Florida Justice Reform Institute, Logo

Insurance Journal

Florida Tort Reform Bill Goes Big, Checks Most Remaining Boxes for Insurers Hoping to Stem Litigation

By William Rabb | March 6, 2023 

Outside of insurance attorneys, plaintiffs’ lawyers and some doctors, few people in Florida may be familiar with what are known as letters of protection.

But critics say the instruments, in which doctors agree to take a share of the judgment in an injury lawsuit, are responsible for greatly inflating some medical costs, which are often paid by liability and auto insurers.

And now, thanks to a tort-reform bill filed before the start of the March 7 Florida legislative session, those letters would have to be disclosed by plaintiffs.

It’s just one of several “monumental” legal changes proposed by House Bill 837, which was submitted by Florida Rep. Tommy Gregory, R-Lakewood Ranch.

“This has been a key priority for the business community,” said George Feijoo, a former Florida insurance regulator and now a government affairs consultant at Floridian Partners. “It’s a perfect alignment of the governor and the Senate and the speaker on these issues.”

Few people this year were talking publicly about another round of reforms designed to limit litigation costs for insurers, after Florida lawmakers approved sweeping legislation in December. But after huddling quietly with the Florida governor and the newly sworn Republican leaders of the House and Senate, along with some of the biggest business and legal reform groups in Florida, Gregory has drafted a bill that checks the remaining boxes that property-casualty insurers and other corporations have been asking for.

Some plaintiffs’ attorneys were caught off guard by the measure.

“This came out of nowhere,” said West Palm Beach attorney Gina Clausen Lozier, who represents policyholders in claims litigation. “They’re really trying to tie up all the loose ends.”

Here’s a look at some of the key provisions in the bill:

No more attorney-client privilege on treating physicians for plaintiffs. In Worley vs. Central Florida YMCA, the Florida Supreme Court in 2017 decided that when claimants’ attorneys refer their injured clients to doctors for treatment, the financial relationship between the lawyer and the doctor does not have to be revealed in discovery. Without that, the jury can’t fairly decide if the physician has an incentive to inflate medical treatments and costs, said William Large, president of the Florida Justice Reform Institute, which has lobbied for tort reforms.

The Worley decision has stuck in the craw of the insurance industry for years, because insurers’ payments to their own medical expert witnesses are considered discoverable in litigation. HB 837 ends the perceived double standard.

50% at fault means no recovery. Florida statutes have allowed juries to allocate responsibility for an accident or negligent act that caused harm. HB 837 states flatly that if a plaintiff is found to be more than 50% at fault, he or she cannot recover damages.

Policy limits equal damage limits. If two or more third-party claimants make competing claims on a single incident, which, taken together, would exceed the policy limits, an insurer cannot be liable beyond the policy limits, the bill reads. The claimants will be entitled to a prorated share, as determined by the court or arbitrator in the case.

Medical costs must be real. The bill would require that evidence provided by plaintiffs in injury claims must be limited to the “amount actually paid, regardless of the source of payment.” That means that if the injured party has health care insurance, the amount paid by insurance should be explained and damages should not be based on unsupported medical estimates.

Letters of protection. The letters are big reasons why medical costs and damages in an injury verdict have often seemed higher than what a health insurer would normally pay for treatment, critics have said. A Justice Reform Institute white paper in 2019 argued that even if an injured person has health coverage, the plaintiff’s lawyer might recommend an LOP in order to avoid damage awards based on the lower, negotiated rates generally paid by health insurers to medical providers.

Under HB 837, all letters of protection, along with the amount the third-party factoring company agreed to pay the doctor, would be divulged in the personal injury or wrongful death lawsuit proceedings. Doctors’ bills would have to be itemized and must include procedure codes where possible.

No more multipliers. What Senate Bill 2D did for property insurance litigation, HB 837 would do for auto and liability insurance claims litigation. Thanks in part to another 2017 opinion by the Florida Supreme Court, courts have allowed plaintiffs’ attorneys to use a multiplier. Gregory’s bill would allow only the Lodestar fee, except in rare circumstances when evidence shows that competent counsel could not otherwise be retained.

One-way attorney fees. At the heart of Florida’s property insurance crisis, many insurers have said, were Florida statutes and court rulings that granted hefty attorney fees, even if the insured prevailed by only a marginal amount in court. Gregory’s bill simply repeals Florida Statutes 627.428 and 626.9373, which authorized the fee structure. It would also apply to surplus lines.