Tort reformer William Large keeps plugging away for PIP bad-faith revamp

MICHAEL MOLINE
February 12, 2018, 8:37 am

One argument in the debate over repeal of Florida’s no-fault auto insurance system isn’t finding much love in the Legislature — that the real key to lower premiums is reform of the legal rules governing coverage disputes that do land in court.

People injured by covered motorists can resort to the tort system if carriers treat them in bad faith — say, by refusing legitimate claims or dallying in replying to demands. Carriers and other advocates argue plaintiffs’ attorneys abuse the system to win recoveries above stated policy limits.

Neither HB 19 by Vero Beach Republican Erin Grall  nor SB 150 by Brandon Republican Tom Lee would do that. This story summarizes the legislation.

We sat down with William Large, president of the Justice Reform Institute, which advocates for tort reform, to discuss the situation. The remarks below have been edited for length and clarity.

FP: PIP reform — good idea? Bad idea?

Large: It’s a bad idea in its current form. You cannot reform PIP without doing something essential. And that is reforming our third-party bad-faith litigation regime. Since both the House bill and the Senate bill don’t have third-party bad faith reforms, it’s currently a bad idea. In addition, the Senate version has a medical pay provision, which is basically PIP 2.0. So when you combine those two factors, you have really bad idea.

FP: Define PIP 2.0.

Large: PIP was developed back in the 1970s here in Florida. It was a no-fault system, whereby, if there were an accident, there would be coverage provided to those individuals. The founder of the PIP system later realized there was a mistake, because you saw litigation over low-dollar amounts while an attorney was making a fee fighting over these low-dollar amounts. It was akin to the problems you see with workers’ compensation litigation.

If we were to remove PIP completely and replace it with a mandatory medical payment system, it’s going to be very similar to the old PIP regime. You’ll see litigation over low-dollar amounts, and you’ll see high attorney fee awards fighting over those low-dollar amounts.

In Florida, there’s been a plethora of third-party bad-faith cases. There are two types of attorneys in these cases. There are the attorneys who handle PIP cases, and they fight over the PIP policy, usually in county court. They’re making an hourly rate. And there are many practitioners who practice in circuit court who look down on county court practitioners. Even though the PIP practitioners do very well litigating those cases.

FP: They’re in county court because of the dollar amounts?

Large: Yes, the jurisdictional limits. There’s a rift in the Florida Justice Association — the trial lawyers — between the traditional PIP attorneys and those attorneys who want to go to mandatory bodily injury coverage. They really want to bring third-party bad-faith cases. And that’s exactly what they’ll do if this law passes without third-party bad-faith reform. What they have done is thrown the PIP county court practitioners under the bus.

FP: Are you concerned about the medical coverage mandate?

Large: Yes, because med pay brings both bad things together. It’s basically PIP all over again, without the 30-some-odd years’ case law. It’s going to be fighting over low-dollar amounts on an hourly rate. You’ll have PIP 2.0, no bad-faith reform, and you’ll see a plethora of lawsuits. Any reform can’t have med pay in it, and you need to have third-party bad-faith reform to be successful.

FP: The one-way fee provision (under which insurers are obliged to pay policyholders’ costs of litigating coverage disputes) applies in this instance?

Large: Right.

FP: So what does third-party bad-faith reform look like?

Large: One is an objective measure of time, such as 45 days, before a insurer can be held in bad faith. Two, a mandate that the third-party plaintiffs and their attorneys act in good faith in handling the claim. And No. 3 is interpleader reform (clarifying apportionment of payments between, say, four people, with diverging injuries and medical costs, hurt by a covered driver). Any PIP repeal bill has to have those three elements, and can’t include a med pay provision.

FP: What are you hearing about the likelihood that the reforms you’re talking about are going to happen?

Large: It’s a difficult road ahead of us. We’ve made our position known at every committee stop and we’ve asked the sponsors to include that. As of this date, that hasn’t happened.

FP: What’s the reluctance?

Large: Seemingly that the trial bar does not want third-party bad-faith reform, and they have advocated against it. It’s a powerful stakeholder group.

FP: What’s next?

Large: What’s next is continuing to advocate. I think it’s also important to point out that the Property Casualty Insurers Association of America came out with a study that shows if you go to a mandatory bodily injury system, it’s going to be a cost driver for a lot of individuals. (Details of that study here.)

FP: Do you consider that report credible?

Large: I consider it very credible. It’s well documented, the analysis is solid, and a lot of time was spent analyzing the issues concerned with both PIP and third-party bad-faith language. There would be a 5.3 percent or $67 dollar increase for the average driver who purchases many but not all of the available auto insurance coverage, a 7.2 percent or $105 dollar increase to drivers who purchase all coverages, and a 50.1 percent or $230 increase to drivers who purchase minimum mandatory limits post HB 19. For a working family of four trying to get by, this is going to be a cost driver.

FP: Did the report have much effect on what the Legislature seems likely to do?

Large: The report just came out. I hope it does cause the policymakers in the Legislative branch to see that this will be a cost driver for insurance premiums for all Floridians — and in particular for Floridians who buy the minimum coverage requirements.

I’ve spoken to Rep. Grall and Sen. Lee about this subject. Their thinking is that these are two separate and distinct concepts that are unrelated. They think third-party bad-faith reform is a separate subject that they want to leave for another day.

FP: That would be a mistake?

Large: Yes. They are completely interrelated. If you’re going to get rid of PIP, you need third-party bad-faith reform and you can’t include a medical payments provision.

http://floridapolitics.com/archives/255961-tort-reformer-william-large-keeps-plugging-away-pip-bad-faith-revamp 

 

Florida Chamber Insurance Summit tackles industry’s hottest topic, AOB abuse

PETER SCHORSCH – November 2, 2017, 2:54 pm

One of the hottest topics in Florida’s insurance market today is assignment of benefits, its use — and abuse — throughout the state.

Beginning Thursday in Orlando, Florida Chamber of Commerce’s Insurance Summit features industry leaders who hope 2018 will be the year the state Legislature will finally address the issue of AOB abuse.

The event brings together legislators, insurance executives and political insiders who will tackle some of the most pressing issues facing the state’s insurance industry, business and consumers: workers’ compensation, AOB, CAT Fund and more. This year’s theme of the two-day summit is “Weathering the Storms: Irma, AOB, Workers’ Comp, and the Work That Lies Ahead.”

On the summit’s opening day is “AOB: The problem — and the solutions — are clear!” a panel of insurance experts to examine the topic, its effect on the insurance market, and possible solutions to protect the state and policyholders throughout Florida.

Assignment of Benefits is a document allowing third-party contractors — such as water extraction company, roofers, plumbers and the like — to “stand in the shoes” of the insured to receive payment directly from the insurance company for work performed.

Moderated by Liz Reynolds, State Affairs Director of the National Association of Mutual Insurance Companies, panelists include:

— Arthur Randolph, principal and consulting actuary of Pinnacle Actuarial Resources;

— Jon Ritchie, senior vice president of operations for the American Integrity Insurance Company of Florida;

— Wesley Todd, chief executive officer of CaseGlide and

— William Large, president of the Florida Justice Reform Institute.

AOB, which has been part of the state’s insurance market for more than a century, is a widespread practice in water and roof claims throughout Florida and is once again coming under scrutiny after Hurricane Irma.

The clash over AOB puts insurers facing repair contractors and attorneys. Insurance companies blame contractors for inflating repair bills; contractors blame insurers for lowballing payouts. The problem has been most acute in Miami-Dade, Broward, and Palm Beach counties.

According to the Florida Office of Insurance Regulation (OIR), loopholes in the way AOB is used in the marketplace drives up costs to homeowners, mostly through “unnecessary litigation” associated with specific claims.

In 2006, Florida produced 405 AOB lawsuits across all 67 counties in the state; in 2016, that number jumped to nearly 28,200. OIR’s 2016 Data Call Study found claims with an AOB have a “much higher severity” than applications without one. The frequency and severity of water claims have also risen sharply by 46 percent since 2010, with a jump in severity by 28 percent.

The Chamber Insurance Summit is through Friday at the Ritz-Carlton Grande Lakes, 4040 Central Florida Pkwy. in Orlando. For information and full agenda visit FLChamber.com.

http://floridapolitics.com/archives/248539-florida-chamber-insurance-summit-tackles-industrys-hottest-topic-aob-abuse

 

Term limits for Supreme Court, appeals judges clear the House, if barely

MICHAEL MOLINE March 29, 2017, 4:23 pm

A proposed constitutional amendment to impose term limits on justices of the Florida Supreme Court and state appellate judges squeaked through the Florida House Wednesday after a majority defeated a series of unfriendly — even sarcastic — amendments.

HJR 1, by Eustis Republican Jennifer Sullivan, won 73 “Yes” votes — one more than the three-fifths support it needed. Forty-six members voted “No.”

The measure would limit judges of the district courts of appeal and justices of the Supreme Court to 12 years in office.

Sullivan argued Florida’s merit-retention system for appellate judges isn’t accountable because the voters have never tossed out a judge.

A number of Democrats argued the real motivation was to rein in a judiciary that has thwarted legislative initiatives.

The measure is “short-sighted and punitive, an “assault on a co-equal branch of government,” Democrat Evan Jenne said.

“And the only sin of that co-equal branch is providing a check and balance when the Legislature runs afoul of the Constitution — which, unfortunately, happens more than even I would like to admit,” Jenne said.

Following the vote, Jenne said he learned the House leadership would move for a final vote only when he arrived on the floor. Democrats opted not to try to block the move, reasoning the measure won’t pass the Senate. A companion measure, SJR 482, has yet to be heard in committee.

“It’s a dead bill,” Jenne said. “We’ve wasted enough time on a dead bill that isn’t going anywhere.”

Tampa Democrat Sean Shaw described the abuse directed at his father, the late Supreme Court Justice Leander Shaw, while running for retention following an abortion ruling. The family received racist material in the mail, and pictures of dead babies.

 “I’m being told on this floor. ‘That’s not accountable.’ That doesn’t make any sense to me.”

 Republicans defended the proposal. Larry Metz, an attorney from Yalaha, argued that appellate judges set policy and need to be held accountable.

“That tells you we are doing what is right. And neither special interest hand-wringing nor political influence will stop the House from doing what is right. It boils down to this — we believe that no government job should be for life.”

The Florida Justice Reform Institute issued its own statement.

“Term limits are not going to ensure the best judges are on the bench,” said William Large, the group’s president.

“Instead they will only ensure that the best and brightest Florida lawyers rarely apply, and even when good judges manage to end up on the bench, they will be kicked off just as they are gaining the institutional knowledge and experience that make for great judges.”

Sullivan warded off 13 of amendments by Jared Moskowitz, a Democratic attorney from Coral Springs, that frankly made a mockery of her proposal.

Moskowitz proposed extending Supreme Court terms to 28, then 24, then 20 years, then 16, then eight.

To extend term limits to trial judges. To require ex-judges to publicly disclose their clients. To bar them from appearing before their old jurisdiction for two years.

He ended up withdrawing the amendments he didn’t withdraw Moskowitiz’s point, he said, was that the proposal would be a mistake and the 12-year limit aribitrary.

http://floridapolitics.com/archives/234982-term-limits

 

House panel would allow interest payments on noneconomic verdicts

MICHAEL MOLINE
February 23, 2017, 4:30 pm

Insurance interests are up in arms about a House committee’s approval of a bill that would allow plaintiffs to recover prejudgment interest on noneconomic claims, including pain and suffering.

HB 469 says that plaintiffs who prevail in lawsuits could collect interest — at a rate now set a 4.9 percent, but varying with inflation — from the date of a loss.

They could collect against attorney fees and costs, too.

Exiting law provides for prejudgment interest on economic claims only, or when provided for by contract.

The Civil Justice & Claims Subcommittee approved the measure Thursday on an 11-4 vote. Details here (scroll down).

A companion measure, SB 334, by Sarasota Republican Greg Steube, has cleared the Senate Judiciary Committee.

Sponsor Shawn Harrison, an attorney from Tampa, said plaintiffs could not collect interest on punitive damages.

The bill would clarify a “gray area” in the law, he said.

“A person who is damaged by a tortfeasor is just as damaged regardless of whether they have an action in contract or in tort,” Harrison said. “Why should there be a difference?”

Katie Webb, representing the Property Casualty Insurers Association of America, warned the measure would increase pressure on carriers to settle unworthy claims.

“It could create an incentive for insurance companies to settle cases early, prior to thoroughly investigating and defending, when appropriate, certain claims that are questionable,” Webb said.

Representatives of the Florida Chamber of Commerce, Associated Industries of Florida, the American Insurance Association, and the Florida Justice Reform Institute were among those who opposed the bill, warning of the potential to increase the cost of doing business.

James Gustafson, representing the Florida Justice Association, argued existing law makes an unfair distinction between economic and noneconomic damages — say, loss of vision. Such an injury “every bit as significant and important and real” as an out-of-pocket loss, he said.

Committee members Erin Grall noted that before prejudgment interest becomes an issue, there has to be a judgment or verdict.

“For anybody to take for granted how easy it is to prove causation, you have not presented in front of a trial court in Vero Beach, Fla.,” she said.

George Moraitis Jr. thought it unreasonable to expect defendant companies to calculate pain and suffering awards.

“It’s a speculative number, and no one really at the beginning can say what do they think a potential jury of unknown people at the time a case starts, how much is that going to be worth,” Moraitis said.

“No one is going to settle a case that they truly believe they are in the right on because of an extra 5 percent that might be awarded,” Harrison said. “We are talking about sophisticated corporate defendants here. They know how to play this game.”

Following the vote, Personal Insurance Federation of Florida President Michael Carlson issued a written statement reiterating that the bill would inflate insurance and business costs.

“PIFF member companies believe that people who suffer damages through the wrongful action of others should be fairly compensated for their losses. Florida law currently provides access to redress and means for full compensation and should not be changed to suit special interests,” he said.

http://floridapolitics.com/archives/232714-house-interest

 

True cost of workers’ compensation rulings pegged at $1.3 billion

MICHAEL MOLINE
February 2, 2017, 6:17 pm

Florida Supreme Court rulings in workers’ compensation cases will boost employers’ costs by 35.4 percent, adding $1.3 billion to the cost of doing business in the state, an economist warned Thursday during the Florida Chamber of Commerce’s Insurance Summit.

“This breaks into a $929 million annual increase in premiums for the insured employers and a $361 million increase in claims costs for the self-insured employers,” said Mike Helvacian, of the National Center for Policy Analysis.

That means smaller payrolls and annual raises, less hiring, and smaller starting wages, he said.

Helvacian blamed escalating attorney fees now that the court has lifted caps on attorney fees. The court did so in Castellanos v. Next Door Co., a ruling handed down last year. The high court lifted limits on total disability eligibility in a separate ruling.

The attorney fee caps were imposed in reforms the Legislature adopted in 2003, as were other restrictions on benefits intended to drive down the cost of administering claims. Before the reforms, Florida posted the highest workers’ compensation premiums in the country. Afterward, the cost savings contributed to to private employment growth at a rate nearly twice that in Alabama, Georgia, Mississippi and Alabama, Helvacian said.

Wage growth also exceeded that in Florida’s neighbors — at 3.4 percent compared to an average 2.7 percent.

The attorney fee caps, based on the amount of benefits earned for the client, and other reforms saved 28.6 percent in system costs, by Helvacian’s calculations. Without them, he expects costs to rise by that same percentage.

Helvacian appeared during a panel discussion during the Chamber gathering in Miami. Also participating was Chris Bailey, state relations executive with the National Council on Compensation Insurance, or NCCI, which proposes workers’ compensation premium rates in Florida.

Last year, NCCI proposed a 19.6 percent premium hike, although the Office of Insurance Regulation approved only an 14.5 percent increase. The rate, which began to take effect in December, is under attack in the 1st District Court of Appeal over alleged violation of the Sunshine Law.

Critics of Florida’s workers’ compensation system have questioned NCCI’s role in proposing rates for nearly all Florida insurers. These critics, including trial attorneys on key House and Senate Committees, argue insurers should compete against each other on rates — basing premiums on individual policy loss costs.

That’s a “red herring,” Bailey said — “truly, more of a distraction” from the real problem, And that, he said, is attorney fees.

Under Florida’s system, insurers compete on the “back end,” Bailey said — offer dividends and other inducements to lure business.

Lisa Miller, a Tallahassee lobbyist, counts herself among the system’s critics.

“Workers’ compensation is designed to protect injured workers. The best way to do that is competition on the front end and the back end,” Miller said.

“The best way to do that is re-engineer how we handle rates in Florida, and study the claims practices and go to loss cost.”

http://floridapolitics.com/archives/231488-chamber-workers