Christine Jordan Sexton - March 18, 2023
The hope is insurance rates will be lowered though there is no mandate in the bill.
The House has passed a major legislative package to limit lawsuits against insurance companies and businesses.
Filed by Reps. Tommy Gregory and Tom Fabricio, the bill (HB 837) cleared the chamber on an 80-31 vote. Rep. Paula Stark, a Republican from St. Cloud, voted against the bill and was the only member to cross party lines.
The omnibus bill makes substantive changes to how lawsuits are filed and litigated in the state, all but eliminating the longstanding statute that allows a policyholder who successfully sues their insurance company on a coverage denial claim to recoup attorney fees.
That 1893 law was “misguided,” Gregory, a Republican civil litigator from Manatee County, said, because it encouraged policyholders to file lawsuits.
By contrast, he continued, the bill seeks to establish three principles: That each party to litigation should pay its own attorney fees; that “the person who causes you harm, that’s the person who pays for your damages” and not “those with the deepest pockets,” whether a business of insurance company; and to “trust the juries.”
Fabricio, also a Republican civil attorney but from Miami-Dade County, noted that the bill does nothing to cap damages, even punitive damages. It does promote transparency as to damages suffered by requiring plaintiffs to provide evidence of the medical costs they’re actually paying, less any discounts or waivers, he said.
“We want the juries to be armed with all the information. We want the juries to be able to go back to that jury room, deliberate based on the numbers that both sides present,” Fabricio said.
The bill is a priority for Gov. Ron DeSantis, House Speaker Paul Renner, and Senate President Kathleen Passidomo and has been fast-tracked through the legislative process.
SB 236, the companion bill filed by Sen. Travis Hutson, has cleared all of its committees of reference and could be considered by the full Senate as soon as Wednesday.
Business interests were quick to issue statements lauding Renner and the House for passing the legislation.
“With the House’s passage today of legislation that will significantly transform our state’s legal system, Speaker Paul Renner has taken a stand in support of Florida’s businesses and consumers and put unscrupulous billboard lawyers on notice,” AIF President and CEO Brewster Bevis said in a prepared statement.
Bevis said the bill puts a stop to what he called “frivolous” lawsuits being filed solely for personal gain.
Democrat Mike Gottlieb, a criminal-defense lawyer from Broward County, conceded the state needs tort reform, but warned that the bill’s limits on medical payouts would discourage doctors from treating injured people on the basis of a future insurance recovery.
In addition to the near-total elimination of the one-way attorney fee statutes, the bill changes the information that juries are allowed to consider regarding past and future medical bills.
The House bill initially would have put an end to the use of letters of protection, or LOPs.
LOPs are sent by plaintiff attorneys to their clients’ health care providers. LOPs guarantee the provider payment for medical treatment from a future lawsuit settlement or verdict award. Therefore, if the patient is insured, providers don’t bill the insurers, Medicare or Medicaid.
While HB 837 doesn’t ban LOPs altogether, the bill allows juries to consider the contracted commercial reimbursement rates for the costs of care as well as Medicare and Medicaid rates when determining future medical expenses.
The bill makes clear the jury can consider 120% of the Medicare reimbursement rate or, if the service isn’t covered by Medicare, 170% of the Medicaid reimbursement rate.
Florida Justice Reform Institute President William Large said letters of protection enable plaintiff attorneys to inflate the value of past medical bills and claims the use of LOPs artificially inflates settlement amounts by as much as 400%.
The bill also allows separate court proceedings to divide payouts between policyholders and any third parties, such as auto passengers, injured in any accident. The carrier wouldn’t have to pay third parties any amount in excess of the policy limit.
But all parties, including third parties, would have to cooperate in good faith. Hillary Cassel, a Democrat from Broward County, argued that provision would allow those third parties, by refusing to cooperate with someone who harmed them, to muddle the claim.
“Good faith now would require that family that lost a family member to work in good faith with this person who hurt their family member. And if that person who’s been injured doesn’t cooperate in the manner in which the insurance company sees fit, that impacts that business’ insurance,” Cassel said.
“Is that common sense?”
In past Legislative Sessions, companies such as Publix were on the front lines of the LOP battle alongside FJRI. But for the 2023 Session, the Florida Trucking Association (FTA) has taken on a more prominent role.
“Today is a promising step in the fight against trial attorneys who have been profiting while businesses and Floridians have suffered under the cost of lawsuit abuse,” FTA President and CEO Alix Miller said in a prepared statement. “We look forward to seeing the Senate take similar action, so we can, once and for all, rebalance our judicial system to the benefit of all Floridians.”
Worth noting: There were eight House members who weren’t included in the final House vote. And while the official vote remains unchanged, three of the eight members — Reps. Mike Beltran, Joe Casello, and Chip LaMarca — voted later.
Beltran, a Republican from Valrico, and Cassello, a Democrat from Boynton Beach, cast “no” votes while LaMarca, a Republican from Lighthouse Point, cast a “yes” vote.
Meanwhile Reps. Jervonte Edmonds, Dianne Hart, Lauren Melo and Allison Tant did not vote.
There is no requirement for insurance companies to reduce rates as a result of the substantive changes. And that is one reason why the legislation has been criticized by trial attorneys and their clients who say it goes too far and will result in a windfall for insurance companies.
Specifically, they note that the bill changes Florida’s bad faith statutes so that insurance companies cannot be sued for bad faith if, prior to a complaint being filed or within 90 days of being notified of the complaint, they tendered the lesser of the policy limits or the amount demanded by the claimant.
Additionally, if there are multiple claimants in a single bad faith action, the bill allows the insurer at the outset to pay the total amount of the policy limits through an interpleader action. That limits the insurer’s bad faith liability and makes the claimants compete against each other for a share of the money.
NFIB Executive Director Bill Herrle said Friday that the small business owners his association represents have “clamored for” the changes.
The bill “won’t stop anyone from going to court. If you’ve been hurt, you have a constitutional right to seek redress, but HB 837 brings the scales of justice back into balance after being weighted in favor of plaintiffs’ attorneys for so many years,” Herrle said.
He added that, unlike big corporations, small businesses don’t have legal departments to defend themselves against.
“The cost of defending itself against just one nuisance lawsuit can break a small business, even if the case is eventually thrown out of court,” he said.
Material from The Florida Phoenix was used in this post.