The insurance industry and plaintiffs attorneys are trying tohelp sway the Florida Supreme Court in a potentially high-stakescase stemming from a fatal auto accident in 2006 in Palm BeachCounty.

Insurance-industry groups and the Florida Justice Association,which represents plaintiffs attorneys, have filed dueling briefs inrecent weeks in the case centered on whether Geico GeneralInsurance Co. acted in "bad faith" in handling a claim from the 2006accident.

Expansion of bad faith liability

The insurance-industry groups said in a brief filed last week thata Supreme Court ruling against Geico could expose insurers to "badfaith liability far beyond what has long been established by thiscourt."

"Plaintiff's position would constitute a sea change that woulddegrade bad faith law such that mere negligence in claims handlingcould constitute bad faith, even in the absence of any evidencethat the insurer was acting in its own best interests or withoutdue regard for the interests of its insured [customer]," said thefriend-of-the-court brief filed by the American InsuranceAssociation, the National Association of Mutual InsuranceCompanies, the Personal Insurance Federation of Florida and theProperty Casualty Insurers Association of America.

But the Florida Justice Association, in a brief filed lastmonth, argued that the Supreme Court should overturn a 4th DistrictCourt of Appeal ruling in favor of Geico. The association'sfriend-of-the-court brief said the appeals-court ruling wouldcreate "standards for insurer bad faith actions not previouslyrecognized by Florida courts."

The association's brief said the legal basis for bad-faith lawsuits in Floridadates to a 1938 Supreme Court decision and that state law is "nowsettled that a liability insurance company owes a fiduciaryobligation to exercise good faith `to protect its insured from ajudgment exceeding the limits of the insurance policy.' "

Failure to cooperate with estate's attorney?

In the Palm Beach County case, Geico customer James Harvey wasinvolved in an accident that killed John Potts. Harvey had a$100,000 policy with Geico, which nine days after the accident sentPotts' estate a check for $100,000.

The estate later filed a wrongful-death lawsuit against Harveyand returned Geico's $100,000 check. Ultimately, a jury awarded$8.47 million in a judgment against Harvey, according to courtdocuments. But Harvey filed a lawsuit against Geico alleging thatit acted in bad faith by failing to cooperate with the estate'sattorney about information the estate had requested before thelawsuit was filed.

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The information, at least in part, dealt with Harvey's personaland business assets and whether he was acting in the course of hisbusiness at the time of the accident, according to a brief filed byHarvey's attorneys in the Supreme Court. A jury ruled in Harvey'sfavor on the bad-faith claim, but that decision was overturned bythe appeals court.

Geico's handling of claim & duty to insured

"Although Geico's claims process was not without fault and could beimproved, Geico's handling of the claim did not amount to bad faithas a matter of law," the appeals court ruled in January 2017."Additionally, even if Geico's handling of the claim weredeficient, Geico's conduct was not proven to cause the excessjudgment against the insured."

Harvey's attorneys are urging the Supreme Court to find that theappeals court misconstrued the state's bad-faith law.

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"The principles governing bad faith conduct by an insurer havebeen well-settled in this state through a long line of consistentopinions from this [Supreme] Court," Harvey's attorneys wrote in aJune 29 brief. "Nonetheless, the [Fourth] District deviated fromthat clear precedent and ruled … that an insurer does not have toact prudently or even reasonably to satisfy its duty of good faithto its insured. That determination is inconsistent with thefundamental principle established by this [Supreme] Court that aliability insurer owes a fiduciary duty to its insured; and afiduciary cannot be said to comply with its duties when it actsimprudently or unreasonably."

But Geico's attorneys, in a brief filed last month, said theappeals court ruling should be upheld.

Potential split on Fla. Supreme Court

"The [Fourth] District Court of Appeal appropriately considered theevidence in the light most favorable to Harvey, applied the correctstandard for determining bad faith under Florida law, applied thecorrect standard for directed verdict, and properly concluded thatGEICO was entitled to judgment as a matter of law," the briefsaid.

Related: Georgia Chamber sides with Nationwide Insuranceover bad-faith judgment

As a sign of a potential split on the Supreme Court, thejustices voted 4-3 in June to take up the case. Chief Justice JorgeLabarga and Justices Barbara Pariente, R. Fred Lewis and PeggyQuince were in the majority, while Justices Charles Canady, RickyPolston and Alan Lawson dissented. The court has not scheduled oralarguments, according to an online docket.

Jim Saunders ([email protected]) reports for theNews Service of Florida.