The poorly executed handoff of a claims file from a retiring claims adjuster to his replacement may have made USAA liable for a $5.2 million excess judgment.
A panel of the 11th Circuit Court of Appeals on Tuesday reversed a trial court judgment, ruling that a jury should have been allowed to decide whether USAA’s failure to quickly settle a claim filed by a seriously injured motorist for the $10,000 policy limit amounted to bad faith.
The appellate panel noted a 2018 Florida Supreme Court decision that stated an insurer’s obligations to avoid an excess judgment against its insured “are not a mere checklist.”
“Rather, Florida’s highest court has emphasized, ‘the critical inquiry in a bad faith [action] is whether the insurer diligently, and with the same haste and precision as if it were in the insured’s shoes, worked on the insured’s behalf to avoid an excess judgment,'” the opinion says.
In July 2017, Daniel Ilias suffered catastrophic injuries in a spectacular motor vehicle crash on County Road 1 in Pasco County, Florida. Scott Dunbar lost control of the van he was driving, struck a vehicle driving in the same direction, veered across a center divider, launched toward oncoming traffic and landed on top of Ilias’ Honda Pilot.
Ilias had to be airlifted from the scene. Doctors placed him in a medically-induced coma when he arrived at the hospital. He suffered a torn aorta and several broken bones. He spent three weeks at the hospital and a rehabilitation center.
Dunbar was insured by USAA General Indemnity Co. His auto policy paid up to $10,000 per person for bodily injuries.
An attorney hired by Ilias’ wife told a USAA adjuster that Ilias had suffered a torn aorta, several broken bones and had an extended stay in an intensive care unit. Because of the seriousness of the crash, the insurer assigned the claim to an experienced adjuster, John Raymond.
On Aug. 10, 2017, Illias fired the attorney hired by his wife and hired Maryanne Furman to represent him. She asked USAA to provide information about Dunbar’s insurance policy and any other known insurance.
Raymond learned from a police report on Aug. 14 that Dunbar was driving 70 mph in a 45-mph speed zone just before the accident. Police said he had driven in a “negligent and careless” manner and was responsible for the crash.
Raymond concluded that USAA should accept liability, but he didn’t tell Furman. He also failed to tender the $10,000 policy limit. He spoke with Furman on Aug. 22, but only about the extent of property damage. He didn’t mention that USAA had accepted liability for Ilias’ claim. He said nothing about other insurance coverage.
Raymond retired on Aug. 30 and USAA assigned Don Johnson to handle the claim. Johnson misread the claim file and initially thought Ilias suffered only a “cervical strain.” Johnson did not learn that Ilias has several broken bones until he spoke with Furman on Sept. 15. He told Furman immediately that USAA would pay the $10,000 limit and mailed a check soon after.
But it was too late. Furman filed a personal injury lawsuit against Dunbar on Oct. 12. She told Johnson that she could not accept the policy-limit offer to settle the lawsuit because she needed to depose Dunbar and the other motorist involved in the crash to find out if there was any other coverage available.
Johnson told Dunbar that Ilias has filed suit, but there is no evidence in the record indicating that Johnson ever asked Dunbar whether he had any other coverage, the opinion say. A senior litigation manager for USAA told Dunbar that the suit seeks damages “that may, but are not expected to,” exceed the limit of his policy.
The case proceeded to trial and Ilias obtained a $5,230,559.44 judgment against Dunbar. Ilias then filed suit against USAA alleging a single count of bad faith.
The US District Court for the Middle District of Florida granted USAA’s motion for summary judgment, finding that no reasonable jury could find the insurer’s actions exhibited bad faith. The 11th Circuit panel disagreed.
The opinion says a jury may find that USAA unduly delayed settlement negotiations. Raymond learned that Ilias suffered a torn aorta on Aug. 8, but USAA did not offer to pay the policy limit until Sept. 15, the court said. What’s more, Johnson concluded that Ilias suffered only a cervical strain despite the fact that the case had been assigned to a senior adjuster precisely because of the extent of Ilias’ injuries.
“The evidence shows that, in this case, Furman informed USAA that she could not accept the policy limit until she could confirm that Dunbar lacked additional insurance coverage, yet USAA did nothing in its capacity as the ‘go-between’ to facilitate the exchange of that information or to seriously apprise its insured of the risk posed by an excess judgment,” the opinion says.
The 11th Circuit remanded the case to the Middle District of Florida to proceed toward trial.
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