OPINION & ORDER
MICHAEL L. BROWN, UNITED STATES DISTRICT JUDGE.
This bad faith failure to settle case arises from an automobile incident between Defendant Equity Insurance Company's insured, Christopher Brown, and Plaintiff Amy Marie Kemper. Both parties have filed motions for summary judgment. (Dkts. 235, 239.) Ms. Kemper has also moved to exclude part of expert J. Randolph Evans's testimony (Dkt. 258) and to supplement her motion for summary judgment (Dkt. 266). For the reasons set forth in this order, the Court grants Equity's motion for summary judgment, grants in part and denies in part Ms. Kemper's motion to supplement, and denies Ms. Kemper's motions for summary judgment and to exclude Mr. Evans's testimony.
In March 2012, Christopher Brown drove his vehicle across a road's center line into oncoming traffic and struck Ms. Kemper, who was riding her motorcycle. (Dkt. 252-1 at 1.) Mr. Brown was drunk. (Dkt. 224-1 at 2.) Ms. Kemper was injured and airlifted to a hospital. (Dkt. 235-9 ¶ 3.)
Brown had an automobile liability insurance policy with Equity that provided $25,000 per person in bodily injury liability coverage. (Dkt. 224-165 at 2.) Equity retained Statewide Claims Service to adjust Ms. Kemper's claims against Mr. Brown. (Dkts. 224-1 at 1; 252-1 at 5-6.) Statewide and its adjuster, Mr. Chop, began working on Ms. Kemper's claims after they received notice of the accident and the police report. (Dkt. 252-1 at 5-6.) Statewide confirmed the insurance policy provided liability coverage for the accident and concluded Mr. Brown was at fault for the accident. (Id. at 7-8.)
In April 2012, Statewide received a claim form that included Ms. Kemper's $24,456.92 air ambulance bill and an authorization and consent with an assignment of benefits and lien provision, which Ms. Kemper had not signed. (Dkts. 223-5 at 2; 252-1 at 8.) Statewide also received several medical bills and statements for medical expenses Ms. Kemper incurred because of the accident. (Dkts. 116-1 at 53:1-6, 54:1-23; 223-5 at 5-7, 9-10, 12.) Mr. Chop concluded that Ms. Kemper's medical
In April 2012, Mr. Chop sent Ms. Kemper a letter and requested that she provide a medical update or medical bills, medical records from her treating physicians, and information about any lost wages. (Dkt. 224-10 at 1.) Attorney Michael Werner helped Ms. Kemper draft a demand letter in response. In it, Ms. Kemper offered to sign a limited release in exchange for the liability policy's limit. (Dkt. 224-11 at 1.) She stated the release must not have any language about her paying Mr. Brown's or Equity's "incurred costs" and that Equity must deliver the check to her before June 8, 2012. (Id. at 1.) Ms. Kemper also wrote "PLEASE
Statewide knew Ms. Kemper's medical bills were extensive and, not knowing whether she had adequate medical coverage, feared medical providers would file liens on her claims against Mr. Brown. (Dkt. 224-1 at 5-6.) Statewide enlisted attorney Bill Allred, the founder of an insurance-defense firm, to assist. (Dkts. 205 at 65:8-16; 224-93 at 1; 235-3 at 1; 252-1 at 40.) He, in turn, hired another company to determine whether any of Ms. Kemper's medical providers had filed liens on her claims against Mr. Brown. (Dkts. 224-1 at 8; 224-168 at 1; 252-1 at 45.) That company found none. (Dkt. 224-1 at 8; 252-1 at 45.) Nevertheless, Statewide remained concerned about liens on Equity and Mr. Brown's behalf, given the extent of Ms. Kemper's medical bills. Statewide also sent Mr. Brown a letter stating that Equity had settled Ms. Kemper's claim for $25,000. (Dkt. 224-17 at 1.)
Statewide, as the administrator for Equity, responded to Ms. Kemper's demand letter within the time required. (Dkt. 224-13.) It sent her a $25,000 settlement check, a limited release, and a Medicare form for Ms. Kemper to execute and return. (Id. at 1.) Statewide stated that it was tendering Mr. Brown's policy limits to settle Ms. Kemper's claim. (Id.) Statewide also included the following paragraph in its response.
Ms. Kemper's counsel rejected Statewide's counteroffer and returned the check. (Dkt. 224-20 at 1.) He stated that the demand Ms. Kemper place her money in escrow was unacceptable. (Id.) He explained, "Ms. Kemper has over one million dollars of medical bills, is catastrophically injured, and she needs this money to live." (Id.)
Ms. Kemper later sued Mr. Brown in the Superior Court of Heard County, Georgia. Equity defended him. (Dkt. 252-1 at 58.) The trial court granted Mr. Brown's motion to enforce his purported settlement agreement with Ms. Kemper. The Georgia Court of Appeals, however, reversed holding Statewide's June 5th response to Ms. Kemper's demand letter was a counteroffer, not an acceptance. See Kemper v. Brown, 325 Ga.App. 806, 754 S.E.2d 141, 143-44 (2014). Because she had not accepted the counteroffer, the court held there was no settlement. Id. (concluding the parties reached no binding settlement). Ms.
Both Ms. Kemper and Equity have moved for summary judgment. (Dkts. 235, 239.) Ms. Kemper has also moved to exclude part of Equity's expert Attorney J. Randolph Evans's testimony (Dkt. 258) and to supplement her motion for summary judgment (Dkt. 266).
II. Summary Judgment Motions
A. Legal Standard
Summary judgment is appropriate when "the movant shows that there is no genuine dispute as to any material fact and [it] is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). "No genuine issue of material fact exists if a party has failed to `make a showing sufficient to establish the existence of an element ... on which that party will bear the burden of proof at trial.'" AFL-CIO v. City of Miami, 637 F.3d 1178, 1186-87 (11th Cir. 2011) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). An issue is genuine when the evidence is such that a reasonable jury could return a verdict for the nonmovant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
The moving party bears the initial responsibility of asserting the basis for his motion. See Celotex Corp., 477 U.S. at 323, 106 S.Ct. 2548. The movant is not, however, required to negate the non-movant's claim. Instead, the moving party may meet his burden by "`showing' — that is, pointing to the district court — that there is an absence of evidence to support the nonmoving party's case." Id. at 325, 106 S.Ct. 2548. After the moving party has carried its burden, the non-moving party must present competent evidence that there is a genuine issue for trial. Id. at 324, 106 S.Ct. 2548.
The Court views all evidence and factual inferences in a light most favorable to the non-moving party. See Samples v. City of Atlanta, 846 F.2d 1328, 1330 (11th Cir. 1988). But the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. Anderson, 477 U.S. at 248, 106 S.Ct. 2505. "The requirement is that there be no genuine issue of material fact." Id. The essential question is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson, 477 U.S. at 251-52, 106 S.Ct. 2505.
The Georgia Supreme Court has held that an insurance company "may be liable for the excess judgment entered against its insured based on the insurer's bad faith or negligent refusal to settle a personal claim within the policy limits." Cotton States Mut. Ins. Co. v. Brightman, 276 Ga. 683, 580 S.E.2d 519, 521 (2003); see also First Acceptance Ins. Co. of Ga. v. Hughes, 305 Ga. 489, 826 S.E.2d 71, 74 (2019). An insurance company faces liability for bad faith or negligence if it fails to act as "the ordinarily prudent insurer." Brightman, 580 S.E.2d at 521 (holding insurer in bad faith failure to settle action "judged by the standard of the ordinarily prudent insurer").
Ms. Kemper has asserted that Equity was negligent and acted in bad faith by failing to settle her claim. (Dkt. 1-1 ¶¶ 48-52.) As the Eleventh Circuit has recognized,
Ordinarily, a jury must decide whether the insurer acted negligently or in bad faith in failing to settle a claim. S. Gen. Ins. Co. v. Holt, 262 Ga. 267, 416 S.E.2d 274, 276 (1992) (explaining the jury must generally decide whether an insurer has accorded the insured "the same faithful consideration it gives its own interest"). It must judge the insurance company's actions in the light of "all the relevant circumstances including the insurer's knowledge of facts relevant to liability and damages on the claim; the insurer's diligence in conducting a reasonable investigation to discover the relevant facts; and the terms of the settlement offer and any response by the insurer." Baker, 747 S.E.2d at 6.
Georgia courts, however, have provided some guidance about what constitutes an insurance company's bad faith failure to settle. For example, the Georgia Supreme Court has held that "[a]n insurance company does not act in bad faith solely because it fails to accept a settlement offer within the deadline set by the injured person's attorney." Holt, 416 S.E.2d at 276. On the other hand, an insurer has a duty to its insured "to respond to a deadline to settle a claim within policy limits when the [insurer] has knowledge of clear liability and special damages exceeding the policy limits." Id.; accord Brightman, 580 S.E.2d at 521.
It is undisputed that Statewide (acting for Equity) had "knowledge of clear liability and special damages exceeding the policy limits." See Holt, 416 S.E.2d at 276. Statewide and its adjuster, Mr. Chop, knew that Mr. Brown was liable and at fault for causing the accident. (Dkts. 224-1 at 2-3; 224-163; 235-2 at 7; 252-1 at 7-8.) Ms. Kemper and some of her medical providers sent Mr. Chop medical bills from treatment she received after the accident. (Dkts. 116-1 at 53:1-55:1; 223-5 at 2-7, 9-10, 12; 224-6; 224-7; 224-8; 224-9; 252-1 at 10-11.) The bills' total exceeds $25,000. (Dkt. 116-1 at 55:8-9.) Thus, Statewide knew that Mr. Brown faced legal liability from the accident above the $25,000 policy limit. (Dkts. 116-1 at 55:2-13; 252-1 at 12.) Equity's agent Statewide thus had a duty to respond to Ms. Kemper's time-limited demand letter. See Holt, 416 S.E.2d at 276.
The filing of a claim or lien serves as notice of the lien to an insurer, whether or not the insurer received written notice of it. § 44-14-471(b). Such a lien allows a "hospital to step into the shoes of the insured for purposes of receiving payment from the tortfeasor's insurance company for economic damages represented by the hospital bill." S. Gen. Ins. Co. v. Wellstar Health Sys., Inc., 315 Ga.App. 26, 726 S.E.2d 488, 492 (2012) (quoting State Farm Mut. Auto. Ins. Co. v. Adams, 288 Ga. 315, 702 S.E.2d 898, 901 (2010)). Hospital liens essentially become part of an injured party's claim against an insurer. Id. at 495. If an insurance company pays an injured party's claim after a lienholder perfects its lien, the lien-holder may collect against the insurance company. See Allstate Fire & Casualty Ins. Co., 822 S.E.2d at 835 (affirming trial court's grant of summary judgment against tortfeasor's insurer). Indeed, under Georgia law, an insurance company can be liable to the lien-holder even it if was unaware of the lien, so long as the lien-holder properly perfected its claim. See § 44-14-471 ("The filing of the claim or lien shall be notice thereof to all persons, firms, or corporations liable for the damages, whether or not they received the written notice provided for in this Code section.").
When Statewide received Ms. Kemper's demand letter it was facing a dilemma. On the one hand, it knew the Georgia Supreme Court's decision in Holt required its client, Equity, to respond to that demand. It also feared Equity might face a bad faith failure to settle claim if it did not pay Ms. Kemper the full policy amount. At the very least, Equity would have faced a jury question on bad faith. Wellstar, 726 S.E.2d at 493 (finding insurance company's failure to accept policy limit demand presents jury question of negligent and bad faith failure to settle when liability is clear and individual's damages exceed policy limit).
On the other hand, Statewide (as Equity's administrator) feared medical liens. It knew Ms. Kemper had extensive medical bills that exceeded the policy limits. (Dkt. 224-1 at 5-6.) Under both Georgia's statutes and its common law, Equity had an obligation to look out for any claims or liens hospitals, physicians, or other medical
Statewide enlisted Mr. Allred and a vendor to search for any liens against Ms. Kemper's insurance claim. (Dkt. 224-16 at 1.) Although the vendor did not send someone to the Coweta County courthouse to examine its lien books, the vendor found no liens on the county's website. (Dkts. 224-1 at 8; 224-16 at 1.) Statewide also learned that the courthouse only updates its website "every couple of days." (Id.) Despite Statewide's efforts to search for any outstanding liens, there was a risk that a lien holder might file and perfect a lien or claim before Statewide settled Ms. Kemper's claim or she signed a release.
(Id. at 6.)
Ms. Kemper's demand letter also prohibited Statewide and Equity from contacting her. This is particularly important because a lien holder would have had to give Ms. Kemper actual notice of its potential claim, while it would only have to notify an insurance company like Equity that it knew might be liable to Ms. Kemper. See § 44-14-471(a)(1) (requiring that a lien claimant must "provide written notice to the patient and, to the best of the claimant's knowledge, the persons ... and their insurers."); see also Allstate Fire & Casualty Ins. Co., 822 S.E.2d at 834-35 (affirming a trial court's grant of summary judgment to the lien holder, even though the lien holder did not send notice to the insurer under § 44-14-471(a)). So Ms. Kemper's instruction that Equity not contact her prevented Equity or Statewide from simply asking her whether her insurance company had paid all of her medical bills or whether any liens had been filed. It barred Statewide and Equity from an easy solution to their dilemma.
Georgia law, however, has a safe harbor that protects insurance companies facing these conflicting statutory and common law duties. In Wellstar, an insurance company argued that its duty to accept a policy-limits demand under the conditions outlined in Holt conflicted with its duty to satisfy hospital liens. Wellstar, 726 S.E.2d at 491. The Court of Appeals disagreed, holding that a Georgia law protects an insurer from liability under Holt if "(1) the insurer promptly acts to settle a case involving clear liability and special damages
After reviewing the record and viewing all evidence and factual inferences in a light most favorable to Ms. Kemper, the Court finds that Equity is entitled to the Wellstar "safe harbor." The undisputed evidence shows that Statewide promptly acted to settle Ms. Kemper's case, which involved clear liability and special damages above the applicable policy limits. It tried to give Ms. Kemper the $25,000 policy limits on June 5, 2012, three days before the June 8th deadline Ms. Kemper set in her demand letter. (Dkt. 224-13 at 1.) "Statewide demanded that Kemper place settlement funds into an escrow account for the purpose of protecting the interests of any pending liens." Kemper v. Brown, 325 Ga.App. 806, 754 S.E.2d 141, 144 (2014). This demand complies with Wellstar's suggestion that an insurance company could "tender its policy limits to the plaintiff, subject to a reasonably and narrowly tailored provision assuring that the plaintiff will satisfy any hospital liens from the proceeds of such settlement payment." Wellstar, 726 S.E.2d at 493. Indeed, the Georgia Court of Appeals stated that an "insurance company could request that plaintiff's counsel or a third party hold a portion of the settlement proceeds (in an amount equal to that of the hospital lien) in escrow to allow the plaintiff an opportunity to investigate the validity of the liens and to negotiate with the hospital." Id.
Here, the sole reason for the parties' inability to reach a settlement was Ms. Kemper's unreasonable refusal to assure the satisfaction of any outstanding hospital liens from the proceeds of the settlement. Ms. Kemper construed Statewide's response on Equity's behalf as a counteroffer, which she rejected because she found the demand that she place her money in an escrow account unacceptable as she "need[ed] this money to live." (Id.). (Dkt. 224-20 at 1.) Ms. Kemper could have allowed Statewide or Equity to contact her to discuss any outstanding liens, informed them that there were no liens, or signed the affidavit under § 44-14-473(c) in the limited release Statewide provided. (Dkt. 224-13 at 3.) Ms. Kemper did none of these. Instead, she disavowed her obligation to satisfy any potential outstanding liens because she had over one million dollars of medical bills and needed the money to live. (Dkt. 224-20 at 1.)
Ms. Kemper explained that, when she received Equity's administrator Statewide's letter and the check for $25,000, she was "happy." (Dkt. 231 at 104:20-105:3.) She did not know whether her insurance company had paid her medical bills or whether there were any hospital or medical liens against her. (Id. at 118:5-8, 119:16-18, 127:1-21.) She intended to put the money in her own bank account and use it to live on. (Id. at 79:21-24, 110:9-22.) She might have used it to pay medical bills, buy groceries, or for any other expenses. (Id. at 110:17-22.) She did not understand what Statewide meant when it asked and demanded that she place the money in escrow to ensure the payment of any liens. (Id. at 119:1-13.) She contacted the lawyer who had helped her draft her
Ms. Kemper argues that Equity cannot genuinely claim the Wellstar safe harbor because some of Equity's administrator Statewide's employees determined it was unavailable in the absence of verified liens. Indeed, Mr. Chop originally did not include the demand or request that Ms. Kemper place money in an escrow account in an initial draft of the response to Ms. Kemper's demand letter. (Dkt. 116-1 at 69:19-70:22, 73:6-74:6, 75:22-76:6.) He added that language because his supervisor instructed him to do so, even though he did not fully understand the paragraph he inserted into the letter.
Even Statewide's attorney Bill Allred advised Statewide, both before and after it sent its June 5th response letter, that Wellstar likely does not apply to Amy Kemper's demand.
But, Ms. Kemper did not refuse Equity's counteroffer because no liens existed. Indeed, she testified she did not know whether her insurance company had paid her medical bills or whether any liens existed.
It may be that Wellstar involved actual, verified liens, but the Georgia court's opinion provides a broader manner in which an insurance company may protect itself when faced with competing risks of liability to an insured and liability to potential lien holders. Given the clear priority that lien holders have under Georgia law and the guidance from the Georgia Court of Appeals that Statewide could seek assurance that liens would be satisfied, it was unreasonable for Ms. Kemper to refuse to provide that assurance while also demanding that Equity not contact her. In the light of these facts, Equity's inability to confirm the existence of any lien does not prevent it from obtaining the benefit of the Wellstar "safe harbor."
Ms. Kemper also argues that Statewide did not promptly act to settle her claim because, rather than make a proactive offer to settle, Mr. Chop sent a letter to Ms. Kemper asking for information he did not need. (Dkt. 235-1 at 14.) But neither Wellstar nor other Georgia law requires an insurer to make a proactive offer to settle. See Kingsley v. State Farm Mut. Auto. Ins. Co., 353 F.Supp.2d 1242, 1252 (N.D. Ga. 2005) ("[T]o find liability for tortious refusal to settle there must be something the insurer was required to `refuse.'"), aff'd 153 F. App'x 555 (11th Cir. 2005); see also Patriot General Ins. Co. v. Krebs, No. 1:12-CV-0997-RWS, 2012 WL 2990067, at *1 (N.D. Ga. July 20, 2012) (finding insurer was entitled to the Wellstar "safe harbor" even though the claimant made a time-limit demand before the insurer offered to settle). "[A]n insurer's duty to settle arises when the injured party presents a valid offer to settle within the insured's policy limits." First Acceptance Ins. Co. of Ga., 826 S.E.2d at 75. Moreover, the Wellstar court found that an insurer may act promptly and be entitled to the safe harbor even if the insurer makes a "counteroffer (in a timely and reasonable fashion)." Wellstar, 726 S.E.2d at 493. Equity's administrator Statewide's response to Ms. Kemper's demand letter was a prompt and timely offer to settle her claim.
The Georgia Court of Appeals laid out a path for an insurance company to follow to avoid bad faith and negligent failure to settle claims. It explained how a company can safely navigate between the liability to its insureds on the one hand and liability to lienholders on the other hand. It explained that an insurance company can tender its policy limits with a "reasonably and narrowly tailored provision assuring that the plaintiff will satisfy any hospital liens." Id. It even explained that the insurance company could do this by requesting that the plaintiff hold a portion of the settlement in escrow to assure the payment of liens. Id. Equity (through Statewide) followed this path and is entitled to the Wellstar "safe harbor." The Court grants Equity's motion for summary judgment.
III. Plaintiff's Motion to Supplement Her Briefing
Ms. Kemper has requested leave to supplement her brief in opposition to Equity's motion for summary judgment in the light of the Eleventh Circuit's unpublished decision in Moore v. GEICO General Insurance Company, 758 F. App'x 726 (11th Cir. 2018) (per curiam). (Dkt. 266.) She also urges the Court to rule that evidence about Attorney Werner's dealings with her uninsured motorist insurance providers ("UM carriers") is inadmissible under Rule 403 of the Federal Rules of Evidence. (Dkt. 266-1 at 4-7.) Equity argues that the Court should not grant Ms. Kemper leave to supplement her briefing because her brief is untimely and raises a new issue and arguments about Rule 403 that she had not asserted before.
The supplemental authority Ms. Kemper cites, Moore v. GEICO, involved claims that an insurer acted in bad faith by failing to settle a dispute that arose from an automobile accident in Florida. 758 F. App'x at 728. Before trial, the defendant moved to exclude any arguments that it could have settled the underlying claim because plaintiff settled her claims with a third-party insurer. Id. at 730. The district court at first denied the motion but later regretted that decision and granted a new trial. Id. The Eleventh Circuit affirmed. Id. at 733.
The Court grants Plaintiff's motion, and has accepted and considered Ms. Kemper's proffered supplemental authority.