LMA NEWSLETTER FEBRUARY 13, 2017

As you peruse this edition, be thinking about someone you know who needs a change or wants a new adventure and recruit them to the insurance industry!  Let us know who you know and how we can help!

There are key elections in France, Germany and the Netherlands this spring that could potentially shock markets like the Brexit vote last year and drive long-term interest rates here in the U.S.  Freddie Mac economists also note that appreciation of the U.S. dollar is making U.S. real estate pricier to many international buyers.

The golf cart policy has similar coverage types to auto policies, including collision, comprehensive, property damage liability, and injury liability.   Customers can even select from several deductible options and the program features discounts, too.  Bob Ritchie says his company will continue to innovate and expects to launch several additional products later this year.

Our congratulations to Bob and Jon RItchie and the entire American Integrity team.  As they wish in golf, “May you hit it straight and far!”

The Commissioner told the Cabinet, sitting as the Financial Services Commission, that there’s been a significant increase in the use of AOBs since 2010, from 5.7% of claims to 15.9% among those insurers who track AOB and driven mostly by non-storm water claims.  Both the frequency of water claims (up 46% since 2010) and the severity (up 28% since 2010) have increased, resulting in rising loss and LAE ratios.  Commissioner Altmaier’s presentation also showed the percentage of water claims that are litigated has increased from 21% to 34% in the last three years.  He said those increased costs are being passed along to consumers:  OIR’s approval rate for residential rate increases went from 38% in 2014 to 72% in 2016. Click here to view HO3 filings through 2016 Q3.

• Allstate Insurance won and medical providers lost, when the court ruled that insurers have broad leeway in choosing fee schedules from which to reimburse providers for Personal Injury Protection (PIP) medical cases.  The 4-3 ruling overturned a 4th DCA decision that involved 32 consolidated PIP cases.  The Supreme Court found that Allstate’s policies provided legally sufficient notice that it would use the cheaper Medicare fee schedules to base reimbursements to hospitals and other providers.

• The court also shut down a defense hospitals have been raising in medical malpractice cases, by claiming that federal HIPPA and other patient confidentiality provisions trump Florida law.  Specifically, the court ruled that federal law doesn’t preempt a 2004 state constitutional amendment requiring hospitals to release adverse medical reports.  The 5-2 ruling overturned a 1st DCA decision that quashed discovery orders for a Jacksonville hospital to release its adverse reports.  The Supreme Court decision noted that “health care providers should not be able to unilaterally decide which documents will be discoverable and which will not in medical malpractice cases.”

• The court has once again, said limits on attorney fees are unconstitutional.  This time, it involves Claims Bills, which are a yearly ritual in the legislature, where injured parties ask the legislature to pay-out more than the $200,000 damage cap established in state law.  Sometimes plaintiff lawyers put in long hours on cases leading up to and including such an appeal.  The court ruled that attorney fees may not be limited by a claims bill if the limitation impairs the contract between the law firm and the client.

• The court has also ruled that a party can raise new legal claims for which the statute of limitations has expired in an amended complaint if they are based on the same facts set out in the original complaint. The ruling clarified disagreement over the “relate back doctrine” that had resulted in two different interpretations running through Florida’s district courts of appeal.

According to the lawsuit Springhill later filed this past summer against the Cohen Firm, the hiring of Harvey Cohen seemed to have been the highlight of the relationship.  Things went downhill from there.   According to Springhill’s suit for legal malpractice and breach of fiduciary duty, Cohen and his underlings engaged in a pattern of litigious mistakes and failures to communicate with their client, which resulted in Springhill paying hundreds of thousands of dollars in attorney’s fees, judgments and other costs.

The suit references three specific AOB cases in which the Cohen firm at times failed to voluntarily dismiss the AOB case within the 21-day safe harbor period, kept right on litigating without Springhill’s knowledge and consent, requested bad faith discovery items, refused to coordinate hearings on motions with insurance company counsel, failed to timely respond to discovery and when it did, was deficient, repeatedly changed attorneys, and then tried to withdraw from cases, citing irreconcilable differences with their client Springhill.

In one instance, the law firm was in such a hurry to sue, that it failed to make sure the insured had submitted a proof of loss, according to Springhill’s lawsuit.  In another case, it transposed the first and last names of the insured, sued the wrong insurance company subsidiary, and attached wrong exhibits to its AOB complaint.

The court in one of those cases found the Cohen Firm was 100% responsible for filing a meritless lawsuit and awarded the insurance company $93,000 in attorney fees to be paid by the Cohen Firm.  In another case, Cohen had to pay $83,000 in attorney fees to the insurance company.  In yet another, the court itself pointed out the many errors in Cohen’s work, including mislabeling its client Springhill as an insured, rather than a third-party company.  Oops!

Folks, these are trying times.  People are trying everything and getting away with it.  It’s nice to see that Lady Justice cuts both ways and that Karma also uses balance scales.  We are happy to discuss this case with you.

OIR’s report noted part of the cost increase was due to the approved 14.5% average rate increase it granted to NCCI last month, spurred largely by the anticipated impact of the state Supreme Court’s decisions last year in the Castellanos and Westphal cases.   (The court in Castellanos ruled the cap on attorney fees unconstitutional and in Westphal that payments to certain injured workers should be extended from two years to five years.)

The report notes that past reforms to the attorney’s fee statute spurred lower rates but that the recent court decisions “have the potential to significantly impact the workers’ compensation system in Florida.”  OIR also noted that medical cost drivers in the areas of drug costs, hospital inpatient reimbursement, and ambulatory surgical center reimbursement are noticeably higher in Florida than the nationwide average.  The legislature is considering what action to take this upcoming session in all of these areas.

Overall, OIR says Florida’s workers’ comp market is competitive and served by a large number of independent insurers. The residual market is stable and accounts for a small portion of the overall market despite increases in policy count and written premium in recent years.