By, Alicia M. Lopez, Esq.

In 1982 the Florida legislature enacted Florida Statutes §624.155 creating a cause of action for bad faith against an insurance company in first party claims, as Florida’s common law only recognizes a claim for third party insurance bad faith. The statute creates a notice requirement and safe harbor period within which the insurance company has an opportunity to cure the alleged violations, as a prerequisite to filing suit for “bad faith” in the handling of the first party insurance claim. “There are three prerequisites to filing a statutory bad-faith claim: (1) determination of the insurer’s liability for coverage; (2) determination of the extent of the insured’s damages; and (3) the required notice must be filed under section 624.155(3)(a).” Landers v. State Farm Florida Insurance Company, 234 So.3d 856, 859 (Fla. 5th DCA 2018).  An insured may file a Civil Remedy Notice to satisfy the third prerequisite before the first two prerequisites have been satisfied. Vest v. Travelers Insurance Company, 753 So.2d 1270 (Fla. 2000).

The first prerequisite is satisfied if the insurance carrier admits coverage for the claim, in which case the amount of the loss may be disputed. If an insurer wholly denies coverage for the claim, then the issue of coverage must be decided by a court.[i] Johnson v. Nationwide Mutual Insurance Company, 828 So.2d 1021 (Fla. 2002). The second requirement is satisfied when there has been a determination of liability and the extent of damages owed on the first-party insurance contract. Barton v. Capitol Preferred Insurance Company, Inc., 208 So.3d 239 (Fla. 5th DCA 2016); Vest v. Travelers, 753 So.2d 1270. This may be determined through litigation or by some other means such as settlement (Barton, 208 So.3d 239) or appraisal (Landers, 234 So.3d at 859; Cammarata v. State Farm Florida Insurance Company, 152 So.3d 606 (Fla. 4th DCA 2015); Hunt v. State Farm, 112 So.3d 547 (Fla. 2nd DCA 2013)). Payment of policy limits by the Insurer after the cure period has expired also satisfies this requirement (Demase v. State Farm Florida Insurance Company, 239 So.3d 218 (Fla. 5th DCA 2018)) while payment of policy limits during the cure period cures the alleged violation (Lane v. Westfield Insurance Company, 862 So.2d 774 (Fla. 5th DCA 2003).  The Demase court stated, “An insured may obtain a determination of the insurer’s liability and the extent of their damages by litigation, arbitration, settlement, stipulation, or the payment of full policy limits.” 239 So.3d at 220. However, a confessed judgment in the underlying case by the insurer will not bind the insured as to the amount of damages. Fridman v. Safeco Insurance Company of Illinois, 185 So.3d 1214, 1224 (Fla. 2016).

The third prerequisite is to file a Civil Remedy Notice (CRN) under Florida Statutes §624.155(3)(a). The requirements for the Civil Remedy Notice set forth in the statute are as follows:

 (3)(a) As a condition precedent to bringing an action under this section, the department and the authorized insurer must have been given 60 days’ written notice of the violation.

(b) The notice shall be on a form provided by the department and shall state with specificity the following information, and such other information as the department may require:

1. The statutory provision, including the specific language of the statute, which the authorized insurer allegedly violated.

2. The facts and circumstances giving rise to the violation.

3. The name of any individual involved in the violation.

4. Reference to specific policy language that is relevant to the violation, if any. If the person bringing the civil action is a third party claimant, she or he shall not be required to reference the specific policy language if the authorized insurer has not provided a copy of the policy to the third party claimant pursuant to written request.

5. A statement that the notice is given in order to perfect the right to pursue the civil remedy authorized by this section.

(c) No action shall lie if, within 60 days after filing notice, the damages are paid or the circumstances giving rise to the violation are corrected.

(d) The authorized insurer that is the recipient of a notice filed pursuant to this section shall report to the department on the disposition of the alleged violation.

(f) A notice required under this subsection may not be filed within 60 days after appraisal is invoked by any party in a residential property insurance claim.

F.S. §624.155 (2019)

In addition, Florida Administrative Code Rule 69J-123.002, issued in 2009, provides that the Civil Remedy Notice shall be electronically submitted on a form issued by the Department of Financial Services through its website at  Once filed, the CRN is “accepted” by the department immediately and assigned a filing number and acceptance date (the date filed) from which the statutory cure period is calculated. The Insurer’s response and any further communications between the parties related to the CRN are to be added electronically to the existing filing through the website. Fla. Admin. Code R. 69J-123.002 (2009). The website provides the additional instruction that, “After submitting a Notice using this system, you must print a copy and provide it to the insurer.”

Because F.S. §624.155 is in derogation of common law, it must be strictly construed. Talat Enterprises, Inc. v. Aetna Casualty and Surety Co., 753 So.2d 1278, 1283 (Fla. 2000). However, the requirements of the statute may be waived if the insurer does not raise the defect in its response to the Civil Remedy Notice. Evergreen Lakes HOA, Inc. v. Lloyd’s Underwriters at London, 230 So.3d 1 (Fla. 4th DCA 2017) see also, State Farm Insurance Company v. Ulrich, 120 So.3d 217, 220 (Fla. 4th DCA 2013).  In Evergreen Lakes, the insurer argued that the insured’s bad faith claim was precluded because the insurer was not given a copy of the CRN on the same day it was filed and accepted and therefore did not have the full sixty day period in which to cure the alleged violations, in spite of having responded to the CRN before the expiration of the sixty day period. Id. The court rejected this argument, observing that the insurer had been given the CRN more than sixty days before the lawsuit was filed. Id. The Evergreen Lakes court stated, “Even if we were to construe section 624.155 as requiring that the insurer be ‘given’ a copy of the CRN on or before the DFS acceptance date, Underwriters waived compliance with any such requirement by responding to the CRN within 60 days of the DFS acceptance date without challenging its timely receipt of the CRN.” Id. at 3. Thus, if an insurer does not specifically set forth deficiencies with the CRN in its response, such deficiencies may be waived.

Subsection 3(a) of F.S. §624.155 requires that the insurer “must have been given 60 days’ written notice of the violation,” and subsection 3(c) states that, “no action shall lie if, within 60 days after filing notice, the damages are paid or the circumstances giving rise to the violation are corrected.” The Florida Supreme Court explained this language stating,

The sixty day window is designed to be a cure period that will encourage payment of the underlying claim, and avoid unnecessary bad faith litigation. … To cure an alleged violation and to avoid a civil action, an insurer must pay the claim … before the sixty days expire. … We find that in creating this statutory remedy for bad-faith actions, the Legislature provided this sixty-day window as a last opportunity for insurers to comply with their claim-handling obligations when a good-faith decision by the insurer would indicate that contractual benefits are owed.

Talat, 753 So.2d at 1282-4.

This language was also addressed in Harper v. GEICO General Insurance Company, wherein the court held that, “the sixty-day cure period under §624.155 begins when the CRN is electronically filed with the Department, and to avoid a bad faith action, the insurer must pay the claim or take the corrective action within sixty days from the date the CRN is electronically filed.” 272 So.3d 448, 451 (Fla. 2nd DCA 2019). The insurer in Harper argued that the sixty day cure period began to run when it received a copy of the Civil Remedy Notice (about a week after the date it was filed) and that the alleged violations had been cured by their payment within sixty days of that date. Id. at 450. The court rejected that argument, citing to the language of the statute and the language on the website which indicates that, “the Department … considers the form to be ‘filed’ when the insured clicks on the ‘submit’ button at the end of the electronic form.” Id. at 451. The Harper court further stated that, “To hold that the sixty-day cure period begins only upon actual receipt of the CRN would be to add language to the statute that is not there – something this court is prohibited from doing.” Id.

The result of the strict construction of the statutory language by the Evergreen Lakes and Harper cases is that an insurer’s cure period may actually be less than sixty days if the insurer does not receive a copy of the CRN on the same day it is filed, even though the insurer has “been given 60 days’ written notice of the violation” as required by subsection 3(a,) because bad faith suits are not typically filed on the date the cure period expires.  In Evergreen Lakes, the court points out in dicta, “Underwriters had almost four years to cure the alleged violation before it was sued for bad faith.” 230 So.3d at 3. But according to the Harper case, even if the insurer had paid the claim during those four years or even before the expiration of sixty days from its receipt of the CRN, but after sixty days of the filing of the CRN, such payment would not have protected it from a bad faith suit. 272 So.3d 448. Moreover, under Demase v. State Farm, such payment would have satisfied the prerequisites to bringing a bad faith suit of establishing coverage and the amount of damages. 239 So.3d 218. This inconsistency may be resolved by clarification from the courts or the legislature, but as it is now the common practice for insureds to provide the CRN to the insurer via email on the same day it is filed, the occasion for such clarification to be given may never arise.

Subsection 3(b) of F.S. §624.155 contains five pieces of information required to be included in the form: (1) the specific statutory language violated, (2) facts and circumstances giving rise to the violation, (3) names of individuals involved in the violation, (4) specific policy language violated, and (5) a statement that the CRN is given in order to perfect the right to pursue a claim for statutory bad faith. The fifth requirement is provided automatically on the form and the user has to check a box acknowledging this statement before submitting the form on the CRN website. The other required information must be provided by the Insured. The first, third and fourth are straightforward requirements of what must be specifically set forth in the CRN. The “facts and circumstances giving rise to the violation” is a broader description of what is required but has been interpreted to mean that the insured must provide sufficient specificity to give the insurer notice of what it did wrong. Lane v. Westfield, 862 So.2d 774.

In Lane v. Westfield, Florida’s Fifth District Court of Appeal affirmed the trial court’s conclusions that the insured’s allegation in the CRN that the insurer “responded with accusations” to the insurance claim was vague and not in compliance with the statutory requirement to give the facts and circumstances with specificity. 862 So.2d 774. In Hunt v. State Farm Florida Insurance Company, the court held that the insured was not required to set forth in the CRN a specific amount to be paid on the claim in order for the insurer to cure the alleged violations. 112 So.3d 547; see also State Farm v. Ulrich, 120 So.3d at 220. In so ruling, the Hunt court observed, “On its face, the statute does not require a specific cure amount. We are hesitant to impose a requirement beyond that directed by the legislature.” 112 So.3d at 550.  The Hunt court also cited to Vest v. Travelers, which stated,

We expressly hold that a claim for bad faith pursuant to section 624.155(1)(b)(1) is founded upon the obligation of the insurer to pay when all conditions under the policy would require an insurer exercising good faith and fair dealing towards its insured to pay. This obligation on the part of the insurer requires the insurer to timely evaluate and pay benefits owed on the insurance policy. … The insurer’s appropriate response is based upon the insurer’s good-faith evaluation of what is owed on the insurance contract. … An insurer … must evaluate a claim based upon proof of loss required by the policy and its expertise in advance of a determination by a court or arbitration.

Vest, 753 So.2d at 1275-6. Thus, the insurer retains the responsibility to determine the value of the loss.

Subsection 3(c) of F.S. §624.155 provides that, “No action shall lie if, within 60 days after filing notice, the damages are paid or the circumstances giving rise to the violation are corrected.” Thus, while payment is usually the proper method for curing a CRN, it is not always required. The appropriate cure is determined by the allegations made in the CRN. In Lane v. Westfield, the CRN alleged that the insurer filed an unfounded lawsuit against the insured and failed to provide the adjuster’s estimate. 862 So.2d 774. The estimate was provided during the cure period and the insurer’s lawsuit was dismissed. Id. Thus, although the claim was not paid during the cure period,[1] the court found that the CRN was cured because the bad faith acts set forth therein had been cured during the sixty-day period. Id. Likewise, in another CRN on a different claim, Lane alleged that the wrongful act committed by Westfield was filing a declaratory judgment lawsuit. Id. The court deemed that although the outcome of the lawsuit was adverse to Westfield, the CRN was cured by Westfield’s decision not to file an appeal when the time period for filing an appeal expired before the expiration of the CRN cure period. Id. Since the CRN did not allege failure to pay as a violation, payment during the cure period was not required to cure the CRN. When payment is appropriate, however, the policy benefits must actually be paid during the cure period as this subsection plainly states; an agreement to pay made during the cure period is insufficient if the actual payment is not made until after the cure period expires. Paz v. Fidelity National Insurance Company, 712 So.2d 807 (Fla. 3rd DCA 1998). Thus, while the phrase “the circumstances giving rise to the violation are corrected” can mean something other than payment, it does not include merely agreeing to pay amounts that are due. Id.

While F.S. §624.155 does not specifically require the insurer to respond to the insured relative to a CRN filing, subsection (d) states that “The authorized insurer that is the recipient of a notice filed pursuant to this section shall report to the department on the disposition of the alleged violation.” Moreover, Rule 69J-123.002, F.A.C. requires these reports to be made through the website as part of the original filing. Typically, the insurer will file a response through the website denying the allegations contained in the CRN and provide a copy to the insured. The Florida Supreme Court held in Fridman v. Safeco, “If an insurer fails to respond to a civil remedy notice within the sixty-day window, there is a presumption of bad faith sufficient to shift the burden to the insurer to show why it did not respond.” 185 So.3d 1214, 1220 (internal quotations omitted).

Subsection (f) of F.S. §624.155 states that, “A notice required under this subsection may not be filed within 60 days after appraisal is invoked by any party in a residential property insurance claim.” This provision was added to the statute in 2019 and appears to be in direct response to the Landers v. State Farm case, which held that “nothing in the statute or case law precludes the filing of a CRN while a demand for appraisal is outstanding.” 234 So.3d at 860. In Landers, State Farm argued that the CRN was invalid because it was filed while State Farm’s request for appraisal was outstanding but before the appraisal process had been completed. Id. Thus, the statute precludes the filing of a CRN within 60 days after appraisal has been invoked, but does not preclude filing a CRN first, then demanding appraisal afterwards, during the cure period. Likewise, the statute does not preclude filing a CRN sixty days after appraisal has been invoked even if the appraisal has not been completed. This provision may prove to be less than straightforward in its application, as appraisal is often invoked more than once during the course of a claim.

The filing of a CRN can be done at any time during the claim process except less than sixty days either after appraisal has been invoked or before the filing of the bad faith lawsuit. Nor does the statute preclude filing more than one CRN during the course of a claim, as further grounds for a claim of bad faith may arise from the continued handling of the claim and each CRN is limited to the specific grounds for statutory violation stated therein. The requirements set forth in the CRN statute should be strictly adhered to, as they have been strictly applied by the courts. While a specific cure amount is not required, a CRN should specifically and carefully set forth exactly what the insurer did wrong and what can be done to correct it; the CRN should specifically allege failure to pay if the insured is seeking payment as a cure. Additionally, although not specifically required, it is best practice to provide the CRN to the insurer on the same day it is filed. Finally, if an insured intends to file a CRN and invoke appraisal, the CRN must be filed first or the insured must wait until sixty days after appraisal has been invoked.

[1] Some insurance policies require disputes between the Insured and the Insurer to be resolved by binding arbitration, including coverage disputes.

[2] The amount of the claim as reflected in the final judgment was paid after the expiration of the cure period. Lane v. Westfield, 862 So.2d 774.