Thursday, August 6, 2009

Trial Court Did Not Abuse Discretion In Limiting Recovery Against Receiver For Insolvent Insurer

In Bender v. Florida Department of Financial Services (1D08-104), the First District addressed "whether a trial court abuses its discretion under the Insurers Rehabilitation & Liquidation Act when it limits an insured claimant's recovery to policy limits, where the claimant obtained a final judgment in excess of policy limits after liquidation proceedings under the Act are voluntarily initiated by the insurer."

In affirming the trial court's order, the First District stated:

In the present case, although Appellants brought medical negligence suits against Dr. Meriwether before Caduceus’ voluntary placement in receivership, they did not obtain judgments until two and six years, respectively, after the receivership process began. Section 631.181, although not mandatory, goes so far as to state that judgments entered up to 4 months before the filing of a liquidation petition need not be considered as evidence of liability or amount of damages. § 631.181(2)(d), Fla. Stat. Accordingly, it was within the trial court’s discretion as to what weight to place upon Appellants’ final judgments in the claims objection process.

In exercising this discretion, the trial court did not find bad faith on the part of Caduceus and determined that Appellants’ recovery should be limited to the $250,000 policy limit. Because the trial court’s ruling was not arbitrary or unreasonable, we must affirm.
The court also noted:
We also reject Appellee’s argument, however, that the Act required Appellants to obtain an excess judgment or a finding of bad faith before Caduceus voluntarily sought liquidation. No provision of the Act bars a trial court from granting a claim in excess of the policy limits. By comparison, payment of excess judgment claims is expressly prohibited in the Florida Insurance Guaranty Payment Act, a similar statute regulating insurance. § 631.57(1)(a)4., Fla. Stat. (2009) ("In no event shall the association be obligated to a policyholder or claimant in an amount in excess of the obligation of the insolvent insurer under the policy from which the claim arises."). No such prohibition is found in IRLA; thus, we are not at liberty to recognize the same limitation in the present case.


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