Of Peanut Butter and Jelly Sandwiches
This weekend I had the pleasure of spending time with family and one of my family members was absolutely ecstatic that you can now buy a peanut butter and jelly sandwich without the crust on the bread, in the freezer section of a grocery store. As my brother-in-law took one of the packages out of the freezer and the sandwich out of the plastic wrap for it to thaw for 20 minutes prior to devouring it, he talked about the sandwich as though it was one of the most important discoveries of the 21st-century.
Of course I had to have a quip about it and exclaimed, “We not only can put a man on the moon, we now have an instant PBJ!” I am still shaking my head as I see what this new innovation may symbolize for us. For him, it may mean that we have sunk to the lowest of low laziness, that we can’t make our own peanut butter and jelly sandwich. And to others, it’s a symbol of saving a few extra minutes out of every day and using those minutes in a more quality way.
To me? Call me old-fashioned but I still get a newspaper in my driveway every day. I read hardcopy books and I use a percolator to make my coffee every morning. So as you start your week today, what marvelous invention or innovation do you see taking the place of age-old practices? I would love to hear from you! Please enjoy this week’s edition and keep a good thought for us working in the legislative halls on your behalf!
Recap of Week Three & Preview of Week Four of the Session
This past week saw the formal debut of the Florida Senate’s Assignment of Benefits (AOB) reform bill. While it would change some AOB rules, it doesn’t address one-way attorney fees and has other provisions insurers don’t support. So this may very well be the sixth year in a row that the legislature remains deadlocked – with no progress on resolving the AOB crisis. The House passed its AOB reform bill in the first week of session, which sets special two-way attorney fees for third-party claims and has other provisions attorneys and some contractors and remediation vendors don’t support.
There was also movement this past week to tweak the Florida Hurricane Catastrophe Fund, to allow rate relief to policyholders during quieter storm years by reducing or eliminating the so-called “hurricane tax”. Several health insurance measures are also making headway in both chambers.
The House and the Senate both released their proposed budgets for the fiscal year that begins July 1. The House came in at $87.2 billion, while the Senate is at $87.3 billion. The Governor’s proposed budget is $87.4 billion (our current year budget is $85 billion for comparison). So all three are amazingly close in terms of dollar figures, but contain significant differences in proposing how that money would be spent, including healthcare spending, public school funding, and the Governor’s request for $100 million for tourism marketing. The Senate and House are particularly far apart on higher-education funding. The House doesn’t include more than $100 million in funding for the Senate’s proposed expansion of the Bright Futures scholarship program. It’s part of the House’s $216 million cut to state universities and another $64 million cut to state colleges, in part to encourage them to spend down their reserves.
On the revenue side of the sheet, the House Ways & Means Committee began assembling its tax cut package of more than $200 million, including further cuts in the business rental tax, greater sales tax holidays, and select sales and use tax exemptions, including aircraft and diapers. The House also passed a measure that would limit future legislatures’ ability to raise statewide taxes and fees, by requiring a supermajority (two-thirds) vote of both the House and Senate – rather than the simple majority required today.
As the legislature begins its fourth week of session this morning, look for the focus to be on the next state budget, with both houses in session Wednesday to discuss appropriations.
Here’s a look at where things stand in this week’s 2018 Bill Watch:
Assignment of Benefits (AOB) – After weeks of testimony last fall from various sides of the AOB issue, Senate leadership finally showed its hand this past week in action before its Banking and Insurance Committee. In a well-orchestrated move, Committee Chair Senator Anitere Flores (R-Miami) considered a last-chance strike-all amendment by Senator Doug Broxson to gut the committee’s preferred bill, SB 1168 by Senator Greg Steube (R-Sarasota), before quickly dispensing of it and moving to the Chair’s intended purpose: to pass SB 1168.
Senator Broxson (R-Pensacola) called his amendment “a simple solution to a simple problem”: a combination of bills and input from Senator Steube’s 1168, Senator Hukill’s SB 62, the Florida Office of Insurance Regulation, and Citizens Property Insurance. “The state of Florida has too much litigation. This amendment puts the one-way attorney fees back to whom it was untended, the named policyholder. It sends a message to courts on their overreach on this issue,” Senator Broxson said.
To be clear, the biggest difference between Broxson and Steube’s measures are how attorney fees are handled in third-party AOB disputes with insurance companies. Broxson’s measure preserves reimbursement for attorney fees solely to policyholders while Steube’s continues current practice to allow it to the prevailing party in a lawsuit or settlement – whether that be the policyholder or a third-party vendor exercising an AOB.
Associated Industries of Florida (AIF) pointed out that restoration and contractors who have disputes with insurance companies could still file lawsuits against them and if the billing is correct, be awarded attorney fees under general law. They just wouldn’t be automatically entitled to them under the courts’ application of current AOB law. AIF noted the current AOB statute is actually very clear as to who gets the one-way attorney fees – the policyholder – and that the courts have just chosen to overlook it.
Former Florida Supreme Court Justice Ken Bell, who now handles appellate work including insurance companies, backed-up Senator Broxson, saying “The one-way attorney fee was meant to be for consumers. It should not be extended to others and so I support this.”
Attorneys and restoration specialists and many contractors groups present opposed Broxson’s amendment with one saying “As for having policy language requiring a mortgagee to sign off on an AOB, that will be the end of AOBs.”
Senator Broxson’s amendment failed in a very quick voice vote.
In introducing SB 1168, Senator Steube modified his original bill with several consumer-friendly amendments, all of which were approved by the committee. The amendments:
- Prohibit an insurer from requiring a particular vendor make repairs and makes recommendations on vendors only if asked by the policyholder;
- Require an AOB vendor provide the policyholder with a written estimate;
- Require an AOB vendor provide an accurate updated statement of work;
- Allow a policyholder to cancel an AOB agreement within seven days;
- Require an insurer pay for work performed before the AOB cancellation;
- Waive the right of an AOB vendor to go after the policyholder for unpaid claims beyond the deductible; and
- Require an AOB vendor provide a 30 day notice of intent to sue the insurer and proposal for settlement
SB 1168 prohibits insurance companies from including the costs of attorney fees paid in losing cases into their rate base or future rate requests, a concept Insurance Commissioner David Altmaier last fall called “one of the worst ideas he’s heard.” The reason the commissioner has this opinion is that insurance companies, for the most part, are not the instigator of litigation; the vast majority of AOB suits are from AOB law firm “factories,” much like the home foreclosure saga where trial lawyer firms filed thousands of suits against banks. Senator Steube’s bill also limits an insurer’s ability to deny coverage because of fraud by an insurance applicant.
SB 1168 had the support of attorneys and restoration specialists and many contractors present at the committee meeting – the same folks who had opposed Senator Broxson’s amendment. Critics of SB 1168, noted it lacked necessary consumer protection and cost controls (by its failure to address one-way attorney fees). Citizens Property Insurance Legislative Affairs Chief Christine Ashburn represented the sentiment by many in the audience. “We are concerned that this bill doesn’t address the underlying bad behavior of the 11 attorneys and the vendors that are opening offices now beyond the Tri-County area and into Orlando,” she said. “If we pay just one dollar more on the claim than we were going to, we’re going to have to pay attorney fees – everyone wins but the consumer.” There was also concern that multiple vendors on a house repair will generate multiple AOBs, with multiple attorney fees in case of dispute – with the homeowner not even aware they’re part of such vendor lawsuits.
Senator Broxson said he appreciated what Senator Steube was doing with his amendments, but said “we’re rearranging the chairs on the Titanic – we still have a giant hole in the middle of the deck.” He also referenced last Sunday’s Wall Street Journal editorial (Protecting Legal Fraud in Florida), the newspaper’s latest editorial criticizing Florida lawmakers, and specifically Chair Flores, for inaction on the AOB crisis.
Chair Flores reiterated her past position, that what it comes down to for her is what impact there will be on rates by changing current AOB public policy. “The (insurance) commissioner and others tell us how much rates will go up if we fail to act… unfortunately, the converse… if we take away the problem, it should lower rates or at least stay the same. But they can’t tell us if rates will go down with (resolving AOB). I have a real problem with that, and I think other members do as well.”
Several senators voiced their expectation that insurers and trial attorneys continue to work toward a better compromise than the current version of SB 1168 provides. It passed the committee by a vote of 7-3 and now goes to the Judiciary Committee for consideration.
So the differences between the House and Senate versions of AOB reform currently boil down to how to handle attorney fees in third-party disputes (the same differences that sunk reform efforts last year).
The Florida House on January 12 passed its version of AOB reform, with HB 7015 by Rep. Jay Trumbull (R-Panama City). The bill addresses AOB abuses and enhances consumer/policyholder protections. It’s a replica of last session’s HB 1421, which had passed the House but was never heard in the Senate. The bill allows AOBs to exist under certain conditions, and requires that they be in writing, contain an estimate of services, notice the insurer, and allow the policyholder 7 days to rescind the AOB. It prohibits specified fees as part of an AOB as well as any policy changes related to a managed repair program. It requires a 10-business day notice prior to filing suit against an insurer, an assignee’s pre-suit settlement demand and insurer’s pre-suit settlement offer, and puts parameters around attorney fees. There would be consumer disclosure language so the consumer is fully aware of the consequences when executing an AOB and would limit an assignee from recovering certain costs directly from the policyholder. Beginning in 2020, insurers would be required to report to OIR their data on claims paid via AOBs.
While one-way attorney fees would continue to exist for first-party claims filed by a policyholder against an insurer, this bill sets special two-way attorney fees for third-party claims. Insurance Commissioner David Altmaier said consumers would be held harmless regardless of who wins the lawsuit and described the bill as a balance between discouraging abusive vendor claims while still allowing contractors to go after insurers who low-ball claims and settlement offers. Here’s how (from the bill):
“If the parties fail to settle and litigation results in a judgment, the bill provides the exclusive means for either party to recover attorney fees. The bill defines the difference between the insurer’s pre-suit settlement offer and the assignor’s pre-suit settlement demand as “the disputed amount.” The award of fees are as follows:
- If the difference between the judgment and the settlement offer is less than 25 percent of the disputed amount, then the insurer is entitled to attorney fees.
- If the difference between the judgment and the settlement offer is at least 25 percent but less than 50 percent of the disputed amount, neither party is entitled to fees.
- If the difference between the judgment and the settlement offer is at least 50 percent of the disputed amount, the assignee is entitled to attorney fees.”
Meanwhile, Rep. David Santiago (R-Deltona), who has been a champion in the fight against the abuse of assignment of benefits for the past several years, has a catch-all insurance bill (HB 465), known as an “omnibus” bill to change several provisions of the insurance code. The bill expanded from 15 to 55 pages. While the committee substitute continues to cover several insurance topics such as property, auto, and surplus lines, it removed one of the most interesting, which excluded from the Department of Financial Services complaint registry complaints filed by third parties who are not satisfied with an insurance company’s claims handling when an assignment of benefits is involved. The thinking is that there is an incentive by third party vendors to dispute the claim to delay it, which drives up the cost of the claim. Again, this provision is NOT in the newest version of the bill. Among other things, the bill increases confidentiality of documents submitted to OIR under Own-Risk and Solvency Assessment requirements and also allows auto insurers a blanket exclusion of transportation network services coverage. The Senate Bill (SB 784) by Senator Brandes has not been placed on an agenda thus far.
Windshield AOB – Senator Dorothy Hukill’s SB 396, would allow auto insurers to require an inspection of a damaged windshield of a covered motor vehicle before the windshield repair or replacement is authorized. The bill will go before the Commerce and Tourism Committee today after its unanimous passage by the Senate Banking and Insurance Committee on January 16. Senator Hukill said the bill addresses “the proliferation of damaged windshields in Florida by bad actors, waiting in parking lots and car washes, offering free windshields and incentives for their services, whether needed or not, and it’s driving up costs.” The bill now includes requirements that the inspection take place within 24 hours from the notice of a claim – but must be skipped if the damage has impacted the vehicle’s structural integrity or otherwise would be a violation to drive on the roadway. The bill is also meant to cut down on the number of AOB lawsuits by out-of-network windshield shops. Those lawsuits, according to the state Department of Financial Services, have grown from 397 in 2006 to 19,513 in 2017. Hukill’s bill has an identical companion bill in the House (HB 811) by Rep. Plasencia, which is still awaiting its first of three committee hearings.
Workers’ Compensation – Like AOB reform, Workers’ Comp reform is another issue being fast-tracked by the Florida House while the Senate still has no formal bill. The House, on January 12, passed HB 7009 by Rep. Danny Burgess (R-Zephyrhills). It’s a near replica of HB 7085 from last session that died over disputes on maximum hourly attorney fees. This is by far one of the most contentious – and by court rulings, most immediate – issues facing the legislature after the state Supreme Court’s 2016 ruling that our workers’ comp system was unconstitutional. While the bill has no Senate companion, Senate President Negron has been quoted as saying his chamber is eager to pass something this session.
Last year’s House bill came on the heels of a 14.5% average increase in workers’ comp rates – adding to the urgency. This fall, however, OIR approved decreased rates averaging 9.5%. Rep. Burgess has warned that those decreased rates don’t reflect the lagging cost increases still anticipated from state Supreme Court decisions throwing out limits on attorney fees and extending certain disability payments. Recent statistics do show increases in workers’ comp legal fees, as previously reported in the LMA Newsletter. Rep. Burgess said it was important to be proactive and pass reforms now, before the next rate increase. The bill eliminates fee schedules but puts a cap of $150/hour on plaintiff (workers) attorney fees.
HB 7009 is one of the five most-lobbied bills in the legislature according to a recent report by the Tampa Bay Times.
Workers’ Compensation for First Responders – There’s no further progress to report from this past week on this issue. CS/SB 376 by Senator Lauren Book (D-Plantation) removes the requirement on some first responders that there be a physical injury in some circumstances in order to receive medical benefits for a “mental or nervous injury”, so long as the responder witnessed a specified traumatic event. The bill passed the Senate Commerce and Tourism Committee unanimously on January 16 – its second committee – and awaits a hearing before the Appropriations Committee. These efforts are inspired, in part, by the city of Orlando’s refusal to pay such benefits to a police officer reportedly diagnosed with PTSD after responding to the Pulse nightclub shootings. A similar House bill HB 227 by Rep. Matt Willhite (D-Royal Palm Beach) will get its first committee hearing tomorrow before the Oversight, Transparency & Administration Subcommittee. SB 126 by Senator Victor Torres (D-Kissimmee), which would require treatment begin within 15 days, has not been heard.
Personal Injury Protection (PIP), also called No Fault Insurance – There’s no further progress to report from this past week on PIP, following successful House passage earlier this month and the Senate’s initial movement on its bill. These various bills under consideration would eliminate the state requirement that motorists carry $10,000 in PIP insurance and put responsibility for vehicle accidents on the party at fault. The House chalked up another quick victory on January 12 with passage of HB 19. The bill eliminates PIP and would require motorists instead to carry Bodily Injury liability insurance at a minimum $25K/$50K level. Rep. Erin Grall (R-Vero Beach) who is sponsoring this bill for second year in a row, has noted that despite various PIP reforms in the past, costs keep going up, driven partly by fraud. OIR and committee staff analysis show auto rates would go down (5.6% overall) if the bill passes and should encourage those driving illegally without proper insurance (22% of Florida drivers she has said) to get coverage. The bill also revises the uninsured and underinsured coverage legal damage thresholds.
HB 19 is one of the five most-lobbied bills in the legislature according to a recent report by the Tampa Bay Times.
The Senate’s answer to PIP reform took its first formal step forward on January 10 with the Banking and Insurance Committee passing SB 150, by Senator Tom Lee (R-Brandon). It goes beyond the House bill and replaces PIP with mandatory $5,000 of Med Pay coverage (and loses the consumer savings as a result) plus varying amounts of Bodily Injury liability limits which appears to give consumers choices. Senator Lee revamped his original bill to now focus Med Pay coverage solely on emergency hospital treatment and within two weeks after the accident. The bill was further amended to allow less expensive treatment by other practitioners, including chiropractors. Some senators expressed concern that the bill will effectively raise auto insurance rates for those motorists who have just PIP policies. But Senator Lee refuted that, noting that mandatory BI will cost $49 per $1,000 of coverage versus the current $121 per $1,000 of PIP coverage. As an example, he said a scenario of PIP + minimum BI + Med Pay would cost just $4 more, proof of a more efficient system without PIP.
SB 150’s Bodily Injury liability coverage choices are:
- 20/40/10 minimum coverage from 1/1/19-12/31/20 or a Med Pay and motor vehicle liability policy with a combined property damage and bodily injury coverage of $50,000 for one crash;
- 25/50/10 minimum coverage from 1/1/21-12/31/22 or a Med Pay and motor vehicle liability policy with a combined property damage and bodily injury coverage of $60,000 for one crash; and
- 30/60/10 minimum coverage from 1/1/23 and thereafter or a Med Pay and motor vehicle liability policy with a combined property damage and bodily injury coverage of $70,000 for one crash.
Senators are facing pressure by Incoming Senate President Bill Galvano to “get ‘er done” this session before he takes over in the fall. The bill is awaiting its next hearing before the Appropriations Subcommittee on Health and Human Services.
Hurricane Irma Damage – Legislation giving the state Public Service Commission the sole ability to require underground transmission lines passed the House this past week, one of only a very few bills so far in reaction to Hurricane Irma’s impacts on Florida.
The House Select Committee on Hurricane Response and Preparedness issued its final report on January 16 with 78 recommendations to make Florida a safer and better prepared state when the next big hurricane hits. They include extending the Suncoast Parkway from Citrus County to the Georgia line to aid in evacuations, strengthening the power grid, and better protecting vulnerable populations housed in shelters and senior care facilities. The report is now in the hands of House Speaker Corcoran who has made clear the House spending priorities this session will be for hurricane relief. Both chambers have bills that would make backup generators mandatory and nursing homes and assisted-living facilities, one of the report’s recommendations. How to help the industry pay for it is still being debated. Among the proposals are increasing Medicaid reimbursement rates or offering tax incentives. The report capped 20 hours of committee meetings over two months hearing various ideas from government and private interests.
Better management of local shelters was another priority in the report with recommendations to provide more training and better coordination. Developing a better communication process between local emergency management officials and electric utilities to identify restoration critical to public safety was suggested. As for fleeing Florida prior to storms, the report recommends the state develop and implement a real-time, web-based evacuation route/destination resource tool to assist the public in making informed decisions relating to the selection of evacuation routes and destinations. Also, better utilization of rail lines before, during, and after an event to bring gasoline and diesel fuel and likewise, using expanding passenger rail service for evacuations.
Other recommendations of note to insurance interests: investing in plans that cost effectively mitigate flood risks to developed areas, including protection of greenways and blueways that act as flow ways or provide temporary storage during high water events. Also, to provide incentives, such as civil immunity, for parking garage owners to make their garages available to the public during a hurricane. Rep. Holly Raschein’s suggestion that high-risk areas not be rebuilt after storms and instead, could be part of a state buyout program, did not make the final list. The report’s full list of 78 recommendations are in Appendix 3 beginning on page 43.
Hurricane Flood Insurance – There’s no further progress to report from this past week on this issue. One of the bills out of the chute in Irma’s aftermath is CS/HB 1011 by Rep. Janet Cruz (D-Tampa) which would require homeowners insurance policies that do not include flood insurance (most don’t) to so declare and would require policyholders to initial that declaration in acknowledgment. The bill and its Senate counterpart, SB 1282 by Senator Taddeo (D-Miami) were filed in December and prompted by two realities: upwards of 60% of Irma’s damage here was caused by water and up to 80% of Florida flood victims may not have either NFIP or private flood coverage. Insurance Commissioner Altmaier told legislators a month after Irma hit that he believed flood losses alone in Florida could exceed $4.5 billion and that certain areas of the state could see flood losses that exceed wind losses. A newer version of the House bill unanimously passed the House Insurance and Banking Subcommittee on January 10 and awaits a date in the Commerce Committee. SB 1282 is scheduled before the Senate Banking and Insurance Committee tomorrow.
Florida Hurricane Cat Fund – CS/HB 97 by Rep. David Santiago (R-Deltona) received its first hearing this past week before the House Insurance and Banking Subcommittee and was passed after interesting debate. The bill addresses the growing balance – until Hurricane Irma – of the Florida Hurricane Catastrophe Fund. The Fund provides reimbursements to insurers for a portion of their catastrophic hurricane losses. Insurers pay premiums into the fund each year and pass the costs along to their policyholders, just like reinsurance. But in quiet years, the fund has grown beyond its current statutory requirement of $17 billion, prompting the question: Should you reduce collections and thereby reduce premiums to policyholders?
The bill attempts to do that by changing the premium formula through changes in the rapid cash build-up factor based on the projected fund balance each year. The factor would vary, from 25% when the fund balance is less than $14 billion, to 0% when the fund balance is at least $16 billion. (A previous amendment to gradually reduce the Cat Fund limit of $17 billion to $14 billion by the year 2022 was withdrawn.) The elimination of this “hurricane tax” as the rapid cash build-up factor is often described, will reduce rates approximately 4% but may be offset by other rate increase drivers like the assignment of benefits.
Jay Neal of the Florida Association for Insurance Reform supported the bill, noting the average policyholder pays an extra 4% now for the rare possibility of a catastrophic event. “When fund balances are high, we don’t see the need to have the assessment and instead let the consumer spend that money elsewhere in the economy,” he said.
Other groups, including the Florida Chamber of Commerce and Associated Industries of Florida urged caution, saying the bill too dramatically reduces the rapid cash build up, creating the risk of special assessments on policyholders if the fund is caught short after a big hurricane. Indeed, the representative for the Cat Fund testified that they are projecting a $2 billion hit to the Fund from Hurricane Irma. If Irma had been a direct hit on Florida, the Fund would have been exhausted, requiring such special assessments to build the fund up for the next season.
Bill sponsor Rep. Santiago admitted more debate is needed. Although acknowledging that the “safety valve” in the bill wouldn’t produce consumer savings this year due to the $2 billion hit from Irma, “that safety valve would work, so that in quieter years, there would be savings…to help constituents avoid what I consider a tax year after year.” CS/HB 97’s next stop is the Commerce Committee.
SB 1454 by Senator Brandes (R-St. Petersburg) has key similarities but would eliminate the rapid cash build-up factor resulting in immediate rate savings. It still awaits its first hearing.
Property Tax Exemption for Generators – There’s no progress to report from this past week on this issue. Designed to help those who want to help themselves the next time a big hurricane or other calamity hits and the power goes out, SJR 974 by Senator Jeff Brandes (R-Pinellas) would place a constitutional amendment on the 2018 ballot for voters to consider a property tax exemption for the just value of a permanently installed stand-by generator system when assessing annual property taxes; a companion bill SB 976 (Brandes) would implement the measure.
Direct Primary Care – Informally dubbed “concierge medicine for the masses”, the House last Thursday passed HB 37 by Rep. Danny Burgess (R-Zephyrhills). The bill allows doctors to enter into monthly fee for service arrangements directly with individuals or employers, essentially bypassing health insurance organizations. Burgess, in explaining the bill on the floor, said a lot of doctors don’t enter direct primary-care agreements because of regulatory uncertainty. The bill would make clear direct primary care is not subject to insurance regulations. Burgess said the agreements are more affordable than insurance (typically costing about $75 month) and co-sponsor Rep. Mike Miller (R-Winter Park) said the bill gives the “ultimate decision-making process” to doctors and patients. “We’re trying to lower the cost of health care and improve the outcomes,” he said. Two amendments which would have essentially added Obamacare provisions by preventing a primary care practice from declining a new patient because of health status or discontinuing care to an existing patient due to health status, as well as eliminating refunds to an employer paying on behalf of an employee, directing the refund go instead to the patient – failed to pass. A companion bill, CS/SB 80 by Senator Lee, passed by unanimous votes in October out of the Banking and Insurance, as well as the Health Policy Committees and awaits action in the Appropriations Committee.
HB 37 is one of the five most-lobbied bills in the legislature according to a recent report by the Tampa Bay Times.
Health Insurer Authorization – CS/SB 98 by Senator Steube was heard on the Senate floor last week and is now ready for a final vote as soon as this week. It and a revamped companion bill CS/HB 199 by Rep. Shawn Harrison (R-Tampa) would require insurers and Medicaid HMOs to approve or deny prior authorization requests as well as appeals from denials of care within three days in non-urgent situations and one day if the care is urgent. It would also prohibit prior authorization forms from requiring information not necessary to determine the medical necessity or coverage for a treatment or prescription. Health insurers and their pharmacy benefits managers would also have to provide requirements and restrictions on prior authorizations in understandable language and to make them available on the internet, along with a 60-day notice of any changes. It also defines “step therapy” and prohibits insurers and HMOs from requiring patients repeat step therapy protocols. In recognition of the current opioid crisis, the Senate approved an amendment requiring insurers waive step therapy requirements if the treatment being recommended is a non-opioid alternative. Meanwhile, CS/HB 199 is making steady progress and is scheduled before the Insurance and Banking Subcommittee tomorrow. Senator Steube is also sponsoring SB 162 that would prohibit health insurers and HMOs from retroactively denying insurance claims under certain circumstances. The bill was passed unanimously last week by the Senate Health Policy Committee and now goes to the Rules Committee.
Flood Insurance and Mitigation – There’s no further progress to report from this past week on this issue. SB 158 by Senator Jeff Brandes (R-St. Petersburg) provides greater funding for flood mitigation so that more individuals and communities can meet NFIP flood insurance standards. The bill would allow flood mitigation projects to be funded by the Florida Communities Trust to reduce flood hazards. Senator Brandes has for the past 5 years taken the lead in Florida in the flood insurance arena. The bill has been referred to the Committees on Environmental Preservation and Conservation, Appropriations, and the Appropriations Subcommittee on the Environment and Natural Resources but has not been scheduled to be heard. An identical House companion, HB 1097 by Rep. Cyndi Stevenson (R-St. Augustine) was filed in late December.
Telehealth – CS/SB 280 by Senator Aaron Bean (R-Fernandina Beach) is scheduled tomorrow before the Senate Health Policy Committee after unanimously passing the Banking and Insurance Committee two weeks ago. It’s part of a continued effort to put remote health practitioner visits via the internet on an equal footing as in-office visits, in order to reduce health costs and provide parity of care to rural patients. A state panel in 2016 executed a list of legislative directives to help smooth the kinks and establish recommended procedures to help make this bill a reality. SB 280 would establish the standard of care for telehealth providers; encourage the state group health insurance program to include telehealth coverage for state employees; and encourage insurers offering certain workers’ compensation and employer’s liability insurance plans to include telehealth services. A companion, HB 793 by Rep. Massullo, was filed in late November and has been referred to the House Health Quality Subcommittee and the Health and Human Services Committee, but has not been scheduled for consideration.
Texting While Driving – Moving Florida’s current ban on texting while driving from a secondary offense (where you can be ticketed during a traffic stop made for another reason) to a primary offense continues to steadily advance, although with a potential hiccup this past week. Under HB 33 by Rep. Jackie Toledo (R-Tampa), first-time violators would face a $30 fine plus court costs for a non-moving violation. Second-time offenders would face a $60 fine plus court costs with a moving violation. Those involved in crashes or texting in school zones face additional penalties. Like SB 90 by Senator Keith Perry (R-Gainesville), this bill requires the officer notify the driver of the constitutional right not to have their cellphone examined by authorities. Neither applies to stationary vehicles. The Senate Appropriations Subcommittee on Transportation, Tourism, and Economic Development last week passed SB 90 but added a requirement that the driver’s race and ethnicity would have to be recorded by law-enforcement officers when ticketing for texting while driving. The amendment passed out of concerns about racial profiling of minorities The House Judiciary Committee approved HB 33 last week but did not agree to the same change. The House and Senate bills each have one more committee to clear before going to their full chambers. Florida one of four states where texting while driving isn’t a primary offense.
Controlled Substances – Two bills continue to progress rapidly through their respective chambers to address the huge increase in Florida’s accidental drug overdose deaths. SB 8 by Senator Lizbeth Benacquisto (R-Ft. Myers) passed its second committee last week with unanimous approval by the Senate Appropriations Committee. It now heads to its stop before the Rules Committee. It would restrict an opioid supply to three days for standard prescriptions but would allow doctors up to a seven-day supply in certain medical cases. Additionally, it provides for more continuing education for responsibly prescribing opioids and requires participation in the Prescription Drug Monitoring Program by all healthcare professionals that prescribe opiates. It specifically requires doctors to check the database before writing prescriptions, to avoid enabling “doctor shopping” multiple-prescription patients. Speakers at past hearings have included doctors and patient groups and were very positive and supportive of the bill. Pain doctors and ER physicians have expressed some concern about the three-day limit, but overall, the bill’s concepts have been favorably viewed.
A similar bill in the House (HB 21) by Rep. Jim Boyd (R-Bradenton) likewise unanimously passed its Appropriations Committee this past week. It now heads to its last stop before the Health & Human Services Committee. It has the same prescription limits as the Senate version. It would also authorize the state Department of Health to share data with other states to avoid patient abuse in filling multiple prescriptions. The House and Senate have each earmarked about $50 million to address the opioid crisis, with more than half of that to come from federal funding. The House also wants to spend $1 million on the statewide prescription drug database.
HB 21 is the most-lobbied bills in the legislature according to a recent report by the Tampa Bay Times.
Governor Scott has requested the legislature appropriate $53 million toward the fight against opioid abuse, something state Attorney General Pam Bondi earlier in the session called “a great start” but nowhere near enough given the funding that will be necessary for treatment. She serves on the President’s Opioid and Drug Abuse Commission. She’s also conducting a multistate investigation into potentially unlawful practices by drug companies in the distribution, marketing, and sales of opioids.
A November report by the FDLE’s Medical Examiners Commission found the total number of drug-related deaths in Florida rose 22% from 2015 to 2016. The number of opioid deaths were up 35%, where opioids were either the cause of death or present in the decedents. And this whopper: deaths from the especially dangerous synthetic opioid fentanyl rose 97%. In fact, the report showed death from almost all kinds of drugs, prescription, street drugs, and alcohol – were all up. Deaths by cocaine jumped 83%. One of our readers sent us this research published in the Journal of the American Medical Association showing that states with any kind of medical marijuana law had a 25 percent lower rate of death from opioid overdoses than other states.
Insurers in December announced that they are seeking reimbursement for the high cost of opioid addictions: Opioid Pain Treatment Addiction Costs Workers’ Comp Carriers, Health Insurers Billions.
Assignment of Benefits (AOB) – There are other AOB bills in the Senate, but they are all stalled. They include SB 62 by Senator Dorothy Hukill (R-Port Orange). The bill prohibits certain attorney fees and requires those vendors that execute the AOB to comply with certain requirements prior to filing suit. HB 7015, which passed the House on January 12 has some elements of this bill.
Likewise stalled is SB 256 by Senator Gary Farmer (D-Ft. Lauderdale), which would prohibit insurer managed repair programs and prevent most property insurance policies from prohibiting or limiting AOB. But it would also require the AOB be in writing, be limited to an accurate scope of work to be performed, and allow the policyholder to cancel the AOB within seven days without penalty and otherwise, be shared with the insurer within seven days of execution. A final repair bill would be required to both policyholder and insurer within 7 days of work completed. Referral fees would be limited to $750 and require water damage remediation assignees to be ANSI certified. Insurance companies would be required to offer any settlement within 10 days of assignee filing suit over an AOB dispute. It also prohibits insurers from including the costs of attorney fees paid in losing cases into their rate base or future rate requests. Under the bill, OIR would be required to conduct an annual AOB data call beginning in 2020. HB 7015 which passed the House on January 12 has some elements of this bill, but not the attorney fee rate recoupment.
Personal Injury Protection (PIP) – There are other PIP bills, but they are also stalled. HB 6011 by Rep. Julio Gonzalez (R-Venice) deletes the requirement for policyholders & health care providers to execute disclosure & acknowledgment forms to claim personal injury protection benefits. It had its first reading on January 9 but remains unscheduled for committees. These requirements were originally established to help prevent fraud and include verification that actual services were rendered and weren’t solicited by the provider. HB 6011 has no Senate companion.
Regulation of Workers’ Compensation Insurance – Filed by Senator Lee on the Friday before Session began, SB 1634 authorizes the Insurance Consumer Advocate to intervene as a party in certain proceedings relating to the regulation of workers’ comp insurance or to seek review of certain agency actions before the Division of Administrative Hearings (DOAH). The bill also specifies requirements and procedures for the consumer advocate in the examination of workers’ compensation rates or form filings. There is no House companion bill.
Property Insurance – Filed by Senator Lee on the Friday before Session began, SB 1652 would prohibit property insurers who fail to make inspections within 45 days of notice of claim from denying or limiting payments for certain hurricane-related claims under certain circumstances. It also restricts insurers from requiring proof of loss and requires all these changes be added to Florida’s Homeowner Claims Bill of Rights and provided to the policyholder. The bill also requires property owners to disclose the sinkhole report in lease or lease/purchase agreements when an insurance claim has been paid for sinkhole damage. It has no House companion bill.
Florida Building Commission – The Florida Building Commission, which oversees state building codes – some of the toughest in the nation due to Florida’s susceptibility to hurricane damage – would be downsized under HB 299 by Rep. Stan McClain (R-Ocala), who is a residential contractor. The bill would cut the board more than in half, from 27 to 11 members, removing representation from several sectors in the building industry. The bill removes members representing: air conditioning, mechanical or electrical engineering, county code enforcement, those with disabilities, manufactured buildings, municipalities, building products, building owners/managers, the green building industry, natural gas distribution, the Department of Financial Services, the Department of Agriculture and Consumer Affairs, the Governor appointee as chair, and reduces from three members to one municipal code enforcement official and would no longer require a fire official. The bill also changes the qualifications of the architect member, removing the requirement of actively practicing in Florida. Rep. McClain said the bill is meant to remove any Commission members that aren’t directly involved in the building process but that he’s open to suggested changes. An amendment that would have removed the insurance representative was withdrawn this fall. HB 299 would leave the Commission comprised mostly of contractors. The bill is on its way to its last stop at the Commerce Committee but has no Senate companion.
Contractors Without Insurance – HB 89 by Rep. Ross Spano (R-Riverview) requires that contractors lacking public liability insurance shall be personally liable to a consumer for damages that having the proper insurance would have covered. The bill passed the Civil Justice & Claims Subcommittee in early November but has two more stops. Its Senate companion SB 604 by Senator Greg Steube (R-Sarasota) hasn’t had a hearing in any of its three committees yet.
Trade Secrets in Public Records – CS/HB 459 & CS/HB 461 by Rep. Ralph Massullo (R-Beverly Hills) were revamped and passed the House Oversight, Transparency and Administration Subcommittee on January 17. On a related note, a Leon County judge recently ruled as well that a TV production/PR company had to release its records surrounding a state contract involving Emeril Lagasse’s $11.6 million Visit Florida contract. These bills and this judicial dispute arise from House Speaker Richard Corcoran’s October press conference about his objection to state agencies who claim trade secret to shield contract and vendor information. Corcoran said that agencies should not be entitled to trade secret privileges if they “spend one penny of taxpayers’ dollars.” CS/HB 459 repeals all public record exemptions for trade secrets in current law, all associated processes for designating a trade secret, and all references to trade secrets contained in definitions for proprietary business information. This includes the trade secret process used in the insurance code, Section 624.4213, Florida Statute. Interestingly, a “sister” bill, CS/HB 461 enacts a new trade secret process that is not unlike current law regulating insurance entities use of trade secrets now. It clearly defines the term and specifically excludes from the definition any of the myriad contracts and agreements between agencies and outside vendors that Speaker Corcoran has been critical of. So in essence, CS/HB 459 repeals the current insurance entity trade secret practice and CS/HB 461 restores it. CS/HB 459 has companion SB 956 and similar bill SB 958 (both filed by Senator Mayfield in November) and CS/HB 461 has a similar bill in SB 958. Neither Senate Bill has progressed so far.
HB 37 is one of the five most-lobbied bills in the legislature according to a recent report by the Tampa Bay Times.
Insurance Rates – Like he’s tried to do with AOB, SB 258 by Senator Farmer would prohibit insurance companies from including the costs of attorney fees paid in losing cases into their rate base or future rate requests in Workers’ Compensation and Life policies. Farmer’s similar bill in the 2017 session failed. SB 258 has been referred to the Committees on Banking and Insurance, Appropriations, and Rules but has not been scheduled to be heard. It is stalled and has no House companion.
Insurance Reporting – Filed by Senator Farmer on the Friday before Session began, SB 1668, follows the same bent as his previous bills on verifying insurance litigation costs. It would require insurers filing rates with the Office of Insurance Regulation provide specified information and projections relating to claim litigation in their rate filings. This includes litigation costs and total dollar value of denied or limited claims where either party prevailed (insurer or insured) and those claims that reached settlement, along with attorney fee breakdowns for all parties. This information would be culled from the year prior to the rate filing, as well as projected costs for the following year. It has no House companion bill.
Insurance Credit Scoring and Redlining – SB 414 by Senator Farmer would ban the use of credit scores as a determining factor in calculating auto insurance premiums. Currently, insurers are permitted to use a customer’s credit history as a justification for higher insurance rates. Statistically, drivers with poor credit scores pay more and according to Farmer “the use of credit scores as a determining factor for auto insurance rates has been found to disproportionately affect minority populations, with African American and non-white Hispanic policyholders often paying higher premiums, and is not a reliable indicator for increased risk.” Similarly, SB 410 would prohibit the use of zip codes as a determining factor in calculating auto insurance premiums, which Farmer called “de facto discrimination.” HB 659, which passed and became law in 2016, allows single zip code rating territories if they are actuarially sound and the rate is not excessive, inadequate, or unfairly discriminatory. Neither SB 414 nor SB 410 have had a hearing yet, and with no House Companion, their future is very uncertain.
Patient’s Choice of Providers – Dubbed the “Patient’s Freedom of Choice of Providers Act”, HB 143 by Rep. Ralph Massullo (R-Beverly Hills) prohibits a general health insurance plan from excluding willing and qualified health care provider from participating in a health insurer’s provider network so long as the provider is located within the plan’s geographic coverage area. The bill has been referred to the Health Innovation Subcommittee, but has stalled. There is a Senate companion, SB 714, which is also stalled.
Autonomous Vehicles – A revamped HB 353 by Rep. Jason Fischer (R-Jacksonville) authorizes the use of vehicles in autonomous mode. It unanimously passed its second hearing stop last week before the House Appropriations Committee and is on its way to the Government Accountability Committee. There was acknowledgment by various parties in the meeting that Florida is in a race with other states to legalize so-called “self-driving cars” together with the impact that would have on our existing AV research projects here. The autonomous technology would be considered the human operator of the motor vehicle and provides that various provisions of law regarding motor vehicles such as rendering aid in the event of a crash do not apply to vehicles in autonomous mode where a human operator is not physically present as long as the vehicle owner promptly contacts law enforcement. The bill also addresses the applicability of laws regarding unattended motor vehicles and passenger restraint requirements as they relate to vehicles operating in autonomous mode where a human operator is not physically present in the vehicle. A Senate companion (CS/SB 712) by Senator Brandes unanimously passed the Transportation Committee this past week and awaits hearings in the Banking and Insurance, and Rules Committees.
Florida Following National Trend of Fewer Foreclosures
But the number of underwater mortgages remains high
There were several new reports out this past week that show Florida’s housing market continues its recovery from the Great Recession, yet there are persistent areas where progress is slower. Given that those same areas were some of the fastest to heat to a boom level in 2008/2009, it’s not surprising they are some of the slowest to recover. Foreclosures nationwide last year fell to their lowest levels since 2006 and their numbers continue to fall in Florida, too. But the number of Florida homes with mortgages that are underwater is second highest in the nation.
Foreclosure filings, which include default notices, scheduled auctions, and bank repossessions numbered 676,535 in the U.S. or just a half-percent of all housing units in the country, according to the 2017 U.S. Foreclosure Market Report by ATTOM Data Solutions. In Florida, 2017 versus 2016 saw 29,258 foreclosure starts (mortgage default notices) (down 28%); 26,544 bank repossessions (down 44%); and 24,215 scheduled foreclosure auctions (down 45%).
A new report by CoreLogic though says that for those Floridians who own a home, 9% are underwater, with negative equity, behind only Louisiana at 10.1%. It’s even worse in the Miami metropolitan area, which leads the nation in underwater mortgages at 13.4% in the third quarter of 2017. The national average is 5%. West Palm Beach and Ft. Lauderdale were higher than the national average, too. That’s not surprising, given Florida led the nation’s housing boom in the mid-2000’s and was among the last market bubbles to burst when the recession struck. Experts say homeowners who are still underwater on their mortgages likely bought when prices peaked during the boom.
Our friends at the Florida Realtors® report that a tight inventory is driving up prices and home sales, helping close the gap for those Florida homeowners with an underwater mortgage. Single-family sales are up 2.6% over a year ago with median price up 8%. Condo sales are up 6% with median price up 7.8%. The statewide median sales price for single-family existing homes in December was $244,185. It was the 72nd straight month of increases for single-family homes and condos. The market is only looking up at this point. ATTOM reports that buying a home is more affordable than renting one in 54% of U.S. markets, including a sizeable chunk of Florida.
Insurers Must Play a More Active Role in Defense of Construction Cases
Recent Florida Supreme Court decision expected to have lasting impact
A recent Florida Supreme Court decision is expected to be a game-changer in the way insurance companies defend claims in faulty construction cases. The court ruled that insurers have a duty to get involved earlier in such a claims case, that a so-called Chapter 558 notice (named after the Florida Statutes chapter number regulating construction defects) is indeed a “suit” that would trigger an insurer’s duty to defend its policyholder in a commercial general liability policy. The ruling is in keeping with the Florida legislature’s intent when it passed the law by providing an alternative dispute resolution process.
The case before the court (Altman Contractors, Inc. v. Crum & Forster Specialty Insurance Company) involved construction defects at the Sapphire Condominiums, a high-rise condo tower on Fort Lauderdale Beach. Altman received notices of those defects under Chapter 558 and turned them over to its insurance company, Crum & Forster, for help in resolving. The insurer denied the 558 notices invoked its duty to defend because the notices themselves did not constitute a “suit”, it argued before the court. The language in its commercial general liability policy defining “suit” included alternative dispute resolution. The court ruled the Chapter 558 process so qualified as such an alternative resolution.
Critics have long complained that insurance companies had to be dragged in kicking and screaming into a process that was designed to avoid the very thing insurance companies hate most – lawsuits. “Better to mediate than litigate” – remember that mantra? The state Supreme Court’s decision should reign as the rule of the land going forward, for the betterment of claimants and insurers alike, in reducing the number of costly lawsuits that only put upward pressure on the rates we all pay for insurance. Make sense? We welcome your replies.
Florida Family Literally Sees Court Ruling ‘For the Birds’
The strange fate of Bamboo Key
It was about a year ago that we brought you the story of Gordon and Molly Beyer and their family’s two-decade long quest for justice in what they claim is an unfair taking of their land in the Florida Keys without just compensation. After a series of hearings and appeals over the years in the Florida state court system, the Beyers appealed to the Florida State Supreme Court last year which refused to hear the case. So the Beyers took it to the U.S. Supreme Court, which recently announced it will not hear the case either.
When the Beyer’s bought a nine-acre island in the Florida Keys in 1970, they intended to hold it as an investment for their children. But the island – known as Bamboo Key – went through development zoning change over the years from one house per acre, to one house per ten acres, and finally to a bird rookery allowing only primitive camping.
The couple filed suit and when they passed away, their two sons and daughter continued the legal fight. They claimed the city of Marathon had effectively banned all future development of their family’s property, amounting to an unconstitutional seizure without just compensation.
The family had previously appealed the bird rookery designation and showed their property value declined from the initial $70,000 investment to just $900. Although a Special Master concluded “there is absolutely no allowable use” under city regulations, he awarded them 16 “ROGO” points. ROGO, derived from the local “Rate of Growth Ordinance” is meant to control growth by allocating points toward possible purchase of one of the limited number of development permits available elsewhere.
A trial court later ruled against the family as well, saying they unreasonably waited too long to make an initial claim, and didn’t present evidence they had a plan to develop the property when they bought it. The Third District Court of Appeal in 2016 upheld that decision, ruling that the ROGO points awarded provided adequate compensation and that the family had no reasonable investment-backed expectations for the property. The family has continued to pay taxes and retain liability on the property, according to the Pacific Legal Foundation, which has been representing the family at no charge.
Judge Frank Shepherd, who dissented from the full 3rd DCA’s decision not to rehear the case, labeled the court’s ruling, “for the birds,” because the Beyers are being unlawfully forced “to suffer significant economic injuries.” For more behind the story, visit the Pacific Legal Foundation webpage devoted to their case.
New Tool on Insurable Risks
Free reference database covers the latest trends
A new research tool from the Reinsurance Association of America (RAA) is now available to the public, with great summaries, explanations, and trends on just about every type of risk an insurance professional could encounter – and write. The Insurance Risks Database was previously available only to RAA members and includes risks that are both developed and emerging. It’s the product of RAA’s Emerging Issues Work Group. It’s literally a reference on risks from A-Z!
The database has risk categories on Chemical, Corporate Liability, Cyber Risks, Environment and Energy, Food, Medical, Natural Catastrophe, Product Liability, Radiation Related Risks, Technology, Terrorism, Tort Trends, and Workplace Liability. Under each of these are a variety of subcategories that currently number 69 and include some of the newest risks we talk about here in the LMA Newsletter. They include such risk as Blockchain, Driverless Cars, Drones, 3D/4D/5D Printing-Additive Manufacturing, Cybersecurity, and Opioids, to name just a few.
Each risk has a complete report that includes an executive summary, background, information on injuries and damages, recent studies, legislation and regulation, liability issues, litigation, and recent news stories. The reports also include a “Future Outlook” section with insight and advice to insurers and reinsurers. You can access the database here.
Seeing the Opportunity
Many of you have written me the last few weeks after reading the daunting legislative news in our weekly Bill Watch. I so appreciate the words of encouragement and the fact that you keep a good thought so we at LMA can keep a good thought!! One of you sent me a message from Sir Winston Churchill and it’s very timely since the incredible movie is at a theater near you: “A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” All we can say is Amen Brother! See you next week!!