administration Statute, section 627.426, Florida Statutes.  Specifically, GEICO did not provide a written refusal to defend, did not obtain a nonwaiver agreement from the driver, and did not retain mutually agreeable independent counsel.  Therefore, the court held that coverage existed as a matter of law.

The concurring opinion highlights what it suggests could be an unintended consequence of the Claims Administration Statute and one which would defeat the purpose of the statute.  Notably, because Lacayo fled and GEICO did not want to leave him without representation, it would have been impossible for GEICO to comply with the requirements of the statute and protect its insured.  As such, the concurring opinion invites the Legislature to review and amend the statute.