Proposals for Settlement (PFS) are written settlement offers utilized in litigation to encourage early dispute resolution. PFSs are governed by Rule 1.442 of the Florida Rules of Civil Procedure and Section 768.79, Florida Statutes. Generally, the acceptance of a PFS results in the resolution and dismissal of the claims between the party serving the proposal and the party accepting the proposal. However, there is a statutory mechanism in place which allows an uninsured/underinsured motorist (“UM”) carrier the right to refuse permission to settle with an underinsured motorist.
Section 627.727, Florida Statutes, dictates that an UM carrier may choose “to preserve its subrogation rights by refusing permission to settle…within 30 days after receipt of the notice of the proposed settlement….” Fla. Stat. § 627.727(6)(b) (2024). The UM carrier must also “pay to the injured party the amount of the written offer from the underinsured motorist’s liability insurer.” Id. After the resolution of the UM claim, an UM carrier “is entitled to seek subrogation against the underinsured motorist and the liability insurer for the amounts paid to the injured party.” Id.
Given the above rules, how should a case proceed when an UM carrier refuses permission to settle after a PFS is accepted by an underinsured motorist? In short, dismissal of the underinsured motorist is appropriate even when an UM carrier refuses to grant permission to settle and objects to dismissal of an underinsured motorist.
Example:
Plaintiff alleges that Defendant A was negligent in causing an accident that resulted in injury to Plaintiff in Count I of Plaintiff’s Complaint. Count II of Plaintiff’s Complaint is directed to Plaintiff’s insurance carrier, Defendant B, alleging that Plaintiff had a policy of insurance with Defendant B, and that Plaintiff is entitled to UM benefits under that policy because Defendant A was an uninsured/underinsured motorist. During the course of litigation, Plaintiff serves a PFS directed to Defendant A. Defendant B refuses to approve the settlement, preserves its subrogation rights per Section 627.727, and objects to dismissal of Defendant A. The case law below outlines why dismissal of Defendant A is proper notwithstanding Defendant B’s objection.
Dismissal of an alleged tortfeasor is proper when an underinsured motorist carrier chooses to preserve its subrogation rights, pays the amount of the written offer from the alleged tortfeasor, and the injured party is willing to forego seeking damages in excess of the limits of the alleged tortfeasor. See Metropolitan Cas. Ins. Co. v. Tepper, 969 So.2d 403 (Fla. 5th DCA 2007) (holding the circuit court did not err in dismissing the alleged tortfeasor after the underinsured motorist carrier refused to grant permission to settle, paid the settlement amount on behalf of the alleged tortfeasor, and objected to dismissal of tortfeasor).
The Tepper Court found the plaintiff was not required to pursue his claims against the alleged tortfeasor if the plaintiff was willing to forgo seeking damages in excess of the sum offered by the alleged tortfeasor but paid by the underinsured motorist carrier. Id at 407. Moreover, the Supreme Court of Florida has held that “an UM carrier ‘is entitled to seek subrogation’ only upon final resolution of the underinsured motorist claim.” Metropolitan Cas. Ins. Co. v. Tepper, 2 So.3d 209, 215 (Fla. 2009). In keeping with the holding in Tepper, an Order granting an underinsured motorist’s motion to dismiss after PFS acceptance was recently granted in the Fifth DCA over an UM carrier’s objection.
In sum, following proper notice under § 627.727(6)(a), even if an UM carrier refuses permission to settle and objects to dismissal after an underinsured motorist accepts a valid PFS, dismissal of the underinsured motorist is proper. Notwithstanding the foregoing, the UM carrier retains the right to seek to enforce its subrogation interest, but only after reaching a final resolution of the UM claim with the plaintiff.