The Kum ba yah Moment   
The fifth week of the Legislature was lively to say the least.  The Senate and the House are still divided on so many issues including their budgets.  On Wednesday of last week the House Appropriations Committee voted to adopt its hefty $81.2 billion budget and the Senate Appropriations Committee adopted theirs at a stunning $83.2 billion after 4 hours of discussion and over 100 amendments added to the over 400 page budget document.

The next step?  Both the entire House and all 40 Senators will vote on their respective budgets in each individual chamber and then they have to hash out their differences the last couple weeks of April in a series of “conference” negotiations.  I was sitting next to a former Speaker of the House in a committee meeting and we both agreed that the “great divide” between the House and Senate has got to narrow for the Legislative Session to end May 5 as scheduled.

This past week’s work didn’t give us any indication that there were many kum ba yah moments between the two bodies. Part of the problem is that there doesn’t appear to be any discussions among the House and Senate leaders – no joint press conferences on working together or public “affection” for each other!  We know that in our everyday work, we all talk and try to work through disputes – insurance claims disputes or co-worker disputes or family squabbles.

The fundamental premise of working things out is communicating and so those of us in the legislative process remain hopeful that perhaps after this week’s Easter break, our elected officials will be rested and have a plan for us to bring in for a landing so many of these great public policy issues that need resolution. And many of you will be traveling to see family and friends this week, so we at LMA are wishing you safe travels and happy egg hunting!


Bill Watch
Here’s our weekly update of Bill Watch on the major legislation we’re following so far:

Assignment of Benefits (AOB) – Saying she was disappointed that none of the insurance lobbyists worked with Senate Banking and Insurance Committee members to amend Sen. Gary Farmer’s proposed AOB legislation (SB 1218), Chair Anitere Flores ensured that her position on the bill was clear – she was supporting it because rates didn’t come down after sinkhole and PIP legislative reforms in the past and believed Sen. Farmer’s bill would finally yield property insurance rate reductions. The bill passed and includes a requirement that the Department of Business and Professional Regulation (DBPR) license water extraction firms and sanction firms who violate provisions in the proposed legislation.  Several other provisions are aimed at providing consumer protections but eliminate insurer “repair networks” of vetted contractors who have been pre-screened to repair the damage.  One observer, when asked about Chair Flores’ comments regarding the lack of amendments offered, commented that a committee Chairman and a bill’s sponsor, as a matter of protocol, need to agree to have a bill amended and based on the Chair’s support of the Farmer bill by placing it on the agenda, there was no signal she or Sen. Farmer were open to amendments.  It is unknown at this time if the House is contemplating moving Rep. Jamie Grant’s AOB reform bill HB 1421.  In related action during the committee, Sen. Farmer’s SB 1684 passed that would prevent insurance companies from including insurance defense legal fees in their rate filings.  Sen. Farmer believes that his push to require water extraction company licensing as provided in SB 1218 will “ratchet down” lawsuits so there won’t be a need for including the legal insurance defense fees in rate calculation.

Flood InsuranceSB 420 (Brandes) extends rate deregulation from 2019 to 2025 and relaxes eligibility requirements to write flood lines.  It allows commercial lines coverage (residential & nonresidential), excess flood coverage, and more surplus lines participation by removing the capital/surplus requirement in favor of a stronger financial strength rating.  Note that this and Diligent Effort represent a strong push this year by the unregulated lines to gain a stronger foothold in Florida’s currently stable P&C market.  HB 813 (Lee) contains elements of both the Flood and Diligent Effort bills.  Both bills still await hearings in their next committee of reference.

Insurance FraudSB 1012 & SB 1014 (Brandes) and HB 1007 & HB 1009 (Raschein) are being pushed by outgoing CFO Atwater as providing needed tools to help DFS stay ahead of criminals who seek to defraud Floridians.  The measures would create a dedicated Insurance Fraud Prosecutor grant funding program, require insurers to adopt an anti-fraud plan and designate primary anti-fraud employees, and require that those plans and statistics be submitted to DFS annually.  SB 1012 and SB 1014 didn’t move this week and HB 1009 passed out of its next committee.  This bill is significant as currently when a consumer or insurance company sends information to the Department of Financial Services insurance fraud authorities, that information is a public record.  This bill removes that provision from the law which addresses the concerns of those who report insurance fraud practices from being a target of retaliation from parties interested in “getting back at” the person or entity who made the effort to report the fraud or abuse.

Insurance Litigation/Prejudgment InterestHB 469 (Harrison)/SB 334 (Steube) establish a requirement for an insurer’s interest payment and the timeline those monies are due.  The Senate bill, sponsored by Senator Greg Steube, is a priority of the Senate President’s according to sources familiar with the bill.  The primary supporter of this bill is the Florida Justice Association/trial bar.   SB 334 has passed its two committees of reference and is ready to be heard on the Senate floor but the House bill has one more committee stop before it is heard by the full House. SB 334 is only two pages with the gist of the bill reprinted here:  (1) In any action in which a plaintiff recovers economic or noneconomic damages, the court shall include interest on each component of damages in the final judgment. (a) For economic damages, interest accrues from the date of the loss of an economic benefit to the plaintiff.  (b) For noneconomic damages, interest accrues from the date the defendant received notice of a claim from the plaintiff. (2) If the plaintiff recovers attorney fees or costs, the court shall include in the final judgment interest on such fees or costs beginning on the date the entitlement to attorney fees is fixed through an agreement, an arbitration award, or a court.  LMA will closely watch these bills.

Insurance Premium TaxSB 378 (Flores) repeals the insurance premium tax credit of up to 15% on the salaries that insurers pay to their Florida-based full-time employees. This is a long-standing priority of the Senate President who has stated the credit was a good jobs incentive when enacted 30 years ago but is unnecessary now.  The $297 million in resulting savings was originally going to go to pay for a 2% reduction in the Communications Services Tax but instead would now go to reducing the Business Rent Tax on building leases by 1% (from 6% to 5%).  While there was no action on the bill this week, another bill SB 484 that would reduce the Business Rent Tax but doesn’t affect the premium tax credit passed the Senate Community Affairs Committee this past week.

Medical Marijuana – Senator Rob Bradley presented SB 406 in the Senate Health Quality Committee and presented 8 amendments to the bill. The amendments passed except for one dealing with how to incorporate new licenses.,  In summary, the amendments:

-Would create a coalition for medical marijuana research through Tampa’s H. Lee Moffitt Center and Research Institute and another would allow a 90-day supply versus 45 days in an earlier version of the bill;

-Would allow Florida nonresidents to access the drug as long as the prescription originates in their home state;

– Would require a seed-to-sale tracking system overseen by the Department of Health who would also oversee independent labs to test the drug before distribution; and

– Would allow for more licensees in addition to the 7 already doing business in the state. Senators debated this provision heavily with some senators opposing any additional licenses while others said there needed to be more.

As a reminder, the House has a vastly different bill with no provision for additional licenses or any of the above provisions.  That bill, HB 1397 by Rep. Ray Rodrigues (R-Estero) would ban smokeable marijuana as well as prohibit edibles and vaping and did not advance this week.

Personal Injury Protection (PIP)HB 461 (Hager) and  HB 1063 (Grall) repeal the Florida Motor Vehicle No-Fault Law & eliminate the requirements for PIP coverage, along with a series of self-insurance provisions.  Rep. Grall’s bill is awaiting a hearing in the House Commerce Committee and was not scheduled on that agenda as of this writing.  Florida has been a no-fault (PIP) state since 1972, yet despite significant reforms in 2001, 2003, and most recently under 2012’s HB 119intended to reduce fraud, rates keep rising – up 13% in 2015.  The Senate version of Grall’s bill, SB 1766 (Lee) requiring mandatory Bodily Injury coverage in place of PIP, but without a Bad Faith remedy, has not had a hearing in a Senate Committee and does not appear to be moving.

Workers’ Compensation – By far one of the most contentious – and by court rulings, most immediate – issues facing the legislature after the state Supreme Court last year ruled our workers’ comp system unconstitutional.  A couple weeks ago, the Senate Banking and Insurance Committee passed a bill (SB 1582) by Sen. Rob Bradley that was…well, let’s say most weren’t happy with it and in the legislative world, if no one is happy, some would say it’s a good bill!  The bill aims to restore the balance to the “grand bargain,” a phrase Bradley uses to describe Florida’s worker’s compensation system of covering valid employee injuries in a comprehensive and with relatively little fuss manner.  Two 2016 Florida Supreme Court decisions ruled parts of the current work comp law invalid causing an almost 15% rate increase because parts of the law simply “went away,” as on observer noted.  “Poof – in two court opinions, the worker’s comp system was turned on its head,” according to a former regulator.  The bill addresses the Court’s attorney fee cap issue by keeping the current fee schedule but allowing a judge to decrease or increase attorney fees to a maximum hourly rate of $250.  The bill also increases temporary total disability benefits and temporary partial disability benefits from two years to five years, the Court’s other point of contention, and converts Florida to a loss cost state to encourage greater competition among carriers. The hourly attorney fee maximum caused angst during the committee meeting with one group saying that the rate shouldbe dynamic to reflect the geography of the attorney.  There was also concern voiced by a labor union representative who said the bill doesn’t allow injured workers to choose their physician. SB 1582 was not heard last week in a Senate Committee but, in the House, HB 7085 was heard in the Commerce Committeewhere there was much debate about attorney fee cost drivers and changing the ratemaking process currently used in Florida. Rep. Danny Burgess, smart young gun lawyer and chairman of the House Insurance and Banking Committee, has done a marvelous job of navigating all the parties in the workers’ comp debate.  He ended his almost hour presentation in the House Commerce Committee with this quote: “It’s been said that this workers’ compensation issue and the bill that we have before us today in general is an egg on a spoon on a tightrope over a whole bunch of molten lava.”  Well put Chairman Burgess.  For a full briefing on these bills and the differences between the two, please let us know.

General Insurance BillsSB 454 (Brandes)/HB 359 (Santiago) are insurance “catchall” bills, also called “omnibus” bills.  They provide insurers a $15 insufficient funds fee when a customer’s electronic payments bounce with some exceptions and add electronic checks and drafts to the list of allowable e-premium payments; allow medical malpractice insurers flexibility on their annual rate filings and a permanent exemption from having to pay assessments into the Florida Hurricane Cat Fund; and specifies procedures for insurance companies to send documents electronically to policyholders.  Both bills passed a committee stop this week and it appears they will pass the full Legislature in the coming weeks.

Bills We’re Monitoring But Have Had No Action – Include SB 1746 (Flores) Comprehensive reform of insurance regulation and practices; HB 1271 (Trumbull) “Right to Repair” construction defect claims law; SB 614 (Brandes), SB 1388 (Antiles), and SB 1472 (Galvano) all medical marijuana regulation; and HB 191 (Beshears) and related SB 208 (Passidomo/Mayfield) on diligent effort.


The Abusive Roofer: A Personal Story       
In between published editions of this LMA newsletter, I have taken to writing “Lisa’s Blog”, to share my thoughts, reflections, and an occasional inside or “story behind the story” on issues of mutual importance and interest.  (If you are receiving this newsletter you will be receiving “Lisa’s Blog” as well.  It’s also on the home page of  www.LisaMillerAssociates.com.)  Every now and then there’s a story that goes straight to the heart of the matter and Kellie Clark’s story is one for the books when it comes to AOB abuse.  It’s one of the most abusive dastardly cases of would-be insurance fraud, I’ve ever seen in my 30+ years of working in the insurance industry.  You can read – and hear – for yourself, right here.


OIR Launches AOB Resource Webpage  
The Florida Office of Insurance Regulation has launched an Assignment of Benefits (AOB) resource webpage with information to educate Florida’s consumers about changes needed to discourage fraudulent AOB activity. The new webpage provides a sobering projection of insurance rate increases homeowners can expect to see in the next five years without any legislative reform. It also includes various presentations, video links, and news articles related to this issue.   To learn more, visit the Office’s “Assignment of Benefits” webpage here.


AOB Abuse Not Limited to Homeowners Insurance 
The Florida Department of Agriculture and Consumer Services is also warning about AOB abuse this week, but of a different kind – these scammers go after your automobile windshield. They’re called “windshield bullies” and they often approach motorists at gas stations and car washes offering to fix your windshield for free. Just like in homeowners insurance AOB abuse by contractors, some auto repair and glass shops misuse the process and bill auto insurance companies for exorbitant amounts of money.

It’s the familiar AOB two-step jig: first, file an outright fraudulent or over-priced claim; and secondly, sue the insurer in the consumer’s name without their knowledge or permission, when the insurer balks at paying the claim. Commissioner Putnam warns that these “bullies” can drive up the cost of auto insurance, just like their homeowners counterparts. In fact, AOB lawsuits of all varieties are soaring in Florida – up nearly 300% in the past seven years, according to the Florida Justice Reform Institute.

Putnam’s advice to consumers?   Be wary of people who approach you and pressure you to repair your windshield. Contact your insurance company directly and work through the appropriate process to have your vehicle glass repaired or replaced.


South Florida Insurance Fraud Sentencing Begins 
Sentences are being handed out now in that massive $172 million health insurance fraud scheme operating in South Florida that the Feds broke open last summer. The criminal enterprise controlled almost every step of the supply chain, from call centers trolling for patients to unnecessary prescriptions written by corrupt physicians to the purchase of expensive compounding ingredients by suspect pharmacies.   This gang exemplifies the old expression, “If you’re going to be a crook, be the best crook you can be.”

All 16 defendants have pled guilty and as of this past week, nine have been sentenced to terms ranging from two to 15 years in federal prison. The alleged ringleader, Clifford Carroll of Boca Raton, was sentenced to a 15 year term. According to prosecutors he led the team that got its start secretly buying failing independent pharmacies that served as fronts. They produced compounded prescriptions that had the highest reimbursable value by the military insurance program TriCare and several unnamed private insurers, including a $31,000 tube of skin cream.

They found their potential patients via call centers, using information of those who had previously been prescribed, and then using a slick deceptive phone script, would convince the patients to authorize the doctors’ offices to fax the prescriptions. The feds say illegal kickbacks, in the form of cash and gift cards to doctors and even payments to patients helped make the scheme run smoothly for nearly three years. Several of those doctors were named as co-conspirators. They even disguised the payments as reimbursement for data collection through a sham software company called ClinicCorp LLC.

Other companies nabbed in this insurance fraud scheme were NuMedCare LLC of Boca Raton and two compounding pharmacies – Rx of Boca LLC and Texas Compounding Pharmacy in Dallas, TX. The participants have forfeited more than $30 million in assets, with more restitution hearings scheduled for next month in federal court.


Filling the Health Insurance “Gap” 
There is certainly legitimate money to be made in healthcare, especially these days given the challenges of the federal healthcare exchange that have some people buying the very minimum coverage necessary – until disaster strikes.  Enter Miami startup company Emerge.me, launched by a former life & health insurance company executive to sell gap/supplemental health coverage online directly to consumers.  The idea is to supplement the current lengthy and relatively unknown brokerage system at a time when people need emergency insurance more than ever.

Founder and CEO Wes Thompson was most recently president of Sun Life Financial and is trying to simplify the complicated web of supplemental or gap polices that exist today only though brokers and agents.  These policies offer a cash benefit to protect against unexpected medical emergencies not covered by health insurance.

The company has created an algorithm it says allows a consumer to spend 15 minutes or less and get coverage advice, then shop, compare, and apply – all online.  Emerge currently offers two products: critical illness insurance which provides financial protection for major illness such as stroke, heart attack, and cancer; and injury insurance which provides benefits for broken bones and the like.  In the works is short-term disability insurance and hospital indemnity insurance.

With medical costs now the largest component of consumer debt today, Thompson believes he’s found a niche product.


UF: Floridians’ Confidence in Economy at Highest Level in 15 Years 
It was University of Florida day in the Capitol this past week and one of the surveys LMA learned about was that consumer sentiment among Floridians rose last month to the highest level in 15 years.  The reading of 99 in March was the highest since March 2002 and the second-highest since November 2000. All five of the components that make up the index increased, with Floridians’ perception of their personal financial situation up over a year ago.  Perceptions as to whether it’s a good time to buy a major household item such as an appliance rose as well.

According to Hector Sandoval, director of the Economic Analysis Program at UF’s Bureau of Economic and Business Research, “Women and those under age 60 displayed more optimistic perceptions.”  As reported in the survey, the sub-index measuring Floridians’ personal finance expectations a year from now rose 7.8 points from 99.5 to 107.3. Opinions of anticipated U.S. economic conditions over the next year increased 7.2 points, from 92.0 to 99.2.

Similarly, expectations of U.S. economic conditions over the next five years rose 7.2 points, from 89.5 to 96.7.

“Overall, Floridians are far more optimistic in March than the previous month. The gain in March’s index came mainly from consumers’ future expectations about the economy. Importantly, these views are shared by all Floridians, independent of their demographic characteristics and socioeconomic status,” Sandoval says. “These expectations are particularly strong among women and those with an income under $50,000.”

In Florida, consumer sentiment may have been lifted by good economic news. The Florida labor market has continued expansion, adding jobs on a monthly basis for more than six years. The unemployment rate in Florida remained unchanged at 5% in February, the most recent figure available. Over the last year, the unemployment rate has remained stable: Between March and December 2016, the unemployment rate was 4.9%, and since January the rate has been 5%.

According to the U.S. Bureau of Economic Analysis, Florida ranked third out of all states in the country in personal income growth, with a growth rate of 4.9% in personal income between 2015 and 2016. The main contributor to this change came from net earnings, which includes wages, salaries and supplements but excludes contributions for government social insurance.

Nationwide, economic activity and the labor market has continued to expand and strengthen, and household spending has risen. As a consequence, last month the Federal Open Market Committee decided to raise the federal funds rate to a target range of 0.75 to 1 percent.

“In general, the economic outlook is very positive and the positive sentiment will aid the economy to expand even further,” Sandoval said.

Conducted March 1-30, the UF study reflects the responses of 507 individuals who were reached on cellphones, representing a demographic cross section of Florida. The index used by UF researchers is benchmarked to 1966, which means a value of 100 represents the same level of confidence for that year. The lowest index possible is a 2, the highest is 150. Learn more about the survey here.


Charge Card Surcharge OK 
Consumers in Florida could soon see surcharges for using their credit cards for purchases of goods and services. The state recently lost its bid to have the U.S. Supreme Court review a lower court decision that current Florida law violated merchants’ free speech rights. The law allows merchants to offer discounts for cash purchases but specifically prohibits them from adding surcharges to credit card purchases, in what the lower court ruled as “distinctions in search of a difference.”

The original case was brought by four Florida merchants who’d been slapped with cease-and-desist orders by the state for passing along credit card surcharges – the amount above the sales price that the merchant pays the credit card company for the transaction – to the customer. Violators can face second-degree misdemeanor charges.

The merchants argued before the 11th U.S. Circuit Court of Appeals last summer that the law violates free-speech rights and the court agreed. A lawyer for Dana’s Railroad Supply in Spring Hill argued the merchant wanted to “disclose the true cost of accepting credit cards” to customers of the model-railroad hobby shop. Attorney General Bondi’s office countered that the law simply deals with a “pricing practice” and is not a free-speech issue.

Although the U.S. Supreme Court refused to hear this Florida case, it did rule that a similar New York law involved regulating speech and returned the case to a lower court for further consideration. For our readers who accept credit card purchases for policy premiums and other services, we advise you to consult with your attorney on how this ruling may impact your business practices.


Appeals Court Rules Law Enforcement Can’t Use Black Box Data 
The Fourth District Court of Appeal in a 2 to 1 decision, in a first of its kind ruling in Florida, ruled that drivers have a “reasonable expectation of privacy” in the data contained in their car’s black box, meaning a warrant is required before police can get the data from the box.

Since 2003, South Florida police have used auto black box data in their investigations, particularly when they are trying to determine the speed of drivers involved in accidents and in essence, the ruling indicates that any evidence used in cases of black box data will now be considered an illegal search and seizure.

Judge Alan Forst in his dissenting opinion, wrote that the driver didn’t have a privacy right when it came to the car’s black box.

“Obviously, searches of (event data recorders) in motor vehicles were not on the minds of the first United States Congress when the Fourth Amendment was introduced in 1789, and the United States Constitution’s right to privacy sheds no light on the subject,” Forst wrote.

The judge noted that across the nation there have been only two court cases involving warrantless searches of black boxes, one from New York and one from California. While rulings in both of those cases found the downloads were legal, Forst noted “there is no definitive answer to the question posed in this case…A reasonably prudent seller of his/her used cellphone or personal computer would clear the hard drive of all personal information; the seller of a used vehicle would be unlikely to take similar action with respect to the vehicle’s (black box),” Forst wrote. We will be watching to see how this ruling will impact auto insurance rates and claims going forward.


A Closing Invitation…     
As always, it’s a privilege to “talk” to each of our almost 1,200 readers and more importantly, YOU inspire our team to deliver solid information that you can use and enjoy.  We love guest authors, too, so if you have a knack for writing and want to be “published,” consider this your first stop for creativity and originality.  Whether it’s an article about how to solve an insurance issue, how to meet deadlines and remain sane, “a day in the life of an insurance professional”, or how to stay on top of technology when you use a Blackberry, please consider the LMA newsletter YOUR newsletter!
Have a great week!