Whistler’s Park, Inc. v. The Florida Insurance Guaranty Association, ___ So. 3d ___, 37 Fla. L. Weekly D1188 (Fla. 5th DCA May 18, 2011)
The trial court entered summary judgment for the Florida Insurance Guaranty Association (FIGA) because the insured filed suit for underpayment of its windstorm claim before submitting to the examination under oath requested by its insurance company. The appellate court reversed based upon its decision in State Farm Mutual Automobile Insurance Company v. Curran, 83 So. 3d 793 (Fla. 5th DCA 2011), which held that, absent prejudice to the insurer, an insurance claim may not be forfeited because of the insured’s failure to comply with a condition subsequent. Prejudice did not exist in this case because the insured did not refuse to attend an examination under oath, and the insurance company never scheduled one.
Judge Griffin, who wrote the court’s opinion, observed that cases holding that the insured’s failure to submit to an examination under oath before filing suit results in a forfeiture of coverage “have led to a cottage industry of EUO litigation. If an insurer can procure a failure to comply – or even better, a refusal to comply – with the EUO requirement, they have a perfect defense to payment. Similarly, if counsel for insureds can bait the insurer into refusing payment without adequate justification, this may trigger a bad faith claim. The actual, if unglamorous, true purpose of the EUO – verification of the insured’s loss – has been lost in this larger battle. No doubt there can be genuine instances of insurance fraud, but the recent and ever-escalating number of EUO cases that have arisen all over the state appear to be more about strategy than truth.” “Most policies provide that an insurer can demand multiple EUO’s and unlimited records and that insureds cannot even have counsel present. The breadth of this power, combined with the promise of forfeiture if the insured is not compliant, has had predictable results. . . .” The court cited a case from the Third District Court of Appeal that upheld an insured’s right to refuse to answer questions during an examination under oath that were “impertinent, improper, and irrelevant to the claim.” “In this case, [the insurer] requested an EUO, but never set a time or place for it. Rather, it instructed [the insured] to call to schedule the EUO. [The insured] does not appear to have called to schedule the EUO before filing suit; however, counsel for the [insured and its assignee] did provide the name of [the insured’s corporate representative], and when FIGA raised the failure to submit to an EUO as a defense, the offer to submit was renewed. By that time, however, under the case law that was rejected in Curran, even though the EUO was never actually scheduled by the insurer, by not having appeared for the requested EUO before filing suit, the defense to the claim was complete. Nothing could revive the insured’s right to be paid for its loss.” The court viewed this scenario as an “illust[ration] of the soundness of the reasoning behind Curran,” which the court applied in reversing summary judgment for FIGA.