By William Rabb | February 16, 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 Wednesday, those letters would have to be disclosed by plaintiffs.

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

  Gregory

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 over the last few weeks 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.

“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.”

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

“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. “There is no lawyer-client privilege under this section when: A communication is relevant to the lawyer’s act of referring the client for treatment by a health care provider,” the bill reads.

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 recovery damages in a lawsuit.

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.

 Feijoo

If the claimant has signed a letter of protection with a medical provider, circumventing health insurance, the plaintiff’s demand must still be guided by what health coverage would have paid. If the injured party has no medical insurance, the Medicare reimbursement rate should be considered.

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.

In addition, some providers sell their LOPs to medical lien-purchasing companies, or factoring companies, which can pay less than the doctor’s claimed amount, but still more than a health insurer would pay.

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, on top of a “Lodestar” factor, to calculate higher fees when they prevail in litigation, in many cases. The idea is that fee multipliers help ensure that qualified law firms will accept difficult cases, or will travel distances when other lawyers can’t be found.

Gregory’s bill would allow only the Lodestar fee, except in rare circumstances when evidence shows that competent counsel could not otherwise be retained. Lodestar was the name of a federal court decision that set out a formula for determining reasonable attorney fees and is widely followed in federal litigation.

Bad-faith claims. While SB 2A in December raised the threshold for making bad-faith claims against property insurers, HB 837 extends that to auto and liability insurance claims. Mere negligence by an insurer would not be sufficient to sustain a bad-faith action, the bill notes. And the judge or jury would have to consider whether the insured and the insured’s attorney acted in good faith and may reduce damages accordingly.

Insurers have for years complained that Florida law encourages unwarranted third-party, bad-faith claims by law firms looking to recover damages in excess of policy limits. The reform bill would give a “safe harbor,” barring a suit if the insurer pays damages or rectifies violations within 60 days of being notified.

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. While SB 2A ended one-way fees for property insurers, HB 873 would effectively end them for claims litigation against other types of insurers, including surplus lines.

The bill also would strike another section of state law, which now reads: “The provisions of s. 627.428 do not apply to any action brought pursuant to this section against the uninsured motorist insurer unless there is a dispute over whether the policy provides coverage for an uninsured motorist proven to be liable for the accident.”

 Large

At the two special sessions of the Florida Legislature in 2022, insurance bills crafted by the governor and legislative leaders sailed through both chambers virtually unchanged. But at the regular session, which begins March 7 and lasts for 60 days, things may be a little different, Tallahassee insiders and lobbyists suggested. With more time for lawmakers to review and more corporate interests involved, it’s possible that some provisions in HB 837 could be revised before the bill is finalized.

But probably not by much.

After hearing the business community’s cries, DeSantis “is taking on the trial bar in dramatic fashion and is leading Florida towards a more predictable legal environment,” said Large, of the Justice Reform Institute. “And he’s poised to deliver.”

https://www.insurancejournal.com/news/southeast/2023/02/16/708217.htm  

By William Rabb | January 8, 2023

The Florida Supreme Court has struck down $16 million in punitive damages against R.J. Reynolds Tobacco Co. as “excessive,” a decision that could bode well for insurers and businesses relying on courts to interpret state law strictly as written.

“Text matters,” said William Large, president of the Florida Justice Reform Institute, which filed an amicus brief supporting the tobacco company’s side in the case. “This is a victory for textualism. It’s important for all civil justice cases.”

Florida law dictates that punitive damages can be no greater than four times the compensatory damages awarded in a lawsuit, in most cases. At the time that this case, Brinda Coates vs. R.J. Reynolds, was heard at trial, the statutory ratio was 3:1. An Orange County jury granted $150,000 to the family of a woman who died after years of cigarette smoking, but then awarded $16 million in punitive damages – more than the plaintiff had asked for.

That was a ratio of 107 to 1 – far out of line with the Florida statute, Reynolds and amicus briefs argued. The Florida 5th District Court of Appeal last year agreed and remanded the case back to the trial court. But it also asked the Supreme Court to weigh in on when, exactly, courts can agree to a request to trim hefty punitive amounts.

 Large

The named plaintiff is the sister of deceased smoker Lois Stucky, and represents Stucky’s estate and grown children. Coates’ attorneys argued that Florida law gives juries and courts wiggle room to allow higher punitive amounts in some circumstances. Consideration in this case should be given to the fact that Stucky’s suit began as a wrongful-death case and under the vagaries of Florida law, compensatory damages in those cases can be somewhat limited for surviving family members. That artificially limits punitive damages, the plaintiffs argued.

The majority of the justices disagreed, noting that the ratio rule is no different in death cases, and that the trial court had erred in allowing the $16 million as punishment.

“In this case, because no reasonable trial court could have found that the $16 million punitive damages award bears a reasonable relation to the $150,000 net compensatory damages award and the injury suffered by Ms. Stucky’s survivors, the Fifth District correctly reversed the excessive punitive damages award and remanded for further proceedings,” reads the Supreme Court majority opinion, written by Justice Ricky Polston.

The trial court now can allow no more than $450,000 in a punitive award, in keeping with the 3:1 ratio.

On the surface, the Coates decision may seem to fly in the face of other states’ courts that have upheld large awards against tobacco companies and that of a six-year-old opinion by the Florida Supreme Court. In Schoeff vs. R.J. Reynolds, the Florida justices in 2017 affirmed $30 million in punitive damages for the family of a smoker who died. In that case, though, the jury had allowed $10.5 million in compensatory damages, keeping the punitive amount within the three-to-one ratio.

Coates’ attorneys, including John Mills, of Jacksonville, noted that the compensatory damages in Schoeff were based on different circumstances, and the two cases give R.J. Reynolds different punishments for the same deadly offense.

“The sole reason for this disparity had nothing to do with RJR’s conduct or circumstances; the district court found that the ‘actual dollar amount of the punitive damage award’ was not excessive and was fully supported by RJR’s misconduct,” Coates’ lawyers, including John Mills, of Jacksonville, wrote. “Nonetheless, it held that the law required RJR receive substantially less punishment for killing Ms. Stucky than for killing Mr. Schoeff, based solely on the amount of the compensatory damages awarded to their respective survivors.”

In Schoeff, the deceased smoker left behind a spouse, resulting in higher compensatory damages. In Coates, the victim was divorced and had no spouse or young children.

In a sharp dissenting opinion in Coates, Justice Jorge Labarga said the majority’s decision essentially mocks the rationale behind punitive damages and undercuts a jury’s deliberations.

“As a result of today’s decision, a Florida jury’s verdict … will be drastically reduced to a fraction of what the jury determined that the circumstances of the case warrant,” Labarga wrote. “This drastic reduction is attributable to the majority’s analysis of the rephrased certified question, an analysis that unreasonably concludes that the decedent’s death is not a cognizable injury for purposes of punitive damages claim.”

Labarga argued that relying on the quirks of the state’s wrongful-death statute, which has its roots in 1840s case law in England and does not consider a death to be an injury for the purposes of allowing damages to survivors, was a “strained interpretation.”

“The majority’s interpretation raises the question: when evaluating punitive damages in a wrongful death case, how can a decedent’s death not be a cognizable injury,” Labarga wrote. “The Wrongful Death Act, with its focus on compensatory damages, should not be read to limit the type of injury cognizable in determining punitive damages.”

Higher punitive damages are needed to hold R.J. Reynolds fully accountable, he added. The majority’s interpretation puts Florida courts in the position of supporting higher damages for injuries than for deaths.

A Florida law professor, not known for agreeing with Florida’s conservative high court, said in this case Labarga is wrong.

 Jarvis

“Although I am usually quite critical of the Florida Supreme Court, this time it is right,” said Robert Jarvis, who teaches constitutional law at Nova Southeastern University in Fort Lauderdale. “LaBarga wants to introduce a distinction into Florida’s wrongful death statute (between compensatory and punitive damages) that simply does not exist – but would be very helpful for litigants like Coates if it did.”

State lawmakers could remedy the oddity by amending the wrongful-death statute to include a death as a measure of damage, he noted.

Jarvis disagreed with the sentiment that the Supreme Court can now be considered a “textualist” court, given to strict reading of the Legislature’s language and intentions in drafting laws in all matters. He noted that the court in other cases has found ways to work around statutory or constitutional language. The justices, for example, allowed the recent nomination of Justice Renatha Francis to be delayed so that she could meet the Florida Constitution’s 10-year Bar membership requirement.

“What this court is, instead, is a hard-right/pro-business court,” Jarvis said in an email. “In Coates, textualism gave the court the decision it wanted. Had textualism not done so, however, I believe the court would have found another reason to vote the way it did.”

The Coates decision is not directly related to property and liability insurance. The R.J. Reynolds corporation is largely self-insured, and punitive damages generally are not covered by liability insurance policies, anyway. But the ruling could have an impact on insurers in that it could reduce the threat of excessive punitive damage awards and, perhaps, extra litigation in some pending and future cases. Concerns about large verdicts have in often incentivized insurers to press for settlements in litigation, putting them at odds with insured business owners who may want to go to trial, Large and other attorneys have said.

The decision could also prompt defendant corporations to ask courts more often for what’s known as “remittitur,” or a reduction in punitive damages.

Strict interpretation of the text of statutes and insurance policies has been a factor in a number of significant court rulings in recent years — ones that were mostly in favor of insurers.

In June, Florida’s 4th District Court of Appeal found that a contractor in an assignment-of-benefits claim did not provide an itemized, per-unit cost estimate of the services to be performed in the restoration, as required by law. In late 2021, the same court found that policy requirements must be adhered to: A homeowners policy limited payouts on emergency mediation work to $3,000, unless a request was made to exceed that.

Also in 2021, the 3rd District Court of Appeal sided against an AOB contractor and held that an HO policy required the signature of both spouses and the mortgage lender.

https://www.insurancejournal.com/news/southeast/2023/01/08/702390.htm 

Court Won’t Intervene on Request to Show Morgan & Morgan’s Relationship with Doctors

By William Rabb | April 12, 2022

Six months after the Florida Supreme Court held that insurance companies’ financial connections to expert witnesses can be revealed in litigation, a state appeals court won’t force discovery of similar information about one of Florida’s largest plaintiffs’ firms.

Although the ruling was largely procedural in nature, attorneys said it points up continuing issues in Florida’s tort system: Some plaintiffs’ firms may enjoy cozy relationships with certain doctors – but that information is often kept away from jurors.

Florida’s 5th District Court of Appeal late last week dismissed a petition from Publix Super Markets Inc., asking the court to intervene and review an order from the circuit court in Orlando. In the personal injury case, Publix had requested information about the financial relationships between treating doctors and the injury victim’s law firm, Morgan & Morgan, hoping to show potential bias by the doctors.

Tania Molina was injured in 2018 when a Publix vehicle, driven by a Publix employee, crashed into Molina’s car. Attorneys for Molina had objected to Publix’ discovery request, and the trial court upheld the objection. Publix asked the appeals court to step in.

The 5th DCA panel of judges said it’s too soon – Publix did not show why it wouldn’t have adequate remedy during the regular appeals process.

“We do not reach the merits of Molina’s objections or the trial court’s rulings as we are dismissing the petition based on a lack of jurisdiction,” the panel noted in the April 8 opinion.

Publix attorneys in the case declined to comment on the ruling. But one Florida insurance defense attorney said the dismissal could now give Publix and corporations in similar situations more incentive to settle cases rather than go through drawn-out appeals if they don’t have confidence that the financial connections would eventually be exposed.

The case also underlines what some attorneys and judges have called a disparity in the information that insurance companies must disclose about how much they pay expert witnesses, and what plaintiffs’ firms must provide about their connections to treating physicians. In October, the Florida Supreme Court held in two decisions that insurance companies must divulge payments to expert witnesses. In earlier rulings, the court had found that plaintiffs’ firms’ connections were protected by attorney-client privilege, which the Molina attorneys asserted in the Publix case.

But the October rulings sidestepped the disparity question, and other cases are now pending before the high court, asking it to provide further clarification.

“This decision is a big deal,” William Large, president of the Florida Justice Reform Institute, said about the Publix case. “It points to some very fundamental problems with the civil justice system.”

In the Publix case, the appellate court noted that none of the health care providers objected to the discovery request. The plaintiffs’ attorneys also did not offer proof that the disclosure would create a financial burden, nor that it would divulge trade secrets, the court explained.

Despite that, the court ruled against Publix’ intervention request, at least for now.

“Here, Publix has failed to demonstrate irreparable harm because any error in the trial court’s discovery order can be addressed on plenary appeal, subject to the harmless error test,” the appeals court wrote. The court said it rejected Publix’s argument that the trial court order denying discovery “effectively eviscerates” the grocer’s defense on the bias issue.

The trial court did permit some discovery of certain financial relationships, including a letter of protection provided to the plaintiff. But it wasn’t clear from the court documents how much that disclosure revealed.

Letters of protection, or LOPs, have become widely used in personal injury claims and are a growing concern for corporations and insurance companies. With the letters, plaintiffs agree to pay the health care providers once the injury suit is settled or adjudicated. Plaintiffs’ lawyers have said they allow people of little means to receive medical care when the victim doesn’t have adequate health insurance.

But business defense attorneys have said that some personal injury lawyers ask plaintiffs to sign the letters of protection immediately after an injury, and to refrain from using their own medical insurance when they seek treatment. The idea is to work with cooperative doctors who will charge more, which can lead to larger settlements and higher future medical costs for patients who need follow-up care, Large and others said.

At a Florida legislative hearing in 2019, a lawyer for Publix, Lauren McBride, testified: “The sole purpose of the LOP, why it exists, is to drive up verdicts and settlements,” according to a Kaiser Health News report.

McBride said that nearly two-thirds of slip-and-fall injury claims in Publix stores involve letters of protection.

With decisions like the 5th DCA’s, though, full information about LOPs, the prices charged by the doctors, the number of referrals by law firms to the treating physicians, and compensation from Morgan & Morgan to the doctors may not be revealed until deep into the years-long appeals process, if at all, Large said.

“If the doctor is referred by the plaintiff’s attorney and they used an LOP and charged a higher price than what health insurance pays, is that something the jury should know?” Large asked.

In her petition to the DCA, the appellate attorney for Publix, Diane DeWolf, argued that a witness’ bias, including that of a treating physician, is relevant in every case. Limiting discovery will cause “irreparable harm that cannot be remedied on appeal because the appellate court will not be able to determine how the requested discovery, had it been permitted, would have affected the outcome of this case,” DeWolf wrote.

Attorneys for the plaintiff could not be reached for comment Monday. But in response to the Publix petition, attorney Kristin Norse argued that asking the appeals court to intervene on discovery was extraordinary, and that Publix was not irreparably harmed by the denial.

https://www.insurancejournal.com/news/southeast/2022/04/12/662532.htm

Newly-Enacted Florida Property Insurance Reform Bill Said to Be Already Working

By Andrew G. Simpson | June 11, 2021

Florida Gov. Ron DeSantis on Friday officially signed into law reform legislation on property insurance and roofing contractor practices, a measure some say is having a positive impact even before it goes into effect.

DeSantis signed the measure during a morning roundtable with sponsors and business groups in Sarasota. The measure – known as SB 76— will officially go into effect July 1.

But, according to several participants at the roundtable, including Insurance Commissioner David Altmaier, some effects are already being realized.

 “Already there is a lot of positive as a result of this bill,” Altmaier said. He said insurers and reinsurers have both reacted positively and that he has seen that private carriers are beginning to pick up more homeowners policies across the state.

Rep. Bob Rommel, who worked on the House version of the bill, also said insurance carriers are already showing a willingness to again invest and come into the state since the bill passed.

DeSantis said Florida is “uniquely susceptible to having to respond to natural disasters and that naturally” has an impact on insurance.

He said the bill is a response to many problems that he and the sponsors of the bill saw in the system.

“Many of you know over the last decades, there’s been a lot of ups and downs in this property insurance market in Florida,” he said. “We saw a lot of problems. You’ve seen major premium increases and you even see some homeowners, their policies get canceled. They get dumped onto Citizens. So, we wanted to do something to stabilize that.”

DeSantis said the state wants to encourage more private sector involvement and give homeowners policies that are more affordable and that will “protect them from whatever mother nature throws our way.”

“I think we were able to do that,” the Republican governor added.

Supporters hope SB 76 will begin to reduce litigation and control home insurance premiums.

Sen. Jim Boyd, also owner of Boyd Insurance & Investments in Bradenton, said his insureds have been seeing rate increases of 20, 30 and 50%. “So we needed to do something,” he said.

Boyd said it may take a year to 18 months for rates to come down but he is confident it will happen.

DeSantis revealed his intentions to sign the measure during a meeting of the Enterprise Florida board of directors Wednesday. He said then that he thinks the legislature did a “pretty good job” addressing the insurance market but that the state is probably going to have to do more, according to the Orlando Sentinel

Some stakeholders agree with DeSantis that more needs to be done to lower costs and reduce litigation, citing the omission of two provisions the insurance industry said were essential.

The legislation, which passed on the last day of the legislative session, includes changes to the state’s one-way attorney fee statute, the eligibility and glidepath of Citizens, and the deadline to file claims. It also places new requirements and restrictions on roofing contractors.

But two provisions the industry and experts identified as critical to addressing cost drivers and stabilizing the market were left out of the final bill — the elimination of the state’s attorney fee multiplier and a provision allowing insurers to implement policy language to mitigate roof replacement costs. The provisions were sticking points in both legislative chambers.

Industry groups in Florida applauded the signing of SB 76.

“When Florida accounts for only 8 percent of the nation’s property insurance claims but 76 percent of national property insurance litigation, you know there is a problem,” said Mark Wilson, president and CEO, Florida Chamber of Commerce. Wilson said the measure “addresses some of the root causes that are rapidly increasing homeowner’s insurance rates.. He cited specifically attorney fee reform and roofing solicitation practices that he said have been were driving lawsuits.

“As Governor DeSantis has said before, Florida’s legal system should resolve real disputes and not be used as a game,” said William Large, president of the Florida Justice Reform Institute (FJRI), a legal reform lobbying group. Large also cited the reform of the attorney fee formula. FJRI believes the new attorney fee formula will encourage more reasonable settlement offers by all parties and discourage non-meritorious claims, and we look forward to seeing the positive impact of this new approach in practice,” said Large.

In its key provisions, the legislation signed by DeSantis:

 *  Changes the eligibility, rate glidepath and actuarily sound rate indication for Citizens Property Insurance Corp.
 *  Replaces the one-way attorney fee-statute to make the recovery of attorney fees and costs contingent on obtaining a judgment for indemnity that exceeds the pre-suit offer made by the insurance company
 *  Reduces the claims deadline on all claims to two years from the date of loss, except for on supplemental claims which will have an additional year.
 *  Requires plaintiffs to file a pre-suit demand at least 10 days before filing a lawsuit against an insurer that includes an estimate of the demand, the attorney fees and costs demanded and the amount in dispute; disallows pre-suit notices to be filed before the insurance company can make a determination of coverage; and allows an insurer to require mediation or other form of alternative dispute resolution after receiving notice.

The bill also makes several changes to tackle what insurers claim has been an explosion of roofing claims and litigation, including making it illegal for roofing contractors or any person acting on their behalf to make a “prohibited advertisement,” including an electronic communication, phone call or document that solicits a claim. Offering anything of value for performing a roof inspection, an offer to interpret an insurance policy or file a claim or adjust the claim on the insured’s behalf will also be prohibited. Additionally, contractors are prohibited from providing repairs for an insured without a contract that includes a detailed cost estimate of the labor and materials required to complete the repairs. Violations could result in fines of $10,000.

https://www.insurancejournal.com/news/southeast/2021/06/11/618364.htm