Coverage Denial Requires "Substantial Prejudice" From Failure To Submit To EUO

In the case of Fleurimond Barthelemy v. Safeco Insurance Company of Illinois, Case Number 4D17-1254 and 4D17-1543 (Fla. 4th DCA October 24, 2018), Florida’s Fourth DCA held that an insurance company could not deny coverage for “failure to cooperate” when the insured failed to attend three examinations under oath (EUO) unless it could prove “substantial prejudice.”

Underlying Facts

Mr. Barthelemy was involved in a car accident in 2011.  After the accident, his insurance company asked him to submit to an examination under oath (EUO) on three separate occasions.  Mr. Barthelemy failed to attend all three EUO’s and Safeco denied coverage.

We must assume that Mr. Barthelemy was responsible for the car accident.  Therefore, Safeco must have refused to provide him with a defense in the case.  The opinion states that other drivers sued him and subsequently obtained a judgment (but does not say how much).  At that point, we must also assume that he either retained the lawyers who sued him or gave their clients an assignment to sue Safeco on his behalf and the insurance bad faith case ensued.

Defective Jury Instruction In Bad Faith Case

As Mr. Barthelemy sued his own insurance company for bad faith, the trial judge gave the following instruction to the jury regarding the “failure to cooperate” defense:

To prevail on this affirmative defense, Safeco Insurance Company of Illinois must establish, by the greater weight of the evidence, that: (1) Plaintiff did not comply with his post-loss obligations; and (2) that Safeco Insurance Company of Illinois was actually prejudiced by Plaintiff’s failure to comply with his post-loss obligation.

What Is The Required Standard For A Denial Of Coverage?

Missing from the jury instruction were the words “material failure” and “substantially prejudiced.”  In Bankers Insurance Co. v. Macias, 475 So. 2d 1216 (Fla. 1985), the Florida Supreme Court address the “failure to cooperate” defense and said that an insurance company must show:

1. the insured materially failed to cooperate with post-loss obligations; and
2. the failure to cooperate substantially prejudiced the insurer.

On the other hand, Safeco relied on State Farm Mutual Automobile Insurance Co. v. Curran, 135 So. 3d 1071 (Fla. 2014) to argue that the Florida Supreme Court changed the “failure to cooperate” defense to merely a showing that the insured failed to cooperate and that the insurer suffered “actual prejudice.”

The Fourth DCA held that “the level of prejudice” was not an issue in Curran (regarding a compulsory medical examination) and was not contradictory to Macias.

What You Need To Know For Your Case

An examination under oath is often reserved for cases of suspected insurance fraud.  What we don’t know is why Safeco wanted an EUO on someone who caused a car accident.  Even if Mr. Barthelemy had caused a lot of accidents in a short period of time, Safeco should have been able to drop him as an insured rather than seek denial of a defense.

We must also assume about this case that the other drivers (Howell and Wachtel) were legitimately hurt.  However, even if the other drivers submitted fraudulent injury claims, then the remedy would still not be a denial of a defense—instead, the remedy would have been the opposite—to provide a vigorous defense.

With that being said, the most common situations situations where I have an encountered EUO’s in my practice is when the plaintiffs are seeking money from their own insurance companies (in the form of PIP/no-fault benefits or UM benefits).  When you are seeking money from your own insurance company (as opposed to a defense), you are likely to face a higher level of scrutiny and it is more relevant that a failure to cooperate on your part can cause the insurance company to deny your claim.  That is completely different than if Mr. Barthelemy had left the country after causing an accident (and could not be found) only to leave legitimately injured people holding the bag.

Call Us For Help With Your Case

If you have a question about whether your car accident involves bad faith from the insurance company, you should call us for a free consultation to determine whether your case involves a wrongful denial of coverage.  A free consultation with a car accident attorney in Lakeland, FL can help you determine the proper legal issues and get you headed in the right direction.  Schedule your free consultation today.

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