Recovery of mental distress damages in bad faith claims in Florida. (The Price of Peace of Mind).The purpose of this article is to explain why the Third District's decision in Otero v. The Midland Life Insurance Company, 753 So. 2d 579 (Fla. 3dDCA 2000), should be reversed to permit the recovery of mental distress Mental distress is a term used, both by some mental health practitioners and users of mental health services, to describe a range of symptoms and experiences of a person's internal life that are commonly held to be troubling, confusing or out of the ordinary. damages in bad faith claims against life insurers. This article is intended to acquaint the reader with the well-established body of law across the nation which recognizes that the essence of insurance is peace of mind, and which generally supports the recoverability of emotional distress emotional distress n. an increasingly popular basis for a claim of damages in lawsuits for injury due to the negligence or intentional acts of another. Originally damages for emotional distress were only awardable in conjunction with damages for actual physical harm. damages in bad faith claims. Finally, the article will explain why the evidentiary predicate In programming, a statement that evaluates an expression and provides a true or false answer based on the condition of the data. for such recovery imposed in Time Insurance Co., Inc. v. Burger, 712 So. 2d 389 (Fla. 1998), should be receded from.
In Time, the Florida Supreme Court confirmed that mental distress damages were recoverable in a first party bad faith claim, and also established a three-pronged evidentiary predicate for recovery of such damages in bad faith claims against health insurers. In Otero, the Third District Court of Appeal interpreted Time to apply to claims against health insurers only, and ruled that a claimant in a bad faith action against a life insurer was not entitled to recover for mental distress.
After Midland Life Insurance Company denied the Oteros life insurance because of their national origin, in violation of both F.S. [section] 626.9541(1)(x) and a bulletin issued by the Florida Insurance Commissioner, Mr. and Mrs. Otero became virtually uninsurable uninsurable Health insurance A high-risk person without health care coverage through private insurance who falls outside the parameters of risks of standard health underwriting practices. See Underwriting. due to health problems. Trial of their bad faith claim resulted in an award of the full benefit value of the two wrongfully denied life insurance policies to the Oteros, and an additional $400,000 to each of the Oteros for mental distress arising from the insurer's willful, wanton Grossly careless or negligent; reckless; malicious.
The term wanton implies a reckless disregard for the consequences of one's behavior. A wanton act is one done in heedless disregard for the life, limbs, health, safety, reputation, or property rights of , and malicious or reckless refusal to insure. The trial judge vacated the Oteros' award of mental anguish When connected with a physical injury, includes both the resultant mental sensation of pain and also the accompanying feelings of distress, fright, and anxiety. As an element of damages implies a relatively high degree of mental pain and distress; it is more than mere disappointment, damages because it was not supported by medical testimony, as required by Time. On appeal, the Third District held that Time was limited in its application to bad faith claims against health insurers, precluding recovery of mental distress damages in this claim against a life insurer. The Oteros' appeal of that decision is currently pending in the Florida Supreme Court.
The plain language of [section] 624.155(7) establishes the recoverability of all reasonably foreseeable damages which result from a bad faith violation. Life insurance has a unique emotional purpose, inseparable from its indemnity function: to provide the insured with peace of mind, knowing that his or her survivors will be protected from financial duress in the event of death. Emotional distress is undeniably a "reasonably foreseeable result" of the sort of violation of [section] 624.155 which was established in Otero. The Florida Supreme Court's ruling in Time that emotional distress damages are recoverable in a first party bad faith action is in accord with the weight of national authority on this issue. There is no basis in the legislative history, the language of the bad faith statute, or the Time opinion itself which would confine its holding that emotional distress damages are recoverable in first party bad faith claims to cases involving health insurers alone.
Legislative History Supports Recovery of Extracontractual Damages
The relevant legislative history was recounted by the Florida Supreme Court in Time. For more than half a century, Florida Century is a town in Escambia County, Florida, United States. The population was 1,714 at the 2000 census. Geography
Century is located at (30.977648, -87.261500)GR1. courts have imposed a duty upon insurers to act in good faith when defending their own insureds against third-party claims; they have authorized actions by both insureds and judgment creditors of insureds against insurers who have dealt in bad faith with their insured; and the measure of damages MEASURE OF DAMAGES, prac. Those principles or rules of law which control a jury in adjusting or proportioning the damages, in certain cases. 1 Bouv. Inst. n. 636. has always been the "excess judgment" obtained against the insured, notwithstanding that notwithstanding; although.
See also: Notwithstanding such a judgment was in excess of the insurer's contractual policy limits. See, e.g., Auto Mut. Indem. Co. v. Shaw, 134 Fla. 815, 184 So. 852 (1938); Thompson v. Commercial Union Ins. Co. of New York New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , 250 So. 2d 259 (Fla. 1971); Boston Old Colony Ins. Co. v. Gutierrez, 386 So. 2d 783 (Fla. 1980). However, with respect to first party claims, Florida courts had historically declined to impose a duty of good faith upon the insurer; the insureds were limited to actions for breach of contract; and the measure of damages was therefore limited to breach of contract damages, costs, and, where statutorily authorized, attorneys' fees. See, e.g., Life Inv. Ins. Co. of America v. Johnson, 422 So. 2d 32 (Fla. 4th DCA (1) (Document Content Architecture) IBM file formats for text documents. DCA/RFT (Revisable-Form Text) is the primary format and can be edited. DCA/FFT (Final-Form Text) has been formatted for a particular output device and cannot be changed. 1982); Hobbley v. Sears, Roebuck & Co., 450 So. 2d 332 (Fla. 1st DCA 1984); and Baxter v. Royal Indem. Co., 285 So. 2d 652 (Fla. 1st DCA 1973), cert. disch., 317 So. 2d 725 (Fla. 1975).
In 1982, the legislature corrected this anomalous situation by enacting F.S. [section] 624.155 and requiring insurers to act in good faith at all times when dealing with their insureds, whether defending them against claims by third parties or dealing with them directly on first party claims. The timing and stated legislative intent of [section] 624.155 establish that the legislature was providing for recovery of extracontractual damages as a sanction for abuses by insurance companies which were threatening the welfare of Florida insureds.
Section 624.155 requires insurers to deal in good faith to settle claims. Current case law requires this standard in liability claims, but not in uninsured motorist coverage; the sanction is that a company is subject to a judgment in excess of policy limits. This section would apply to all insurance policies. (1)
Consequently, the approach taken by the bill is to provide a civil remedy CIVIL REMEDY, practice. This term is used in opposition to the remedy given by indictment in a criminal case, and signifies the remedy which the law gives to the party against the offender.
2. , which may be pursued by any policyholder damaged by the actions of an insurance company that violate the Insurance Code. An insured who successfully sues an insurance company under this provision can recover the amount of damages suffered, together with court costs court costs n. fees for expenses that the courts pass on to attorneys, who then pass them on to their clients or, in some kinds of cases, to the losing party. and attorneys' fees. (2)
Before the institution of bad faith liability, insurers "had nothing to lose, and everything to gain, by refusing payment of even meritorious claims." Aetna Life Ins. Co. v. Lavoie, 470 So. 2d 1060, 1079 (Ala. 1984) (Torbert, C.J., dissenting), vacated on other grounds, 475 U.S. 813 (1986). Imposition of bad faith liability changed the measure of damages recoverable in an action by an insured against his insurer and altered the insurer's economic incentives. "The function of the bad faith claim is to provide the insured with an extracontractual remedy." Hollar v. International Bankers Ins. Co., 572 So. 2d 937, 939 (Fla. 3d DCA 1990).
Pursuant to [section] 624.155(1)(a)1, consumers were empowered to bring civil actions for damages resulting from unfair methods of competition and unfair or deceptive acts or practices of insurers. In 1990, the Florida Legislature The Florida Legislature is the state legislature of the U.S. state of Florida. The Florida Constitution mandates a bicameral state legislature with an upper house Florida Senate of 40 members and a lower Florida House of Representatives of 120 members. amended [section] 624.155 to add the following pertinent subsection:
(7) The civil remedy specified in this section does not preempt pre·empt or pre-empt
v. pre·empt·ed, pre·empt·ing, pre·empts
1. To appropriate, seize, or take for oneself before others. See Synonyms at appropriate.
a. any other remedy or cause of action provided for pursuant to any other statute or pursuant to the common law of this state. Any person may obtain a judgment under either the common law remedy of bad faith or this statutory remedy, but shall not be entitled to a judgment under both remedies. This section shall not be construed to create a common law cause of action. The damages recoverable pursuant to this section shall include those damages which are a reasonably foreseeable result of a specified violation of this section by the insurer and may include an award or judgment in an amount that exceeds the policy limits. (3)
The Florida Supreme Court addressed the question of the appropriate measure of damages in a first party action for bad faith failure to settle an uninsured motorist's insurance claim in McLeod v. Continental Insurance Co., 591 So. 2d 621 (Fla. 1992).
[W]e hold that the damages recoverable in a first-party suit under section 624.155, Florida Statutes The Florida Statutes are the codified, statutory laws of the state of Florida. The laws are approved by the Florida Legislature, and signed into law by the Governor of Florida. (1989), are those amounts which are the natural, proximate proximate /prox·i·mate/ (prok´si-mit) immediate or nearest.
Closely related in space, time, or order; very near; proximal.
immediate; nearest. , probable, or direct consequence of the insurer's bad faith actions, and we reject the contention that first-party bad faith damages should be fixed at the amount of the excess judgment. The insurer in a first-party bad faith action is subject to a judgment in excess of policy limits if the actual damages Noun 1. actual damages - (law) compensation for losses that can readily be proven to have occurred and for which the injured party has the right to be compensated
compensatory damages, general damages resulting from the insurer's bad faith are found to exceed the policy limits. Such damages may include, but are not limited to, interest, court costs, and reasonable attorney's fees incurred by the plaintiffs. The attorney's fees recoverable shall also include any fees incurred in the original underlying action as a result of the insurer's bad faith actions. (4)
As part of the analysis which led the McLeod court to define first-party bad faith damages to include "those amounts which are the natural, proximate, probable, or direct consequence of the insurer's bad faith actions," the court cited Fisher v. City of Miami, 172 So. 2d 455,457 (Fla. 1965), for the proposition that "the primary basis for an award of damages is compensation [and] the objective is to make the injured party Noun 1. injured party - someone injured or killed in an accident
victim - an unfortunate person who suffers from some adverse circumstance whole." McLeod, 591 So. 2d at 624-26. Subsequent to McLeod, the legislature enacted [section] 627.727(10), authorizing the recovery of the "excess judgment" in first party bad faith actions against uninsured motorist insurance Uninsured motorist insurance
Insurance that covers the policyholder and family if they are injured by a hit-and-run or uninsured motorist, assuming the other driver is at fault. carriers, and confirmed the original legislative intent that the bad faith statute was to provide for the recovery of extracontractual damages. Of course, legislative intent is the overriding precept An order, writ, warrant, or process. An order or direction, emanating from authority, to an officer or body of officers, commanding that officer or those officers to do some act within the scope of their powers. Rule imposing a standard of conduct or action. of statutory construction, the "polestar" by which the court must be guided. Carawan v. State, 515 So. 2d 161, 167 (Fla. 1987).
The Florida Supreme Court's subsequent decision in Time Ins. Co., Inc. v. Burger, 712 So. 2d 389 (Fla. 1998), established the recoverability of mental distress damages in a first party bad faith claim against a health insurer:
The fact that the legislature has specifically authorized first parties to recover damages in bad faith actions suggests that it may have contemplated more than the recovery of the same damages already available in a breach of contract action. In view of the possibility that an unjustified refusal to pay an insured's medical or hospital bills could result in the inability to obtain health care, we hold that [section] 644.155(1)(b)(1) authorizes the recovery of damages for emotional distress in a first-party bad faith claim against a health insurance company. (5)
Insurance Contracts Unique; Provide Peace of Mind
It has long been held in Florida that a bad faith claim is an action ex contractu EX CONTRACTU. This term is applied to such things as arise from a contract; as an action which arises ex contractu. Vide Action. . Government Employees Insurance Company v. Grounds, 332 So. 2d 13 (Fla. 1976); Nationwide Mutual Casualty Insurance v. McNulty, 229 So. 2d 585 (Fla. 1969); and North American Van Lines North American Van Lines, or NAVL, is a large, United States based trucking company originally formed in Cleveland, Ohio and later based in Fort Wayne, Indiana, that is mainly dedicated to helping clients during the process of moving. , Inc. v. Lexington Insurance Company, 678 So. 2d 1325 (Fla. 4th DCA 1996). Indeed, in a basic breach of contract action, a determination of what damages reasonably flowed from the breach requires an analysis of what was in the contemplation of the parties at the time the contract was entered into. In Life Investors Insurance Company of America v. Johnson, 422 So. 2d 32, 33 (Fla. 4th DCA 1982), Judge Downey stated:
The basic rule governing the recovery of damages for breach of contract is set forth in the oft cited English case of Hadley v. Baxendale Hadley v. Baxendale, 9 Exch. 341, 156 Eng. Rep. 145 (1854), was a famous English contract law case that set the basic rule for how to determine the scope of consequential damages arising from a breach of contract. Facts
The plaintiff, Hadley, operated a mill. , 9 Exch. 341, 156 Eng. Rep. 145 (1854), which holds that the appropriate damages are those that arise naturally from the breach, or those that were in the contemplation of the parties at the time the contract was made. Application of that rule to commercial contracts, such as disability insurance policies, generally results in a limitation of damages to the pecuniary Monetary; relating to money; financial; consisting of money or that which can be valued in money.
pecuniary adj. relating to money, as in "pecuniary loss. loss resulting from the breach. MacDonald v. Penn Mutual Penn Mutual traces its beginning to 1847 when it became the seventh mutual life insurance company chartered in the United States. At the time of its organization there was a general distrust of stockholder-owned corporations so it was established as a mutual owned by its Life Insurance Company, 276 So. 2d 232 (Fla. 2d DCA 1973). However, Kewin v. Massachusetts Mutual Life Insurance Company MassMutual Financial Group is the fleet name for Massachusetts Mutual Life Insurance Company (MassMutual) and its affiliates, with more than 13 million clients and over $455 billion in assets under management at year-end 2006. , 409 Mich. 401, 295 N.W. 2d 50 (1980) noted an exception to this rule in the case of commercial contracts concerned not simply with trade in commerce, but with life and death and matters of mental concern and solicitude so·lic·i·tude
1. The state of being solicitous; care or concern, as for the well-being of another. See Synonyms at anxiety.
2. A cause of anxiety or concern. Often used in the plural. . The Michigan court found, as have others, that the nature and object of the agreement may justify the allowance of other types of damages such as mental pain and anguish. Contracts [section] 1076 and 1 Restatement of Contracts [section] 341 also recognize this exception. (6)
Since bad faith involves more than a mere breach of contract, but also involves conduct by an insurer in violation of the Insurance Code, any analysis of the damages that should reasonably flow as a result of any act of bad faith conduct should also begin with a consideration of what the insurers sell to consumers, how the insurers sell their products, and why consumers buy the particular insurance product involved.
It is beyond dispute that insurance is a unique product and courts around the country have recognized this fact. As the Supreme Court of Oklahoma wrote in McCorkle v. Great Atlantic Insurance Company, 637 P.2d 583, 588 (Ok. 1981):
We believe that the purchaser of insurance does not contract to obtain a commercial advantage but to protect himself/herself against the risks of accidental losses and the mental stress which could result from such losses. Therefore, we think one of the primary reasons a consumer purchases any type of insurance (and the insurance industry knows this) is the peace of mind and security that it provides in the event of loss. (7)
In Agricultural Insurance Company v. The Superior Court of Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. County, 70 Cal. App. 4th 385, 397 (Cal. App. 2d Dist. 1999), the appellate court A court having jurisdiction to review decisions of a trial-level or other lower court.
An unsuccessful party in a lawsuit must file an appeal with an appellate court in order to have the decision reviewed. discussed a ruling by the California Supreme Court in Foley v. Interactive Data Corporation, 47 Cal. 3d 654, 765 P.2d 373 (Cal. 1988), saying:
An insured seeks peace of mind and economic protection against calamity, the insurer provides that protection for a fee. Although the insured depends upon the insurer for protection, the insurer does not depend on the insured in the same manner. Insurers occupy the" "status as purveyor (World-Wide Web) Purveyor - A World-Wide Web server for Windows NT and Windows 95 (when available).
E-mail: <firstname.lastname@example.org>. of a vital service labeled quasi-public in nature." (Id. at pp. 684-685). Thus an insurer's obligations can include a duty to place the interests of the insured on at least an equal footing with its own interests, because the "obligations of good faith and fair dealing encompass qualities of decency and humanity" similar to the responsibilities of a fiduciary. (Id. at p. 685.) Insurance contracts are usually adhesive in nature, since their terms are generally contained in form language dictated by the insurer. Critically, breach of an insurance contract places an insured in a type of dilemma not experienced by an insurance company if an insured should breach a term of the policy. (Ibid.) "[T]he insured cannot turn to the marketplace to find another insurance company willing to pay for the loss already occurred." (Id. at p. 692.) An insurer's breach can therefore frustrate the core purpose of insurance (protecting the insured from calamity) and leave the insured exposed to a disaster it is paid to avoid. The insurance company, by contrast, faces no comparable dilemma.
The Supreme Court of Washington, sitting en banc [Latin, French. In the bench.] Full bench. Refers to a session where the entire membership of the court will participate in the decision rather than the regular quorum. In other countries, it is common for a court to have more members than are in Coventry Associates v. American States Insurance Company, 961 P.2d 933, 939 (Wash. 1998), reached the same conclusion:
As the Arizona Supreme Court The Arizona Supreme Court is the highest court in the U.S. state of Arizona. It consists of a Chief Justice, a Vice Chief Justice, and three Associate Justices. Each Justice is appointed by the Governor of Arizona from a list recommended by a bipartisan commission. noted in Rawlings v. Apodaca, 151 Ariz. 149, 726 P.2d 565 (1986), the insurance industry itself lends credence to the fact the insureds seek more than a bare promise to pay certain claims. Advertising programs portraying customers as being "in good hands" or dealing with a "good neighbor" emphasize a special type of relationship between the insured and the insurer--one in which trust, confidence and peace of mind have some part.
The same observation was made in Andrew Jackson Life Insurance Company v. Williams, 566 So. 2d 1172, 1175 (Miss. 1990), in which the Supreme Court of Mississippi The Supreme Court of Mississippi is the highest court in the state of Mississippi. It was created in the first constitution of the state following its admission as a State of the Union in 1817. Initially it was known as the "High Court of Errors and Appeals. quoted Justice Lint of the Oregon Supreme Court The Oregon Supreme Court (OSC) is the highest state court in the U.S. state of Oregon. The only court that may reverse or modify a decision of the Oregon Supreme Court is the Supreme Court of the United States. in Farris v. United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Fidelity and Guaranty Company, 284 Or. 453,479 n.4, 587 P.2d 1015, 1028 n.4 (1978), stating:
That insurers sell their product as being not only an agreement to indemnify the insured for certain kinds of loss but also to relieve the purchaser from anxiety concerning all aspects of claims is readily apparent in our society. One cannot watch televised entertainment for very long without being exposed to commercials for the sale of insurance which, for example, indicate that the purchaser will be in "good hands," that he will have the assistance of a troop of mounted cavalry, that he [will have] "a piece of the rock," or that "like a good neighbor" the insurer will be there. As such advertisements reflect, the relationship between insurer and insured does not merely concern indemnity for monetary loss [risk aversion risk aversion
The tendency of investors to avoid risky investments. Thus, if two investments offer the same expected yield but have different risk characteristics, investors will choose the one with the lowest variability in returns. ] ... [I]t is common knowledge that ... insurance is obtained to promote peace of mind.
Extensive Authority Supports Recovery
Across the nation, courts have observed the mental and emotional features of certain insurance products, and the great majority of the states also permit plaintiffs in bad faith cases to recover damages for emotional distress. (8) In Employees Benefit Association v. Grissett, 732 So. 2d 968,985 (Ala. 1998), the Alabama Supreme Court The Supreme Court of Alabama is the highest court in the state of Alabama. The court consists of a Chief Justice and eight Associate Justices, elected in partisan elections for staggered six year terms. wrote:
Certainly an insurance contract is not an ordinary commercial contract for profit in which mental distress damages are unforeseeable Un`fore`see´a`ble
a. 1. Incapable of being foreseen.
Adj. 1. unforeseeable - incapable of being anticipated; "unforeseeable consequences"
unpredictable - not capable of being foretold
. The insured does not bargain for a profit; instead he bargains for compensation in time of catastrophe and for peace of mind. In this sense, an insurance contract is more akin to contracts of carriers and innkeepers, for which consequential damages Injury or harm that does not ensue directly and immediately from the act of a party, but only from some of the results of such act, and that is compensable by a monetary award after a judgment has been rendered in a lawsuit. have long been recognized due to the personal nature of the service. A particularly likely risk of breaching an insurance contract is resulting impoverishment or bankruptcy. Coupled with the fact that such breaches almost always coincide with emotional vulnerability (death, health problems, or destruction of a business or home), a very strong case can be made for awarding consequential damages for financial loss and even for emotional disturbance Noun 1. emotional disturbance - any mental disorder not caused by detectable organic abnormalities of the brain and in which a major disturbance of emotions is predominant
affective disorder, emotional disorder, major affective disorder . See Restatement (Second) of Contracts, [section] 353, comment a (1982). Insurers, in effect, sell freedom from care and worry, and should be held to foresee the consequential damages flowing from their breach.
Otero involved life insurance, which provides a unique type of security, under which the obligation to pay benefits does not become executory That which is yet to be fully executed or performed; that which remains to be carried into operation or effect; incomplete; depending upon a future performance or event. The opposite of executed.
executory adj. something not yet performed or done. until after the death of the policyholder. The actual value of the life insurance contract during the life of its owner consists in the owner's peace of mind and security from anxiety which would accompany fear that one's beneficiaries would be placed in financial duress by one's untimely death. The Florida Supreme Court has acknowledged this function in a case involving pension benefits.
The desire for security in the event of disability or during the declining years of life is of paramount concern to every conscientious breadwinner bread·win·ner
One whose earnings are the primary source of support for one's dependents.
bread·winning n. . The security he seeks is not only for himself, but for those who may be dependent upon him when he is no longer able to engage in active work and in the event of his death. (9)
Only by observing the unique societal function of insurance contracts and distinguishing between insurance contracts and commercial contracts can the courts protect consumers from bad faith by holding insurers liable for all the foreseeable consequences of their wrongful conduct Noun 1. wrongful conduct - activity that transgresses moral or civil law; "he denied any wrongdoing"
actus reus, misconduct, wrongdoing
activity - any specific behavior; "they avoided all recreational activity" . As early as 1921, Dean Roscoe Pound Roscoe Pound (1870 - 1964) was a distinguished American legal scholar and educator. Early life
Pound was born in Lincoln, Nebraska, USA to Stephen Bosworth Pound and Laura Pound. wrote:
[W]e have taken the law of insurance practically out of the category of contract, and we have established that the duties of the public service companies are not contractual, as the 19th century sought to make them, but are instead relational; they do not flow from the agreements which the public servant may make as he chooses, they flow from the calling in which he has engaged and his consequent relation to the public. (10)
The record in Otero establishes that Midland marketed itself and its life insurance as providing security, protection, and peace of mind. Given the unique nature of life insurance and the language of [section] 624.155 providing for the recovery of all "damages which are a reasonably foreseeable result" of the violation, we believe Time should be applied to permit recovery of emotional distress damages in Otero. The wrongfully denied life insurance applicant can be made whole only through the award of damages for any emotional distress which was the reasonably foreseeable, natural, proximate, probable, and direct consequence of an insurer's bad faith refusal to issue a life insurance policy.
Rigid Evidentiary Predicate
The Florida Supreme Court has acknowledged its duty to reconsider prior holdings to make sure our law keeps pace with changes in our society, United States of America UNITED STATES OF AMERICA. The name of this country. The United States, now thirty-one in number, are Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Hampshire, v. Dempsey, 635 So. 2d 961, 964-65 (Fla. 1994), and to revisit rules of law which were found, on reconsideration, to be at variance with modern day needs and concepts of justice and fair dealing. See, e.g., Champion v. Gray, 478 So. 2d 17, 20 (Fla. 1985), in which the "impact" rule was modified, and Zell v. Meeks, 665 So. 2d 1048, 1054 (Fla. 1995), in which the court further receded from the "modified impact" rule set forth in Champion:
While fraud and the difficulty in evaluating psychic claims may continue to trouble the court system, an arbitrary cutoff for negligent infliction of emotional distress The tort of negligent infliction of emotional distress (NIED) is a controversial legal theory and is not accepted in many United States jurisdictions. The underlying concept is that one has a legal duty to use reasonable care to avoid causing emotional distress to another claims would have no remedial purpose except to reduce the number of claims. In fact, establishing an arbitrary cutoff for claims would contravene con·tra·vene
tr.v. con·tra·vened, con·tra·ven·ing, con·tra·venes
1. To act or be counter to; violate: contravene a direct order.
2. general public policy by denying persons with meritorious claims access to the courts.
The very same principles which underpinned the Dempsey, Champion, and Zell decisions call for the Supreme Court to revisit its holding in Time and recede re·cede 1
intr.v. re·ced·ed, re·ced·ing, re·cedes
1. To move back or away from a limit, point, or mark: waited for the floodwaters to recede.
2. from the strict evidentiary standard imposed in that case.
The three-pronged evidentiary predicate for the recovery of emotional distress damages in a health insurance bad faith '''
Insurance bad faith refers to a claim that an insured person has against an insurance company for bad acts. Under the law of nearly every U.S. jurisdiction, Insurance companies owe a duty of good faith in dealing with the persons they insure. claim established in Time is:
(1) That the bad-faith conduct resulted in the insured's failure to receive necessary or timely health care;
(2) That, based upon a reasonable probability, this failure caused or aggravated the insured's medical or psychiatric condition; and
(3) That the insured suffered mental distress related to the condition or the aggravation of the condition. (11)
The authors suggest that the Florida Supreme Court's imposition of such rigid evidentiary restrictions in health insurance claims was not well founded, and should be receded from. Such standards arbitrarily restrict who can recover such damages. The standards do not recognize the wide variety of circumstances where the conduct of the health insurer is truly illegal and egregious. For one example, if an insured is forced to deplete de·plete
1. To use up something, such as a nutrient.
2. To empty something out, as the body of electrolytes. his or her savings, borrow money from family and friends, or borrow from retirement funds to prevent any delay or denial of important medical care, doesn't that insured still suffer mental and emotional distress by virtue of placing his or her, and potentially the insured's family's, well-being at risk? Also, the standard established by the Supreme Court in Time may force the insured to seek care from a mental health professional which otherwise would not be required. Finally, proof of the "aggravation" of an insured's medical or psychiatric condition would in many cases be elusive. It is certainly common knowledge that it is vital that any patient battling a severe illness must understand the condition and commit to the treatment plan. Having to fight the insurer at the same time can detract from detract from
verb 1. lessen, reduce, diminish, lower, take away from, derogate, devaluate << OPPOSITE enhance
verb 2. the medical battle, but raising one's perception of this process to an evidentiary standard is another thing altogether.
Damages for emotional distress or mental anguish are recoverable in cases involving a wide variety of intentional torts including defamation, malicious prosecution An action for damages brought by one against whom a civil suit or criminal proceeding has been unsuccessfully commenced without Probable Cause and for a purpose other than that of bringing the alleged offender to justice. , false imprisonment false imprisonment, complete restraint upon a person's liberty of movement without legal justification. Actual physical contact is not necessary; a show of authority or a threat of force is sufficient. The person falsely imprisoned may sue the offender for damages. , invasion of privacy invasion of privacy n. the intrusion into the personal life of another, without just cause, which can give the person whose privacy has been invaded a right to bring a lawsuit for damages against the person or entity that intruded. , tortious interference Tortious interference, in the common law of tort, occurs when a person intentionally damages the plaintiff's contractual or other business relationships. This tort is broadly divided into two categories, one specific to contractual relationships (irrespective of whether they with contract, and tortious interference with prospective business relations. No arbitrary evidentiary predicates have been imposed in these cases and the impact rule is not applicable in these cases, as it should be inapplicable in·ap·pli·ca·ble
Not applicable: rules inapplicable to day students.
in·ap to bad faith cases.
The authors propose the majority's concern in Time was well answered by Justice Anstead in his dissent at p. 393, when he said: "It appears that the majority has given the health insurance consumer a favorable interpretation of the first party bad faith statute with one hand, but has rendered that interpretation substantially meaningless with the other."
The court's concern in Time that health insurers should not feel constrained by potential bad faith exposure in their right and duty to other policy holders to contest illegitimate claims loses its force when the specific basis of the bad faith claim is considered. Insurers whose denial of a claim or application for insurance was ultimately determined to have been in good faith would be protected from any associated exposure for emotional distress, and insureds or putative insureds who sustained foreseeable emotional distress damages associated with denials of claims or applications which were ultimately determined to have been in bad faith would be compensated. No insurer would be punished for contesting an illegitimate claim, and no policyholder or putative policyholder would arbitrarily be denied recovery where a legitimate claim was improperly denied. See concurrence CONCURRENCE, French law. The equality of rights, or privilege which several persons-have over the same thing; as, for example, the right which two judgment creditors, Whose judgments were rendered at the same time, have to be paid out of the proceeds of real estate bound by them. Dict. de Jur. h.t. and dissent of Anstead, J., 712 So. 2d at 394.
By engrafting a rigid evidentiary standard requiring expert testimony Testimony about a scientific, technical, or professional issue given by a person qualified to testify because of familiarity with the subject or special training in the field. by a health care provider to support recovery of mental anguish damages, it is respectfully submitted that the Time court departed from the legislative intent set forth in the statute as well as precedent which specifically limited use of expert testimony in establishing mental anguish damages. As the North Dakota Supreme Court The North Dakota Supreme Court is the highest court of law in the state of North Dakota. The Court rules on questions of law in appeals from the state's district courts. said in Ingalls v. Paul Revere Revere, city (1990 pop. 42,786), Suffolk co., E Mass., a residential suburb of Boston, on Massachusetts Bay; settled c.1630, set off from Chelsea and named for Paul Revere 1871, inc. as a city 1914. , 561 N.W. 2d 273, 282-83 (N.D. 1997):
An insurer's bad faith breach of its duties to an insured is likely to cause mental anguish: it is inconceivable that a layman, unaccustomed to the courtroom, fearful of the entire judicial process, who is also subjected to financial pressures from a refusal of the insurer to discharge its commitments, will not be subjected to stress, the precise effects of which are difficult to measure in exact terms but, which, nevertheless are present. John Alan Appleman and Jean Appleman, Insurance Law and Practice [section] 8878.55 p. 442 (rev. vol. 1981). Thus, in a case of this kind, damages for mental anguish may be "general damages general damages n. monetary recovery (money won) in a lawsuit for injuries suffered (such as pain, suffering, inability to perform certain functions) or breach of contract for which there is no exact dollar value which can be calculated. "--damages for a harm so frequently resulting from the tort that is the basis of the action that the existence of the damages is normally to be anticipated and hence need not be alleged in order to be proved. Marilyn Minzer et al., Damages in Tort Actions [section] 1.01 (1996) (quoting Restatement (Second of Torts [section] 904, through miscites as [section] 940). As the Minzer text also explains at [section] 3.01[b], a claim for mental anguish is a classic example of a noneconomic, intangible loss.
Traditionally, the jury had wide discretion in evaluating and awarding these damages.... The only standard for evaluation of mental anguish damages "is the amount a reasonable person would estimate to be fair compensation." The determination of damages for pain, discomfort, and mental anguish largely is dependent upon the jury's common knowledge, good sense, and practical judgment and mainly rests within its sound discretion.
Prior to Time, the Florida Supreme Court had never required expert testimony as a predicate for recovery of mental pain and suffering. Where damages for emotional distress are recoverable, the amount of the award "is left to the discretion of the jury unless it is clearly arbitrary or so great as to be shocking to the judicial conscience or unless it indicates the jury was influenced by prejudice or passion." Albritton v. Gandy, 531 So. 2d 381, 388 (Fla. 1st DCA 1988). As further observed by Justice Anstead in Time: "To the contrary, this Court in Angrand v. Key, 657 So. 2d 1146 (Fla. 1995), specifically limited the use of expert testimony in establishing damages for mental anguish." 712 So. 2d at 394.
Justice Anstead went on to cite from another Supreme Court opinion:
Jurors know the nature of pain, embarrassment and inconvenience, and they also know the nature of money. Their problem of equating the two to afford reasonable and just compensation calls for a high order of human judgment, and the law has provided no better yardstick for their guidance than their enlightened conscience. Their problem is not one of mathematical calculation but involves an exercise of their sound judgment of what is fair and right. (12)
There is simply no basis in the bad faith statute itself, in the legislative history, or in Florida law The jurisprudence of this state offers major differences from doctrines prevailing in the United States at either the federal level or that of the various states.
Homestead exemption from forced sale, the dangerous instrumentality doctrine, the right to privacy, and the Williams for this court to impose a requirement for expert testimony as the predicate for an award of emotional distress damages when an insurer is found to have acted in bad faith in denying an aspiring insured the peace of mind and protection associated with insurance.
The authors hope the Supreme Court will reaffirm the recoverability of mental anguish damages in bad faith cases, without an arbitrary distinction between health and life insurance settings, since peace of mind is a fundamental aspect of virtually all types of insurance protection. Consistent with Judge Anstead's well-reasoned opinion in Time, we hope the court will recede from that aspect of Time which requires expert testimony as a predicate, instead permitting juries to rely on lay testimony, their own sound judgment and their common experience in determining the recoverability of such damages under a given set of facts.
(1) Staff Report, 1982 Insurance Codes Sunset Revision (HB4S; as amended HB10G) (June 3, 1982).
(2) Bill Analysis, House Committee on Insurance, Bill No. HB607 (Jan. 22, 1982, app. A, p. 14).
(3) FLA. STAT. [section] 624.155 (Supp. 1990) (emphasis added).
(4) McLeod, 591 So. 2d at 626 (footnotes omitted) (emphasis supplied).
(5) Time, 712 So. 2d at 392.
(6) Johnson, 422 So. 2d at 33. See also TDS TDS
total dissolved solids. Incorporated v. Shelby Mutual Insurance Company, 760 F.2d 1520, 1531-1532 (11th Cir. 1985); and The Natural Kitchen, Inc. v. American Transworld Corporation, 449 So. 2d 855, 859 (Fla. 2d D.C.A. 1984).
(7) McCorkle, 637 P. 2d at 588.
(8) See S. ASHLEY, BAD FAITH ACTIONS: LIABILITY AND DAMAGES [section] 8.04.
(9) City of Jacksonville Beach v. State, 151 So. 2d 430, 432 (Fla. 1963).
(10) Comment, Extra Contractual Insurance Damages: Pennsylvania Insured Demands a Piece of the Rock, 85 DICK. L. REV. 321, 322 (1981), quoting DEAN POUND, THE SPIRIT OF THE COMMON LAW 29 (1921).
(11) Time, 712 So. 2d at 393.
(12) Time, 712 So. 2d 394 n.2, quoting Braddock v. Seaboard Coast Line Railroad Co., 80 So. 2d 662,668 (Fla. 1955).
Jeffrey M. Liggio was admitted to The Florida Bar The Florida Bar is the mandatory state bar association for the state of Florida. It is the third largest such bar association in the United States. Its duties include the regulation and discipline of attorneys. in 1982 and graduated from the University of Miami This article is about the university in Coral Gables, Florida. For the university in Oxford, Ohio, see Miami University.
The University of Miami (also known as Miami of Florida, UM, or just The U in 1982 with a J.D, cum laude cum lau·de
adv. & adj.
With honor. Used to express academic distinction: graduated cum laude; 25 cum laude graduates. . He is a Florida board certified board certified,
adj the status of a dental specialist such as an orthodontist who has become a board diplomate by successfully completing the certification program of the recognized certification board in that area of practice. civil trial lawyer and is a nationally certified civil trial advocate. Mr. Liggio is a partner in Liggio, Benrubi and Williams with his practice being devoted almost exclusively to the representation of plaintiffs in insurance claims, bad faith, and a variety of personal injury and wrongful death claims.
P. Scott Russell IV has practiced as a civil trial and appellate attorney in Jacksonville since 1988. Before cofounding Dunlap & Russell, P.A., in 1995, Mr. Russell was a shareholder in Gentry and Phillips, P.A. His practice has been devoted almost exclusively to the representation of plaintiffs in personal injury and wrongful death The taking of the life of an individual resulting from the willful or negligent act of another person or persons.
If a person is killed because of the wrongful conduct of a person or persons, the decedent's heirs and other beneficiaries may file a wrongful death action cases arising from traffic accidents, medical negligence, and product defects, as well as associated bad faith claims.