The Florida Legislature changed bad faith law in 2023. This was a foretaste of what is to come. Enacting a law drawn up by the insurance industry, in 2023 the Florida Legislature became the first State legislature to make a new defense of comparative bad faith. It will not be the last.
The 2023 Florida Legislature took the issue away from the Florida courts where, as in each and every other American jurisdiction, the courts rejected the very idea of comparative bad faith. A federal judge's summation of the law was quoted in the article posted here yesterday; it is so clear and concise that it is well worth repeating:
This inquiry looks at the facts of each case and at the "totality of the circumstances." [Citations omitted.] The proper focus of the inquiry is on the actions of the insurer rather than on the actions of the insured, the claimant, or the claimant's attorney. Thus, when the evidence clearly establishes the insurer acted in bad faith, the insurer may not escape liability merely because the insured or the claimant may have contributed to the failure to settle the claim. [Citation omitted.] At the same time, while the focus is on the insurer's conduct, the conduct of the insured or the claimant is relevant as part of the totality of the circumstance.[1]
The judge wrote this before granting the carrier's motion for summary judgment in that case.
Before the legislature changed it in 2023, bad faith law in Florida, as elsewhere, focused on the carrier's conduct but took into account the relevant actions of the insured, the claimant, or their authorized representatives including attorneys. Florida imported insurance bad faith law from Wisconsin no later than 1938, and it has been Florida law practically from the beginning to consider the totality of the circumstances when considering an insurance carrier's exposure to bad faith liability.[2]
It has been repeated so often since that sometimes the recitation of it can put you to sleep. The "totality of the circumstances" standard of liability for insurer bad faith was recited in cases you might have heard of, even if you do not practice in Florida, in for example, Harvey v. GEICO General Insurance Co.[3] in 2018; Berges v. Infinity Insurance Co.[4] in 2004, and perhaps most famously in Boston Old Colony Insurance Co. v. Gutierrez[5] in 1980.
In Auto Mutual Indemnity Co. v. Shaw, the carrier was awarded a new trial on bad faith in 1938. In Boston Old Colony, a judgment against the carrier for bad faith failure to settle was reversed and the case remanded in 1980. Perhaps the history of insurer bad faith law has been obscured by looking only at some recent decisions. But that is speculation, of course.
The point is pretty clear: Bad faith law considered the totality of the circumstances. The totality of the circumstances always included the conduct of everyone on the scene: the carrier, the policyholder, the claimant if there was one, and their authorized representatives including lawyers. In 2023, that changed in Florida and it was the Florida Legislature that changed it, not a court.
For the first time, a State legislature enacted a new law of comparative bad faith. That the law was written by insurance carriers and their authorized representatives means that it will be introduced into other State legislatures across the United States in the near future. It will address the nonexistent problem of "the bad faith setup;" insurance carriers have always had the ability to control their own conduct, as has been seen in many of the cases cited earlier in this article.
The language in the new Florida statutes, and the implications for the rest of the country, are addressed in the next article to be posted here. To be continued ....
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[1] Wiseman v. Progressive Paloverde Ins. Co., No. 8:21-cv-2743-TPB-AAS, 2023 WL 8877842, at *11 (M.D. Fla. Dec. 22, 2023 (italics by the Court, boldface added), app. voluntarily dismissed, No. 24-10187, 2024 WL 3436239 (11th Cir. May 7, 2024).
[2] The Florida Supreme Court adopted the law of insurer bad faith from Wisconsin in the case of Auto Mutual Indemnity Co. v. Shaw, 134 Fla. 815, 829-30, 184 So. 852, 858 (Fla. 1938), quoting with approval Hilker v. W. Auto. Ins. Co., 204 Wis. 1, 231 N.W. 257 (Wis. 1930).
[3] Harvey v. GEICO Gen. Ins. Co., 259 So. 3d 1, 7 (Fla. 2018).
[4] Berges v. Infinity Ins. Co., 896 So. 2d 665, 677 (Fla. 2004).
[5] Boston Old Colony Ins. Co. v. Gutierrez, 386 So. 2d 783, 785-86 (Fla. 1980), cert. denied, 450 U.S. 922, 101 S. Ct. 1372 (U.S. 1981).
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