2015? It was a very good year – for Citizens
Florida is a study in contradictions when it comes to insurance law. The state has led the nation in consumer protection actions, like the national mortgage settlement and, for that matter, established Citizens Property Insurance Co. to provide coverage to residents who would otherwise go without.
In other ways, though, the state checks the power of insurance consumers in significant ways. Litigation against an insurance company, for example, follows a different path from other types of litigation. In those cases, the state’s civil remedy statute governs, adding to the list of documents to file and to the deadlines by which they must be filed. (This is why you need an attorney to handle a claim against an insurer.)
Last May, the Florida Supreme Court pulled the rug out from under consumers entirely with its decision in the Perdido Sun case. The court ruled that Citizens is immune from bad faith claims — not only because it is a state-run enterprise, but because state law actually disallows bad faith claims against it.
The case, Citizens Property Insurance Co. v. Perdido Sun Condominium Association Inc., began when the condominium was damaged in a 2004 hurricane. The association filed a claim with Citizens, but the payout was not what the plaintiff thought it should be. A breach of contract suit followed, and when the plaintiff prevailed, a bad faith claim filed under the civil remedy statute followed.
Specifically, the plaintiff accused Citizens of refusing to pay the full amount owed according to the policy and delaying the processing and payment of the claim. The plaintiff added that Citizens had engaged in a pattern of such behavior. In short, Citizens’ actions amounted to a failure to try to settle the claim in good faith, as described in state law.
In its purest form, sovereign immunity shields a government from civil and criminal lawsuits. Over the decades, Congress and state legislatures have moved toward allowing lawsuits for negligence but do not allow courts to award punitive damages. Too, Florida and other states impose a dollar limit on damage awards in these cases.
What sovereign immunity does not shield is a government’s intentional bad acts. Bad faith and torts committed with a wonton and willful disregard of human rights, safety, or property may move forward.
Unless you are suing an insurance company that just happens to be operated by the state. The Supreme Court said that bad faith as far as Citizens goes is actually defined in statute, and that means that it does not fall under the exceptions listed in the sovereign immunity waiver.
The upshot? It seems 2015 will be remembered as the year Citizens’ policyholders lost their right to sue their insurer for bad faith.
Source: The National Law Review, “Citizens Property Insurance Corporation Immune to Statutory Bad Faith Claims,” June 10, 2015
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