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Fla. Bill Would Revamp Rules For Civil Suits Against Insurers

By Nathan Hale

Law360, Miami (February 20, 2013) -- A bill filed Friday in the Florida House of Representatives would update the state's rules for suits against insurers, requiring claimants to provide notice before filing common-law bad faith actions and setting new guidelines for resolving claims.

H.B. 813, filed by Rep. Kathleen Passidomo, R-Naples, is not the first to address the Florida statute regarding civil remedies against insurers. A nearly identical bill filed by Passidomo died in the Civil Justice Subcommittee last year, as did a similar bill in 2011. Other similar bills have also failed to make it through the senate in recent years.

Passidomo's newest bill says claimants would be required to provide 60 days' notice in writing of an action alleging bad faith by an insurer, which is defined as when an insurer does not attempt in good faith to settle claims, makes payments to the insured or beneficiaries without an accompanying statement of what is being covered, and — except for liability coverage — fails to promptly settle claims when its obligation has become clear.

“Florida needs express guidelines [that] include set time periods in which all insurers presumptively make decisions on claims and issue payments,” said William W. Large, president of the Florida Justice Reform Institute. “Bad-faith claims should be based upon egregious circumstances of delay. It should not be about contrived bad-faith claims that are the product of sophisticated legal strategies and not the product of actual bad faith."

The bill adds new provisions saying claimants would have to specify not only the circumstances of the alleged violation, but also the amount of money owed, if applicable, and that if the insurer makes a payment in the amount demanded or otherwise rectifies the situation within the 60-day notice window, then the dispute would be considered resolved.

A legislative staff analysis of the 2012 bill said these provisions of the 60-day period could potentially raise concerns from the judiciary over rights to court access.

“The Florida Supreme Court has explained that, where a right of access to the courts for relief has been provided by statute or common law predating the 1968 Constitution, the legislature may not abolish the cause of action without providing a reasonable 
alternative, or may only do so where an overpowering public necessity for the abolishment is shown and there is no alternative method for meeting such public necessity,” the report said.

Passidomo's bill also addresses the issue of third-party liability claims against insurers, which could be brought by either the third party or the insured.

If a third-party claimant files the suit, the insured would be entitled to a general release from the claim if the insurer pays the amount demanded, the bill says. Similarly, if the insured is the one who files and the claimant accepts a payment of the demanded amount from the insurer, then the insured is also released.

The bill also says that either the insured or the third-party claimant can file a liability complaint against the insurer without having to wait for their initial claim to be denied.

And in the case of multiple third-party claimants making competing claims, if the total amount demanded exceeds the policy limits, the bill says that the insurer is not liable for any excess and the claimants must share the available amount under the policy limits.

A representative for Passidomo's office said the lawmaker was not available to comment Tuesday.

If passed, the new regulations would go into effect July 1.

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