The U.S. Court of Appeals for the Eleventh Circuit, disagreeing with a federal district court, has ruled that an insured may proceed with her lawsuit alleging that her insurer acted in bad faith in handling her claim for underinsured motorist coverage following a car accident in which she sustained serious injuries.

The Case

On June 12, 2009, Ethel Cousin and her husband were injured in a car accident. The accident report attributed fault to the driver of the other vehicle.

Ms. Cousin reported the accident to her insurer, GEICO General Insurance Company, which also insured the other driver, claiming injuries to her leg, knee, neck, and shoulder.

On July 28, 2009, Ms. Cousin's lawyer sent a letter to GEICO regarding Ms. Cousin's bodily injury (“BI”) claim, demanding the $10,000 BI policy limit under the other driver's policy. Attached to the BI demand letter were medical records showing that Ms. Cousin had sustained a displaced spiral fracture to her right tibia and x-ray records showing scoliosis of the thoracic spine and mild degenerative disc disease.

On August 3, GEICO tendered the other driver's BI policy limit of $10,000 to Ms. Cousin due to her leg fracture.

On August 10, Ms. Cousin's attorney notified the GEICO claims adjuster assigned to Ms. Cousin's underinsured motorist (“UM”) benefits case – Kimberly Stephens – that Ms. Cousin had received $10,000 for her BI claim against the other driver but that the other driver was underinsured with respect to BI liability coverage. He therefore demanded payment of the full $100,000 available under Ms. Cousin's UM policy. He attached a copy of the July 28 demand package that had been submitted in conjunction with Ms. Cousin's BI claim.

Simultaneously with the August 10 UM demand, Ms. Cousin's lawyer also filed a Civil Remedy Notice of Insurer Violations (“CRN”) pursuant to Florida law asserting that GEICO had acted in bad faith – in particular, by failing to offer anything in settlement of Ms. Cousin's UM claim despite her serious injuries.

GEICO responded on August 17 to confirm receipt of the demand and to inform Ms. Cousin that she would be contacted following evaluation of her claim.

On August 19, Ms. Cousin's lawyer submitted additional medical records (some of which predated the accident). The records revealed, for instance, that Ms. Cousin had testing on her lumbar in February 2007 that showed mild broad lumbar dextroscoliosis. The records also showed that Ms. Cousin underwent additional testing on her lumbar following the accident; those tests revealed degenerative disc and joint disease, but no acute findings.

On August 26, GEICO completed its review of Ms. Cousin's UM claim. GEICO determined that the information available to it at the time was “[l]imited” and that it would need personal injury protection (“PIP”) logs and billing information to properly evaluate the claim. The following day, Ms. Stephens requested these documents from Ms. Cousin, along with any documentation of lost wages.

On September 9, Ms. Stephens again advised Ms. Cousin that her claim remained under consideration and that GEICO would need PIP logs, lost wage information, and all medical records and bills related to the accident to proceed.

On September 29, GEICO again requested Ms. Cousin's medical records and bills by letter and during a phone conversation with Ms. Cousin's lawyer, who reported that Ms. Cousin was still undergoing treatment and that he would update GEICO regarding her status in a week or so.

In a letter dated October 5, Ms. Cousin's lawyer provided GEICO the promised update. In particular, he noted that her fractured tibia had received a positive prognosis and was healing well, but that she was still experiencing “tremendous” back pain for which she had already received two epidural injections and was expected to receive a third the following week. The letter also informed GEICO that Ms. Cousin had met informally with her husband's neurosurgeon, Dr. Gomes, at one of her husband's appointments, and that as a courtesy, Dr. Gomes had reviewed her MRI films and requested that she schedule an appointment to explore a lumbar fusion procedure, for which, he said, she might be a candidate given that the epidural injections were not relieving her pain. Ms. Cousin's lawyer's letter attached a report from an August 10, 2009 MRI of Ms. Cousin's lumbar, which showed a mild annular disc bulge, eccentric disc bulge, mild central canal stenosis, and small central disc protrusion. The letter did not include any notes from Dr. Gomes to support the opinions that the letter attributed to him. 

On October 7, Ms. Cousin provided GEICO with a letter confirming that she had scheduled an October 29 appointment with Dr. Gomes.

On October 8 – the end of the first 60-day CRN cure period – GEICO responded that it had received the additional medical records attached to the October 5 letter, but noted that Ms. Cousin had provided only one medical bill, no PIP logs, no recommendation for surgery, and no lost wage documentation. Based on the lack of quantifiable damages and the $10,000 BI benefits already paid, GEICO offered $5,135 to resolve Ms. Cousin's UM claim. GEICO also requested MRI films of Ms. Cousin's lumbar so that it could conduct an independent medical evaluation (“IME”), per its rights under Ms. Cousin's policy.

On October 12, Ms. Cousin provided medical bills of $11,882 and evidence of lost wages totaling approximately $2,000. The same day, Ms. Cousin's lawyer filed a second CRN, asserting that GEICO had again acted in bad faith, this time by failing to make a timely, reasonable offer to settle her UM claim “despite being presented with documentation supporting a very serious set of injuries,” and that as a result, Ms. Cousin had suffered “undue additional financial loss and additional pain and suffering and emotional distress.”

On October 21, GEICO scheduled an IME for Ms. Cousin on November 2. On October 30, Ms. Cousin's counsel contacted GEICO to reschedule the IME because, he said, it had never been cleared on his schedule. He offered to reschedule Ms. Cousin's exam on a date that was convenient for both parties and attached a copy of the requested PIP logs showing that Ms. Cousin had received an additional $10,000 from GEICO under her PIP coverage.

On November 5, GEICO and Ms. Cousin rescheduled the IME for November 9. The next day, November 6, Ms. Cousin's lawyer contacted GEICO to inform it that on November 4, Dr. Gomes had performed a percutaneous endoscopic laser discectomy and arthroscopic laser facet ablation on Ms. Cousin, and that, as a result, her IME would again need to be canceled because she was “not medically able to undergo an IME for at least another 3 weeks.”

Along with the notice of cancelation, Ms. Cousin's attorney attached a surgeon's bill for $27,340 and a pre-operative exam bill for $375, and informed GEICO that Ms. Cousin's total out-of-pocket expenses were estimated to be approximately $60,000. The letter also indicated that Ms. Cousin had filed a state court lawsuit the same day and threatened to perfect service of process on GEICO if Ms. Cousin did not receive the full $100,000 policy limits by November 11.

On November 11, GEICO sent a fax to Ms. Cousin outlining its previous efforts to resolve her UM claim, including its repeated attempts to gather the necessary documentation and schedule an IME, and stating its belief that the cost of the surgery with Dr. Gomes was “excessive and not reasonable” and would be reviewed for proper coding and pricing. GEICO's letter concluded with an increased settlement offer of $14,104.

Ms. Cousin's trial counsel responded on November 12 with a letter expressing his confidence that a jury would agree that GEICO's “offer utterly fails in every respect” and that “[u]nfortunately, [they would] have to move forward in litigation and let a jury decide what Ms. Cousin is entitled to receive in compensation for her injuries.”

The letter included the first hard evidence linking the car accident to a permanent injury – a report from Dr. Gomes stating his belief that Ms. Cousin had sustained a permanent lumbar injury as a result of her accident. Ms. Cousin's lawyer reemphasized his belief that Ms. Cousin should be entitled to the full amount available under her UM policy and extended the deadline for GEICO to tender the UM policy limits to November 12 at 2:00 p.m. He warned GEICO that “all offers to settle this case within [the] policy limits will be withdrawn” after the deadline.

On December 11, the end of the second 60-day cure period, GEICO sent a letter to Ms. Cousin stating that the parties had a “difference in opinion as to the value of this case” and because a lawsuit had already been filed, the case would be handled by GEICO's staff counsel attorney's office.

Ms. Cousin's state court bad faith action was tried in Duval County, Florida, in October 2011. The jury rendered a verdict in Ms. Cousin's favor and against GEICO in the amount of $1,305,000, which the state court reduced to the UM policy limits of $100,000.

In an attempt to collect the balance of the award, Ms. Cousin filed a lawsuit in the U.S. District Court for the Middle District of Florida, alleging (again) that GEICO had acted in bad faith in handling her UM claim.

The district court granted summary judgment in favor of GEICO, and Ms. Cousin appealed to the Eleventh Circuit. She contended, among other things, that there were disputed facts based on which a reasonable jury could conclude that GEICO had acted in bad faith.

The Eleventh Circuit's Decision

The circuit court held that genuine issues of material fact remained in dispute and that the district court had erred by granting summary judgment.

In its decision, the circuit court noted the general rule that the issue of bad faith was “a question for the jury.”

It then agreed with Ms. Cousin that genuine issues of material fact remained in dispute and, accordingly, that summary judgment was improper. In particular, the Eleventh Circuit pointed out that, in response to Ms. Cousin's $27,340 percutaneous-discectomy surgery bill and the $375 pre-operative bill, Ms. Stephens of GEICO had stated that these amounts were “excessive and not reasonable” and that GEICO would perform its own evaluation of proper coding and pricing for the procedure.

The circuit court observed that Ms. Stephens later testified, however, that a typical billing range for this procedure was between $20,000 and $75,000, and admitted that the total amount estimated for Ms. Cousin's procedure was within that range.

Accordingly, the Eleventh Circuit ruled, at the very least, a dispute remained as to the reasonableness of the billing for Ms. Cousin's percutaneous discectomy and, therefore, the adequacy of GEICO's second settlement offer.

Because, under Florida's totality of the circumstances approach, the reasonableness and adequacy of an insurer's settlement offer were relevant factors to consider when determining bad faith, summary judgment had been improperly granted, the Eleventh Circuit concluded.

The case is Cousin v. GEICO General Ins. Co., No. 16-10113 (11th Cir. Jan. 16, 2018). Attorneys involved include: For ETHEL COUSIN, Plaintiff – Appellant: Bryan Scott Gowdy, Meredith Abernathy Ross, Creed & Gowdy, JACKSONVILLE, FL; Garrett McGregor Brown, Kerry C. McGuinn, Jr., Rywant Alvarez Jones Russo & Guyton, PA, TAMPA, FL; Michael D. Marrese, Morgan & Morgan, PA, JACKSONVILLE, FL; Michael S. Rywant, Rywant Alvarez Jones Russo & Guyton, PA, GAINESVILLE, FL. For GEICO GENERAL INSURANCE COMPANY, a foreign corporation, Defendant – Appellee: Adam Duke, Young Bill Boles Palmer & Duke, PA, PENSACOLA, FL; Billy Richard Young, Amanda L. Kidd, Stephanie Ann McQueen, Young Bill Boles Palmer & Duke, PA, TAMPA, FL; Courtney F. Smith, Cole, Scott and Kissane P.A., PENSACOLA, FL.