The third week of legislative committee meetings
We’re recapping the third week of legislative committee meetings from January 22-24 and previewing this week’s fourth week of meetings – the first of three weeks in a row. The legislature will then take off the last week of February and begin the formal 60-day legislative session on March 5.
Governor DeSantis this past Friday released his proposed $91.3 billion budget for the new fiscal year that begins July 1. His budget would increase money for schools, water quality and environmental projects, and $335 million in tax cuts, including local school tax contributions. The budget is $2 billion more than the current budget. The Governor noted that reflects a projected $1 billion increase in general revenue taxes and federal and state monies for Hurricanes Michael and Irma recovery.
The Governor’s budget is scheduled to be heard in the Senate Appropriations Committee on Wednesday. The Florida House of Representatives and the Senate will release their budgets in the coming weeks and all three have to agree by session’s end. Remember, the budget is about public policy, not about the money!
Assignment of Benefits (AOB) reform and the broader issue of excessive litigation remain the big story. CFO Jimmy Patronis delivered a strong indictment of the bad players involved during the Associated Press Legislative Planning Session last week in Tallahassee. Patronis was quoted as saying “the bad attorneys and contractors that exploit it we should bury them under the jail.” He said he’s also warned insurance companies to treat policyholders right so they don’t feel they have to resort to AOBs.
Here’s this week’s update on AOB and other bills of interest, among the 845 bills filed.
Assignment of Benefits (AOB) – At the second meeting of the Senate Banking & Insurance Committee on January 22, Chairman Doug Broxson (R-Pensacola) announced that “we’ve got to own this issue once and for all,” noting this marks the seventh legislative session that AOB reform is being considered.
The committee meeting provided the baseline discussion and testimony that’s been heard many times in the previous six sessions, in what’s become a “habitual battle between insurance companies and attorneys,” to quote former Justice Ken Bell, representing an insurance industry group. There’s renewed optimism that lucky seven will be the charm, as Broxson, an insurance agent by trade, is a longtime advocate for AOB reform.
Senator Broxson has made it clear that he’s setting his sights on fixing the state’s one-way attorney fee law that encourages needless litigation against insurance companies across many lines. “If we deal with that, I think we’ll be dealing with the core issue that has been driving the rates up,” Broxson said.
The Committee heard from Insurance Commissioner David Altmaier who warned the increase in litigation over property claims (the state expects to see 34,000 AOB-related lawsuits this year) is going to push carriers to eventually stop doing business in Florida.
“This is an issue associated with excessive litigation associated with the assignment of benefit mechanisms,” Altmaier said, noting that “we are going to hear more and more about insurance companies that are leaving our market because of this issue and leaving consumers with little to no choice with respect to insure their most valuable assets.
Barry Gilway, President and CEO of Citizens Property Insurance Corp., which had to raise rates an average of 8.2% statewide in December due mostly to costly litigation, told the committee that AOB abuse is now a statewide problem.
“It was primarily a South Florida problem until 2016, but now it is exploding across the state,” he said. “When you get a litigated claim, it costs you over three times versus a non-litigated claim. A $1.3 billion impact just as the result of the increase from 2013 to ’18 on the overall industry. The numbers are absolutely staggering.”
Senator Broxson has filed SB 122, which would prohibit policyholders from transferring their rights to attorney fees in claims disputes to third parties, such as repair or restoration contractors. The bill will be discussed again this afternoon at 4pm before Broxson’s committee and is expected to be queued up for a vote. (To watch the meeting live or later, click on The Florida Channel.) A comparable bill, HB 301 by Rep. David Santiago (R-Deltona), was filed in the House (see the “Omnibus Insurance Bill” in the next section).
The one-way attorney fee law requires insurance companies to pay the attorney fees of policyholders who sue their company and prevail – even if the award or settlement is just one-dollar more than a previous payment or offer. It was meant to protect policyholders’ legal rights but has been used and abused by third-party contractors and attorneys to sue carriers with or without a policyholder’s permission.
Essentially, the three-page bill says that attorney fees must be awarded to a named insured or beneficiary and can’t be assigned or extended by agreements, which would eliminate the incentive for contractors to have customers sign AOBs. This bill could change significantly throughout the session depending on stakeholder input/feedback, testimony during committee hearings, and other negotiations. So while this is a first draft, so to speak, we are encouraged that the Senate is looking at the issue this year.
Likewise, HB 357 by Rep. Brett Hage (R-The Villages) reduces the time period from 90 to 30 days within which a contractor must begin to perform certain work on residential real property after receiving initial payment; it also reduces from 60 to 30 days the time period for the contractor to perform substantial work on such property – work equal or greater to the amount already paid. It also removes an exemption from permitting requirements for certain solicitors, salespersons, and agents using sample catalogs or brochures. It has a similar bill in the Senate (SB 420) by Senator Dennis Baxley (R-Lady Lake).
Also filed is HB 359 by Rep. Javier Fernández (D-Coral Gables) which has a lot in common with some of the AOB consumer safeguard bills of the 2018 session. The bill requires the third-party who was assigned the AOB to send a copy of the AOB to the insurance company within 3 days after being executed “by all named insureds”; maintain records of services provided; cooperate with the insurance company in its investigation of the claim, including providing copies of records within 7 days; and provide a written, itemized, per-unit cost statement of services actually performed. Prior to filing a lawsuit, the third-party must participate in an appraisal or other alternative dispute resolution method in the policy and submit to carrier examinations under oath. They must also agree to hold all named insureds harmless for payment beyond the policy deductible, regardless of whether the AOB is later deemed invalid. The bill also shifts the burden onto the party seeking relief to demonstrate the insurer wasn’t prejudiced in handling the claim.
We will be following all of these bills and report on developments as they occur.
Many believe a solution to AOB abuse must also involve reform of Florida’s Bad Faith law. We’ve covered this on The Florida Insurance Roundup podcast episode on Bad Faith (and listening to former OIR General Counsel Belinda Miller’s comment beginning at 11:42 into the program is instructive about the market being “out of balance.”)
(For a recap of last year’s failed reform efforts, read LMA Backgrounder: Assignment of Benefits (AOB) 2018. For the complete picture of AOB Abuse in Florida and what we’re doing about it, visit our AOB webpage.)
Omnibus Insurance Bill – This session’s “catch-all” bill for everything else insurance is HB 301 filed last week by Rep. David Santiago (R-Deltona) and includes some of the elements of Senator Broxson’s SB 122 one-way attorney fee bill. Some items in the bill have major policy implications like lowering the threshold for surplus lines insurers to continue their push into admitted markets, capping Citizens Property Insurance rates in Monroe County to 5% versus the current 10%, and provisions on Personal Injury Protection (PIP) deductibles.
Bills to repeal PIP passed the Florida House over the past two years only to die in the Senate. A recent study shows Florida drivers pay the third-highest auto insurance premiums in the country. Repealing PIP would save Florida drivers about $81 annually. Florida remains one of two states that do not require bodily injury coverage, under our current nearly 50 year-old “no-fault” auto insurance system. (See LMA Backgrounder: Personal Injury Protection for more details on the history of PIP reform and the failed 2018 bills, the latest data, and past committee and stakeholder discussions.)
Hurricane Michael Reimbursement – Last week, Senator Bill Montford (D-Tallahassee) whose district includes some of the worst hit areas of the storm, filed SB 376 that would allot up to $50 million a year from the state Land Acquisition Trust Fund for the 14 counties that suffered damage. The trust is funded by doc stamp taxes for land and water conservation and last year brought in $870 million.
In the House, Rep. Brad Drake (R-DeFuniak Springs) has filed HB 191, to create the Northwest Florida Rural Inland Affected Counties Recovery Fund. The fund would provide grants in the inland counties of Calhoun, Gadsden, Holmes, Jackson, Jefferson, Liberty and Washington counties using 5% of the $2 billion BP Oil Spill Deep Horizon settlement which is $100 million. The bill got a boost recently from Senate Appropriations Chairman Rob Bradley, who expressed willingness to consider a broader use of oil spill funding.
Courts – SB 328 by Senator Jeff Brandes (R-Pinellas) seeks to shift court cases that are now heard in county court to be heard in the circuit court. Reactions are mixed with some saying that circuit court dockets are more jammed than county court dockets so it will take longer to get cases resolved; others say it will force more settlements because of the delay. The bill is scheduled to be heard today by the Judiciary Committee. HB 337 by Rep. Tom Leek (R-Daytona Beach) is similar, with both bills looking to shift the docket makeup of county and circuit courts with the aim to redistribute caseload to purportedly make the court system more efficient.
Autonomous Vehicles – HB 311 represents the on-going quest to balance proper regulation with encouraging Florida’s developing autonomous vehicle (AV) market. The bill, sponsored by Rep. Jason Fischer (R-Jacksonville) himself an engineer, covers a lot of ground. It allows fully AVs to operate regardless of the presence of a human operator; provides that the automated driving system is deemed the operator when the system is engaged; authorizes the Florida Turnpike Enterprise to fund & operate test facilities; provides requirements for on-demand AV networks to operate; and revises registration requirements for AVs. SB 660 filed last week in the Senate by Senator Jeff Brandes (R-Pinellas) is comparable.
Communications While Driving – Where efforts failed last year to make texting while driving a primary offense (from the current secondary offense, where you can be ticketed during a traffic stop made for another reason), this year’s efforts so far are concentrated on the much broader distracted driving created by any wireless communications device.
SB 76 by Senator Wilton Simpson (R-Trilby) and HB 45 by Rep. Emily Slosberg (D-Boca Raton), essentially bar any hand-held devices while driving. Neither bill has been scheduled for a hearing. SB 76 creates the “Florida Ban on Wireless Communications Devices While Driving Law”; prohibiting a person from operating a motor vehicle while listening or talking on a wireless communications device for the purpose of voice interpersonal communication. It also makes it a primary offense. So instead of just prohibiting texting, it would not include listening or talking on such a device for voice as well as non-voice communication. Exceptions are radio broadcasts, navigation assistance, and safety-related alerts.
HB 45 creates the “Hands-free Florida Law” and is similar but seemingly less stringent, in that it does allow the use of a hands-free device for voice communication. It prohibits operation of a motor vehicle while holding or touching a wireless communications device. It has similar exceptions; requires law enforcement officer to note the offender’s race on the citation and to the DHSMV; requires a report to Governor and Legislature; and also makes it a primary offense.
Concealed Weapons Licenses – SB 108 by Senator Lauren Book (R-Plantation) transfers the concealed weapons licensing program of the Department of Agriculture and Consumer Services to the Department of Law Enforcement (FDLE).
Property-Assessed Clean Environment – HB 63 by Rep. Ray Rodrigues (R-Fort Myers), would allow the use of Property-Assessed Clean Environment (PACE) funds to get folks off septic tanks and connected to municipal sanitary sewer systems or to retrofit to an advanced onsite treatment system. An identical bill, SB 282, has been sponsored in the Senate by Senators Ben Albritton (R-Bartow) and Joe Gruters (R-Sarasota).
Smoking on Beaches – Smoking on public beaches would be prohibited under SB 218 by Senator Joe Gruters (R-Sarasota) who hails from an area consistently on the Top 10 list of beaches in the country. Doing so would be a civil infraction with a maximum penalty of $25 or 10 hours of community service.
Attorney Fees in Injunctions – HB 297 by Rep. Chuck Brannan III (R-Lake City) would prohibit attorney fee awards in certain protective injunction proceedings, including domestic violence cases.
Homeowners Insurance Policies – SB 380 by Senator Brandes is a “glitch bill” that fixes an oversight in last year’s HB 1011 which said that property insurance policies must prominently display that they don’t provide flood or other coverages. HB 1011, however, didn’t contemplate “endorsement” of coverages onto property insurance policies, so SB 380 fixes this, as will a pending House companion bill.
Disclosure of Sinkhole Activity – Landlords would have to disclose sinkhole activity to renters under SB 392 by Senator Gary Farmer (D-Ft. Lauderdale). This includes suspected, known, or reported activity.
Red Light Cameras – Efforts resume in the Florida legislature this year to ban the use of red-light cameras by local law enforcement in Florida’s 67 counties and 435 municipalities. The state Supreme Court ruled unanimously last year, clarifying the right of municipalities to use third-party contractors to assist in the traffic infraction process. The Court found that local governments have the right “to contract with a private third-party vendor to review and sort information from red light cameras… before sending that information to a trained traffic enforcement officer, who determines whether probable cause exists and a citation should be issued.”
HB 6003 by Rep. Anthony Sabatini (R-Clermont) would do away with the equipment and the trained officers currently allowed under the Mark Wandall Traffic Safety Program. The bill was passed on January 23 by the Transportation & Infrastructure Subcommittee and has its next stop in the Appropriations Committee. There’s a similar bill (SB 622) in the Senate, sponsored by Senator Brandes. Last July, a federal judge sided with more than 70 cities and counties in dismissing a class action seeking refunds for motorists who had been ticketed after the cameras photographed those running red lights.
Possession of Firearms on School Property – People, presumably including students, would be allowed to carry a gun in a vehicle on school property under HB 6005 by Rep. Cord Byrd (R-Jacksonville Beach) and Rep. Anthony Sabatini (R-Clermont). This includes any preschool, elementary, middle, junior high, secondary school, career center, or postsecondary school, whether public or nonpublic.
Rep. Sabatini is also sponsoring HB 6007 which would remove the current prohibition against those with concealed carry permits from taking their gun to school. The bill would allow such licensed college and university students to carry guns into the classroom. Sabatini has been quoted as saying “it’s a natural corollary to begin allowing good people to arm themselves on college campuses to prevent the next mass shooter,” following the state’s effort to allow trained teachers to carry guns in the classroom in the aftermath of the Valentine’s Day 2018 mass shooting at Marjorie Stoneman Douglas High School in Parkland, Florida.
Pet Leasing – Calling it a predatory and deceptive practice, Senator Annette Taddeo (D-Miami) last week filed SB 316 which would regulate the contracts for the sale or lease of pets. Just as with expensive cars, a lease-to-own practice allows people to make payments on pets, usually expensive pure breeds, until they own them. The ASPCA says all but six of the roughly 65 puppy-selling stores in Florida offering leasing options.
