Defining Occurrence – When Policy Definitions Do Not Apply To All Coverages
September 24, 2020
On Friday, September 30, 2016, the Eleventh Circuit Court of Appeal affirmed a renewed motion for judgment as a matter of law that had been granted by the Middle District Court of Florida in an uninsured/underinsured motorist (“UIM”) bad faith case. In Cadle v. GEICO Gen’l Ins. Co., the federal appeals court held that the plaintiff’s failure to provide evidence that she suffered a permanent injury within a reasonable degree of medical probability within the statutory cure period was fatal to her bad faith claim against GEICO.
Adhering to recent developments in this area, the parties tried the UIM case in state court, resulting in a verdict of $900,000, which GEICO did not appeal. Plaintiff then filed a bad faith action in federal court after satisfying the procedural requirements of section 624.155, Florida Statutes. Plaintiff filed several Civil Remedy Notices demanding the policy limits ($75,000), which GEICO declined.
At the close of plaintiff’s case in chief, GEICO moved for a directed verdict on the ground that plaintiff failed to submit any evidence that she suffered a permanent injury within the meaning of Florida’s “permanency threshold” statute, which prohibits recovery of non-economic damages in the absence of proof of a permanent injury. Without such proof, plaintiff could only recover her out-of-pocket expenses attributable to the accident, which was indisputably less than the policy limits. During the bad faith trial, plaintiff’s expert testified that he agreed the records provided prior to the expiration of the last civil remedy notice did not indicate or even imply a permanent injury.
Although initially denying the motion for directed verdict and submitting the claim to the jury, the District Court entered judgment as a matter of law post-trial, and the Eleventh Circuit affirmed. Key to the District court’s ruling, which rationale was affirmed on appeal, was the fact that the plaintiff did not provide a medical opinion supporting permanency in any of the medical records she submitted to GEICO in support of her demand for the limits of the GEICO policy prior to the date of expiration of the second Civil Remedy Notice. Therefore, GEICO had no reason to accept a policy-limits demand, because plaintiff had already recovered $25,000 from the tortfeasor and $10,000 on her own PIP coverage. Furthermore, her remaining medical expenses were covered by health insurance. Therefore, as of the last date an opportunity to settle existed, she could not prove her claim was in excess of policy limits.
Another critical aspect of the opinion was the rejection of the plaintiff’s argument that GEICO had a duty to have the plaintiff undergo a compulsory medical examination to create its own evidence of a permanent injury. The District Court rejected that argument, holding that “the insurer’s duty does not go this far.” Specifically, the District Court stated the insurer’s reliance on documents provided by the insured cannot amount to bad faith because the insurer is entitled to rely on those documents in determining whether to accept a policy limits demand. Further, the court noted that no evidence existed that any additional investigation would generate a different result.
In concluding its analysis, the Eleventh Circuit quoted approvingly from the District Court:
Despite numerous opportunities, [the insured’s attorney] never provided any evidence of a permanent injury …except to note that his client was considering surgical intervention. This possibility of surgical intervention is not, however, a notice of permanent injury.”
This case is significant because the court limited the time frame during which the evidence must be provided to the date of expiration of the last Civil Remedy Notice, without inference from the insurer, and also lessened the burden of investigation most plaintiffs try to lodge against the insurer.