The U.S. Court of Appeals for the Eleventh Circuit has affirmed a bad faith judgment against an insurer that failed to offer full policy limits to settle a claim three days after it learned of an accident involving its insured.
The Case
On October 27, 2010, Margaret Randall was seriously injured in a vehicle collision with a driver insured by GEICO General Insurance Company.
GEICO was notified of the collision on November 2, 2010.
By November 4, GEICO knew that Ms. Randall had been airlifted from Key West to Miami with a severe brain injury and that the police report indicated that the driver of the car that hit Ms. Randall, Melissa Servold, whom GEICO insured, had failed to yield the right-of-way. The insurer also knew at that time that Thomas Bannon and Ms. Randall had the same address.
By November 5, GEICO knew that Ms. Randall had been in a coma for 10 days.
GEICO made a determination on November 5 that Ms. Servold was 100 percent at fault.
GEICO, however, did not tender an offer to settle at the policy limit of $250,000 until November 22, 2010.
Mr. Bannon and Ms. Randall sued GEICO for bad faith.
After a jury verdict in favor of Mr. Bannon and Ms. Randall, GEICO moved for judgment as a matter of law and for a new trial. The U.S. District Court for the Southern District of Florida denied GEICO's motions, and GEICO appealed to the Eleventh Circuit.
On appeal, GEICO argued that there had not been sufficient evidence presented at trial for a reasonable jury to have decided that it had acted in bad faith.
The Eleventh Circuit's Decision
The circuit court affirmed, finding that the evidence presented was “more than enough for a jury to find that GEICO acted in bad faith.”
In its decision, the Eleventh Circuit explained that, given the evidence, a reasonable jury could have concluded that, by November 5, the cost of the medical expenses and non-economic damages merited a tender of the $250,000 policy limit.
Moreover, the circuit court observed, GEICO's own expert said that by November 10 GEICO had expected that it would offer the $250,000 policy limit to resolve the case. By November 11 GEICO knew that Ms. Randall was still in a coma, had a catastrophic face injury, was undergoing brain surgery, and had a feeding tube and could not breathe on her own, but it still did not offer to tender the $250,000 policy limit, the Eleventh Circuit noted.
The Eleventh Circuit added that GEICO knew that Mr. Bannon was Ms. Randall's husband, but did not offer the $250,000 at that time. It observed that Ms. Randall and Mr. Bannon's expert testified that Ms. Randall's face injury alone would cost more than $250,000 to remedy.
Then, the Eleventh Circuit continued, on November 15, GEICO interviewed eyewitness Becky Klapil who said that Ms. Servold did not have her car lights on, that she came out of nowhere, and that Ms. Servold was attempting to make an illegal left-hand turn.
On November 18, Mr. Bannon told a GEICO field representative that he was meeting with an attorney, and on November 22, GEICO offered the $250,000 policy limit.
Given all of this, the Eleventh Circuit ruled that a reasonable jury “had enough evidence to conclude” that GEICO had acted in bad faith. Thus, it concluded, there was no basis on which to grant GEICO's motions for judgment as a matter of law or for a new trial.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].