Recap of committee week 3 & preview of week 4
All eyes were on the Florida Senate last week with testimony in two key committees about ways to reform the property insurance arena. One of the featured presenters was Greg Holder, a recently retired judge, now in practice with the Zinober Diana Monteverde law firm in Tampa.
Greg was invited by Senator Jeff Brandes (R-Pinellas) to Tallahassee last Monday, February 1, to present testimony to the Senate Judiciary Committee concerning the abusive P&C litigation practices and fraud he witnessed in his 26 years as a Circuit Court Judge in Hillsborough County. More specifically, Greg fully supported changes to the following Florida statutes:
- 768.79 Offer of Judgment and Demand for Judgment, amend to allow attorneys to make an offer for only the indemnity amount excluding attorneys’ fees. This change would allow the attorneys’ fees to be negotiated separately and allow prompt payment to the insured.
- 627.428 Attorney Fees, amend to create a rebuttable presumption that a lodestar fee is sufficient absent evidence that competent counsel could not be retained a reasonable manner.
- 627.7152 Assignment of Benefits, Require Direction to Pay Agreements and similar hybrid AOB contracts comply with current AOB statutory requirements and require insurers to issue insurance payments based upon verified work completed to protect the insured and the property.
These proposals align with bills currently proposed by Senator Brandes and Senator Jim Boyd (see below) as well as legislative proposals by Tasha Carter, the Florida Insurance Consumer Advocate. Greg provided not only a pointed analysis of the abusive litigation tactics, but also presented actual litigation experiences based on his years on the bench which demand required changes to Florida laws to bring true fairness and justice to Florida’s P&C markets and all Floridians.
Here is a master list of the legislative bills we’re following so far in the upcoming 60-day session that runs from March 2 – April 30 (you can click the bill link to go directly to its details farther below). “New” and “Updated” bills are so noted. Updates within each bill are noted in red font:
Contingency Risk Multipliers
Residential Property Insurance Updated
Offers of Judgment
Consumer Protection New
Insurance Policies Updated
Civil Liability for COVID-19 Damages Updated
COVID-19-related Claims Against Health Care Providers New
Motor Vehicle Insurance (PIP) Updated
Demand Letters for PIP
Motor Vehicle Insurance Coverage Exclusions
Hurricane Loss Mitigation Program Updated
Resiliency
Telehealth Practice Standards
Telehealth
Florida Building Code Updated
Contingency Risk Multipliers – SB 212 by Senator Jeff Brandes (R-Pinellas) is a renewed attempt to put the brakes on a growing abuse of attorney fee awards. The bill provides that for certain attorney fees awarded for claims arising under property insurance policies, a strong presumption is created that a lodestar fee (billable hours x reasonable hourly rate) is sufficient and reasonable; and providing that such presumption may be rebutted only under certain circumstances, specifically “in a rare and exceptional circumstance with evidence that competent counsel could not be retained in a reasonable manner.” The bill passed the House last session but got hung up in the Senate. The bill awaits its first hearing. There is no identical bill in the House. (Return to Top of Page)
Residential Property Insurance – Comparable in some aspects to SB 212 is SB 76, which focuses on attorney fees and roof replacements. Sponsored by the Chairman of the Senate Banking and Insurance Committee, Senator Jim Boyd (R-Bradenton), the bill would require a notice of intent 60 days before initiating a lawsuit. It creates a “strong presumption” for a lodestar fee (billable hours x reasonable hourly rate) but award attorney fees based on the relationship between the plaintiff demand and final judgment. If the claimant recovers at least 80%, full attorney fees would be awarded; less than 20%, then there would be no attorney fees. Judgments between 20% and 80% would merit the same proportional attorney fee. The bill also attempts to thwart neighborhood roofing canvassers trying to use insurance policies to cover normal wear-and-tear. It would require insurance companies to provide full replacement for roofs under 10 years old and establish a reimbursement schedule for older roofs based on age and type of roof to pay actual cash value. A claim would have to be filed within two years (instead of the current three) and insurance companies would have the right to request inspection and photographs prior to work commencing. A comparable bill in the House, HB 305 by Rep. Bob Rommel (R-Collier) revises definitions of supplemental and reopened claims. It awaits its first hearing.
SB 76 passed the Senate Banking and Insurance Committee on a 9-3 vote last Tuesday and now goes to the Judiciary Committee. There was lively debate on the bill with Senators Taddeo, Thurston and Rouson offering amendments to delete certain sections of the bill, including removing the attorney fee provisions, changing the statute of limitations to file a claim timeframe, and adding to the law a provision to clarify the notice provision of the bill. All of these amendments failed.
Senator Brandes noted that 93% of claims come in after the first year of the event, with most fraud occurring in later years, with Senator Boyd saying that “two years is plenty of time to file a claim.” Both pointed to Texas and two other states that experienced these same problems and passed similar legislation to solve them. “If we do nothing, rates will double,” Brandes warned, noting his personal homeowners insurance rate went up 20% last year, as have many. Boyd, an insurance agent, said “Every day we are counseling our clients who have increases of over 30, 40 and 50%. We are not limiting the rights of the policyholder. Insurance is the contract between the policyholder and insurer and if the insurer misbehaves certainly the policyholder has the right to pursue them. The lawyer doesn’t have the right to be paid an exorbitant amount.” Under federal law, he noted, contingency fee multipliers are awarded only in “rare and exceptional circumstances” when the lodestar fee would not have been “adequate to attract competent counsel.” Boyd said the Florida Supreme Court has not adopted the federal standard and has held there is no “rare and exceptional” circumstances requirement before a court can apply a contingency fee multiplier. “Reforming the multiplier will help consumers,” he said.
The Office of Insurance Regulation made a presentation last month showing that homeowners insurance companies will likely double their losses from 2019 to 2020. The combined ratios are above 100 for the third year in a row, with net underwriting losses in each of the past five years.
Florida’s Insurance Consumer Advocate, Tasha Carter, testified before the House Insurance & Banking Subcommittee last week and weighed-in on many of the same issues addressed in this Senate committee meeting. She said the current 3-year limit to file hurricane claims makes it hard for insurance companies to “effectively and adequately” adjust claims when some are filed so long after the purported initial loss. She is among the first to admit that insurance fraud and inflated claims are significant problems. Her slides (beginning on page 37) show non-medical insurance fraud amounts to $40 billion and costs the average family $400 to $700 per year in increased insurance premiums. She said 1 of 10 P&C claims are fraudulent. Insurance litigation in Florida, she testified, has grown from 27,416 lawsuits in 2013 to 85,007 in 2020. (Return to Top of Page)
Offers of Judgment – SB 686 by Senator Jeff Brandes (R-Pinellas) would allow parties in a lawsuit to make an exclusive offer of judgment identifying the total amount of indemnity or damages and stipulating attorney fees and costs would be determined at a later date by the parties or the court. A party serving the offer would not be required to stipulate an amount offered for attorney fees and costs; the other party would have 30 days to challenge the validity of the offer. The bill awaits its first hearing. There is no House companion bill. (Return to Top of Page)
(NEW) Consumer Protection – HB 717 by Rep. Chuck Clemons (R-Dixie & Gilchrist) attempts to go to the heart of insurance fraud in Florida – unlicensed and unregulated contractors. The bill prohibits unlicensed activity by an adjusting firm; prohibits a person from providing claims adjusting services unless the person meets specified requirements; and prohibits licensed contractors & subcontractors from engaging in certain activities unless licensed & compliant as public adjusters. The bill also provides disclosure requirements that insurance coverage must meet before being eligible for export under Surplus Lines Law; prohibits foreign venue clauses in property insurance policies; and provides penalties for a licensed bail bond agent or a temporary bail bond agent who knowingly engages in certain activities.
The bill also address life & health insurance lines. It authorizes regulators to disapprove use of insurance agency names containing words “Medicare” or “Medicaid” and prohibits life insurers from writing new policies of industrial life insurance beginning on a certain date. The bill was filed last Wednesday and is awaiting its first hearing. There is no identical Senate bill.
The issue of homeowners (and auto) fraud and unlicensed activity was brought up in a presentation to the Senate Judiciary Committee last Monday by the Office of Program Policy Analysis and Government Accountability (OPPAGA), which is Florida’s version of the federal GAO. Staff Director Dr. Emily Leventhal said their review of data from 2015-2020 shows that homeowners insurance fraud referrals to the Department of Financial Services (DFS) more than doubled over the five year period. Yet few resulted in full investigation and even fewer in prosecution.
OPPAGA revealed that many DFS referral evaluations aren’t timely (48% of homeowners and 30% of auto referrals were still under evaluation beyond its own 180-day timeline policy to either close or initiate a case; most referrals were dismissed due to evidence concerns and lack of information; and DFS staffing issues limit its ability to investigate complex cases. And of the relatively few cases sent over for prosecution, state attorneys reported various barriers to prosecuting the fraud. Senator Brandes asked how often DFS is called back insurance companies to ask for more information with Dr. Leventhal replying she is not sure how often that happens.
Out of the nearly 8,400 referrals, only 979 fraud cases were actually initiated. And OPPAGA’s look at the almost 500 cases initiated in the first three years, shows only 129 cases were presented to prosecutors, of which 97 were successfully prosecuted, Leventhal said. The most common fraud referrals were non-storm related water damage, roofing and windstorm damage, and third party representations.
Some legislators are growing frustrated that insurance fraud resources are used to fight automobile fraud at the expense of homeowners insurance fraud. And what might be needed is a dedicated unit focusing on just that. While its final report won’t be complete until next month, OPPAGA offered six options for legislative consideration:
- Modify fee provisions for attorneys
- Amend assignment of benefits guidelines for auto glass insurance policies
- Reduce the statute of limitations for hurricane/windstorm claims
- Amend the required elements insurance companies must provide in fraud referrals
- Establish the Department of Financial Services capacity to audit insurance company investigative units
- Modify the Anti-Fraud Reward Program (Return to Top of Page)
Insurance Policies – SB 742 seeks to fix a number of issues in insurance law and regulation. The bill, sponsored by Senate Keith Perry (R-Gainesville) would redefine “covered policy” under the Florida Hurricane Catastrophe Fund in relation to certain collateral protection insurance policies; specify when service of process is valid and binding upon insurers; specify the entities that must receive requests for loss run statements; limit loss run statement requests with respect to group health insurance policies to group policyholders; and authorize, rather than require, rate filings for certain residential property insurance to include certain rate factors. The bill is awaiting its first hearing. There is no identical House bill. (Return to Top of Page)
Civil Liability for COVID-19 Damages ̶ HB 7 by Rep. Lawrence McClure (R-Plant City) and the identical SB 72 by Senator Jeff Brandes (R-Pinellas) are meant to provide businesses and institutions civil immunity from lawsuits so long as they acted in good faith in following coronavirus health precautions. The bills provide requirements for a civil action based on a COVID-19-related claim; provide that the plaintiff has the burden of proof in such action; and provide a statute of limitations, severability, and retroactive applicability. The bill excludes healthcare providers, which are addressed instead in SB 74 (see next Bill Watch item). The House bill was approved last Wednesday in an 11-6 vote by the Pandemics & Public Emergencies Committee and awaits a final hearing before the Judiciary Committee before heading to the full House. The Senate bill passed the Judiciary Committee on January 25 and awaits a hearing before the Commerce and Tourism Committee. At last week’s committee meeting, supporters said the bill will help protect businesses that comply with pandemic safety guidance from frivolous lawsuits. (Return to Top of Page)
(NEW) COVID-19-related Claims Against Health Care Providers ̶ SB 74 by Senator Jeff Brandes (R-Pinellas) would do for healthcare workers and facilities what HB 7 (see above) does for businesses and organizations: protect them from liability lawsuits relating to the coronavirus so long as government-issued health standards were substantially and properly followed. The bill provides preliminary procedures for civil actions based on COVID-19-related claims; provides the standard of proof required at trial for such claims (gross negligence or intentional misconduct, instead of simply negligence); provides immunity from liability for COVID-19-related claims under certain circumstances, such as unavailability of personnel or supplies; and requires COVID-19-related claims to commence within a specified timeframe, among other things. The bill was filed last Wednesday and will have its first hearing this Wednesday at 9am before the Senate Judiciary Committee that Sen. Brandes chairs. Late Friday, House Speaker Chris Sprowls announced PCB HHS 21-01 by the House Health and Human Services Committee and Chair Colleen Burton (R-Lakeland) as the House companion to SB 74.
Also last week, OSHA issued expanded guidelines to all businesses to include more worker input into COVID safety protocols and a way for workers to voice complaints anonymously. OSHA is facing a mid-March deadline from the Biden administration to recommend whether its ongoing non-binding COVID workplace standards should instead be mandated under an emergency standards order being contemplated. (Return to Top of Page)
Motor Vehicle Insurance (PIP) ̶ This is a perennial effort to do away with Personal Injury Protection (PIP) coverage under Florida’s No-Fault insurance law and replace it with bodily injury (BI) liability coverage. Similar bills failed the last several sessions. SB 54 by Senator Danny Burgess (R- Zephyrhills) passed the Banking and Insurance Committee on January 26 and awaits a hearing before the Judiciary Committee. A bad faith amendment was added to the bill that would establish standards for third-party claimants. A dispute between the Senate and House about such bad faith provisions sank last year’s effort. This past Wednesday HB 719 by Rep. Erin Grall (R-Vero Beach) was filed in the House. It is similar to SB 54 but has no bad faith provision. It has a bunch of other measures, including revising garage liability insurance requirements, requirements on transportation network companies such as Uber and their drivers and vehicle owners, as well as financial responsibility requirements for owners or lessees of for-hire passenger transportation vehicles. The bill is awaiting committee assignments. Also this past week, the CFO came out against PIP repeal as a potential step in the wrong direction, citing it is projected to raise overall auto rates on some drivers. (Return to Top of Page)
Demand Letters for PIP ̶ HB 237 by Rep. Keith Truenow (R-Tavares) requires written notice of intent to initiate litigation for relief related to Personal Injury Protection (PIP) benefits. It also revises requirements for demand letter for PIP benefits and prohibits actions by & prosecutions on behalf of claimants unless certain requirements are met. The bill awaits its first hearing. There is no identical Senate bill. (Return to Top of Page)
Motor Vehicle Insurance Coverage Exclusions ̶ HB 273 by Rep. Scott Plakon (R-Longwood) creates a named driver exclusion. It provides private passenger motor vehicle policies may exclude identified individuals from specified coverages and provides exceptions. It has an identical Senate companion in SB 420 by Hooper. Both bills await their first hearing. (Return to Top of Page)
Hurricane Loss Mitigation Program – SB 168 by Senator Ed Hooper (R- Pinellas) continues a controversial program that while on its face appears to “harden” mobile homes from the threat of hurricanes, it has been questioned by many mitigation experts who have said the effectiveness of the $2 million annual program is doubtful. We will keep a close eye on this bill in hopes the legislature will ask for concrete data to show the results of this appropriation post Hurricane Irma. The bill unanimously passed the Senate Banking and Insurance Committee last week and awaits its next hearing before the Community Affairs Committee. A similar bill, HB 423, by Rep. Kaylee Tuck (R-Sebring) is awaiting its first hearing in the House. (Return to Top of Page)
Resiliency ̶ SB 514 by Senator Ray Rodrigues (R-Lee) establishes the Statewide Office of Resiliency within the Governor’s Office. It also creates the Statewide Sea-Level Rise Task Force within the resiliency office and authorizes the Department of Environmental Protection to contract for specified services, upon request of the task force. It also requires the Environmental Regulation Commission to take certain action on the task force’s recommendations. This bill contains an appropriation of $500,000. A similar proposal passed the Senate in 2020 but failed to get through House committees. It has an identical House companion in HB 315. Both bills await their first hearing. (Return to Top of Page)
Telehealth Practice Standards – HB 247 by Rep. Tom Fabricio (R-Hialeah) and Rep. Mike Giallombardo (R-Cape Coral) revises the definition of “telehealth” and would allow providers to prescribe controlled substances during telehealth visits. It and an identical Senate bill, SB 660 by Senator Manny Diaz (R-Hialeah) await their first hearing. (Return to Top of Page)
Telehealth – SB 700 by Senator Ana Maria Rodriguez (R-Doral) would require the Agency for Health Care Administration to reimburse the use of telehealth services under certain circumstances and with certain limitations; authorize telehealth providers to prescribe specified controlled substances under certain circumstances; authorize out-of-state physician telehealth providers to engage in formal supervisory relationships with certain non-physician health care practitioners in this state; authorize registered pharmacy technicians to compound and dispense medicinal drugs under certain circumstances; and exempt certain registered pharmacy technicians from specified prohibitions. The bill awaits its first hearing. There is no House companion bill. (Return to Top of Page)
Florida Building Code – HB 401 by Rep. Elizabeth Fetterhoff (R-DeLand) exempts assisted living facilities from compliance with rules relating to lifeguard standards; authorizes substantially affected person to file petition with the Florida Building Commission to review local government regulations and provides requirements for such petition; provides requirements for the commission when considering petition; requires the commission to issue nonbinding advisory opinion within a specified timeframe; authorizes the commission to issue errata to code; prohibits local government from requiring certain contracts for issuance of building permit; and requires evaluation entities that meet certain criteria to comply with certain standards. The bill is awaiting committee assignments and has no Senate companion so far. (Return to Top of Page)
LMA Newsletter of 2-8-21
