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Examining High-Low Agreements in Florida Car Accident Lawsuits

The majority of Florida car accident claims are settled prior to a trial, and one form of settlement is called a “high-low agreement.” This is when the parties in the case agree that no matter what the outcome of a case, defendant will pay a minimum amount – but no more than an agreed-upon maximum amount. This takes some of the “all-or-nothing” guesswork out of the trial process, and ensures a plaintiff will receive some amount of compensation no matter what. 

However, injury lawyers can explain it might still be risky, and it must be done with all parties – including insurers – being appropriately informed.

Although certain procedures and timelines can vary from state-to-state, the same basic principles of high-low agreements typically apply across the board. In a recent case out of New Jersey, a plaintiff who agreed to a high-low agreement ran into trouble by failing to inform his uninsured/ underinsured motorist coverage carrier of the arbitration, high-low agreement, completed jury trial or verdict. When it came time to collect, the UM/UIM insurer refused. 

According to New Jersey Supreme Court records, plaintiff was involved in an automobile accident 12 years ago wherein the other motorist caused the crash. Without informing his auto insurance company, plaintiff initiated a negligence lawsuit against the at-fault driver, whose auto insurance bodily injury liability limit was $100,000. Both parties engaged in mandatory arbitration, the outcome of which was a finding that plaintiff’s damages were $90,000. Plaintiff, still without informing his UM/UIM carrier (who would have grounds to assert subrogation rights). The case moved toward trial. Defendant offered to settle for $50,000, an offer plaintiff rejected, again without notifying his insurer.

Before trial, plaintiff entered into a high-low agreement with defendant, which set his range of damages at $25,000 to $100,000 – no matter what the jury verdict.

The case went to trial and jurors awarded plaintiff $200,000. However, because of the high-low agreement, the court set the damage award at $100,000.

Then for the first time, five years after the initial crash, plaintiff sent a letter to his UM/UIM insurer, seeking UIM benefits. He noted that tortfeasor (wrongdoer) was “willing to settle” for $100,000. However, there was no mention made in this letter about any of the proceedings that had already taken place. Based solely on this communication, auto insurer instructed plaintiff to accept the offer.

Subsequently, plaintiff and his insurer proceeded to trial over his UIM benefits. During discovery, plaintiff disclosed his past dealings with the tortfeasor. Auto insurer moved to dismiss based on this, arguing he’d violated previous case law precedent by failing to notify the insurer of any of these prior proceedings. Trial court granted this request, but a split appellate court reversed, finding the court failed to consider whether insurer was actually prejudiced by the lack of notice. A dissenting justice argued that no such demonstration by insurer was required because plaintiff’s omission of trial and high-low agreement resulted in the irretrievable loss of subrogation rights of insurer.

The state supreme court agreed with the dissenting justice, finding the insurer could refuse to pay any of the UIM benefits it would otherwise by required to pay.

This case underscores why it’s imperative to have an experienced car accident attorney in Orlando on your side at all points throughout arbitration, settlement negotiations and trial, to ensure you are following are required legal procedure and your rights are protected.

Call Freeman Injury Law — 1-800-561-7777 for a free appointment to discuss your rights. Now serving Orlando, West Palm Beach, Port St. Lucie and Fort Lauderdale.

Additional Resources:

Ferrante v. New Jersey Manufacturers Insurance Group, April 11, 2018, New Jersey Supreme Court

More Blog Entries:

Pursing Product Liability Claim in Vehicle Defect Lawsuit, April 21, 2018, Orlando Car Accident Attorney Blog

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