Jobs, Jobs, Jobs
The state of Florida has submitted four regional proposals to Amazon in hopes of becoming the site of the online retail giant’s second headquarters. The four – South Florida, Orlando, Tampa Bay, and Jacksonville – are among 238 proposals Amazon had received by last week’s deadline from cities and regions in 54 states, provinces, districts, and territories across North America.
To the victor will go impressive spoils. The Seattle-based company says it will invest $5 billion and create 50,000 high-wage (average $100K salary) jobs for the second headquarters it dubs “HQ2”. There’s also the economic multiplier effect and impact on related companies and entire industries. Amazon has already spun out about 50 startup tech companies.
This is a huge opportunity and one that many in the know consider once-in-a-lifetime for its impact on creating badly needed high-skilled jobs. For those in the real estate and insurance sectors of course, more jobs mean more homes and greater insurance needs. This is one project folks that we all need to get on board with and help push the Sunshine State success story in our own special way.
Governor Scott, who has been laser-focused on creating jobs in Florida in his two terms in office, has had a relationship with Amazon executives for the past four years. His efforts helped bring the first Amazon warehouse fulfillment centers to Ruskin and Lakeland in 2013 that have since grown to collectively employ more than 4,000 people.
Amazon’s requirements for HQ2: a diverse metropolitan area of at least one-million people with enough land to build a 500,000 square-foot building and another eight million square feet of additional land. A nearby international airport, major highways, good universities, mass transit, adequate workforce – and of course, cost of living and economic incentives – are all additional criteria. An $85 million fund the legislature created last spring to provide infrastructure and job training is no doubt in the mix of the Florida offers.
Each of Florida’s four regions is able to check a lot of the boxes on Amazon’s wish list and thus has a legitimate shot of landing HQ2. While the actual details of the proposals are confidential, Orlando notes that Amazon is already building a big distribution center near the airport that will employ 1,500 workers. The South Florida proposal is said to contain eight sites from the tri-county area and emphasizes the area’s multilingual diversity of culture and its position at the crossroads of Caribbean and Central and South American trade. Amazon CEO Jeff Bezos is an ’82 graduate of Miami Palmetto Senior High School. Jacksonville is touting its three new Amazon fulfillment centers that opened this year, employing more than 3,000 and the availability of inter-model logistic magnet Cecil Field Business Park. Tampa Bay notes it is Florida’s largest and fastest-growing tech hub, especially for female tech workers, and has a thriving seaport and airport.
Amazon says it will make a decision next year. Regardless of its ultimate choice, it’s clear to us that Florida is already a winner and has benefited greatly from the fulfillment centers that continue to open around the state.
Irma Lessons Being Tallied
DOT Chief: Making both sides of interstates one-way no way to evacuate
Florida Department of Transportation Secretary Michael Dew testified last week that while it sounds like a good idea, turning both sides of Florida’s interstate highways and turnpike into one-way traffic during storm evacuations is not a safe nor logistically workable solution. Dew told the Florida House Select Committee on Hurricane Response and Preparedness that instead, both shoulders on northbound lanes should be opened to handle the additional volume of vehicles. Although both sides of major highways were opened for select periods during the Hurricane Irma evacuations, such a scheme he said requires law enforcement resources at interchanges and severely limits where and how motorists using previously wrong-way lanes can exit the highway for services. It also impedes fuel and other vehicles delivering needed supplies to storm-targeted areas. While using shoulder lanes sounds good, he acknowledged that driving over rumble strips is unnerving for those motorists using shoulder lanes and pledged to examine the lanes’ future design. Here’s the latest on other post-Irma developments:
Damage & Claims
- Total Estimated Insured Losses in Florida as of a week ago Friday (Oct. 20) were $5.3 billion. Almost 773,000 claims have been filed, with nearly 41% closed, and a paid to unpaid ratio of 19:13. Industry estimates of total damage range from $8 billion to $16 billion. OIR will post updated figures here by tomorrow morning.
- Regardless of insurance, some of those with Irma (and Harvey) damage are complaining they haven’t received emergency disaster assistance. FEMA says it must first inspect and verify damage before payments can be made and acknowledged delays, saying its hiring hundreds of additional people in the next few weeks, according to the New York Times.
- Meanwhile, some Floridians with National Flood Insurance Program (NFIP) policies are facing the choice of “raise or raze” given the severe damage done to their homes from Irma’s flood waters. Local officials designating such properties as having special “substantial damage” are also adding to a homeowner’s cost.
- Flooded vehicles are also costly. In the same season Hurricane Harvey is smashing records for vehicle insurance claims, a report says Hurricane Irma has generated a hefty number of its own in Florida — more than 215,000.
- Collateral damage from Irma now includes financial institutions, who report that one-month delinquency on mortgages soared nearly a half-percentage point last month driven by deterioration in states impacted by the recent hurricanes, including Florida,whose delinquency rate was 7.67%
- The reinsurance market is closely following damages from Irma, Harvey, and Maria. Hannover Re’s CEO told Best’s News that if combined industry losses exceed $100 billion, his company would seek a return to 2015 rating levels, which could mean 40%-to-50% increases for Florida cat-exposed property.
- The state of Florida is tallying the expenditures it had to make in its response and recovery efforts, which currently as discussed in the Senate Appropriations Committee last week, total $650 million in state agency expense with a portion of that being reimbursed by the federal government. However, even with the federal government help, Florida’s unexpected hurricane expense will most likely erase any surplus the 2018 legislature had counted on for this budget year.
- The Florida Department of Financial Services, which established three fraud strike force units in the hardest hit areas of the state post-Irma reports its first arrest. A Fort Myers man was arrested after he was found to be conducting “subpar” roof repairs. He had no contractors license either. Nor workers’ comp insurance coverage. Other than that, everything was tip-top. More here.
- Insurance Commissioner Altmaier is again warning homeowners not to sign Assignment of Benefits (AOB) agreements with contractors when ordering Irma repair work. He issued the reminder during testimony last week on AOB abuse during a legislative committee meeting (more in this newsletter). In a recent press release he offers consumer tips and encourages homeowners to file a claim directly with their insurance company to maintain control of their policy.
- Florida officials say they have distributed more than $1 billion worth of food assistance following Hurricane Irma. The Department of Children and Families says Irma has had an unprecedented impact on families.
- The Federal Housing Administration (FHA) is extending its initial 90-day foreclosure moratorium for FHA-insured homeowners impacted by Hurricanes Irma, Maria, and Harvey for an additional 90 days due to the extensive damage and continuing needs in hard-hit areas. The Hurricane Irma moratorium is extended through March 9. Other helpful programs here.
U.S. Senate Committee Asks Florida About Nursing Home Deaths
In a recent letter to Florida health officials, U.S. Senate Finance Committee leaders asked about the effectiveness of emergency preparedness and response for nursing homes. This letter comes on the heels of 14 nursing home deaths in a Hollywood facility. The controversy pits Governor Rick Scott against the nursing home executives who say the Governor gave them his cell phone to call if they needed help in the aftermath of Hurricane Irma last month. The facility leaders said they left messages for the Governor but there was no response. The Governor contends that the nursing home should have called 911. We will follow this story and you can read the federal inquiry here.
Congress Provides Financial Bail-Out to NFIP
Florida’s private flood market featured as an attractive alternative
A $36.5 billion hurricane relief package from Congress was signed by President Trump last week, with almost half of that going to replenish the National Flood Insurance Program (NFIP). The program was already $24.6 billion in the red prior to Hurricanes Harvey, Irma, and Maria. Estimates are the claims from those storms could amount to $16 billion – much more than the $3.5 billion in premiums NFIP will earn this fiscal year. The federal government is spending almost $200 million a day for disaster response. The rest of the money in the package will go toward FEMA’s rapidly dwindling emergency disaster assistance accounts we talked about earlier in the newsletter.
What wasn’t included was an additional $27 billion requested for additional hurricane rebuilding money for Florida and $19 billion for Texas from Hurricane Harvey damages. Another $3 billion in immediate agriculture assistant grants for Florida’s citrus growers was also denied – for now. Congressional leaders vowed to include all of these monies in another spending bill next month, something the White House said it will go along with but only if the aid is paid for by cuts from other government programs.
At last report, NFIP had 24,316 Florida claims with about 8% closed and total insured losses paid of $72 million. But the NFIP turn-down rate on those closed claims is 90%, with FEMA claims branch chief Greta Richardson explaining in this Palm Beach Post story that “Irma was a hurricane that brought in a lot of wind damage.” The quote implies – but doesn’t specifically state – that the high turn down rate might have to do with those claims being non-covered wind damage. Florida U.S. Senator Bill Nelson read that and has asked FEMA to make sure procedures are in place to adequately assess flood claims.
Meanwhile, in Florida’s private flood insurance market, 1,563 flood claims have been filed as of October 20, with 34% closed and a turn-down rate of 39%. Florida’s success story with private flood insurance was recently featured in E&E News and I was happy to point out in their story that while flooding has historically been seen as too risky for private companies, recent advances in computer modeling have helped them better predict risk and make insurance more affordable. The fact is it’s working for Florida and can work in other states, too, and provide the needed alternative to the financially-underwater NFIP.
The need for more comprehensive offerings is urgent. CoreLogic has estimated about 80% of residential flood damage in the Southeast from Irma is uninsured and could amount to upwards of $30 billion. That is frankly startling and I believe will impact the ability of our communities to successfully recover. As we’ve said here many times, just because someone’s not in a flood zone doesn’t mean they don’t need flood insurance. The NFIP is currently set to expire in mid-December, when its current extension runs out. We will continue to watch this story closely.
In addition to DOT Secretary Dew’s views on one-way evacuation traffic on interstate highways during Hurricane Irma, Florida legislators also heard from petroleum marketers and utilities on their response during Irma and suggestions going forward. It’s all in this week’s 2018 Bill Watch on the major legislation we’re following so far, with this past week’s updates in bold print in individual bills:
Hurricane Irma Damage – The House Select Committee on Hurricane Response and Preparedness last week held its second hearing to consider critical issues related to state disaster policy post-Hurricane Irma. Petroleum suppliers and marketers said they did the best they could in keeping the gas trucks heading into South Florida to help fuel the vehicles of evacuees in front of the storm. Using rail cars in the future was discussed but in the end, you still have to offload the fuel into trucks at some point.
Several associations representing electric utilities testified as well about their efforts to restore power to the 6.5 million homes and businesses (about 65% of the state) that lost it during Irma’s landfall September 10-11. Florida Power & Light, the largest supplier, said it will seek to recoup $1.3 billion from customers for repair of lines damaged in the storm. The damage depleted FPL’s storm reserve fund and FPL said those additional costs are not covered by regular rates customers pay. FPL can do so with approval of the Public Service Commission. While utilities can generally build costs from past events into future rates, insurance companies by law cannot. It’s worth noting though that reinsurance rates certainly are based on past events and subsequent losses and those future reinsurance costs are allowed to be reflected in future rate requests by insurers to OIR.
Committee Chairman Nuñez is digging deep into lessons learned from Irma and potential changes in state policy and procedures that may be needed for better response and recovery in future events.
Personal Injury Protection (PIP), also called No Fault Insurance – Rep. Erin Grall (R-Vero Beach) has filed HB 19, the second year in a row in her attempt to repeal Florida’s PIP laws. This year’s version is different from her 2017 version in that it does not require mandatory medical payments coverage but has the same mandatory Bodily Injury (BI) coverage requirements starting January 1, 2019. In addition, this bill attempts to provide coverage for “resident relatives” of the named insured in the household. HB 19 has received just one committee reference (Commerce) and if passed will then go to a floor vote. When just one committee is assigned, it’s usually a signal that leadership wants a bill to pass. Past practice is rare to see just one committee stop.
Senator Tom Lee (R-Brandon) R-of Hillsborough County has his re-filed version of PIP repeal, SB 150 that would eliminate the state requirement that motorists carry $10,000 in PIP. It replaces it with mandatory $5,000 of medical payments (Med Pay) coverage and varying amounts of Bodily Injury liability limits which appears to give consumers choices:
- 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 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.
HB 19 revises the uninsured and underinsured coverage legal damage thresholds. The issue of keeping PIP in law or eliminating it has been the subject of debate for almost two decades.
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. These requirements were originally established to help prevent fraud and include verification that actual services were rendered and weren’t solicited by the provider. While we have not had a personal conversation with Rep. Gonzalez to understand the catalyst behind this bill, we surmise that as an orthopedic surgeon, lessening the insurance paperwork burden for medical providers has long been a goal of those in the profession. This bill appears to be a step in that direction. The bill has been referred to the House Insurance and Banking Subcommittee.
Assignment of Benefits (AOB) – In the Senate Banking and Insurance Committee last week, Chairman Flores held the second meeting of a panel discussion (here on pages 2-4) to frame the assignment of benefits debate. (See the following story in this newsletter.)
We will follow closely in hopes that Senator Dorothy Hukill’s (R-Port Orange) version of AOB reform (SB 62) gets a hearing, as it prohibits certain attorney fees and requires those vendors that execute the Assignment of Benefits to comply with certain requirements prior to filing suit. Many of you followed this legislation filed last year and it did not move. Suffice it to say that in the past several months, almost every single Florida newspaper and other media have reported about the great consumer harm that is occurring because of assignment of benefits abuse. Hurricane Irma repair has revitalized the debate. The CFO has come out swinging about AOB on the Florida Chamber’s Bottom Line program and Insurance Commissioner David Altmaier has made AOB reform his top priority. Citizens Property Insurance Corporation’s attempt to address AOB abuse –the implementation of a managed repair program with a $10,000 water claim limit for those who don’t use the program — was approved by OIR in August for Citizens HO-3 and DP-3 policies.
AOB abuse is now increasing in the auto insurance lines, as insurance companies note an increase in customers being solicited out of the blue for a “free windshield” with accompanying exorbitant claims costs. Senator Hukill has a bill for that, too, in SB 396, which would allow auto insurers to require an inspection of the damaged windshield of a covered motor vehicle before the windshield repair or replacement is authorized. The bill has not been assigned to committees yet. In a recent conversation with a circuit judge, we asked what kinds of cases made up his judicial docket. He couldn’t be specific but said he “keeps seeing more and more windshield cases.” We have begun the research to ascertain in certain judicial circuits if we can show the exponential increase in windshield cases over the past few years. SB 396 has been referred to the Banking and Insurance, Commerce and Tourism, and Rules committees.
SB 256 by Senator Gary Farmer (D-Ft. Lauderdale) 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. SB 256 has been referred to the Committees on Banking and Insurance, Appropriations, and Rules but has not been scheduled to be heard. Insurance Commissioner Altmaier, testifying in the Senate Banking and Insurance Committee meeting on the AOB panel last week, said prohibiting insurers from doing so “is one of the worst ideas presented during this meeting.” He said if companies aren’t allowed to recoup legal losses through rates, you’ll eliminate their incentives to litigate and rates will definitely go up then.
Insurance Rates – 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 256 has been referred to the Committees on Banking and Insurance, Appropriations, and Rules but has not been scheduled to be heard.
Direct Primary Care – SB 80 by Senator Lee, allows doctors to enter into monthly fee for service arrangements directly with individuals or employers, essentially bypassing health insurance organizations. Informally dubbed “concierge medicine for the masses”, the bill passed by unanimous vote out of the Health Policy Committee last week (its second committee of reference) and now goes to the Appropriations Committee. SB 80 has a companion bill in the House (HB 37) by Rep. Burgess which has only one committee stop. When just one committee is assigned, it’s usually a signal that leadership wants a bill to pass, especially given the House passed a similar measure last session, but it stalled in the Senate.
Health Insurer Authorization – SB 98 by Senator Steube and HB 199 by Rep. Shawn Harrison (R-Tampa) would prohibit prior authorization forms from requiring information not necessary to determine the medical necessity or coverage for a treatment or prescription. The bills would also require health insurers and their pharmacy benefits managers 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. Both bills have been referred to their respective insurance committees. Senator Steube’s SB 162 would prohibit health insurers and HMOs from retroactively denying insurance claims under certain circumstances. The bill has been referred to the Banking and Insurance, Rules, and Health Policy Committees.
Flood Insurance and Mitigation – 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. We are closely following this bill including asking the committee chair to put this on her next committee’s meeting agenda.
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 bill has been assigned committees.
Florida Hurricane Cat Fund – HB 97 by Rep. David Santiago (R-Deltona) adds an additional 10% charge to an insurer’s reimbursement premium with the money going to the Division of Emergency Management to fund a wind and flood mitigation program for residential structures. The charge would increase to 15% and remain there until the fund reaches $10 billion. It also contemplates OIR levying an emergency assessment to cure certain deficits in the fund. The bill also revises reimbursements the SBA must make to insurers to add a 25% and 60% level of insurer’s losses from each covered event in excess of the insurer’s retention and the overall contract year obligation. The bill has been referred to the House Insurance and Banking Subcommittee meeting.
Workers’ Compensation for First Responders – SB 126 by Senator Victor Torres (D-Kissimmee) and HB 227 by Rep. Matt Willhite (D-Royal Palm Beach) removes the requirement that there be a physical injury in order to receive medical benefits for a “mental or nervous injury”, so long as the responder witnessed a specified traumatic event and begins treatment within 15 days. Neither bill has been scheduled to be heard.
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.
Telehealth – SB 280 by Senator Aaron Bean (R-Fernandina Beach) is 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 has spent the past year executing 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. The bill has been referred to the Banking and Insurance; Health Policy; and Appropriations Committee, as well as the Appropriations Subcommittee on Health and Human Services, but no hearing has yet been scheduled.
Texting While Driving – SB 90 by Senator Keith Perry (R-Gainesville) would move 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. The Senate Communications, Energy, and Public Utilities committee approved the measure last week, along with an amendment requiring the officer notify the driver of the constitutional right not to have their cellphone examined by authorities. A similar bill in the House (HB 121) goes a step further by doubling fines for violations in school zones. The committee heard emotional testimony from families of loved ones who died in vehicle accidents involving drivers texting, in support of the bill. There was debate however, on just how an officer would realistically be able to tell the difference between a driver texting versus using their phone for a lawful purpose, such as map navigation. Another amendment designed to address that broader issue of distracted driving by prohibiting holding a wireless device while driving, failed.
Controlled Substances – Proclaiming that opioids are “ravaging families and communities” in Florida, Senator Lizbeth Benacquisto (R-Ft. Myers) this week filed SB 8 which would restrict 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 comes on the heels of President Trump’s declaration of a national health emergency over opioid abuse. 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.
Senators Get Input But Little Consensus on AOB Reform
One-way attorney fees the latest hang up
The Florida Senate Banking and Insurance Committee last week re-convened its industry panel discussion on Assignment of Benefits (AOB) reform with its Chairman, Senator Anitere Flores stating the goal was not necessarily to come to agreement but maybe “not hating” (as much). At its first meeting two weeks prior, the panel agreed there is a need to establish basic contract standards and that includes agreements that are in writing. The second session this past week focused on one of the more contentious issues: one-way attorney fees.
Florida’s one-way attorney fee statute awards plaintiff attorney fees for any case where the verdict or settlement is higher than the initial claims offer, even if by an amount of one dollar. “If a carrier loses by one dollar, they are on the hook for attorney fees and it allows vendors and their attorneys to threaten to sue, so yes, carriers are settling,” said panelist Christine Ashburn of Citizens Property Insurance. “It’s not fair and I don’t’ know if this 1950’s statute was meant to be used by vendors like this.” She said that Citizens is 82% more likely to get sued if a claim has an AOB.
“The lies being fed to you folks just aren’t accurate,” attorney Lee Jacobson, who represents policyholders in disputes with insurance companies, told the committee. “Suits aren’t filed unless there’s denial or low-ball. And you need a trial or for the other party to give up and say we’re wrong before there are attorney fees awarded,” he said.
Not so, said panelist Jeffrey Scott, Chairman, CEO, and President of the holding company for Olympus Insurance Company, a Florida domestic P&C insurer. He called Jacobson’s assertion that insurance companies are low-balling claims presumably for their own profit and benefit “patently false,” and pointed to underwriting losses last year by a sizeable number of companies writing in Florida, four of which went out of business this year.
“If there’s a settlement purely for economic reasons – it doesn’t mean the denial or partial payment wasn’t valid – that’s considered a ‘confession of judgment’ as if you were adjudicated to have not paid your liability. A recent court case makes it clear it requires no wrongdoing,” Scott said. “All you need is a warm body, an insurance policy, a lawsuit, and a settlement and they’re entitled to legal fees.”
The interchange prompted Senator Braynon and Chair Flores to suggest that future testimony be taken under oath to help sort fact from fiction. “Maybe someone’s telling the truth and someone is not- or you both are and there are specifics being made into generalities,” Flores said. Later, when she learned there exists a list of insurance companies who’ve been sued that Insurance Advocate Sha’Ron James volunteered to provide, Flores said “maybe there are specific problems we (the committee) are making general here” instead.
The vendor on the panel told the committee that if there weren’t one-way attorney fees, he wouldn’t be able to afford to bring suit. “And without AOB, I would have to sue the homeowner. How fair is that? AOB enhances the homeowner’s rights,” said Don DeBlander of Pro Clean Restoration and Cleaning. He said the same disputes happen with the same insurance companies over again just as the same bad vendors keep profiting as well.
Panelists said there was room for compromise – all involving keeping one-way attorney fees. Scott suggested the committee require mediation, as the legislature did years ago in resolving sinkhole disputes. Jacobson said insurance adjusters should be licensed and certified under IICRC water mitigation standards, that company adjusters be required to inspect within three days of a claim, regulation of water remediation companies, and reduce the 90 day window for settlement proposals from insurers. DeBlander echoed the 90 day timeline suggestion.
Florida Insurance Commissioner David Altmaier made clear that he doesn’t support eliminating one-way attorney fees, only limiting their availability to the policyholder – not to any assignee under an AOB. He said HB 1421 which passed only the House last spring and put staggered parameters around attorney fees, made significant strides. Insurance Advocate Sha’Ron James echoed his support.
Chair Flores made clear that any potential legislation addressing AOB concerns would have to be tied to rate decreases and challenged Commissioner Altmaier for that answer. He said it’s difficult to know how something is going to change marketplace behavior but that he believes water loss trends could be reversed. Citizens’ Ashburn said if the insurer can get back to pre-2012 water damage claims frequency and averages, Citizens customers would see rates stabilize and many would see rate reductions.
Florida’s Attorney Billing Rates Among the Highest
It’s not just the sunshine and great beaches…
Many of us are only too well aware of the high price of litigation in Florida. Now there’s a report that shows Florida’s lawyers are in the top 10 in billable hourly rates. The 2017 Legal Trends Report by software firm Clio puts the average Florida rate at $279, ranking it seventh among 49 states. When the cost of living was taking into account though, Florida’s billing rate ranks third highest, behind New York and Nevada (which was first in both categories).
Nationally, insurance, civil litigation and construction cases had the highest case values. The top 10% of insurance cases brought in more than $9,900 in revenue, but half of the insurance cases brought in less than $1,868, which “suggests that law firms often rely on a small number of cases for the bulk of their revenue,” noted the report.
You may wonder exactly how lawyers spend their time. Well, the report measured that over three key performance indicators – utilization, realization, and collection rates – to measure just how much of a lawyer’s workday contributes to actual earnings. The report found that on average, lawyers spend only 2.3 hours (29% of an 8-hour workday) on billable tasks. Which is perhaps why many lawyers work a lot longer than an 8 hour workday!
The realization rate, which is the amount of time that actually gets invoiced to a client, was 75% for Florida firms, seven points below the national average. The report notes that not all billable hours are applied to actual invoices for unknown reasons. Florida lawyers also spent slightly less time of their day working billable hours, averaging 28% of the day versus the 29% previously noted nationally.
The average hourly rate for Miami attorneys was $310, behind counterparts in New York ($344) and Los Angeles ($323), but ahead of D.C. lawyers ($304). Urban lawyers earned 25% more than rural lawyers in 2016, the year from which data was used to compile this report. The data was provided by 60,000 Clio software users from various sized law firms, together with surveys from 3,000 legal professionals and 2,000 consumers.
Florida Supreme Court Reaffirms Contingency Fee Multiplier
Plus updates on Workers’ Comp and other OIR news
There is other Florida insurance news of interest to report. The Florida Supreme Court has reaffirmed judges’ discretion to apply the contingency fee multiplier to plaintiff attorneys who prevail. The court overturned a 5th DCA ruling that such multipliers are only available in “rare” and “exceptional” cases. You can read the ruling here. Two justices dissented, writing the case points to the need for a “full re-examination of the court’s multiplier jurisprudence.”
Meanwhile, across the street at the Capitol, the Florida Office of Insurance Regulation (OIR) held a rate hearing on workers’ compensation insurance rates. NCCI filed for a statewide average rate decrease of 9.3% on behalf of about 250 insurers writing in Florida, together with a $40 reduction in the fixed expense cost of each policy. Together it comes to a 9.6% average premium reduction for 2018. It’s on the heels of this year’s 14.5% rate hike. NCCI credits the proposed decrease for 2018 on fewer claims filed this year, but warns the request was based on 2014 and 2015 data and didn’t contain much data from cases that occurred after the dual 2016 Florida Supreme Court decisions that actuarially drove this year’s rate increase. Those court decisions tossed out caps on attorney fees and restrictions on interim disability benefits. Insurance Commissioner Altmaier will rule on the NCCI rate decrease by year’s end.
And it’s that time of year when OIR sets annual profit and contingency rating factors for insurers who can’t produce credible factors on their own for future rate filings. The factors for 22 sublines of insurance range from -8.2% (Claims made in Products Liability) to +5% (Financial Guaranty).
OIR has also posted two Notices of Proposed Rule Development, one changing the name and various requirements, including fees, for discount medical plan organizations and the other clarifying rules on HMOs peddling Medicare Advantage plans be actively engaged in managed care within 24 months of licensure.
The Case of the Non-Existent Cases
What happens (sometimes) when trial lawyers cheat
Two Jacksonville law firms who collectively filed thousands of tobacco litigation cases, some on behalf of people who never smoked, have been hit with sanctions totaling $9.2 million for their “breathtaking scale of wrongdoing” by a federal court panel. Charlie “You can call me Chuck” Farah of the Farah & Farah firm and Norwood “Woody” Wilner of the Wilner Firm are now also targets of a Florida Bar investigation.
A four-judge panel of U.S. District Court judges determined that of the 3,700 Engle-progeny smoker litigation cases the two lawyers filed, 1,250 were frivolous lawsuits, “followed by years of maintaining those cases through obfuscation and recalcitrance.” According to the judges’ order, Farah’s and Wilner’s actions were the result of the state supreme court disbanding the famous statewide Engle smoker class action in 2006, which then allowed individuals who weren’t part of the action, one additional year to sue on their own. One year wasn’t enough time to file potential lawsuits on all their past client leads, so the dynamic duo filed 3,700 “actions to preserve” the cases. But as it turns out, the lawyers hadn’t had contact with some of the would-be plaintiffs in years.
Compounding the wrongdoing, according to the order, was Wilner verifying in 2011 that he’d been in touch with all of the clients in the past six months. A court questionnaire later sent to plaintiffs however, revealed more than 500 had died before their cases were filed, while others did not smoke or live in Florida – all requirements for Engle actions.
While acknowledging the $9.2 million sanction was a large number, the judges wrote it was necessary “to deter other lawyers from engaging in similarly outrageous conduct in the future.” The sanctions will come out of the two firms’ share of a $39 million escrow fund set aside for fees for all plaintiffs’ attorneys who participated in the federal Engle settlement that totaled $100 million against RJR, Philip Morris, and Lorillard Tobacco companies.
Folks, like the old saying goes, “Pigs get fat – hogs get slaughtered!”
Remembering the London Beer Flood
A lesson for today’s flood market
Given that we’ve been talking a lot lately about flooding and flood insurance, it seems timely that we are reminded that the floods that can destroy lives and property aren’t nearly as various as they once were. This month marks the 203rd anniversary of the London Beer Flood, in which a three-story vat of beer at the Meux and Co. Brewery ruptured and caused 1.47 million liters to eventually spill out – destroying homes, swamping local streets and killing eight people. While it may sound unbelievable in today’s society, accidents such as those weren’t uncommon. As we take this trip down memory lane, we’re reminded of another biggie: the Great Boston Molasses Flood. In Bean Town (which uses molasses in bean recipes, not to mention those delicious New England molasses cookies!) a large storage tank burst back in 1919, sending a wave of molasses through Boston’s North End, killing 21 folks and injuring 150.
How times have changed! As safety standards and needed regulation have improved, we no longer face such threats from our food and drink. Behind those improvements are human innovation and the better technology they develop. The same is still happening today with our flood prediction technology. Better modeling can now predict risk to the household level and price it accordingly. So no longer should anyone be at risk of flood destruction – from food or otherwise!
Stay safe this Halloween!