Time Limit Demands and Tenders

Dan Santaniello has acted as an expert on the areas of Bad Faith and the Powell Doctrine.  His team assists firm members with all time and policy limit demands. 

On March 24, 2023 (Tort Reform), the Florida Legislature made significant changes to statutory law affecting bad faith litigation.   The Time Limit Demand and Tenders team (TLD) guides insureds and in their insurers on the Bad Faith rules before Tort Reform (the “old” rule) and the Best Practices under the new statutory rules that became effective on or after March 24, 2023 (the “new” rule).   The plaintiff’s bar will continue to assert that the new rule is unconstitutional or does not apply to policies in existence at the time of tort reform.  Their alternative argument is that the old rule applies to any claim arising on a policy that was issued before March 24, 2023, and that Tort Reform did not abrogate old rule case law.

Under the “new” rule, Tort Reform requires the claimant and his/her attorney to act in good faith and give an insurer sufficient evidence and 90-days to make a decision.  The definitions of sufficient evidence will play out over the next several years, so our TLD team will help navigate these risks under both the pre- and post-tort reform old and new rules.  The firm’s dedicated practice team understands the specific duties of time and policy limit demands. The team employs best practices in navigating this environment and documenting all attempts to investigate and settle these demands.  

“Tender Watch” Exposure – The Powell Doctrine  

With regard to “old” rule claims, an insurer must investigate the facts, give fair consideration to a settlement offer that is not unreasonable, and settle the claim, if possible, where a reasonably prudent person, faced with the prospect of paying the total recovery, would do so. The “Powell Doctrine” can present traps for unwary insurers that await a formal demand. “Where liability is clear and injuries so serious that an excess judgment is likely, the insurer has a duty to initiate negotiations…” Powell v. Prudential Prop. & Cas. Ins. Co., 584 So. 2d 12 (Fla. 3d DCA 1991). This has been construed to mean an insurer may have a duty to tender its policy limits to a claimant where no demand has even been made.  

The requirements of an insurer include under the old rules is to: (1) advise of all settlement opportunities, (2) advise as to the probable outcome of the litigation, (3) warn of the possibility of an excess judgment, (4) advise the insured of any steps he might take to avoid an excess judgment, (5) investigate the facts, (6) give fair consideration to a settlement offer that is not unreasonable under the facts and (7) settle, if possible, where a reasonably prudent person, faced with the prospect of paying the total recovery, would do so. Florida’s standard jury instruction states that “an insurance company acts in bad faith in failing to settle a claim against its insured within its policy limits when…” “under all the circumstances, it could and should have done so…”“had it acted fairly and honestly toward its insured (or excess carrier) and with due regard for their interests.”  

On losses that have exposure that could exceed or result in a “tender” of policy limits, we employ a “tender watch” strategy and protocol that involves timely investigation and interaction with claimant and their counsel. The team will interact with the insured and claimant’s counsel and document all attempts to investigate and evaluate issues of liability, causation and damages so that the carrier and its insured can have substantive strategy discussions to allows the carrier to make calculated decisions prior to the receipt of a demand.  

Tender of Policy Limits – The Mirror Image Rule   

A decision to tender policy limits on a claim is governed by contract law. It is of paramount importance that a strategy be developed and executed flawlessly to increase the likelihood of acceptance. Our dedicated team will scrutinize all aspects of plaintiff’s demands and pre-demand communications and develop a strategy to effectuate a successful tender of policy limits should that be the desired goal of the insurer and its insured. There are a number of common tender mistakes pre-tort reform under the old rules, also known as “bad faith” setups.  Some examples include alleged violations of the ‘mirror image’ rule, release language, conditions on tenders, statutory compliance with insurance disclosures, requests for financial and other information from insureds (Harvey Doctrine), decisions affecting the release of additional insureds (the Contreras Doctrine, etc.) Our team will identify and avoid these traps so as to avoid a rejection when a decision has been made to tender policy limits.  

Global Mediations – The Farinas Doctrine  

Multiple claimant, single limit, no excess time and policy limits demands present their own unique challenges on pre-tort reform, old rule claims.  The most common and most difficult bad faith set up to navigate involve multiple claimants out of the same incident, particularly in a single limit, no excess insurance scenario. The Farinas v. Florida Farm Bureau doctrine required an insurer to investigate and settle as many claims as it can within policy limits. Pre-tort reform, under the old rules, there is no safe harbor other than to document and execute a strategy that increases the chances of a successful tender, especially when many times the competing plaintiffs’ do not want to compromise claims because they exceed all available insurance coverage for the loss. Our team employs a proprietary strategy to resolve these claims without the need for litigation.  

The decision in Aldanas  serves as a sobering reminder to insurers of the importance of having a tender protocol and strategy in place and executing it flawlessly once a decision to tender policy limits has been made. A mere checklist is not enough. You should meticulously document your strategy calls with your insured, the risk and options and ultimate decision-making process using a multi-disciplinary and decision-tree approach because every loss presents its own unique set of circumstances and challenges.  

In post-tort reform, new rule cases, an insurer may utilize Interpleader if the claim cannot be resolved in a Global Mediation or Settlement Conference.  When representing the insured, we will assist with coordinating efforts to obtain a Global Release of all claims, and documenting our attempts to develop a “Farinas or Prioritization” chart to rank all claims.  When representing the insurer, we will advise and develop an Interpleader strategy when the Global Settlement Conference attempts fail. 

Case law in Florida will develop over the next several years with the passing of new Bad Faith tort reform.  This makes it critical to have a team in place for the insured and insurer that can navigate the old and new rules, and mitigate risk.

For assistance, Contact Daniel Santaniello.

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