Bad faith litigation is usually a situation where the case could be settled within the policy limits, but that chance is lost and the verdict exceeds the policy limits.  Here is the inverse.  The carrier settles a case within the policy limits but the insured [in this case a doctor] did not want to settle, and sues the carrier for settling in bad faith.

"A Florida appellate court has recognized a new statutory bad faith cause of action in medical malpractice claims. In Rogers v. Chicago Ins. Co.,1 the fourth district court of appeal held that an insured has a private cause of action under section 627.4147, Florida Statutes, which requires that settlement offers be made in good faith and in the best interests of the insured.

In Rogers, a medical doctor sued his professional liability insurer for failing to properly investigate the malpractice claim filed against him, as required by section 766.106,2 Florida Statutes. He alleged that the insurer had acted in bad faith under section 627.4147 by settling a completely defensible claim, causing him damages such as his inability to obtain medical malpractice insurance, which limited his practice.

In 1985, the Florida Legislature enacted section 627.4147, titled “Medical malpractice insurance contracts.” Subsection 627.4147(1)(b) provides that it is against public policy for any insurance policy to contain a clause giving the insured the exclusive right to veto a settlement offer within the policy limits. It also provides that “any offer of admission of liability, settlement offer, or offer of judgment made by an insurer or self-insurer shall be made in good faith and in the best interests of the insured.”

Will this principal spread to legal malpractice?