Government Employees Insurance Co. v. Grounds
In Government Employees Insurance Co. v. Grounds, 311 So. 2d 164 (Fla. 1st DCA 1975), the First District permitted a jury to consider whether an insurer acted in bad faith in failing to respond to a time-limited settlement offer, even though the offer to settle did not specifically dispose of a potential claim by the U.S. Government for medical benefits and the claimant was a minor whose guardian needed court approval. 311 So. 2d at 167-68.
The accident which gave rise to the claim involved an automobile owned and driven by a minor, Geoffrey Nevils.
There was never any contention that the insured was not liable for Nevils' injuries and damages. Indeed, an independent adjusting firm investigating the accident for the insurance company concluded that "it looked bad because our driver was charged with DWI." Id. at 165.
The insurer was later informed that the Government was making a claim under the Federal Medical Care Recovery Act for the cost of the treatment provided to Nevils, who, at the time, was a helicopter pilot student in cadet training. See id.
The attorney for Nevils wrote a time-demand letter to the insurer that detailed Nevils' injuries, pointed out that if the case went to jury trial the damage award would likely be in excess of the policy limits, and offered to settle within the policy limits. See id. at 166.
The settlement offer stated that the offer would remain open for two weeks and expressly stipulated that any settlement would include the claim of the Government, with whom Nevils promised to settle directly. See id.
The insurer neither responded to the offer within the two-week period for acceptance nor informed its insured of the offer. See id. at 167.
Nevils eventually filed suit against the insurer and Grounds. See id. A jury awarded Nevils approximately $50,000 in compensatory damages above the $20,000 policy limits. See id. at 165, 167.