In a case that went all the way to the federal appeals court level, a panel of judges has found that GEICO General Insurance adequately investigated a Florida claim after an insured motorist killed a cyclist, and did not act in bad faith.
Driver Jonathan Ellis, who fled the scene after slamming into the man on a bicycle in 2014, argued in a lawsuit that GEICO’s delay in addressing the claim, and paying out on his insurance policy, caused the victim’s family to reject the settlement offer, ultimately resulting in a $479,000 judgment against him.
The 11th U.S. Circuit Court of Appeals said in an opinion posted this week that some delays did occur, partly due to slowness by the police in providing an accident report, but also because Ellis did not respond to repeated calls and letters from GEICO adjusters. The plaintiffs were Ellis and Joyce Brobeck, the wife of the deceased cyclist.
The attorney for the plaintiffs contended that the adjusters could have done more to find Ellis and to uncover information about the accident, including scouring his car while it was in a tow yard. The circuit judges disagreed, pointing out that GEICO offered to pay the limits of the policy as soon as it obtained the accident report – six weeks after the fatal crash.
“Ellis overlooks the efforts GEICO did take to investigate the claim and confirm coverage,” the Circuit Court opinion noted. “Given the undisputed facts of this case, we agree with the district court that no reasonable jury could conclude that GEICO operated in bad faith under the totality of the circumstances.”
The court further explained that an insurer “is allowed a reasonable time to investigate a claim; no obligation exists to tender policy limits in advance of a settlement offer without time for investigation.”
The decision also gives some insight into what obstacles insurers and their adjusters face after an accident, and the grounds that some lawyers will use to argue that insurers may be guilty of acting in bad faith.
After Ellis struck cyclist Timothy Brobeck on Sept. 7, 2014, Ellis immediately left the scene, the court explained. He was arrested three days later and remained in jail for two weeks. Ellis later said that the police kept his cell phone, forcing him to get a new one with a new number. He also moved into the home of a friend or relative, and, on the advice of his lawyer, would not discuss the case with anyone, including his insurance company, he told the court.
One GEICO adjuster said she was unable to reach Ellis or the attorney for the victim’s family. GEICO also said it never received a letter from the lawyer. Another adjuster said she attempted to find Ellis at his place of employment, but did not feel safe entering the windowless building. Ellis’ lawyer made that a key point in the bad-faith claim, and said the woman should have tried a little harder. The adjuster said she went to Ellis’ apartment but no one was home.
Finally, on Oct. 29 that year, GEICO obtained the accident report from the state police. The adjuster and her GEICO supervisor immediately decided that Ellis, GEICO’s policyholder, was 100% at fault. GEICO quickly dispatched an adjuster to hand-deliver a check for the limits of the policy. The policy provided $10,000 in coverage per person and $20,000 per accident.
Two weeks later, the family rejected the offer, saying it was a week too late.
Hyram Montero, the Fort Lauderdale attorney for the Brobeck family, held the opinion that “GEICO did not act in good faith towards Ellis and did not treat this case with the urgency it required because it failed to follow up on leads that would have enabled it to make a timely tender of policy limits,” the Circuit Court recounted.
Brobeck had a 16-year-old daughter with cerebral palsy. She and her mom had moved to Argentina before the accident so that the mom could care for her ailing mother.
Florida insurance attorneys have long complained that some plaintiffs’ lawyers are too quick to file bad-faith claims, and that Florida law sets a low bar to bring such cases. In this case, the federal judges acknowledged that Florida courts have long recognized the good-faith duty that insurers owe to their insureds in handling claims.
“Because the insured ‘has surrendered to the insurer all control over the handling of the claim, including all decisions with regard to litigation and settlement, the insurer must assume a duty to exercise such control and make such decisions in good faith and with due regard for the interests of the insured,'” the court wrote, citing a 2018 Florida case that involved GEICO.
Some cases are considered “ticking financial time bombs” due to the threat of a lawsuit, and delays in making offers, even when there’s no guarantee that the settlement will be accepted, could be viewed as evidence of bad faith, the circuit judges said.
But the court said it also had to look at the totality of the circumstances. The key question is whether the insurer diligently – and with the same haste and precision as it would if it were in the insured’s shoes – worked on the insured’s behalf to avoid any excess judgment.
GEICO did, in fact, act diligently, and immediately began an investigation into the claim after the accident, the judges said.
The insured also has some responsibility, the court noted.
“GEICO’s efforts in timely confirming coverage were frustrated by Ellis’s lack of communication,” the per-curiam opinion reads. “While GEICO’s actions, not Ellis’, are the focus of the bad-faith case, Ellis’s lack of communication with GEICO can be considered when determining the totality of the circumstances.”
The three-judge panel included Adalberto Jordan, Kevin Newsom and Susan Black.
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