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Debunking the Myth: Mentions of Insurance During Trial

By Brent Steinberg, Swope Rodante P.A.

Trial myth: If the word “insurance” is uttered during the trial of my auto case, the judge will grant the defense’s motion for mistrial quick enough to make his afternoon tee time.

Trial truth: While you should still take steps to minimize the risk of evidence coming in regarding a defendant’s liability insurance, the mere mention of “insurance” at trial is not the defense team’s free ticket to a mistrial or new trial.

Let’s start with the basics. Every auto practitioner knows that “insurance” is a taboo word in your standard auto negligence case. Why? Because Florida courts have long expressed fear that if a jury thinks a verdict is ultimately going to be paid by an insurance company, they may fix liability where there is none or award damages that have not otherwise been proven.

Likewise, defense lawyers – like Pavlov’s dogs – have been trained to pounce as soon as the big bad “i-word” is uttered in the courtroom.

Of course, in today’s world, you would be hard-pressed to make it through voir dire – let alone an entire trial – without the idea of insurance coming up. Heck, if anyone on your jury panel caught some Seinfeld re-runs the night before they came in for jury service, odds are they saw a commercial straight up telling them the defendant likely has insurance to pay for the verdict.

The pervasiveness of insurance in a prospective juror’s mind is nothing new. As far back as 1970, one Florida court noted that “because of the advanced state of our society in which liability coverage is so prevalent . . . courts may not have to be so sensitive in . . . isolating from the jury’s consideration any knowledge that coverage for the insured exists.”

Luckily, as demonstrated in a recent case from the First District, today’s appellate courts remain cognizant of this reality.

In Winters v. Harper, a case arising from a rear-end collision, the defendant sought a new trial based on two mentions of insurance during the plaintiff and the defendant’s testimony. On direct examination, the plaintiff testified she took a picture of the defendant’s license plate so she could report it to her own insurance company. Reflexively, the defendant moved for a mistrial, which was denied.

The other mention of insurance came during cross-examination of the defendant. In a slip of the tongue, the plaintiff’s lawyer asked the defendant driver whether at the accident scene he had provided the plaintiff with anything “other than your mother’s insurance – I’m sorry – other than your mother’s phone number?” The defense again moved for mistrial, which the trial court did not grant.

The jury eventually returned a verdict in favor of the plaintiff, and on appeal, the First District affirmed.

The appellate court noted the “age-old rule” in Florida is that “evidence of insurance carried by a defendant is not properly to be considered by the jury.” Thus, the first mention of insurance at trial – the indication that the plaintiff had her own insurance – didn’t implicate the rule. (And regardless, the collateral source jury instruction exists for that exact scenario!)

Regarding plaintiff’s counsel’s slip-up during cross examination of the defendant, the court concluded it did not constitute actual evidence that the defendant had liability insurance. Rather, the defendant objected, the jury was given an instruction to disregard the question, and the trial moved on. Furthermore, the appellate court held that even if the single fleeting reference to existence of liability insurance was “problematic,” the trial court was well within its discretion to deny the defendant’s motion for mistrial.

As the Supreme Court stated nearly 70 years ago, “if insurance is inadvertently mentioned, or information about insurance is volunteered, or even if such testimony is attempted to be introduced and the court upon objection immediately acts to prevent further transgression of the rule and to caution the jury to disregard the testimony the trial need not be discontinued.”

So, what’s the takeaway here? Try not to sweat it too much when “insurance” inevitably slips out of someone’s mouth in the courtroom. But that does not mean you should be laissez-faire about it either. While an isolated reference to the defendant’s liability insurance should not warrant a new trial, it could be the straw that breaks the cumulative error camel’s back. See Harrison v. Gregory, 221 So. 3d 1273 (Fla. 5th DCA 2017).

Tortfeasor Not Entitled to Setoff for UM Bad Faith Settlement

It has long been the rule that “an underinsured tortfeasor is not entitled to a setoff for payments made by plaintiff’s own UM insurer.” The underlying principle is that “it is better for the wronged plaintiff to receive a potential windfall than for a tortfeasor to be relieved of responsibility for the wrong, particularly in the case of UM insurance since the insured procured the insurance.”

But what about when the plaintiff settles a UM bad faith claim for an amount in excess of his UM policy benefits and then subsequently obtains a judgment against the tortfeasor – does the tortfeasor get a setoff for that settlement?

No, according to a recent Second District case, Ellison v. Willoughby.

The plaintiff had settled with his UM carrier, 21st Century, for $4 million on a $10,000 UM limit following the carrier’s alleged wrongful denial of coverage. Thereafter, the plaintiff proceeded to trial against the co-owner wife of the negligent driver and obtained a judgment for more than $30 million. The trial court denied the wife’s motion for a $4 million setoff and the Second District affirmed.

The court explained that section 768.041(2) did not require a setoff because that statute presupposes the existence of multiple tortfeasors who are jointly and severally liable for the same damages arising from the same injury. Conversely, when a claim is “asserted only against the settling co-defendant, the non-settling co-defendants are not eligible for a setoff in the amount of the settlement.” 21st Century was not a joint tortfeasor and, of course, the UM bad faith claim was not asserted against the co-owner wife, so section 768.041 did not apply.

The court also held the UM bad faith settlement did not qualify as a “collateral source” under section 768.76 because an “extracontractual payment on a bad faith claim” does not qualify as a payment of “insurance benefits.”

However, because this was an issue of first impression, the court certified the following question of great public importance:

Is a settlement payment made by an uninsured motorist insurer to settle a first-party bad faith claim subject to setoff under section 768.041(2) or a collateral source within the meaning of section 768.76?

Missed EUO? No PIP for You!

Up until the 2012 amendments to the No-Fault Law, a PIP insurer could not require an insured to attend an examination under oath (EUO) as a condition precedent to recovering PIP benefits.

But in 2012, section 627.736(6)(g) was amended to require any insured seeking to recover benefits to “comply with the terms of the policy, which include, but are not limited to, submitting to an examination under oath.” The section also states that “[c]ompliance with this paragraph is a condition precedent to receiving benefits.”

Construing this statutory language, the Third District recently held an EUO is (now) a condition precedent to receiving PIP coverage and affirmed a summary judgment in favor of the insurer where the insured failed to attend two EUOs.

Taking the rationale one step further, does that mean a PIP insurer is off the hook any time the insured fails to comply with any policy provision, even if the insured’s noncompliance was immaterial and harmless to the insurer? So much for that “swift and virtually automatic payment” of PIP benefits that was promised.

Got a Turo Case? Better File Suit Before January 1

You may be asking yourself, “What’s a Turo?” But if you have not encountered a case involving Turo yet, you probably will soon.

No, I’m not talking about lawn mowers (that’s Toro). Turo is a peer-to-peer (P2P) carsharing platform with more than 14 million members and 450,000 vehicles in the US, Canada and the UK. An individual car owner (“host”) lists his personal vehicle on the P2P website for a lessee (“guest”) to rent. Think Airbnb, for cars.

It has been reported that Turo’s last round of funding was at a valuation of more than $1.2 billion, and that the company is planning to go public this year. Avail and getaround are other major players in the P2P space.

These companies have been operating in Florida completely unregulated for a few years now. The Legislature (and car rental companies), understandably, wanted to tax these rental transactions like a traditional car rental. And after years of trying, they finally succeeded in doing just that this past session, passing SB 566, which was signed into law by Governor DeSantis on June 29, 2021.

But nothing in Tallahassee comes for free. Although the new law requires the P2P to ensure that the owner and driver are covered under a 10/20/10 policy during the “car-sharing period,” it also purports to extend Graves Amendment immunity to the P2P company and the owner sharing his car. The FJA fought against this bill, but our policy arguments fell on deaf ears.

If the ambiguous statutory language is construed to immunize owners and P2P companies from vicarious liability claims, this will be a devastating blow to anyone injured by the negligence of a Turo driver. Under current law, owner/hosts are vicariously liable under the dangerous instrumentality doctrine, and there are potential paths to holding Turo vicariously or derivatively liable as well. Turo also presently provides $750,000 to $1 million of liability coverage for the owner/host.

But now, moving forward, owners will likely be vicariously liable only up to the limits of Florida’s financial responsibility laws. And Turo will generally “assume liability . . . of a shared vehicle owner for bodily injury or property damage to third parties,” but only up to an amount stated in the car-sharing agreement (likely 10/20/10).

Beyond that, what claims will remain against the owner and/or P2P company? Direct negligence claims, of course, although those will presumably be rare. In unique fact scenarios, there may be ways around the Graves Amendment too. And if an interim bailee is involved, they would still be vicariously liable for the negligence of the driver.

But the bottom line is that if you have a Turo or other P2P case, you probably want to file suit before January 1, 2022, when the new statute takes effect. Although the law should not be retroactive to any accidents occurring on or before December 31, 2021, better to avoid the issue altogether.

Another Insurance Company Handout: “Named Driver Exclusion” Bill Passes

The hits just keep on coming.

As of July 1, 2021, named insureds may now execute a “named driver exclusion” that excludes coverage for “all claims or suits resulting from the operation of a motor vehicle by an identified individual who is not a named insured.” So, if the named insured / vehicle owner Dad excludes teenage Son to lower his premiums and Son causes a wreck driving Dad’s car, both Dad and Son are liable, but neither has liability coverage under Dad’s policy.

Although insurers were already allowed to do this for policies that were not furnished as proof of financial responsibility, this completely guts the limited protection provided by section 324.151. That section required all policies furnished as proof of financial responsibility to provide liability coverage to the owner and any permissive users. Now, the named driver exclusion gets around that requirement.

Takeaway? The worst, most irresponsible drivers are now required to carry less liability coverage.

But it gets worse. The new law also allows insurers to eliminate PIP and UM for any damages sustained by the identified excluded individual. And this can be done whenever the “identified individual is named on the declarations page or by endorsement and the named insured consents,” without the insurer having to first comply with any notice requirements like in section 627.727(1).

It does not take a crystal ball to see where this is likely headed. Unscrupulous insurers will take advantage of their unsophisticated insureds who want to reduce their premiums and sell them policies that eliminate coverage for everyone else in their household. Insurers will make a fortune selling these practically worthless auto policies, and injured claimants will be left holding the bag.

As if we needed another policy reason to require every driver to carry a minimum level of bodily injury liability coverage. Which leads me to . . .

MBI: The Epilogue

I’m sure by the time this Journal hits your inbox, every one of you will have heard that Governor DeSantis vetoed Senate Bill 54.

Senate Bill 54 was the culmination of a 5-year effort to repeal Florida’s no-fault system and replace it with a responsibility-based system that requires drivers carry minimum levels of bodily injury liability coverage (like 48 other states and the District of Columbia). It was the most significant proactive legislation supported by the FJA to pass the House and Senate in decades, if not ever.

If I were to list all the folks who donated their time, talent and treasure to help get the MBI bill to the Governor’s desk, it would push me well beyond my word limit. But if you were happy SB 54 passed the House and Senate, you owe a special debt of gratitude to Jeff Porter, Eric Romano, Dale Swope, Robert Rubenstein and, of course, Representative Erin Grall, who has championed MBI and been the House bill sponsor for 5 years running.

The bill ended up at 127 pages in length. Here’s the 30,000-foot view:

  • The PIP repeal would mean no more “verbal threshold” or $10k offset in virtually every auto case.
  • Every private passenger vehicle would be required to carry 25/50 bodily injury liability coverage (in addition to the $10,000 of property damage liability coverage presently required).
  • Insureds would have the option of purchasing medical payments coverage in the amount of $5,000 or $10,000, which would effectively work like health insurance coverage.
  • Every auto policy would carry a $5,000 death benefit (just like under current PIP law).
  • If an uninsured motorist was injured while operating a motor vehicle and had been uninsured for more than 30 days before the crash, the at-fault defendant would be entitled to a $10,000 setoff against any award of noneconomic damages.
  • The bill had a 12-page bad faith statute which included, inter alia, (1) “best practice standards” which, if followed, would immunize the insurer from any third-party bad faith claim, and (2) a 45-day “safe harbor period” for insurers to investigate and evaluate a liability claim before it could be held liable for failing to offer to settle in bad faith.

But, alas, despite huge bipartisan support (37-3 in the Senate and 100-16 in the House), Governor DeSantis vetoed it, stating that “[w]hile the PIP system has flaws and Florida law regarding bad faith is deficient,” Senate Bill 54 “does not adequately address the current issues facing Florida drivers and may have unintended consequences that would negatively impact both the market and consumers.”

Where do we go from here? Back to the drawing board and, hopefully, back to the Governor’s desk, whether it be 6 months or 10 years from now. As esteemed philosopher John Blutarsky once stated: “Nothing is over until we decide it is. Was it over when the Germans bombed Pearl Harbor? Hell no!”

Brent Steinberg, Esq. is a partner at Swope, Rodante P.A. and handles catastrophic injury, insurance bad faith, legal malpractice and insurance coverage cases throughout Florida and Georgia at both the trial and appellate levels. 

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