The issue of whether Florida’s legislative-created insurer, Citizens Property Insurance Corporation, is, or should be, subject to damages for bad faith claims handling practices has been heavily debated by industry professionals during the last several years. Debbie Moroy, of ClaimSmentor, recently posted a comment to request an update on the Citizens Property Insurance Corporation v. San Perdido Association, Inc. case. In my Property Insurance coverage Law Blog post from October 18, 2010, titled Bad Faith Lawsuit Allowed to Proceed to Trial Against Citizens Property Insurance Corporation, I discussed an interesting turn of events on this issue. At that time, the First District Court of Appeal rejected Citizens’ request to stop a bad faith action against it from proceeding in the trial court.

The First District certified conflict with the Fifth District Court of Appeal’s decisions in Citizens v. Garfinkel, 25 So.3d 62 (Fla. 5th DCA 2009) and Citizens v. La Mer Condo. Assoc., 37 So. 3d 988 (Fla. 5th DCA 2010), both of which overruled the trial courts’ denial of motions to dismiss bad faith lawsuits against Citizens and granted writs of prohibition precluding any further litigation against Citizens for bad faith. The majority in San Perdido certified this question to the Florida Supreme Court:

Whether review of the denial of a motion to dismiss based on a claim of sovereign immunity should await the entry of a final judgment in the trial court?

The Florida Supreme Court has accepted jurisdiction, and oral argument is set for September 8, 2011. Citizens argues the substantive issue of whether it is subject to bad faith claims in its initial brief. San Perdido argued in its answer brief that the First District certified a procedural issue: whether the appellate courts can accept interlocutory appellate review of a trial court’s denial of a motion to dismiss a bad faith case based upon a claim of immunity. The First District held that interlocutory appellate review is not available to Citizens, while the Fifth District has allowed interlocutory appeals in the same circumstances.

It is uncertain at this time whether the Florida Supreme Court’s will address the substantive issues asserted by Citizens –whether it is immune from bad faith liability– or solely the procedural issues—whether the District Courts can accept such interlocutory appeals.
The following is an excerpt from San Perdido’s Answer Brief, which demonstrates how strongly policyholder representatives feel about this important issue:

In its brief, Citizens has posited a variety of arguments why bad faith either is not a willful tort or, alternately, that the Legislature “intended” to exempt Citizens from bad faith liability, all of which are discussed in depth below. In the final analysis, San Perdido would submit that if the Court decides to take cognizance of this issue, any analysis of whether Citizens is immune from bad faith must begin with one crucial question: What is Citizens asking for in this appeal, and is the remedy that Citizens seeks congruent with the Legislature’s purpose for creating Citizens in the first place? No matter how Citizens tries to spin this issue, it is asking this Court for the ability to deny claims in bad faith with impunity, which is totally contrary to the Legislature’s stated purpose in creating it. (Emphasis in Original).

Citizens likes to claim that it’s an arm of the government, created to promote the welfare of the average Floridian and for that reason it is entitled to special protection. But the Legislature recognized that when it created Citizens, it was, first and foremost, creating an insurance company and checks were needed to prevent Citizens from straying off course and behaving like an insurance company…Analysis of the provisions of §627.351(6)(s)(2) shows that the Legislature clearly and unambiguously imposed a duty of good faith in regards to claims handling and settlement upon Citizens. §627.351(6)(s)(1) Florida Statutes grants Citizens general immunity then carves out specific exceptions to that immunity in order to provide a mechanism to enforce the duty of good faith.

The ultimate question that this Court must answer is this: What was Citizens created for and does it serve that purpose to allow Citizens to breach its contracts at will and engage in bad faith claims handling practices? Because when all the rhetoric is cleared away, that’s what Citizens is really arguing for: Citizens wants this Court to say that it’s ok for it to breach its contracts with the people of this State and deny their claims in bad faith.

This case could have an important widespread impact given the large numbers of policyholders in Florida insured with Citizens, particularly if the Florida Supreme Court rules that Citizens is subject to claims for bad faith. We will continue to monitor this case and provide updates as it progresses. 

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Founded in 1985, our law firm continues to be dedicated to representing insurance policyholders throughout the United States. Collectively, our lawyers are licensed to practice in 25 states. In fact, many of Merlin Law Group’s attorneys worked for the insurance industry before joining the firm, so they bring a strong understanding of insurance company practices. Anyone can file a claim, but it takes experience, knowledge, and savvy to achieve a truly successful outcome. As The Policyholder’s Advocate®, Merlin Law Group aims to drive positive change within the insurance sector by obtaining justice for our clients and educating policyholders on how to navigate insurer bad faith tactics.

When we handle property insurance claim disputes, we hire the most experienced and qualified expert witnesses to evaluate your insurance claim and testify on your behalf. In most cases, we can advance the fees for this. Typically, we hire experts such as engineers, contractors, independent roofing consultants and other professionals to perform a thorough assessment on all possible causes of damages. This is a process that provides us with a very detailed and all-inclusive estimate for determining and justifying a proper settlement. Our use of these professional expert witnesses sets us apart from other insurance law firms.

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