Florida’s Good Faith Claims Handling Statute prohibits an insurance company from making a material misrepresentation of coverage available under its policy in order to effectuate settlement on less favorable terms than the coverage afforded under the policy at issue. See Fla. Stat. § 626.9541(1)(i)(2).
Florida’s Good Faith Claims Handling Statute also prohibits an insurance company from misrepresenting facts or policy provisions relating to its coverages. See Fla. Stat. § 626.9541(1)(3)(b).
Both provisions are made actionable by Florida’s Bad Faith Statute, Fla. Stat. § 624.155.
These provisions were at issue in the United States Sugar Corporation case where we left off in our last article posted here on Claims and Bad Faith Law Blog. The U.S. District Judge “finds that the Plaintiff has adequately pled its statutory bad faith count” in that case. U.S. Sugar Corp. v. Commerce & Indus. Ins. Co., No. 22-21737-Civ-Scola, 2024 WL 5040843, at *8 (S.D. Fla. Dec. 9, 2024).
Taking first the alleged misrepresentation of facts or policy provisions under Section 626.9541(1)(3)(b), the Court approved of findings by a U.S. Magistrate Judge on the plaintiff’s motion for leave to amend to add this count, and added: “These same allegations also adequately plead that the Defendant misrepresented its coverage.” United States Sugar Corporation, 2024 WL 5040843, at *8.
But it is the Court’s ruling on the material misrepresentation to effectuate a settlement more favorable to the carrier that merits our close attention here. For the guidance of Courts and counsel, here is what this Court held in this regard:
The Plaintiff pleads that the Defendant’s “claim handling and litigation tactics” “are intended to leverage the lowest possible payout.” FAC ¶ 10. The Plaintiff also alleges that “[a]fter wrongfully withholding millions of dollars and finally making a partial payment, C&I continued its effort to leverage U.S. Sugar into accepting less than what was still owed by serving a lowball Proposal for Settlement.” Id. ¶ 111 (emphasis added). These allegations are enough to plead that the Defendant engaged in bad faith conduct “for the purpose and intent of effecting settlement.” See Fla. Stat. § 626.9541(1)(i)(2).
United States Sugar Corporation, 2024 WL 5040843, at *9 (italics by the Court).
“In sum,” said the Court in this case, “the Plaintiff pleads the Defendant’s misrepresentations with adequate specificity.” United States Sugar Corporation, 2024 WL 5040843, at *9.
The Court’s ruling on these allegations and on these statutory provisions is instructive for all cases, Courts, lawyers, policyholders, and carriers concerned with the similar provisions written into the National Association of Insurance Commissioners’ Good Faith Claims Handling Statute which has been adopted in some form in virtually every jurisdiction in America – and which is the basis of both provisions interpreted by the Court in the United States Sugar Corporation case.
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