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News Room

Case Law Update: Kevin Whitney v. Mercury Insurance Company of Florida

February 23, 2018

Dear Ladies/Gentlemen:

Atkinson, P.A. is writing today to alert you to a very recent and troubling trial level result from Duval County, Florida. On January 26, 2018, in Kevin Whitney v. Mercury Insurance Company of Florida (Duval County Jan. 26, 2018) a jury awarded an $8 million dollar bad faith verdict against Mercury Insurance for allegedly failing to properly handle a settlement check for a young man rendered quadriplegic in a 2011 car crash.

The verdict hinged on questions about how insurers should address settlements of personal injury claims when protected medical liens are involved. In the underlying case, Kevin Whitney (“Whitney”), then 23, was riding in the backseat of a car with friends, when a passenger jerked the steering wheel and caused a crash. Whitney was paralyzed, less than a year after becoming a father.

The passenger’s insurer, Mercury Insurance Company of Florida (“Mercury”) tendered the limits of the policy- $10,000.00- to Whitney less than a month after the crash. The check was made out to Whitney and his attorneys. Whitney then discharged his law firm several months later. Whitney’s mother received the case file, signed the release and sent it to Mercury. She asked the company if she could cash the check. Mercury re-issued the check, but this time made it out to Whitney and Shands Teaching Hospital and Clinics, Inc. in Gainesville, where Whitney received care after the crash. As most of you know, Shands is a lien protected public hospital and Mercury was required to protect the Shands lien.

During the bad faith trial, Mercury argued that its industry practice is to include a lien holder on a settlement check if no attorney is involved. At that point, Plaintiff argued, that Whitney could not cash the check without an endorsement from Shands. Whitney’s mother wrote to Mercury to ask them to remove the hospital’s name from the check.  Whitney’s mother alleges she had called Shands and was told she had a zero balance because Medicaid was paying for her son’s hospital stay. However, there was no record of the claimed telephone call.

Mercury argued that the request was responded to by Mercury saying “Sure, we can take Shands off the check, but if Medicaid paid, we may have to protect the lien.” Whitney’s mother argued that she did not recall Mercury ever leaving such a voicemail or following up.  As a result, Whitney decided to return the check and file litigation against the passenger. The underlying personal injury lawsuit never made it to trial, resolving with an $8 million dollar consent judgment in 2015.

Domnick Cunningham Whalen then filed a bad faith claim against Mercury in February 2016, alleging Mercury did not do enough to protect its insured from the potential of an extra contractual exposure[1]. At the bad faith trial, in Jacksonville, before Duval Circuit Judge Adrian Soud, the defense argued Mercury believed any claims against its insured were settled. Defendant also told the jury that the Plaintiff’s letter asking for Shand’s removal from the check was a question, not a demand. The Plaintiff “never made a demand to change anything, and in fact signed a release and sent it back to Mercury, so Mercury therefore at all times thought the case was settled.”

Plaintiff argued that Mercury did not act reasonably in protecting its insured from the multimillion-dollar quadriplegia claim. Plaintiff mentioned the case of, Shands Teaching Hosp. & Clinics, Inc. v. Mercury Ins. Co. of Florida, 97 So. 3d 204 (Fla. 2012), where the Florida Supreme Court held that a hospital asserting an insurance company impaired a lien may only recover the policy limits. Therefore, even though the Plaintiff’s lien was about $220,000, Mercury knew it would only be potentially liable for an additional $10,000 at most if it impaired the lien by leaving a lienholder off the check, the Plaintiff argued.

Plaintiff argued that Mercury knew the insured had nothing, and so it was concerned that the hospital or Medicaid could come after Mercury. Plaintiff went on to argue that Mercury should have been focused on protecting its insured from the claimant’s claim, which was the greatest exposure by far.

The jury found Mercury acted in bad faith.

The argument used by Plaintiff, that Mercury acted in bad faith because a lien protected hospital suing on an impaired lien may only recover the policy limits defies logic and is a non-sequitur. The decision is very disturbing. We will have to wait and see what happens with post-trial motions and, if necessary, at the appellate level. Mercury filed a motion for new trial on February 9, 2018, challenging the jury instructions and some of the evidence. The main evidentiary dispute revolves around the fact that GEICO, which insured the driver of the car, paid Whitney the policy limits without putting any lienholders on the check. The judge ruled plaintiff’s counsel could not make arguments about Mercury’s alleged bad faith based on GEICO’s action. Instead, GEICO, could only be mentioned to give jurors an idea of the mother’s mindset when she contacted Mercury about taking Shands off the check. Defense counsel claimed, a plaintiff’s witness testified to the jury “GEICO did it right[2],” which she argued “poisoned the jury.”

We will monitor this case and provide you with an update once a decision is made on post-trial motions and by the appellate court. As always, we will continue to keep you advised regarding any pertinent appeals or decisions from the Supreme Court.

Should you have any questions regarding the above, do not hesitate to contact the undersigned.

Very Truly Yours,

JOHN BOND ATKINSON

LAURA P. GUZMÁN

[1] Because the insured did not want to be involved, the firm brought the claim on behalf of the claimant.

[2] A mistrial motion was denied during trial. Aaron Ekblad Womens Jersey