Erskin Bell v. Geico General Insurance Company

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
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No. 12-10265
Non-Argument Calendar
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D. C. Docket No. 6:09-cv-00876-MSS-KRS
ERSKIN BELL,
as Guardians and Parents of Erskin Bell, II,
PHILLIPA ST. MARIE-BELL,
as Guardians and Parents of Erskin Bell, II,
Plaintiffs-Appellants,
versus
GEICO GENERAL INSURANCE COMPANY,
Defendant-Appellee.
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Appeal from the United States District Court
for the Middle District of Florida
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(September 14, 2012)
Before DUBINA, Chief Judge, JORDAN and ANDERSON, Circuit Judges.
PER CURIAM:
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Plaintiffs-Appellants Erskin Bell, Sr. (Erskin, Sr.) and Phillipa St. Marie-
Bell (“Phillipa”) (collectively “the Bells”), as guardians and parents of Erskin
Bell, II (“Erskin”), appeal the district court’s order granting Defendant-Appellee
GEICO General Insurance Company’s (“GEICO”) motion for summary judgment
and denying the Bells’ motion for partial summary judgment. Upon review of the
record and the parties’ briefs, we affirm the district court’s judgment in favor of
GEICO.
I. Background
GEICO issued an automobile liability insurance policy to the Bells
providing non-stacking Uninsured/Underinsured Motorist (“UM”) coverage in the
amount of $25,000.00 per person and $50,000.00 per occurrence. The policy’s
“payment of loss” provision states that:
Any amount due is payable:
(a) to the insured or his authorized representative,
(b) if the insured is a minor, to his parent or guardian,
(c) if the insured is deceased, to his surviving spouse; otherwise
(d) to a person authorized by law to receive the payment, or to a
person legally entitled to recover payment for the damages.
[GEICO] may, at [its] option, pay an amount due in accordance with
(d) above.
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[R. 62-2 at 32–33.]
On November 30, 2008, the Bells’ son, Erskin, was involved in a very serious
automobile accident which left Erskin, in a coma. The accident required Erskin’s
transport to and care from Orlando Regional Medical Center (“the hospital”).
GEICO was first notified of Erskin’s injury on December 2, 2008, when it
received a call from the hospital requesting information about coverage under the
Bells’ policy. GEICO immediately began investigating the loss and contacted
Erskin, Sr.
On December 3, 2008, GEICO claims supervisor Karen Hall (“Hall”) noted
that GEICO would tender its full $25,000.00 UM policy limits to the Bells once
she received confirmation from underwriting as to the available amount of
coverage under the policy. In accordance with Chapter 57-1644, Laws of Florida
and Orange County Code of Ordinances, Part II, Chapter 20, Article IV, the
hospital filed a lien on December 12, 2008, which attached to “any and all . . .
claims . . . accruing to [Erskin]” [R. 62-7 at 1.] The same day, Nick Denton
(“Denton”), a GEICO claims examiner, contacted Phillipa and told her that
GEICO would be issuing a check for the $25,000.00 UM policy limits and that the
check would include the hospital as a payee. Denton also wrote Phillipa
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confirming their conversation and providing her with a check for the $25,000.00
UM policy limits, a proposed release of the UM claim, a certified copy of the
insurance policy, an affidavit of coverage, and the UM selection form showing the
Bells’ amount of UM coverage.
The Bells’ attorney, Nathan Carter, Esq. (“Carter”), wrote GEICO a letter,
received on December 15, 2008, advising that he represented the Bells and
requesting disclosure of their insurance information. Denton wrote Carter on the
same date, provided a certified copy of GEICO’s policy, an affidavit of coverage,
the Bells’ uninsured motorist selection form, and advised that GEICO had
tendered the $25,000.00 UM policy limits to the Bells by check payable to Erskin
Bell and the hospital.1 Afterward, the Bells contend that Carter or his paralegal
contacted Denton two or three times by phone, stating that Phillipa’s health
insurance would cover the hospital expenses and asking GEICO to reissue the
check to the Bells, or alternatively, to Carter’s firm trust account. Denton does not
remember the substance of each conversation, but claims that if Carter’s paralegal
in fact raised the possibility of reissuing the settlement check to the law firm’s
trust account, that Denton would have requested confirmation in writing that
Carter’s firm would satisfy the hospital’s lien. Carter drafted a letter on January
1
The check was presumably payable to Erskin, Sr., as he was the GEICO policy holder.
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23, 2009, requesting a check made payable to his firm’s trust account and
promising to resolve the hospital lien, but GEICO never received the letter. It is
not clear from the record whether the letter was actually mailed. Hall testified that
had she been aware of Carter’s request to reissue the check to the firm trust
account, GEICO would have done it so long as Carter promised to protect GEICO
from any obligation on the lien.
On January 28, 2009, Carter filed a Civil Remedy Notice (“CRN”) on behalf
of Erskin, Sr. with the Florida Department of Financial Services. The CRN
identified “claim denial” as the “reason for notice,” and described the “facts and
circumstances giving rise to the insurer’s violation” as follows: “CLAIMANT
HAS PROVIDED PROOF OF CLEAR LIABILITY ON THE PART OF AN
UNDERINSURED/UNINSURED MOTORIST, AND DAMAGES IN EXCESS
OF THE POLICY LIMITS, YET GEICO HAS FAILED TO
UNCONDITIONALLY TENDER THE INSURED’S UM POLICY LIMITS.”
The CRN identified Denton as the GEICO employee most responsible for and
knowledgeable of the facts surrounding the alleged violation. Upon receipt of the
CRN on February 2, Denton claims that he tried to call Carter, but was unable to
reach him. On February 6, 2009, Denton responded to the CRN by writing Carter,
explaining that GEICO had already tendered payment and that it would reissue the
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check without the hospital as a payee if GEICO received written notice from
Carter explaining how the hospital’s lien would be satisfied. On February 20,
2009, Carter responded by letter to GEICO, refusing any check made payable to
the hospital. For whatever reason, Carter did not address GEICO’s request for the
firm’s assurance that it would be responsible for satisfaction of the hospital’s lien.
The Bells were also entitled to $10,000.00 in personal injury protection
(“PIP”) coverage from GEICO. Another GEICO employee, Veronica Williams
(“Williams”), who had no interaction with Denton, separately processed the PIP
claim and allegedly paid the entire $10,000.00 to an ambulance company, rather
than paying $5,000.00 to the hospital. GEICO then refused to pay the hospital the
$5,000.00 in PIP coverage until GEICO was reimbursed $5,000.00 from the
ambulance company. The hospital would not bill Philippa’s health insurance
company or release its lien until receiving notification from GEICO that the Bells’
PIP coverage had been exhausted. The hospital’s lien was released on May 29,
2009, once GEICO reissued $5,000.00 for PIP coverage to the hospital. On June
12, 2009, GEICO issued a new $25,000.00 check, payable solely to Erskin Bell.
The Bells refused to accept the $25,000.00, as they had already filed a complaint
in state court against GEICO alleging first-party bad faith for GEICO’s failure to
settle their UM claim within the statutory cure period. After GEICO removed the
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case to federal court, answered the complaint, and settled some issues in
mediation, the parties filed cross motions for summary judgment on the first-party
bad faith claim. The district court decided the motions in GEICO’s favor, and the
Bells timely filed this appeal.
II. Standard of Review
We review the district court’s grant of summary judgment de novo, applying
the same standard as the district court. Perry v. Sec’y, Fla. Dep’t of Corrs., 664
F.3d 1359, 1363 (11th Cir. 2011).
III. Discussion
Fla. Stat.§ 624.155(1)(b)1, which creates a cause of action for first-party
bad faith, provides that an insurer is liable if it does not attempt “in good faith to
settle claims when, under all the circumstances, it could and should have done so,
had it acted fairly and honestly toward its insured and with due regard for [the
insured’s] interests.” An insurer’s simple negligence does not amount to bad faith.
See DeLaune v. Liberty Mut. Ins. Co., 314 So. 2d 601, 603 (Fla. Ct. App. 1975).
Before an insured may bring a suit for first-party bad faith, he or she must give the
insurer written notice of the alleged violation by filing a CRN. Fla. Stat. §
624.155(3)(a). If “within 60 days after filing [the CRN], the damages are paid or
the circumstances giving rise to the violation are corrected,” then no claim for bad
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faith exists. Fla. Stat. § 624.155 (3)(d). To cure a violation, the insurer must
tender “the amount owed pursuant to the express terms and conditions of the
policy.” Talat Enters., Inc. v. Aetna Cas. & Surety Co., 753 So. 2d 1278, 1282
(Fla. 2000).
In the instant case, the district court found that the Bells never acquired a
claim under Fla. Stat.§ 624.155 because GEICO tendered the full policy coverage,
$25,000.00 payable to Erskin, Sr. and the hospital, in compliance with the Bells’
insurance policy providing for payment of loss “to a person authorized by law to
receive payment, or to a person legally entitled to recover payment for the
damages.” [R. 94 at 6 (quoting R. 62-2 at 33).] On appeal, the Bells allege error
on three grounds discussed below.
A. GEICO’s responsibility for delay in the release of the hospital lien
The Bells first argue that the district court ignored GEICO’s errors in
processing their PIP claim that created and prolonged the hospital’s lien on their
$25,000.00 in UM funds. They allege that by erroneously paying their PIP funds
entirely to an ambulance company, and then delaying a $5,000.00 payment to the
hospital until receiving reimbursement from the ambulance company, GEICO’s
action (and later, inaction) kept the hospital lien in place. Absent the existence of
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the hospital lien, GEICO would have issued the check to the Bells as payees, as
they demanded. The Bells’ position is without merit for several reasons.
First and foremost, as the district court held, GEICO’s payment of loss did
not amount to bad faith since the “express terms and conditions of the [Bells’]
policy” allowed for payment to the hospital, a person entitled by law to receive
payment. See Talat, 753 So. 2d at 1282. Thus, we conclude that the district court
correctly reasoned that GEICO’s error and delay in routing $5,000.00 from the
Bells’ PIP claim to the hospital did not change the fact that GEICO was
contractually entitled to render payment to the hospital so long as the hospital held
its valid lien. See Dade Cnty v. Pavon, 266 So. 2d 94, 96 (Fla. Ct. App. 1972)
(holding that upon admission to a hospital, the hospital’s lien “attached to the
proceeds of all [insurance] claims accruing to the patient or his legal
representative as a result of the patient’s hospitalization”).
Second, we conclude that while GEICO’s error and delay in the handling of
the separate PIP claim may constitute negligence, it does not rise to the level of a
bad faith failure to settle the UM claim. Third, in the CRN – the statutory vehicle
for curing an insurer’s bad faith denial of a claim – Carter gave GEICO no facts
explaining the connection between the delayed PIP payment to the hospital and the
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hospital’s unresolved lien on the UM claim payment.2 The Bells respond that
GEICO never asked Carter for more information about the vague complaint.
Further, they claim that they could not address the PIP issue in the CRN because
they were unaware of the connection between the mishandled PIP claim and the
lien on UM proceeds until after filing the CRN. Even so, Fla. Stat.§ 624.155(3)(b)
requires the insured to explain in the CRN the “facts and circumstances”
surrounding the insurer’s bad faith in order to allow the insurer to remedy the
problem. The Bells’ CRN did not afford GEICO the opportunity to correct “the
circumstances giving rise to the [alleged] violation.” Id. § 624.155(3)(d); see also
Lane v. Westfield Ins. Co., 862 So. 2d 774, 779 (Fla. Ct. App. 2003) (reasoning
that “[t]he purpose of the [CRN] is to give the insurer one last chance to settle a
claim with its insured and avoid unnecessary bad faith litigation—not to give the
insured a right of action to proceed against the insurer even after the insured’s
claim has been paid or resolved.”) For all these reasons, we conclude that the
Bells have failed to show how GEICO’s conduct amounted to a bad faith refusal to
settle their UM claim. Thus, we hold that the district court correctly found that no
cause of action for first-party bad faith ever came into existence.
2
Similarly, the CRN is devoid of facts explaining how GEICO acted in bad faith by failing
to cooperate with Carter to issue the check to his law firm’s trust account upon his assurance that the
firm would be responsible for the hospital lien.
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B. The Bells’ additional arguments
Additionally, the Bells argue that the “payment of loss” provision in the
insurance policy, quoted supra, requires GEICO to remit payment to either the
insured or the hospital, but not both. They posit that GEICO should not have
issued a check payable to both the insured and a lienholder, and that to justify this
action, the district court improperly supplied the word “and” in the place of an
implied “or” between the policy’s descriptions of the persons to whom GEICO
was entitled to tender payment. Alternatively, they argue that the “payment of
loss” provision is ambiguous, and therefore, the insurance policy should have been
interpreted in their favor. This contractual interpretation argument was not raised
in the district court. Normally, we will not consider an issue raised for the first
time on appeal. Access Now, Inc. v. Sw. Airlines Co., 385 F.3d 1324, 1331 (11th
Cir. 2004). The Bells urge us to consider this argument because (1) contract
interpretation is a purely legal issue, rather than a factual question; and (2) our
refusal to consider the argument would result in a miscarriage of justice. See
Garcia v. Pub. Health Trust of Dade Cnty., 841 F.2d 1062, 1066 (11th Cir. 1988)
(explaining exceptions to our custom of refusing consideration of arguments
raised for the first time on appeal). We recognize that Florida courts have long
held that an insurer faced with competing demands for payment from the insured
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and a hospital has the option to “ma[k]e a check for the limits [of the policy]
payable to both of the competitors, the hospital and the insured.” Gov’t Emp. Ins.
Co. v. Gonzalez, 512 So. 2d 269, 270–71 (Fla. Ct. App. 1987) (citing Fernandez v.
S.C. Ins. Co., 408 So. 2d 753, 755 (Fla. Ct. App. 1982). Thus, we decline to
consider the Bells’ argument because our refusal to do so could not result in a
miscarriage of justice.
Finally, the Bells argue, also for the first time, that GEICO’s defense based
on the policy’s “payment of loss” provision should be estopped by the “mend the
hold” doctrine, which prohibits a party from taking inconsistent positions during
litigation. The Bells allege that when Carter disputed the UM settlement check’s
listing of the hospital as payee, GEICO never relied on the “payment of loss”
provision in the policy. Even if the “mend the hold” argument has merit, it
requires us to consider factual questions regarding GEICO’s consistent or
inconsistent behavior. We therefore decline to entertain this argument as well.
See Garcia, 841 F.2d at 1066.
V. Conclusion
The circumstances surrounding Erskin’s car accident and incapacitation are
very unfortunate. However, the facts of this case, even when considered in the
light most favorable to the Bells, do not require resolution by a jury. As a matter
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of law, we conclude that GEICO did not act unfairly or dishonestly toward the
Bells by refusing to settle their UM claim on the Bells’ terms. GEICO promptly
responded to the Bells’ claim, settled for the full amount available under the
policy, and acted within its rights under the policy to issue a check payable to both
the Bells and the hospital. Consequently, we affirm the district court’s grant of
summary judgment in favor of Geico.
AFFIRMED.
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