Litigation Scheme Seen as Driving Auto Glass Claims in 5 Florida Counties

June 23, 2017/in Florida Record

Litigation scheme seen as driving auto glass claims in 5 Florida counties

by Michael Carroll | Jun. 23, 2017, 10:11am

TALLAHASSEE — Some Florida counties are seeing a major spike in auto glass litigation, generating fears that auto insurance premiums may follow the trajectory of rising property insurance rates in the state.

A recent study by the Florida Justice Reform Institute found an exponential rise in auto glass litigation in the state over the past several years. The study concludes that collusion between some auto glass companies and a small number of attorneys is largely responsible for the trend. And it’s being done through an exploitation of a provision known as assignment of benefits, the study says.

“This litigation-for-profit scheme permeates the property insurance, auto glass and (personal injury protection, or PIP) marketplaces,” according to the January study. “While this scheme has been prevalent for many years in PIP, contributing significantly to the problems with that coverage over the years, it has recently been exported to the property and auto glass marketplaces.”

The institute’s numbers indicate that legal cases involving auto glass stood at only 92 from 2000 to 2005. But in the from 2010 to 2014, 13,100 such cases were filed in Florida courts, and the cases approached 20,000 last year.

“Our study notes that there has been an extraordinary increase in auto glass claims,” William Large, president of the Florida Justice Reform Institute, told the Florida Record.

No geological or meteorological event during this period can explain such a spike in damaged auto glass or windshields, leaving litigation as the likely culprit, he said.

Typically, third-party vendors might stake out a big box store looking for cars with hairline cracks in the windshield, Large said. They try to persuade the owners of such vehicles to sign over their insurance benefits in exchange for replacing the windshield at no charge, possibly with a gift certificate thrown in, he said.

The glass vendor could then charge the customer’s insurer an inflated fee, according to Large. The vendor could take the insurer to court if the insurance company refuses to pay, and under Florida law, the vender has the right to have attorney fees paid by the insurer if the vendor prevails in court.

“You shouldn’t have a situation in which there’s a third-party vendor praying on people in retail parking lots,” Large said.

In response to a query by the Florida Record, the Florida Office of Insurance Regulation did not comment specifically on auto glass litigation. But the agency did say that similar lawsuits involving assignment of benefits by property owners who were victims of water damage during hurricanes and other weather-related events have been driving up homeowner insurance costs.

Most of the property insurance companies’ rate filings to the Office of Insurance Regulation in 2014 were for rate decreases or no changes, but by 2016, nearly three-quarters of the rate filings dealt with proposed rate increases.

“We have already begun to work on how to best mitigate this cost driver going forward, including preparing proposals for the 2018 legislative session,” Amy Bogner, spokeswoman for the Office of Insurance Regulation, told the Florida Record in an email.

But Don Munro, president of Tampa-based Auto Glass Appraisal Services, challenged the idea that insurers are being forced to increase premiums due to a few bad apples in the auto services industry. Insurers may have begun taking a harder line in recent years by not paying auto shops a fair price for the work they do, Munro said, causing the shops to simply fight back via the legal system.

In addition, many insurance policies have provisions that allow appraisals and arbitration as alternatives to litigation, he said.

“That is an avenue insurance companies can utilize to avoid litigation,” Munro told the Florida Record.

The assignment of benefits provisions are beneficial because the person who’s insured can have his problem addressed quickly and does not have to lay out money up front, he said.

Both Large and the state’s insurance commissioner, David Altmaier, favor a legislative reform that would reserve the one-way attorney fee provision only for the policyholder, not third-party vendors. That would potentially keep premiums down and reduce litigation, they say.

The Florida Justice Reform Institute’s research also found that 75 percent of the auto glass litigation in Florida is now concentrated in five counties: Pinellas, Orange, Hillsborough, Broward and Miami-Dade. Moreover, a relatively small number of vendors and law firms are behind these types of lawsuits, the institute’s research says.

The assignment of benefits issue began to be seen in water-damage claims after a series of hurricanes struck the state, Large said, and then it “metastasized” to auto glass.

“Something has become perverted…” Large said. “That’s why we need the legislature to act and fix this problem.”

http://flarecord.com/stories/511123048-litigation-scheme-seen-as-driving-auto-glass-claims-in-5-florida-counties

Consumers Paying for Florida Legislature’s Inaction on Assignment of Benefits (AOB) ‘Scams’

June 7, 2017/in Florida Record

Consumers paying for Florida legislature’s inaction on Assignment of Benefits (AOB) ‘scams’

by W.J. Kennedy | Jun. 7, 2017, 12:23pm

TALLAHASSEE – Regular session for the Florida Legislature ended in early May without approval of legislation that would have squashed a new rash of insurance scams involving car windshield replacements, and help reverse a rapid increase in insurance rates stemming from these and related fraudulent activity.

In fact, the legislation, SB 1038, sponsored by Sen. Dorothy Hukill (R-Port Orange) was never even seriously considered by the Florida Senate.

The legislation would have left the state’s one-way attorney fee provision in the hands of the consumer, and not transfer it to a third party, where the consumer signs over insurance policy benefits (AOB) to a vendor, or attorney. Transference of the attorney fee provision is all the force that some vendors need to bill the insurance company three or four times the actual cost of windshield replacements, business and insurance officials say. Typically, an insurer -whose first notification of the damage and repair is when it receives the bill – usually pays up rather than incur the costs to fight the bill in court.

“To fight, they have to pay a lawyer to defend and then pay the other party’s lawyer if they lose,” said William Large, president, Florida Justice Reform Institute. “It’s usually not worth it to them.”

Large said the AOB abuse began in south Florida with vendors sometimes repairing water damage in a home caused by a leaky pipe with brand new bathrooms and kitchens, and then billing the carrier directly. Again, the insurance company is first notified of the damage when it receives the bill; the repairs are already complete so sending an adjuster to assess the actual damage would be pointless.

The Florida Department of Financial Services reports that lawsuits brought by auto glass companies against insurance companies skyrocketed from 1,389 in 2012 to 19,695 in 2016.

The trouble is insurance rates for everyone are on the rise because of abusive practices.

Edie Ousely, vice president for public affairs at the Florida Chamber of Commerce, said that legislative inaction on AOB abuse has caused an 18 percent increase in property insurance rates for some Floridians.

“Auto owners are feeling the pinch too,” she said. “In fact, auto glass related lawsuits make up 70 percent of all AOB lawsuits. Just last year, there were 28,000 auto glass AOB lawsuits filed.”

Citizens Property Insurance Corp., the residual market mechanism in Florida, is feeling the pressure. Earlier this spring, the insurer announced a $27.1 million loss, its first since 2005. Citizens expects an $86 million loss by 2018.

The insurer attributes the losses to AOB abuse.

Liz Reynolds, director of state affairs – Southeast Region, National Association of Mutual Insurance Companies, said the practice is beginning to drive away private insurance carriers.

“The one-way attorney fee was established as a David vs. Goliath type of scenario,” she said. “It gives the consumer the power to stand up against an insurance company. This practice has nothing to do with the consumer. In fact, most times they don’t even know that their insurance company is being sued by the third party they assigned the benefits to.”

http://flarecord.com/stories/511124568-consumers-paying-for-florida-legislature-s-inaction-on-assignment-of-benefits-aob-scams?t=9pC4R8XYpyQnr_sBM0bW

Scott Signs Bill to Reduce ‘Frivolous’ Public Records Lawsuits

June 6, 2017/in Florida Record

Scott signs bill to reduce ‘frivolous’ public records lawsuits

By Glenn Minnis | Jun 6, 2017

TALLAHASSEE — Gov. Rick Scott has signed a bill passed by the Florida Senate aimed at rooting out “gotcha” public records requests that have long been a part of the state’s legal landscape.

Introduced by Sen. Greg Steube (R-Sarasota), Senate Bill 80 is designed to penalize what he calls serial records abusers who work to snare public officials into scenarios in which the violation of public records laws can be argued, to gain a monetary settlement in any subsequent legal action.

The plan would also grant judges more discretion in determining whether any attorney’s fees should stem from the ongoing litigation.

The legislation also stipulates that judges award attorney fees if they uncover that an agency violated public records law and a “requestor” gave five days’ notice before filing suit.

The judge would also have the discretion of ruling on the burning question of if a requestor was guided by an “improper purpose” or “frivolous” reason in making the filing.

For years, local governments in Florida have insisted they have been dogged by requests that later turn into baseless legal actions. Current law mandates that state and local agencies cover the cost of attorney fees in public records cases.

“Senate Bill 80 is an important piece of legislation,” William W. Large, president of the Florida Justice Reform Institute told the Florida Record. “For too long, public records requests were being made for the purposes of obtaining attorneys’ fees. Now, this new law clarifies there cannot be an improper purpose behind the public records request.”

In Florida, the law on public records is the only form of legal enforcement regarding such matters short of prosecution.

Steube originally proposed removing the requirement that the legal fees be paid by agencies by altering the stipulation that judges “shall” award attorney’s fees to they “may” bestow them.

“Gov. Scott was correct to sign this bill,” Large said. “Hopefully, it will put an end to frivolous public records requests and the large attorneys’ fee awards associated with them.”

https://flarecord.com/stories/511123159-scott-signs-bill-to-reduce-frivolous-public-records-lawsuits

Judicial Term Limits Proposal Now Faces More Skeptical Lawmakers in Senate

April 11, 2017/in Florida Record

Judicial term limits proposal now faces more skeptical lawmakers in Senate
by Michael Carroll | Apr. 11, 2017, 11:18am

TALLAHASSEE – A constitutional amendment to impose 12-year term limits on state Supreme Court and appellate judges passed the Florida House by a bare one-vote margin on March 30, but it will now go before senators who have voiced skepticism about judicial term limits.

“It’s something important to the House and the House speaker, so we’ll certainly give it every consideration on the Senate side,” Senate President Joe Negron (R-Stuart) said in a recent press briefing. “I know some senators have raised concerns that it may inadvertently create a situation where you have appellate court judges having in the back of their mind that eventually they are going to get back into private business. And I think that we obviously want our judges at all levels of the court focused entirely on the work before her or before him.”

Negron refused to say whether he would support judicial term limits.

William Large, president of the Florida Justice Reform Institute, argued against the proposal in a recent letter to Florida House Speaker Richard Corcoran (R-Land O’Lakes).

“I hope this will not be heard in the Senate because this is such a bad idea,” Large told the Florida Record.

In prepared comments provided to the Record, Large said the proposal would discourage the best attorneys from seeking judgeships. That’s because they would likely have difficulties when trying to re-enter the private sector later in their careers once they are termed out.

“After 12 years on the bench, these lawyers will have difficulty rejoining firms and rebuilding their practices,” said Large, who also sees government attorneys and lawyers who work for corporate clients being more attracted to bench posts under term limits.

Large’s Justice Reform Institute works with the state’s businesses to battle civil litigation excesses and advocates for fair and stable legal practices in Florida.

The term-limits proposal was authored by Rep. Jennifer Sullivan (R-Mount Dora), who has said the proposed amendment was drafted because many judges are not accountable under the current system, which requires retention votes for the judges every six years. In addition, many judges are currently abusing their powers and legislating from the bench, she said during the debate over the proposal.

House Speaker Corcoran strongly endorsed the amendment, which passed by the required three-fifths margin, but by a single vote. If approved, it would go before voters in November 2018.

“It was said in debate today that all the special interest groups have lined up against term limits,” Corcoran said after the House vote. “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.”

But many attorney organizations in Florida, including the State Bar, oppose the idea of term limits for judges at all levels of the Florida judicial system.

“Term limiting judges greatly concerns the Florida Bar and should concern all Floridians,” State Bar President William Schifino Jr. said in a prepared statement to the Record. “The three, co-equal branches of our state government require that we have a fair and impartial judiciary free from political influence or persuasion. We also need judges who have the experience and temperament to deal with the many complex issues that confront our citizens today.”

Large said Florida would be the first state to impose judicial term limits if the proposal eventually gains voter approval. “In fact, similar efforts to impose term limits on appellate judges have been overwhelmingly defeated in several states, including Colorado, Mississippi and Nevada,” he said.

Under the plan, judges would be term-limited out of their positions just as they reached their prime in terms of understanding complex criminal and consumer litigation, according to Large. That would lead to a less-experienced judiciary overall and possibly more reversals of judicial decisions, he said.

Large also argues that placing term limits on state legislators has not fulfilled the original intent of curbing corruption and careerism. Instead, the more inexperienced lawmakers have become more dependent on legislative staffs and lobbyists, he said.

“When term limits pushed out experienced legislators after eight years, one unintended consequence was that lobbyists and unelected legislative staff have taken a greater role in supplying legislators with institutional knowledge,” Large said.

As an alternative, he has suggested that the legislature consider involving more elected officials in the process of nominating judicial candidates and having the state Senate confirm all judges and justices, as is done in the federal system.

http://flarecord.com/stories/511100749-judicial-term-limits-proposal-now-faces-more-skeptical-lawmakers-in-senate

Florida Lawmakers Taking Aim at Assignment of Benefits Agreements

April 4, 2017/in Florida Record

Florida lawmakers taking aim at assignment of benefits agreements

by David Hutton | Apr. 4, 2017, 1:07am

TALLAHASSEE — Lawyers in the Sunshine State may see storm clouds on the horizon as Florida officials look to shut down an alleged plaintiff-attorney get-rich-quick scheme.

Lawyers are teaming up with local contractors to make a case to get homeowners to sign away their insurance rights. This practice is known as “assignment of benefits,” or AOB.

Some Florida lawmakers have proposed legislation that would target the practices of third-party contractors and lawyers using AOB to force larger claims than what is perceived to be justified.

In exchange for this agreement, the lawyers promise to handle repairs to the homeowner’s property and fight with the insurance companies for settlement paydays. However, the attorneys fail to tell the homeowners about the steps that follow. As the Wall Street Journal recently reported, “1950s-era Florida statute dictates that insurers are liable for all legal fees if they lose in court or settle for an amount more than the insurer’s initial offer.”

Using the law as a shield, the lawyers are filing inflated claims to coerce pre-emptive settlements from insurance companies that want to avoid costly, drawn-out legal battles.

Private insurers also are witnessing this trend and are passing the costs on to their clients.

The Wall Street Journal recently reported that data from the Florida’s Office of Insurance Regulation indicates insurers may need to raise rates 10 percent or more annually to break even. In Miami-Dade County, the owner of a $150,000 home pays an average annual premium of $2,678 for multi-peril insurance from Citizens Property Insurance Corp. — higher than twice the national average

These cases also flood the legal system, as litigation-for-profit schemes become an incentive for trial lawyers and their vendor clients to take advantage of the system.

“This report details how the growing use of AOBs and the one-way attorney fee is increasing costs and litigation,” William Large, president of the Florida Justice Reform Institute, recently said. “Insurance Commissioner David Altmaier had it right last week when he told the governor and cabinet that there’s no other explanation other than the one-way attorney fee.”

The Florida Justice Reform Institute reported that approximately 25 percent of all AOB cases were filed in Florida between 2013 and 2016 by 11 attorneys.

As insurance rates continue to increase in Florida, the state’s insurance commission has expressed concerns that consumers will eventually get rid of private insurance, private insurers will shut down, or both.

If this were to happen, state law says that Citizens Property Insurance Corp. would have to offer a below-market rate policy, the Wall Street Journal reported. And taxpayers would be left holding the check as they foot the bill for the losses.

Amid this trend, Citizens has dumped more than a million policies to private insurers and trimmed its market share in recent years. With luck with weather and reforms from Gov. Rick Scott, Citizens now has a surplus, which would allow it to take on the cost itself, the Wall Street Journal said.

Florida Rep. James Grant, R-Tampa, has sponsored House Bill 1421, which would protect consumers from abusive practices. The measure would allow AOBs for residential policies but would prohibit them from altering policies requiring managed repairs. The bill also requires a 21-day notice to the insurer before a lawsuit is filed.

In the Florida Senate, Sens. Dorothy Hukill, R-Port Orange, and Kathleen Passimodo, R-Naples, co-sponsored Senate Bill 1038, which focuses on reigning in one-way attorney fees. The Florida Office of Insurance Regulation was involved in drafting the legislation.

http://flarecord.com/stories/511100239-florida-lawmakers-taking-aim-at-assignment-of-benefits-agreements?t=KsSqrvNf8xugOFzi6XuS

Free-roof Insurance Scam Plauges Florida Homeowners

April 1, 2017/in Florida Record

Free-roof insurance scam plagues Florida homeowner

by Carrie Salls | Apr. 1, 2017, 5:11pm

TALLAHASSEE — A trend has emerged in the storm-battered Sunshine State in which a relatively small number of roofers and attorneys are utilizing assignment-of-benefits (AOB) clauses in homeowners’ insurance policies to sue insurance companies for more than the actual cost of repair or, in some cases, for non-existent damage.

According to a report from WFTV 9 in Orlando, these roofers are falsely claiming that roofs need to be replaced because of hail damage and offering to do the work for free. However, in most cases, there is no storm damage—just a roofing company looking to obtain an AOB from homeowners so they can bill the insurance company for non-existent damage.

Scott Johnson of Johnson Strategies LLC said this kind of activity is “absolutely” rampant in Florida, particularly in upscale neighborhoods where the roofs are an average of 18 to 20 years old.

“Insurance doesn’t pay for gradual wear and tear or deterioration,” Johnson told the Florida Record. “It covers damage that is ‘sudden and accidental.’ Align this fact with the fact that there was no hint of roof damage until two years after the alleged hail event, and then, only after receiving the promise of a free roof.”

Johnson said in a blog post that homeowners victimized by these scam free-roof offers are asked to sign an AOB contract “before their free damage inspection inevitably reveals hail damage.”

According to Johnson, insurance companies are left in a difficult situation when faced with claims from third-party service providers who sue on behalf of the homeowner.

“It’s proven more cost effective to simply go ahead and provide the roof replacement or repair,” he said.

Johnson said most of these companies come from out of town to offer free roofs, and the number of law firms participating in this scheme is not that high.

“The vast majority (90 percent) of the…claims come from a list of about 20 law firms,” Johnson said.

Of the 2,422 wind/hail claims filed in 2014 in Orange, Lake, Pasco and Hillsborough counties, Johnson said 72 percent were tied to just three roofing companies.

Cam Fentriss, legislative counsel for the Florida Roofing and Sheet Metal Contractors Association, told the Florida Record, “I don’t think this type of rip-off is rampant quite yet, but it is well on its way.” She added that the problem has spread beyond South Florida into Orlando, Jacksonville, Tallahassee and other parts of the state.

Fentriss said timing makes this type of scam difficult and expensive for insurers to prevent.

“Frequently (if not almost always), the phony work is completed before the insurance company gets the claim,” she said. “This means any evidence is gone.”

According to an update published by the Florida Justice Reform Institute (FJRI), “the prospect of one-way attorney’s fees has encouraged a growing number of lawyers to partner with various service providers to solicit assignments of benefits from policyholders.”

“The one-way fee is meant to benefit the homeowner, not the vendor,” FJRI President William Large told the Florida Record.

Typically, Large said the insurance company will contact the homeowner when an inflated claim is filed by a third-party vendor. He said the insurance company will ask why the larger claim amount was filed.

“They say ‘the homeowner told me to do this,’” Large said. “The homeowner is often an innocent pawn.”

According to data from the Department of Financial Services’ Service of Process (SOP) database, Florida’s population grew by 26 percent between the years of 2000 to 2016, but the number of lawsuits filed against insurance companies in that same time period jumped about 280 percent.

“Litigation involving AOBs is unique in that it is abundant, yet derives from a very small set of attorneys, law firms, and vendors,” the FJRI said in its update.

Shannon Nelson, communications coordinator for the Better Business Bureau’s Northeast Florida and Southeast Atlantic region, told the Florida Record she thinks “consumers are much more savvy than these unscrupulous contractors give them credit for.”

Nelson said the regional BBB branch received more than 57,000 inquiries about roofing contractors in 2016, yet only received 150 complaints about the same type of business.

“We do receive inquiries from consumers especially when severe storms come through about companies using tactics such as these and always advise them to get several written quotes, the business licensing information and insurance information,” Nelson said.

Nelson said she hopes these types of scams do not drive up insurance premiums.

“This is an opportunity for insurance companies, state agencies, non-profits and the media to work together to educate Florida consumers about how to properly hire a contractor and what their rights are as a consumer and what their responsibilities are as a homeowner,” she said.

Nelson added that the bureau has partnered with the Florida Department of Business and Professional Regulation to educate consumers about hiring licensed professionals.

“We would encourage any homeowner that is contacted by a business unsolicited about storm damage to request estimates from other roofing companies in the area to verify if there is in fact damage to their home,” Nelson said.

http://flarecord.com/stories/511084491-free-roof-insurance-scam-plagues-florida-homeowners?t=1YKysAsb0POlkBTH29_a

Trial Lawyers Gaining Influence at Statehouse, Florida Justice Reform Institute Says

March 25, 2017/in Florida Record

Trial lawyers gaining influence at statehouse, Florida Justice Reform Institute says

by Taryn Phaneuf | Mar. 25, 2017, 5:26pm

TALLAHASSEE, Fla. — It has been a busy legislative session for the Florida Justice Reform Institute (FJRI), a lobbying group that encourages state lawmakers to curb litigation abuse that hurts businesses in the state.

This year, the group’s list of bills to combat outweighs the short list of those to champion.

The FJRI only supports six of the 25 bills that it has taken a formal position on during this session. It opposes the other 19, which cover a range of issues, including exposing health maintenance organizations (HMOs) to vicarious liability for medical malpractice, mandating prejudgment interest on awards and creating a cause of action that would allow a woman to sue a doctor for physical and emotional injury resulting from an abortion.

To William Large, FJRI president, the lopsided nature of his watchlist this session is proof that trial attorneys in Florida have gained influence in the statehouse. The volume of proposed legislation demonstrates that the legislature has different priorities than it has had in prior years – priorities that Large believes don’t favor civil justice reform.

“I do get the sense that the trial bar is in a good enough position that they’re trying a number of things across a broad front,” Large told the Florida Record.

The abortion bill, which Large said is “litigation in disguise,” shows that the trial bar is using social issues to build support for its agenda.

The FJRI is in favor of bills covering three legal reform issues, including accuracy in damages (H.B. 583 and S.B. 146), medical malpractice (H.B. 537 and S.B. 384) and assignment of benefits (H.B. 1421 and S.B. 1038).

The assignment of benefits (AOBs) bills address longtime insurance litigation abuse that causes premiums to rise while bringing a lot of business to a handful of law firms. There have been four previous attempts to pass legislation that reins in the misuse of AOB provisions in insurance policies.

Under an AOB, a policyholder gives up the right to a present claims against someone who performs repairs. Abuse occurs when the other party inflates the price of repairs and then sues the insurance company if it refuses to pay.

Of the legislation FJRI opposes, two bills top the list.

H.B. 675 and S.B. 262 delete a provision of a statute that says HMOs can’t be held vicariously liable for medical negligence, except in certain circumstances. The way supporters see it, HMOs are making treatment decisions, so they should be held responsible if negligence occurs. But opponents, including the FJRI, see it as an overextension of medical malpractice principles that would be detrimental to the industry.

The FJRI also opposes a bill that would mandate that prejudgment interest starts accruing from the time the claim is asserted. The mandate would increase the threat of higher-cost litigation and the pressure to settle. The bill was introduced in previous sessions.

“In years past, that bill went nowhere,” Large said. “This year, it has been flying.”

http://flarecord.com/stories/511097137-trial-lawyers-gaining-influence-at-statehouse-florida-justice-reform-institute-says

Florida Subcommittee to Hold PIP Reform Hearing Monday; Moves to Get Bad Faith Reform in the Mix May Be Sidelined

March 24, 2017/in Florida Record

Florida subcommittee to hold PIP reform hearing Monday; Moves to get bad faith reform in the mix may be sidelined

by Nicholas Gueguen | Mar. 24, 2017, 5:32pm

TALLAHASSEE — The Florida House of Representatives Banking and Insurance Subcommittee will hold a hearing Monday involving reform of auto insurance personal injury protection (PIP) which could lead to a showdown between pro-reformers and the trial bar over the move to work bad faith litigation reform into the mix.

Possibly anticipating that reformers would seek to add a bad faith amendment to PIP reform, House Speaker Richard Corcoran appears to be putting on the brakes.

A Tallahassee source familiar with the tension between the two sides said he believes Corcoran wants “all interested parties to hold off on amendments at this stage of the process.”

The source said that Corcoran has given an assurance that there will be a full opportunity to discuss adding bad faith language before the next full committee hearing.

Florida Justice Reform Institute President William Large told the Florida Record that PIP, which was intended to be a no-fault system for auto insurance, has turned into a system of “setups and gotchas, making the product expensive and of little value to the average driver.

He said the original intent of PIP was good – it promised to avoid the use of attorneys and excess litigation while covering an injured policy holder’s medical and other expenses – but the system which has been in place since the 1970s is no longer functional.

Large has said that third-party bad faith law needs amending. Abuses have occurred, he said, when plaintiffs’ attorneys choose not to settle bodily injury cases that have low policy limits, instead they go forward with a trial in hopes of a big verdict, followed by a third party bad faith lawsuit against the insurer.

Florida has tried several times unsuccessfully to fix PIP in the past, according to Large.

“Now is the time to admit that PIP can’t be fixed,” Large said. “The legislature should repeal PIP and replace it with mandatory, at-fault bodily injury auto insurance. That coverage pays the injured party if the policyholder causes an automobile accident and is sued.”

He said that if the legislature decides to get rid of PIP and replace it with mandatory bodily injury coverage, four things must be kept in mind.

“First, the policy limits should be low, no more than $10,000 per person and $20,000 per accident,” he said.

“Second, the legislature must fix the third-party bad faith law. Right now, in cases where someone has a low policy limit and gets sued on a claim with clear liability and big damages, the plaintiff’s lawyer doesn’t settle the case for those low policy limits. Instead, they sue for big money and then hope to file another gotcha, a third-party bad-faith lawsuit. That would only get worse under a system of mandatory bodily injury insurance. Third, don’t adopt additional mandatory coverages that will drive up the price of insurance, or recreate the problems of PIP, like mandatory first-party medical coverage. Finally, the legislature shouldn’t fix prices with this new coverage. They should let the market decide what this type of policy should cost.”

http://flarecord.com/stories/511097326-florida-subcommittee-to-hold-pip-reform-hearing-monday-moves-to-get-bad-faith-reform-in-the-mix-may-be-sidelined

Florida Justice Reform Institute Applauds Legal Reform Bill

March 13, 2017/in Florida Record

Florida Justice Reform Institute applauds legal reform bill

by Nicholas Gueguen | Mar. 13, 2017, 7:19pm

TALLAHASSEE — The U.S. House of Representatives addressed necessary changes when it passed the Fairness in Class Action Litigation and the Furthering Asbestos Claim Transparency Act of 2017, Florida Justice Reform Institute President William Large said.

“This legislation is a welcomed step for much-needed civil justice reform,” Large told the Florida Record.

The House of Representatives passed the bill in a close 220-201 vote count March 9. According to the National Law Journal, this bill is “part of the largest tort-reform push in more than a decade on Capitol Hill,” and the bill would help cut down the number of class-action lawsuits. The National Law Journal wrote that it would put a special focus on class-action lawsuits that “critics say seek large payouts for speculative or nonexistent injuries.”

The National Law Journal called the bill “controversial.” Large said the bill would help Florida.

“The legislation would improve Florida’s litigation climate,” Large said.

The bill would associate attorney’s fees and the settlement amounts, limit plaintiff’s attorneys in terms of who they could represent and “halt discovery early on in cases,” the National Law Journal wrote. It also said that the House of Representatives spent a lot of time debating those issues.

Large said the bill includes a provision relating to the injuries of both the class in a class-action lawsuit and the class representative.

“The legislation includes a core provision that every proposed class representative must permanently demonstrate that each proposed class member suffered an injury of the same type and scope as the injury of the proposed class representative,” he said.

Large said the bill will only affect federal class-action litigation.

The National Law Journal wrote that part of the Fairness in Class Action Litigation and the Furthering Asbestos Claim Transparency Act also would mandate that “trusts of bankrupt companies file quarterly reports disclosing payments to victims of mesothelioma and other cancers caused by asbestos.”

Along with that bill, the House of Representatives also passed the Innocent Party Protection Act of 2017. The bill passed with a wider margin of 224-194.

The House of Representatives on March 10 passed the Lawsuit Abuse Reduction Act of 2017 by a 230-188 vote.

http://flarecord.com/stories/511091724-florida-justice-reform-institute-applauds-legal-reform-bill

Florida Justice Reform Institute President: AOBs are Problematic to Insurance Policyholders, Insurance Companies

March 5, 2017/in Florida Record

Florida Justice Reform Institute president: AOBs are problematic to insurance policyholders, insurance companies
by Nicholas Gueguen | Mar. 5, 2017, 12:25pm

TALLAHASSEE — The Florida Justice Reform Institute recently released a report in which it outlined what it sees as problems with assignment of benefits (AOBs).

According to the organization’s report, which Ashley Kalifeh and Mark Delegal authored, AOBs normally start when an insurance policyholder signs a contract that designates a third party to receive the rights, benefits, proceeds, and causes of action related to the policy. According to the report, the service provider who makes repairs or provides care for which the person looking for insurance is looking for coverage for is many times the third party.

In the report, Kalifeh and Delegal explained that the service that the service provider agrees to provide is conditioned upon the assignment, and the service provider then uses that against the insurer. Kalifeh and Delegal explained that this setup allows the third party to act as the insurance policyholder.

Kalifeh and Delegal explained that AOBs allow for multiple parties to hold policyholder’s rights and gives those parties rights to sue the insurance companies. Kalifeh and Delegal say in the report that Florida courts have said that insurance policyholders can give out multiple AOBs from one insurance policy. Florida Justice Reform Institute President William Large told the Florida Record that it’s important to understand what the one-way attorney’s fee in Florida entails in order to understand AOBs.

“In Florida, if you’re an insured, and that is the person that pays the policy month after month, year after year, and you have a dispute with your insurance company, and if you take that dispute to court, and you win the amount in controversy, not only do you win the amount in controversy, you get your attorney’s fee paid,” Large said. “So that makes sense. So if I got into a fight with XYZ insurance company that they didn’t repair my roof, they didn’t remove the water from my kitchen, they didn’t fix something, and I won the amount of $2,500, I get the $2,500. But the attorney’s fees, which would probably be about $30,000, would also be paid.”

Large said that AOBs take the place of service providers getting paid for the service they provide.

“Some unscrupulous vendors have figured out a business model,” Large said. “And that business model is to approach insureds and say I don’t want to get paid for this particular repair. Instead, assign your insurance policy to me. And when that assignment occurs, one thing that happens with the assignment is the one-way attorney’s fee now inures to the vendor, not the insured.”

Large said that when this happens, the vendor becomes part of the dispute and this setup allows the vendor to benefit from the one-way attorney’s fee.

“Now, this model was basically concocted by a series of attorneys that realized that they don’t need to be working with insureds, they should be working with vendors,” Large said. “And so, now a typical case looks like this. The market price for a repair, insurance companies have a lot of reports on the repairs for certain things. They know what it should cost to remove water per a certain square foot, fix a certain type of roof, they know these things.”

Large gave an example of a case where a repair costs $2,500 and the vendor charges $10,000. Large said if the insurance company challenges that, the vendor works with an attorney who charges by the hour in his or her representation, and the insurance company is facing paying extra for a repair that it thinks should be much less than the vendor charges for it as well as $25,000 in attorney’s fees, in the hypothetical case totaling $35,000.

“This is why the vendors are asking for the assignment,” Large said. “And this is why they’re being represented by attorneys, because the one-way attorney’s fee provision now inures to the vendor.”

Large said that aside from hurting the insurance companies, the AOB system also hurts policyholders.

“Insurance companies have to pass costs along,” Large said. “It’s insureds, everyday consumers, that pay for this. That’s the true tragedy.”

Large proposed that the one-way attorney’s fee provision should only benefit the policyholder.

“That’s who it’s supposed to benefit,” he said. “It’s not supposed to be assigned to a third-party corporate vendor.”

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