By Rory E. Jurman and Vanessa Alvarez
As published in Law360 Expert Analysis on October 22, 2018
As part of an ever-expanding trend to create a negligence standard against insurers, the Florida Supreme Court, on the heels of the Eleventh Circuit, has spoken. In its most recent decision on bad faith claims, the Florida Supreme Court reversed the decision of the Fourth District Court of Appeal, in part, because the Fourth District “relied ... on nonbinding federal cases that cannot be reconciled with [their] clear precedent.” In Geico General Insurance Co. v. Harvey, the Fourth District compared the present case to Novoa v. Geico Indemnity Co. and also cited to Barnard v. Geico General Insurance Co., both cases are decisions out of the Eleventh Circuit Court of Appeals.
Harvey and Novoa
In Harvey, Geico tendered the $100,000 policy limits just nine days of the fatal automobile accident, but failed to provide its insured for a recorded statement and failed to provide its insured’s financial statement to the attorney for the deceased’s estate.
In Novoa, Geico tendered the $20,000 policy limits, comprising of its insured’s bodily injury and property coverage, just nine days after a fatal automobile accident. The Eleventh Circuit affirmed summary judgment for Geico because Novoa attempted to prove how Geico could have better handled the claim, rather than proving that Geico acted in bad faith, and because Novoa did not prove that any alleged bad faith by Geico caused the excess judgment.
In Harvey, the Fourth District Court of Appeal followed a similar line of reasoning, concluding that Harvey had proven that Geico could have handled the claim better, rather than proving that Geico had acted in bad faith, and that Harvey had not proven that “Geico’s conduct caused the excess judgment against the insured.”
In reversing the decision by the Fourth District Court of Appeal, a narrowly divided Supreme Court of Florida stated that “[f]ederal case law interpreting [their] bad faith precedent does not always hit the mark.” The court asserted that the Eleventh Circuit “cherry-picked a single clause” from a prior Florida Supreme Court case when deciding Novoa and that the Eleventh Circuit “failed to consider [their] opinion in Boston Old Colony [Insurance Co. v. Gutierrez].” The court further stated that “the Eleventh Circuit’s contention that an insurer need not act prudently or even reasonably also misconstrues [their] well-established bad faith precedent.”
Breaking It All Down
As we all know, in general, the federal district courts in Florida must apply the substantive law of the state of Florida. With this doctrine in mind, one of the biggest questions left unanswered by Harvey is what effect this decision will have on cases alleging bad faith that are pending before federal courts.
In a footnote, the Supreme Court of Florida remarked on the lower burden federal courts have for granting summary judgments in the federal court system. Like Novoa, several recent bad faith cases involving Geico that were before the Eleventh Circuit stemmed from the district court’s summary judgment decision. Additionally, multiple federal district court cases have quoted or cited to the specific language from Novoa the Supreme Court of Florida rebuked.
The Florida Supreme Court has opened the door, in bad faith cases, to claims that fall outside of the list of responsibilities enumerated in Boston Old Colony. Because of the Erie Doctrine, insurers may now face an insurmountable hurdler to resolve their cases at the summary judgment stage in federal courts because insureds may now be able to argue that the insurers acted in bad faith even when the insurer complied with the list enumerated in Boston Old Colony.
For example, in Feijoo v. Geico General Insurance Company, the Eleventh Circuit affirmed the district court’s order granting summary judgment for Geico because Geico “complied with Geico’s duty to communicate with its insured.” In Feijoo, the insured claimed that Geico acted in bad faith for failing to disclose the insurer’s counteroffers that the insurer made to the claimant. The Eleventh Circuit affirmed summary judgment and reasoned that Geico had met its obligation to the insured by informing the insured “of each settlement offer, warn[ing] him of the potential for an excess judgment, and [telling] him that he could hire his own counsel to protect him from an excess judgment if he so desired.”
It is this exact reasoning that the Supreme Court of Florida apparently rebuked when it said that “[t]he obligations set forth in Boston Old Colony are not a mere checklist.” “An insurer is not absolved of liability simply because it advises its insured of settlement opportunities, the probable outcome of the litigation, and the possibility of an excess judgment.”
The question remains, however, whether the federal district courts will continue granting summary judgments where the insurer meets the obligations listed in Boston Old Colony, but the insured is claiming that the insurer acted in bad faith for its conduct outside of the obligations enumerated in Boston Old Colony. In Boston Old Colony, the court held that insurers had a duty to “advise the insured of settlement opportunities, to advise as to the probable outcome of the litigation, to warn of the possibility of an excess judgment, and to advise the insured of any steps he might take to avoid same.” Additionally, “[t]he insurer must investigate the facts, give fair consideration to a settlement offer that is not unreasonable under the facts, and settle, if possible, where a reasonably prudent person, faced with the prospect of paying the total recovery, would do so.”
This is a key question because, under the Erie Doctrine, the federal district courts in Florida must apply the substantive law of Florida when hearing a case under diversity jurisdiction. Following Harvey, federal district courts in Florida that apply the substantive law of Florida will be bound by the Supreme Court of Florida’s conclusion that bad faith can exist outside of the obligations set forth in Boston Old Colony. According to the Supreme Court of Florida, “the critical inquiry in bad faith is whether the insurer diligently, and with the same haste and precision as if it were in the insured’s shoes, worked on the insured’s behalf to avoid an excess judgment.” Therefore, Harvey could make it more likely than an insurer will not be able to win the case through a summary judgment in federal court — at least to the extent that it previously had — even where the insurer informs the insured of settlement opportunities and of the possibility of an excess judgment.
Additionally, the Supreme Court of Florida clarified that an insurer’s obligations includes it’s duty to “act with ‘care and diligence.’” Federal district courts in Florida will no longer be able to rely on or cite to the string of cases in the federal system that concluded that “an insurer need not act prudently or even reasonably” because, according to the Supreme Court of Florida, such a contention “misconstrues” Florida bad faith precedent. Harvey reiterates the notion that an insurer’s obligations do not end when an insurer tenders the policy limits. The Supreme Court of Florida reinstated the jury verdict even though Geico tendered its policy limits within nine days of the accident. Its holding was due, primarily, to Geico’s conduct after Geico tendered the policy limits. Accordingly, the good faith duties an insurer faces necessarily involves not only heightened communication to the insured, but also Monday-morning quarterbacking by bad faith attorneys, should insurers ignore requests for information or other due diligence inquiries.
Of note, the court again reiterated that the focus in bad faith cases is on the actions of the insurer, apparently turning a blind eye to the myriad of ever sophisticated bad faith setup schemes. The Supreme Court of Florida rejected the contention that “where the insured’s own actions or inactions result, at least in part, in an excess judgment, the insurer cannot be liable for bad faith.” Going forward, when a claim presents with severe injuries or a fatality, insurers can protect themselves through aggressive claims handling in processing requests by the claimant, whether the insurer believes the request is reasonable or not.
Harvey is not just another cautionary tale. While Florida is called the Sunshine State, that is not the case for insurers when it comes to bad faith claims. Many insurers may feel like Jason and the Argonauts, on an impossible journey.
Correction: A previous version of this article contained a misspelling in the citation for Cousin v. Geico Gen. Ins. Co. The error has been corrected.
Rory Eric Jurman is a shareholder and Vanessa Alvarez is a law clerk at Fowler White Burnett, P.A.
 Harvey v. Geico Gen. Ins. Co., No. SC17-85 (Fla. Sept. 20, 2018).
 Geico Gen. Ins. Co. v. Harvey, 208 So. 3d 810 (Fla. 4th DCA 2017); see also Novoa v.
Geico Indem. Co., 542 Fed. Appx. 794 (11th Cir. 2013); Barnard v. Geico Gen. Ins. Co.,
448 Fed. Appx. 940 (11th Cir. 2013).
 Harvey, No. SC17-85, slip op. at 3–5.
 Novoa, 542 Fed. Appx. at 795.
 Id. at 796–97 (emphasis added).
 Harvey, 208 So. 3d at 816.
 Harvey, No. SC17-85, slip op. at 12.
 Id.; see also Boston Old Colony Ins. Co. v. Gutierrez, 386 So. 2d 783 (Fla. 1980).
 Harvey, No. SC17-85, slip op. at 13.
 See Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938).
 Harvey, No. SC17-85, slip op. at 17 n.2.
 See, e.g., Daniels v. Geico Gen. Ins. Co. , No. 17-15340 (11th Cir. July 3,
2018); Duncan v. Geico Gen. Ins. Co. , 729 Fed. Appx. 900 (2018); Cousin v. Geico Gen.
Ins. Co. , 719 Fed. Appx. 954 (2018).
 See, e.g., Jahn v. Gov’t Emps. Ins. Co., 2017 WL 6948732, at *2 (S.D. Fla. Dec. 14,
2017); Eads v. Allstate Indemnity Co., 2016 WL 3944072, *2 (S.D. Fla. Jan. 26,
2016); Feijoo v. Geico Gen. Ins. Co., 137 F. Supp. 3d 1320, 1329 (S.D. Fla. Sept. 30,
2015); Soto v. Geico Indemnity Co., 2014 WL 12573842, *2 (M.D. Fla. July 16,
2014); Diperna v. Geico Gen. Ins. Co., 2013 WL 6050759, *6 (M.D. Fla. Nov. 15, 2013).
 Feijoo v. Geico Gen. Ins. Co., 678 Fed. Appx. 862, 864–65 (11th Cir. 2017).
 Harvey, No. SC17-85, slip op. at 10.
 See Boston Old Colony Ins. Co. v. Gutierrez, 386 So. 2d 783 (Fla. 1980).
 Id. at 785.
 See Erie R.s Co. v. Tompkins, 304 U.S. 64, 78 (1938).
 Harvey, No. SC17-85, slip op. at 10.
 Id. at 13.
 Id. at 18.
 Id. at 4, 23.
 Id. at 4–5, 18.
 Id. at 20.
 Id. at 20–21 (quoting Harvey, 208 So. 3d at 816).