As a civil circuit court mediator, I have had the challenge and honor of mediating global mediations after the statutory reforms of March 2023. I want to offer some insight into handling those mediations to help all of us better understand how to navigate a global mediation, post-March 2023.
Section 624.155(6) of the Florida Statutes essentially provides an insurance company with immunity from a bad faith action in the instance where the insurer has a limited policy but there are multiple claimants, and the competing claims exceed the policy limits.
To avail itself of this new statutory protection, the insurer must, within 90 days after receiving notice of the competing claims in excess of the policy limits, either file an interpleader or reach a binding arbitration agreement with the third-party claimants.
This presents an opportunity for the parties to reach a resolution of the claim through mediation, which is more expedient in getting the claims resolved than arbitration or an interpleader.
Assume, for example, the tort-feasor was operating his vehicle in a careless manner and caused a multi-vehicle collision or crashed into a vehicle with four passengers, all of whom were injured. The at-fault driver’s insurance policy is with a carrier whose limits are $1,000,000.
The value of the claims among the four passengers, however, clearly exceeds those limits. The carrier is notified of the claims, begins receiving demand letters from the claimants, and responds by scheduling global mediation.
Based on the available information, one of the claimants alone has a seven-figure claim, while the other three have claims which collectively exceed the policy limits.
This type of mediation can be challenging. What are some of the issues the parties need to be made aware of to assess each’s risk?
I try to determine early on if the parties can agree among themselves on how to divide the policy limits. The challenge here is the party with the most serious claim will at least posture for the entire limits. If the parties can agree, that is great, and the case quickly settles. If not, we go to door number two.
The parties then go into separate rooms, and we begin discussing the facts of the case and the issues separately with each claimant.
Some of the interesting aspects of this type of mediation which I have observed include the following:
The parties with the lesser claims, if offered a settlement amount early on by the insurer, should seriously consider that first offer because the offer amounts may be reduced as the mediation ensues. The insurer wants to reduce its risk. It can do so in two primary ways: settling with as many claimants as it can or settling the most serious cases first.
So, if the insurer wants to test the waters by offering an amount to everyone, a wise consideration for the least injured claimant is to seriously consider the first offer. Otherwise, it may be reduced after that when the insured begins focusing on the most serious claim.
As for the most seriously injured claimants who insist on 95% to 100% of the limits, there are some things to consider in helping get the parties to a place where a settlement can occur.
The insurer can file an interpleader. So, let’s say a party insists on $900,000 and the insurer can’t do that because of the other claims yet knows it can avail itself of an interpleader. I want to do some math for the claimant. If the claimant nets out $450,000 with a $975,000 settlement today, how much would that claimant net out if the case doesn’t settle, goes to an interpleader and the claimant actually gets a $990,000 recovery? Most likely, he or she nets out less.
First, there will be an increase in outstanding medical bills. Most of these cases are mediated early after the incident when the medical bills are just starting to climb. Insurance liens will also increase.
Try getting an interpleader heard within 9-12 months. The claimant still must prove the worth of his or her claim, which means doctors and experts still testify and get paid, so costs go up. And the claimants will likely have to pay the fees of the insurer who filed the interpleader.
There are many considerations in this type of case. Costs are even more important if the policy limits were much less, like $100,000 instead of $1 million.
In short, the new statute provides the mediator and the parties with many practical considerations to help each party get its case resolved.
Musa Farmand is a certified civil circuit court mediator.