Florida

UNFAIR CLAIMS SETTLEMENT PRACTICES ACT
FLA. STAT. § 626.9541 (1976/2014).
FLA. STAT. § 626.9743 to 626.9744 (2004) (motor vehicle settlements).

There must first be a determination that coverage is warranted under an insurance policy before one can bring an action for bad faith against an insurer. Hartford Ins. Co. v. Mainstream Const. Grp., Inc., 864 So. 2d 1270, 1272 (Fla. Dist. Ct. App. 2004). “[B]ringing a cause of action in court for [an insurer’s alleged failure to settle] is premature until there is a determination of liability and extent of damages owed on the first-party insurance contract.” Vest v. Travelers Ins. Co., 753 So. 2d 1270, 1276 (Fla. 2000).

• Can insureds sue for bad faith (i.e., first-party bad faith)? Yes per statute. There is no common law bad faith in first-party policy situations.
• Can third parties sue for bad faith (i.e., third party bad faith)? Yes.

FIRST-PARTY BAD FAITH:

• Are there statutory grounds for the bad faith cause of action? If so, identify the source (i.e., an Unfair Claims Practices Act, or some other consumer protection statute) and its main provisions. Yes. Fla. Stat. § 624.155, provides statutory grounds for first party bad faith, but only after the insurer is found to have breached the terms of the insurance contract, and only after the insurer has been given adequate notice of the alleged unfair claim practices and afforded sixty (60) days to cure the violations. Fla. Stat. § 626.9541 specifies the various kinds of unfair claims settlement practices that are actionable under § 624.155.
• Is there a common law/judicially created bad faith cause of action (i.e., the implied covenant of good faith)? If so, identify the major case(s) and language of the standards applicable to bad faith cases. There is no first party action for bad faith in Florida common law. Baxter v. Royal Indem. Co., 285 So.2d 652 (Fla. 1st DCA 1973). Prior to the enactment of § 624.155 in 1982, Florida did not recognize first-party bad faith claims.
• What are the applicable statutes of limitations? Four years.
• What defenses are available to the bad faith cause of action (e.g.., the "genuine dispute of fact" doctrine; "wrong but reasonable")?  In Florida, the determination of whether the insurer acted fairly and honestly towards its insured with due regard for the insured’s interest is made by applying the “totality of the circumstances” test which requires consideration of all pertinent facts and circumstances. Florida does not follow the “fairly debatable” standard. State Farm Mut. Auto Ins. Co. v. Laforet, 685 So.2d 55 (Fla. 1995).
• What are the recoverable damages for the bad faith cause of action? Consequential damages in excess of the policy limits. Fla. Stat. §624.155(7) “…Damages recoverable pursuant to this section shall include those damages which are a reasonably foreseeable result of a specified violation of this section by the insurer and may include an award or judgment in an amount that exceeds the policy limits.”  Possibly emotional distress damages. Time Ins. Co., Inc. v. Burger, 712 So.2d 839 (Fla. 1998), although facts of case suggest that holding is limited to actions against health insurers. Attorneys Fees. Fla. Stat. §624. 155(3).  Interest. McLeod v. Continental Ins. Co., 591 So.2d 621 (Fla. 1992).
• Are punitive damages recoverable? If so, what is the standard that must be met to recover them?  Possibly. No punitive damages are recoverable unless the unfair claim settlement practice occurs with such frequency as to indicate a general business practice and such practice is: a. Willful, wanton and malicious; b. In reckless disregard for the rights of the insured; or c. In reckless disregard to the rights of a beneficiary under a life insurance contract.

THIRD-PARTY BAD FAITH:

• Are there statutory grounds for the bad faith cause of action? If so, identify the source (i.e., an Unfair Claims Practices Act, or some other consumer protection statute) and its main provisions. Yes. Section 624.155, et seq. pertaining to civil remedies as well as Section 626. Unfair Insurance Trade Practices including Section 626.9541, Unfair methods of competition and unfair or deceptive acts or practices defined. See, State Farm Mut. Auto Ins. Co. v. LaForet, 658 So.2d 55 (Fla. 1995) and Auto Owners Insurance Company v. Conquest, 658 So.2d 928 (Fla. 1995).
• Is there a common law/judicially created bad faith cause of action (i.e., the implied covenant of good faith)?  The Florida Supreme Court first established the right of the third party to sue the tortfeasor’s insurer in Auto Mutual Indemnity Company v. Shaw, 184 So. 852 (Fla. 1938). See, State Farm Mut. Auto Ins. Co. v. LaForet, 658 So.2d 55 (Fla. 1995). The Florida Supreme Court held that an insurer has a duty to act in good faith with regard to claims brought by third parties against their insureds. See also Boston Old Colony Ins. Co. v. Gutierrez, 386 So.2d 783 (Fla. 1980). The common law standard for bad faith is whether the insurer breached its fiduciary duty to the insured by wrongfully refusing to defend its insured, by wrongfully refusing to settle within the policy limits or by exposing the insured to an excess judgment. Dunn v. National Sec. Fire & Cas. Co., 631 So.2d 1103 (Fla. 5th DCA 1993).
• What are the applicable statutes of limitations? Four years.
• What defenses are available to the bad faith cause of action (e.g.., the "genuine dispute of fact" doctrine; "wrong but reasonable")? An insurer has the right to deny claims that it in good faith believes are not owed on a policy. Even when it is later determined by a court that the insurer’s denial was mistaken, there is no recovery for bad faith if the denial is shown to be in good faith. Vest v. Travelers Ins. Co., 753 So.2d 1270 (Fla. 2000).
• What are the recoverable damages for the bad faith cause of action? Damages recoverable in a third-party action include the amount of the excess judgment, direct consequential damages, costs, and attorneys’ fees. Mental distress damages are generally not recoverable unless the insurer’s behavior is so outrageous in character and so extreme as to go beyond the bounds of decency and be deemed intolerable in a civilized community.
• Are punitive damages recoverable? If so, what is the standard that must be met to recover them?  Yes. Under a common-law third-party claim, the conduct which gives rise to punitive damages must constitute a separate tort. T.D.S. v. Shelby Mut. Ins. Co., 760 F.2d 1520 (11th Cir. 1985). The Plaintiff must show that the settlement practice in question represents a “general business practice.” In some instances, the question of whether the conduct rises to the level of a “general business practice” is for the Court. Howell Demarest v. State Farm Mut. Auto. Ins. Co., 673 So.2d 526 (Fla. 4th DCA 1996).
  
  A claim for bad faith pursuant to Fla. Stat. ch. 624.155(1)(b)1 is founded upon the obligation of the insurer to pay when all conditions under the policy would require an insurer exercising good faith and fair dealing towards its insured to pay. This obligation on the part of an insurer requires the insurer to timely evaluate and pay benefits owed on the insurance policy. Vest v. Travelers Ins. Co., 753 So. 2d 1270, 1272 (Fla. 2000)
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624.155 Civil remedy.—

1. Any person may bring a civil action against an insurer when such person is damaged:
    (a) By a violation of any of the following provisions by the insurer:
         1. Section 626.9541(1)(i), (o), or (x);
          2. Section 626.9551;
          3. Section 626.9705;
          4. Section 626.9706;
          5. Section 626.9707; or
          6. Section 627.7283.
    (b) By the commission of any of the following acts by the insurer:
          1. Not attempting in good faith to settle claims when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for her or his interests;
          2. Making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which payments are being made; or
          3. Except as to liability coverages, failing to promptly settle claims, when the obligation to settle a claim has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.
   
   Notwithstanding the provisions of the above to the contrary, a person pursuing a remedy under this section need not prove that such act was committed or performed with such frequency as to indicate a general business practice.
2. Any party may bring a civil action against an unauthorized insurer if such party is damaged by a violation of s. 624.401 by the unauthorized insurer.
3. (a) As a condition precedent to bringing an action under this section, the department and the authorized insurer must have been given 60 days’ written notice of the violation. Notice to the authorized insurer must be provided by the department to the e-mail address designated by the insurer under s. 624.422.
    (b) The notice shall be on a form provided by the department and shall state with specificity the following information, and such other information as the department may require:
          1. The statutory provision, including the specific language of the statute, which the authorized insurer allegedly violated.
          2. The facts and circumstances giving rise to the violation.
          3. The name of any individual involved in the violation.
          4. Reference to specific policy language that is relevant to the violation, if any. If the person bringing the civil action is a third party claimant, she or he shall not be required to reference the specific policy language if the authorized insurer has not provided a copy of the policy to the third party claimant pursuant to written request.
          5. A statement that the notice is given in order to perfect the right to pursue the civil remedy authorized by this section.
    (c) No action shall lie if, within 60 days after the insurer receives notice from the department in accordance with this subsection, the damages are paid or the circumstances giving rise to the violation are corrected.
    (d) The authorized insurer that is the recipient of a notice filed pursuant to this section shall report to the department on the disposition of the alleged violation.
    (e) The applicable statute of limitations for an action under this section shall be tolled for a period of:
          1. Sixty days after the insurer receives from the department the notice required by this subsection.
          2. Sixty days after the date appraisal is invoked pursuant to paragraph (f).
    (f) A notice required under this subsection may not be filed within 60 days after appraisal is invoked by any party in a residential property insurance claim.
4. Upon adverse adjudication at trial or upon appeal, the authorized insurer shall be liable for damages, together with court costs and reasonable attorney’s fees incurred by the plaintiff.
5. No punitive damages shall be awarded under this section unless the acts giving rise to the violation occur with such frequency as to indicate a general business practice and these acts are:
    (a) Willful, wanton, and malicious;
   (b) In reckless disregard for the rights of any insured; or
    (c) In reckless disregard for the rights of a beneficiary under a life insurance contract.
    Any person who pursues a claim under this subsection shall post in advance the costs of discovery. Such costs shall be awarded to the authorized insurer if no punitive damages are awarded to the plaintiff.
6. This section shall not be construed to authorize a class action suit against an authorized insurer or a civil action against the commission, the office, or the department or any of their employees, or to create a cause of action when an authorized health insurer refuses to pay a claim for reimbursement on the ground that the charge for a service was unreasonably high or that the service provided was not medically necessary.
7. In the absence of expressed language to the contrary, this section shall not be construed to authorize a civil action or create a cause of action against an authorized insurer or its employees who, in good faith, release information about an insured or an insurance policy to a law enforcement agency in furtherance of an investigation of a criminal or fraudulent act relating to a motor vehicle theft or a motor vehicle insurance claim.
8. The civil remedy specified in this section does not preempt any other remedy or cause of action provided for pursuant to any other statute or pursuant to the common law of this state. Any person may obtain a judgment under either the common-law remedy of bad faith or this statutory remedy, but shall not be entitled to a judgment under both remedies. This section shall not be construed to create a common-law cause of action. The damages recoverable pursuant to this section shall include those damages which are a reasonably foreseeable result of a specified violation of this section by the authorized insurer and may include an award or judgment in an amount that exceeds the policy limits.
9. A surety issuing a payment or performance bond on the construction or maintenance of a building or roadway project is not an insurer for purposes of subsection (1).