Joe Kissane Cole, Scott & Kissane. William Large Florida Justice Reform Institute

Transcription

1 Joe Kissane Cole, Scott & Kissane William Large Florida Justice Reform Institute You are currently sitting in the worst state in the country in terms of insurer bad faith exposure. The bad faith environment in this state can only be described as toxic. There is not a single state in this country not one -- that is anywhere close to Florida. 1

2 There is a current crisis in Florida Bad Faith Law. There are a handful of lawyers getting very, very rich at the expense of Florida citizens.. and no one seems to care. The crisis cannot be overstated -- - as tens of millions of dollars are changing hands in this state every year. Bad faith is no longer equated with wrongful conduct or actions by an insurer. Instead, lawyers are being allowed to employ gotcha techniques to legally extort vast sums of money from insurers. 2

3 The problem currently plagues the liability market and is quickly expanding into the property market. Bad Faith exposure as a result of excess verdicts is no longer the game. The set up now occurs pre-suit when you fail to get your policy limits out in time and or fail to properly comply with a multi-conditional demand. 3

4 The trouble occurs with the unholy trifecta of clear/aggravated liability, serious damage exposure and minimal or insufficient limits. There has been a paradigm shift as to whether settlements are favored in Florida. How the mischief started ; Perez, Cheverie and the unintended consequences. 4

5 If you are waiting for a policy limits demand to be made on these types of cases you will likely wait in vain. Remember the new game is to get the carrier to say NO to a case which should be settled. GAMES PEOPLE PLAY We will settle but will not release our punitive damage claim. We will settle but we will not release all insureds. 5

6 We will settle but we want portions of your claim file, i.e. statements, photos, expert reports, system notes, etc. We will settle but we want the property damage and the BI paid together. We will settle but only if you resolve the BI claims of multiple claimants together. We will settle but we will not sign a release. We will settle but we don t mention anything about potential consortium claims. We will settle but we want you to obtain the UM waiver of subrogation. 6

7 We will settle please send us a standard mutual form release. We will settle but we do not want any lien holders on the draft. We will settle for an amount slightly above the policy limits. We will settle but require certain language in the release. We will settle but require tax returns and financial disclosure information. The conundrum. 7

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9 The Multi-Conditional Conundrum When the check initially comes back the games begin. Watch out for language that says we will settle but only need a few additional items. Read the multi-conditional demand several times they are sneaky by nature. 9

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13 PD only policies the coming crisis. 13

14 How this is coming and how it will effect property insurers. A CRN on a file is served shortly after the loss. It is designed to come before all of the information is available to the carrier. They are drafted so they are vague and in effect provide to the insurer the claimant s D game. On the larger property losses this is usually orchestrated by a public adjuster and a team of lawyers specializing in these types of claims. 14

15 After the time period to cure the CRN expires the lawyers move in, the information starts to flow and the carrier is presented with the A game. However, at that point it is too late to settle for a reasonable amount because the CRN has expired and the predicate for a bad faith claim has been laid. At that juncture the carrier begins to receive threats of punitive damages for allegedly violating the rights of insureds as a general business practice. This usually manifests as an allegation that the carrier has developed a business practice of enhancing profits at the expense of consumers. 15

16 You may be surprised as to what constitutes bad faith in Florida if performed as a general business practice: A. Failing to implement standards for the proper investigation of claims. B. Failing to act promptly on communications with respect to claims. Failing to conduct a reasonable investigation. Failing to provide the insured with notice as to any additional information which is necessary to process a claim. 16

17 There are simple solutions to these problems. Require a CRN on all cases so that failure to settle liability cases come with a right to cure. Require a CRN to be re-filed anytime there are material developments in a case. Require that all information pertinent to a claim be provided before a CRN can be filed. Limit the proof and evidence in any bad faith claim to the information provided to the carrier as of the CRN. 17

18 The Release -- or How Not to Get Beat by Your own Documents The rejection of attempted policy limit tenders because of language in the release has reached epidemic levels in Florida. Always try to get opposing counsel to forward an acceptable release. The Adam and Eve release and the myth of the 12 page release. Your release should be lean, mean and very short. The less language that is in the release the fewer the complications. 18

19 It is advisable to get your release and other settlement documents to opposing counsel early for review and approval. Always make sure that your settlement documents are denominated proposed and that counsel is free to make revisions to same. 19

20 Remove all indemnity and hold harmless language. It has been a huge source of trouble and can only cause problems. Make sure that what you are providing is a bodily injury release if that is the type of claim that you are settling. 20

21 Omnibus releasee and releasor language needs to be removed, otherwise you will impair a subrogation claim. Does the release need to be mutual? The release should only apply to the settled claim general releases should be avoided. Do you need a release in a UM claim? The insurance carrier should generally not be on the release. 21

22 Does the release include Dyess language. Carefully review the demand and include the language verbatim that is requested by opposing counsel. CRN THE BASICS Who is it signed by? Is it under oath? Is the policy complete? 22

23 Boston Old Colony says that the insured must be kept fully informed as to: A. The company s evaluation as to the probable outcome of the case. B. The company s assessment of the potential for excess exposure C. The existence of all settlement opportunities. D. Advice as to steps the insured might take to avoid or minimize the presented exposure. 23

24 Dealing with Liens and Subrogated Interests The goal is and must remain we will not pay twice. However, do not let the lien become a stumbling block in the catastrophic case. Although you are entitled to protection don t get lured into demanding indemnity language or placing the lien holder on the draft. The protection of the lawyer agreeing in writing to keep the money in his trust account is generally acceptable even though you are legally entitled to more. 24

25 Powell Snowdenand the Time to Tender If you are not scared by these cases you haven't read them. The Basics A. No policy limit demand is necessary. B. On serious exposure you will not receive a demand. The time to tender your limits is shorter as the exposure to your insured increases. In serious exposure, clear liability cases, if you don t tender within 30 days you may very well create a jury question on bad faith. 25

26 The pressure to tender created by Powell and Snowden was relieved a little by the recent decision by the 11 th Circuit in Johnson v. GEICO. In that case the 11 th Circuit held that a tender within 33 days of the accident did not create a jury question on the issue of bad faith. Solutions End 3 rd Party Common law bad faith. Make all settlement demands subject to a 60 day right to cure period. Make it the public policy of this state to encourage settlements. 26

27 No settlement demand until 60 days after claim submission. No settlement demand that requires a response in fewer then 45 days. All conditions must be plainly and clearly stated. No requirement to settle on behalf of less then all insureds. No requirement to settle PD and BI together. 27