Recap of Week 9: End of 2021 Session
The Florida Legislature saved the two biggest insurance issues of the session to the last day on Friday: property insurance and no-fault auto insurance reform. Both passed and there were certainly compromises along the way, as you’ll read below.
It was an especially productive session overall. Lawmakers started the week with just 77 bills on their way to the Governor’s desk out of more than 3,100 filed. But by Sine Die (the traditional dropping of the handkerchiefs, marking the ceremonial end of session) Friday afternoon, that number topped 260 – a third more than passed in the 2020 session. Among them:
- Liability protection for Florida businesses and institutions from COVID-19 infections
- Prohibition against any requirements for a “vaccine passport” to enter businesses or schools
- Tightened voting laws
- Toughened anti-riot laws
- New use-of-force training requirements for police officers
- Strict new privacy laws on consumer data
- Online sales tax collections
- Sales tax holidays include hurricane supplies and back-to-school supplies
- Raises for the lowest paid state workers and state agency heads
- Peer To Peer Car Sharing Regulation
- Right to Farm protections
- Allowing alcoholic drinks with take-home meals post-pandemic
- Trimmed M-CORES proposed toll roads
- Statewide flooding and sea-level rise resilience plan
The Legislature passed a record $101.5 billion budget for the fiscal year that will start July 1. That’s a 10% increase over the current year budget of $92.2 billion, bolstered by almost $7 billion in federal coronavirus relief and recovery funding. There is a $4.3 billion increase for an additional 1 million Medicaid enrollees and $2.8 billion in federal stimulus for child care to be spread over several years. The budget keeps about $6 billion in reserves. What a difference 60 days make. When the session began in March, lawmakers initially anticipated a $3 billion budget shortfall.
Lawmakers will be back in Tallahassee during the week of May 17 for a special session on a proposed gambling deal with the Seminole Tribe of Florida. Then early this summer, a special legislative committee will begin congressional redistricting to add another seat due to increased U.S. Census population numbers released last week.
PASSED bills require the Governor’s signature to become law, unless otherwise noted. Here is a list of the legislative bills we’ve been following in the 60-day session (you can click the link to go directly to the bill and its details farther below). Updates from this past week within each bill are noted in blue font:
Contingency Risk Multipliers Did Not Pass
Residential Property Insurance Passed
Offers of Judgment Did Not Pass
Litigation Financing Consumer Protection Did Not Pass
Consumer Protection Passed
Citizens Property Insurance Corporation Did Not Pass
Insurance Policies Did Not Pass
Medical Expenses Did Not Pass
Credit for Reinsurance Passed
Civil Liability for COVID-19 Damages Signed Into Law
Motor Vehicle Insurance (PIP) Passed
Demand Letters for PIP Did Not Pass
Motor Vehicle Insurance Coverage Exclusions Passed
Community Associations Passed
Hurricane Loss Mitigation Program Passed
Property Assessments for Elevated Properties Passed
Resiliency Did Not Pass
Resilient Florida Grant Program Passed
Climate and Resiliency Task Force Did Not Pass
Telehealth Practice Standards Did Not Pass
Telehealth Did Not Pass
Construction Defects Did Not Pass
Florida Building Code Passed
Residential Property Insurance – PASSED – ”This is not the reform bill that it started out to be,” said one insurance executive afterward of the bill that ping-ponged back and forth between the two chambers the last week of session. In fact, SB 76 by Senator Jim Boyd was the last bill the Florida House passed on Friday afternoon, just before adjournment by a vote of 75-41. It had passed the Senate 90 minutes earlier on a vote of 35-5. The bill now goes to Governor DeSantis, who is expected to sign it into law.
The final version essentially has four changes from the bill we started with last Monday: it changes the one-way attorney fee provision; it gives policyholders two years to file a claim and another year to file a supplemental claim; it eliminates proposed changes to roof coverage (the proposed Actual Cash Value changes), and eliminates Proposals for Settlement for both insurance companies and their policyholders.
Here’s a complete recap of what SB 76 does, based on this guiding amendment, which will be incorporated this week into the enrolled version of the bill:
Attorney Fee Law Changes – Broadens the current one-way attorney fee statute formula. If the claimant recovers at least 50% of the disputed amount (down from the previously proposed 80%), full attorney fees would be awarded; less than 20%, then there would be no attorney fees. Judgments between 20% and 50% would merit the same proportional attorney fee to the percentage of the disputed amount obtained.
Contingency risk multiplier – Nothing. Proposed restrictions on use of a multiplier were struck from the final bill. Previous versions had provided for threshold factors, at least one of which must be met, before a court may consider whether to apply a contingency risk multiplier in rare and exceptional circumstances to attorney fees for a suit arising under a property insurance policy.
Solicitation of Residential property insurance claims for roof damage – Establishes contractors or unlicensed persons acting on their behalf may not solicit or incentivize a residential property owner to file a roof damage insurance claim. It also establishes that a public adjuster, a public adjuster apprentice, or unlicensed persons acting on their behalf may not incentivize a residential property owner to file a roof damage insurance claim and has an “up to $10,000 fine” for violations.
Older Roofs & actual cash value coverage disclosure – Nothing. Proposed mandatory actual cash value (ACV) policies for roofs older than 10 years and for signed disclosures of ACV were struck from the final bill.
Authority to examine managing general agents (MGAs) – Clarifies that the Office of Insurance Regulation has the authority to examine MGAs, including insurers’ affiliates.
Collection of property insurance claims litigation data by OIR – Establishes that each insurer or insurer group doing business in Florida shall file specific data regarding litigation of personal and commercial residential property insurance claims with the Office of Insurance Regulation (OIR) on an annual basis. This change should add more transparency to the true distribution of claims dollars (damages vs. attorney fees).
Citizens Property Insurance Corporation (Citizens) – Makes several changes to the operations of, and requirements for, Citizens, the taxpayer-backed, state-run property insurer:
- Changes the eligibility to be a Citizens policyholder. Currently, private insurance company coverage has to be 15% more expensive to qualify to switch to Citizens. This increases to 20% under the bill.
- Establishes that Citizens’ may add 1% per year to its current 10% cap on rate increases until it reaches a maximum of a 15% rate cap on increases in 2026.
- Establishes that if Citizens does not buy reinsurance to cover its projected 100-year probable maximum loss, it must still include the cost of such reinsurance in its rate calculations.
- Establishes that Citizens must have budget allocations for employee salaries, raises for any individual employee in excess of 10%, and an overall employee compensation plan approved by the Citizens’ Board of Governors.
Notice of property insurance claims – Changes the notice of claim deadlines: must be provided to a property insurer within two years of the date of loss and the policyholder then has another year to file a supplemental claim if needed.
Presuit notice and demand – Creates new statutory requirements for residential or commercial property lawsuits that are not brought by an assignee, including a ten-day presuit notice and demand, before bringing suit against an insurance company. The company has 10 days to respond in writing to such notices.
Consolidation of Lawsuits – Requires each party that is aware of multiple lawsuits pertaining to the same property address to notify the court, which may then order the actions be consolidated. There has been a trend among certain plaintiff firms to file multiple suits, sometimes a different one for each room of the house. The court docket systems aren’t equipped to cross reference these suits.
Proposals for Settlement – In Friday’s House session, Rep. Cord Byrd asked Rep. Bob Rommel, the House sponsor, if the revamped bill would do away with Proposals for Settlement for both insurers and insureds; Rep. Rommel acknowledged it would. We will watch how this affects consumers’ ability to resolve lawsuits. Please call me for further discussion.
Earlier in the week, the House had amended its version of property insurance reform, HB 305 by Rep. Bob Rommel, and included it as an amendment to SB 76. Click here to read the past history of these two bills
As Senator Brandes put it so well during his remarks on the Senate floor before Friday afternoon’s vote, SB 76 is “maybe a 40% solution for what is needed in Florida, to really begin to bend the cost curve. This hopefully will potentially stabilize rates, but it will really do nothing to ultimately lower them.” (see The Weekend After.)
Because the bill lacked actual cash value for damaged older roofs, Senator Brandes predicted “it’s one of the big challenges you’re going to see going forward.” Insurance companies will refuse to write coverage of older roofs at full replacement cost, leaving those homeowners to go to Citizens Property Insurance “and Citizens gets full of homes with older roofs,” he said.
Further, because the bill no longer includes requiring actuarially sound rates for new properties or second homes seeking Citizens coverage, “Citizens is more and more becoming for many the insurer of last resort for people with second homes…and old roofs. And second homes and old roofs are really expensive things to insure, especially when your rates are not actually sound,” said Brandes.
“Citizens rates today in many markets are 40% below what the market charges. And while we make some adjustment to the glide path, unfortunately it’s nowhere near enough and especially what happens is if rates continue to go up in the market, 15- 20%, a year. Even if we slow the progression of those rates, Citizens can’t keep up and so that delta continues to grow and so the incentive is to go into Citizens. When we first started session, Citizens was growing by 3,000 policies a week. Today, just 60 days later, it’s growing at 5,000 policies a week. We will be well over 700,000 policies by the end of the year,” said Brandes. And because the bond market looks at Citizens as a liability for the state of Florida, Brandes said it will affect the bond rating and the expense of state debt and its ability to borrow money, including for needed transportation projects.
“We will be back year after a year working through these issues. But understand, Citizens is unsustainable. The property insurance market is unsustainable. And until we put Florida on a sustainable path, we will continue to put the long term economic health of our real estate market at risk. And that’s unsustainable,” Brandes warned.
But opponents of the bill largely remained opponents through the final vote. They included former Senate Democratic Leader Gary Farmer (D-Broward), himself a trial attorney, who argued to his colleagues on the Senate floor, why they should vote no. He accused the insurance industry of acting like “Chicken Little” saying companies will come up with any reason to raise rates to keep the “David vs. Goliath” advantage over its policyholders. “The attorney fees provisions are there for a reason, so policyholders don’t have to pay 25% or 30% of their damage award to their attorney. The insurance industry holds all the cards in this situation. While this bill has gotten better, it will still substantially limit what your constituents will be able to get…to be made whole,” Senator Farmer said.
So we pause to ask, “What do farmers, truckers, small and large businesses, contractors and builders, and insurance companies all have in common? Yep, you guessed it – nuisance lawsuits. This session we heard about all of these groups wondering what on earth is happening with lawsuit mills designed to simply generate fees for plaintiff lawyers. As a matter of fact, the Florida Homebuilders Association (FHBA) sounded a recent alarm that the litigation trends among their trades were putting some out of business. (Return to Top of Page)
Consumer Protection – PASSED – The Florida House last Wednesday passed Senate bill SB 1598 by Senator Joe Gruters (R-Sarasota) that 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. Specifically, the final bill:
- Establishes licensing requirements within the Department of Financial Services (DFS) similar to those for insurance agencies and requires all adjusting firms become licensed, but provides that an adjusting firm’s branch place of business does not require licensure if it meets specified requirements;
- Makes it a third degree felony for knowingly aiding or abetting an unlicensed person in transacting insurance or otherwise engaging in insurance activities without a license;
- Requires a public adjuster to provide a written estimate of the loss within 60 days after the date of the contract and allows the policyholder or claimant to cancel a public adjuster contract within 10 calendar days without penalty;
- Prohibits a licensed contractor or subcontractor from advertising, soliciting, offering to handle, handling, or performing public adjuster services unless licensed and compliant as a public adjuster;
- Prohibits persons other than a licensed public adjuster or attorney from offering to initiate or negotiate on behalf of an insured or advertising services which require a public adjuster license;
- Prohibits a public adjustor, public adjustor apprentice, or public adjusting firm, who solicits a claim and does not enter into a contract with an insured or third party claimant, from charging or receiving payment from an insured or a third-party claimant;
- Prohibits agents or adjusters from doing in-person or telephone solicitation after 9 p.m. or before 8 a.m. unless requested by the prospective customer;
- Authorizes DFS to suspend or revoke licenses and/or impose fines against unlicensed persons performing claims adjusting, soliciting, or other related activities; and
- Eliminates the $60 fee for a new or renewal adjusting firm license.
The bill also establishes new rules and requirements on insurance companies beginning January 1, 2022, specifically:
- Requires an insurance company inform an applicant that a credit report or score is being requested for underwriting or rating purposes and to notice the availability of the DFS free financial literacy program;
- Requires an insurance company to begin its investigation of a claim within 14 days (up from the current 10 days) after receiving the proof of loss;
- If the investigation involves a physical inspection of the property, the adjuster assigned by the company must provide the policyholder with his or her name and license number;
- Requires the company maintain a record or log of each adjuster who communicates with the policyholder and provide the list of adjusters to the DFS of the Office of Insurance Regulation (OIR);
- Requires the company, when providing a preliminary or partial estimate regarding a claim, to provide the following statement to the policyholder: “THIS ESTIMATE REPRESENTS OUR CURRENT EVALUATION OF THE COVERED DAMAGES TO YOUR INSURED PROPERTY AND MAY BE REVISED AS WE CONTINUE TO EVALUATE YOUR CLAIM. IF YOU HAVE QUESTIONS, CONCERNS, OR ADDITIONAL INFORMATION REGARDING YOUR CLAIM, WE ENCOURAGE YOU TO CONTACT US.”;
- Requires the company that issues a payment on a claim which is not the full and final payment, to provide the following statement: “WE ARE CONTINUING TO EVALUATE YOUR CLAIM INVOLVING YOUR INSURED PROPERTY AND MAY ISSUE ADDITIONAL PAYMENTS. IF YOU HAVE QUESTIONS, CONCERNS, OR ADDITIONAL INFORMATION REGARDING YOUR CLAIM, WE ENCOURAGE YOU TO CONTACT US.”; and
- Requires the company to provide a Homeowner Claims Bill of Rights to a policyholder within 14 days after receiving an initial communication concerning a claim and after a state of emergency declaration.
The bill also provides disclosure requirements that insurance coverage must meet before being eligible for export under Florida’s Surplus Lines Law, specifically:
- Requires a consumer purchasing a surplus lines policy to sign a disclosure clearly stating that it is a surplus lines policy, that coverage may be available in the admitted market, and that the policy is not protected under the Florida Insurance Guaranty Act with respect to any recovery in the case of an insolvent unlicensed insurer; STILL THERE
- Labels as “sliding” issuing a policy or submitting a premium invoice to a mortgagee or escrow agent without the prior informed consent of the property owner; and. STILL THERE
- Applies the property insurance claim investigation and communication requirements of section 627.70131, Florida Statutes, to surplus lines insurers. ADDED
The bill also address life & health insurance lines. The bill:
- Authorizes regulators to disapprove use of insurance agency names containing the words “Medicare” or “Medicaid” and prohibits life insurers from writing new policies of industrial life insurance beginning on June 30, 2023; and STiLL THERE
- Prohibits agents and adjusters from doing anything that allows a consumer’s personal financial or medical information to be made publicly available.
SB 1598 has the same language on contractors that is in the passed SB 76 but without the specific fines and penalties as SB 76 has. The bill includes important language clarifying that only an attorney or licensed public adjuster may prepare, complete or file an insurance claim for a policyholder or third-party claimant or negotiate on their behalf in a damages claim. It also gives the Department of Financial Services new powers to pursue administration action and impose fines on those bad actors, including solicitors and those performing related services.
An early March report by the Office of Program Policy Analysis and Government Accountability (OPPAGA), which is Florida’s version of the federal GAO, looks at homeowners and automobile insurance fraud and unlicensed activity. The report shows that homeowners insurance fraud referrals to the Department of Financial Services (DFS) more than doubled over a five year period of 2015-2020. Yet few resulted in full investigation and even fewer in prosecution. The DFS Division of Investigative and Forensic Services reported that staffing issues affect its ability to investigate complex cases like insurance fraud. One in five investigator positions are vacant statewide with higher vacancies in metro areas that have higher number of fraud referrals. OPPAGA made a presentation to the Senate Judiciary Committee on February 1, which you can read more about here. (Return to Top of Page)
Citizens Property Insurance Corporation – DID NOT PASS – While this had great potential to reduce Citizens exposure and the potential Florida taxpayers’ exposure and burden in a future major hurricane, the bill was never taken up by the full Senate, nor did it have a companion bill in the House. SB 1574 by Senator Jeff Brandes (R-Pinellas) seeks to bring a more market-oriented approach to the state’s taxpayer-backed insurer of last resort in the face of reverse migration of policies back into Citizens over the past two years. The bill would revise the method for determining potential surcharges levied against policyholders, limit agent commission rates, and allow eligible surplus lines insurers to participate in Citizens depopulation, take-out, or keep-out programs in the same manner and on the same terms as an authorized insurer. It would also authorize information from underwriting files and confidential claims files to be released by the corporation to specified entities considering writing or underwriting risks insured by the corporation under certain circumstances.
The bill passed the Senate Appropriations Committee on April 19 on a 12-5 vote and is ready for consideration by the full Senate. It underwent additional changes in recent weeks and now calls for:
- Elimination of the 10% “glide path” annual rate increase cap for new Citizens customers after January 1, 2022 on residential properties used as their primary residence with a dwelling replacement cost of less than $700,000 or single-unit condominiums with a dwelling and contents replacement cost of less than $700,000. Existing customers in their primary residences would keep the cap.
- Citizens residential policyholders would become ineligible for coverage upon receiving an offer from an authorized insurance company that is less than 15% greater than the Citizens premium. (Under current law, Citizens policyholders remain eligible unless they receive an offer of comparable coverage less than the current Citizens premium, which for many policyholders is subject to the glide path’s 10% limit on annual rate increases.)
- Deficits in any of Citizens’ three accounts would subject a Citizens’ policyholder to a special annual premium surcharge, based on Citizens current policy count. (20% of premium for a count of one-million to 1.5 million policyholders; and 25% of premium for 1.5 million or more policyholders.)
- Agent commissions would be based on the market average commission rate paid by the top 20 admitted insurers in Florida.
- Enhanced requirements to qualify as an eligible surplus lines insurer for depopulation, take-out, and keep-out programs (see pages 38-42 in the bill).
You can read more in this updated bill analysis prepared by Committee staff.
During its March 15 rate hearing, Citizens asked insurance regulators for the same rate cap flexibility contained in this bill (see Citizens Pushing Higher Rates in our March 22 newsletter). On April 20, the Florida Office of Insurance Regulation denied the request (see Regulators Reject Citizens Rate Cap Request in our April 26 newsletter) so the hope of actuarially-sound rates for new Citizens customers rests solely on this bill.
In his committee presentations, Senator Brandes said the goal is to “right the ship” of Citizens, noting “We are seeing radical growth that is exposing the state of Florida to untold liability.” Indeed, when Citizens grows, so does every Floridians’ risk of paying for that growth through state-mandated assessments, should there be a catastrophe (a single big hurricane or smaller multiple hurricanes). A healthy and competitive insurance market means Citizens shrinks. When Citizens offers cheaper rates than most of the rest of the private market (under the legislatively-created 10% annual “glide path” cap on rate increases) rather than actuarially sound rates, policies flock to Citizens, as they have been doing over the past almost two years.
Since March 2020, Citizens’ policy count has grown from 443,444 to 551,613 by February 28, 2021, an increase of 26.4%. Citizens has been receiving more than 3,000 new customers per week and expects to add a total of nearly 150,000 policies this year. (Return to Top of Page)
Insurance Policies – DID NOT PASS – HB 815 and companion SB 742 by Senator Keith Perry (R-Gainesville) were omnibus bills that sought to fix a number of issues in insurance law and regulation. (Return to Top of Page)
Credit for Reinsurance – PASSED – SB 728 by Senator Doug Broxson (R-Pensacola) and the identical bill HB 733 by Rep. Elizabeth Fetterhoff (R-DeLand) adopt provisions of the NAIC Credit for Reinsurance Model Law, which is based on negotiations between U.S, EU, and UK regulators. It eliminates additional collateral requirements for reinsurers if the reinsurer is domiciled in a “reciprocal jurisdiction.” Capital and surplus requirements and solvency or capital ratio requirements would be determined by administrative rule. The bill requires the assuming insurer to notify the Florida Office of Insurance Regulation (OIR) if it falls below minimum requirements and agree to be bound by the jurisdiction of Florida courts and pay all final judgments. There are also OIR reporting requirements. You can read the bill analysis here. The House bill was fast-tracked this session and was ready for a vote on the House floor. The Senate bill was passed by the Senate on April 1 in a 38-1 vote and sent to the House, which passed it on a 118-0 vote on April 14, setting aside HB 733. It sits with the Governor for his expected signature. (Return to Top of Page)
Civil Liability for COVID-19 Damages ̶ SIGNED INTO LAW Governor DeSantis on March 29 signed into law SB 72 by Senator Jeff Brandes (R-Pinellas). This is the comprehensive agreement on liability protection for businesses, organizations, health care facilities and their workers and is retroactive to the beginning of the pandemic. It’s the first bill of the 2021 session that the Governor has signed into law. At the signing ceremony, the Governor, flanked by Speaker Sprowls and Senate President Simpson, said businesses have been “operating in fear of frivolous lawsuits with no merit threatening their livelihoods.”
“We don’t want to be in a situation where people are scared of being sued just for doing normal things,” the Governor said. “We worked very early on to look and see ways we could provide some certainty for both business and health-care providers.”
The bill, which was a successful combination with Brandes’ other bill SB 74 and adopted by the House, outlines requirements for a civil action based on a COVID-19-related claim; provides that the plaintiff has the burden of proof in such action; and provides a statute of limitations, severability, and retroactive applicability. The bill also requires a finding of gross negligence and applies a tougher clear and convincing evidence standard.
The bill requires a plaintiff – for other than medical malpractice claims against healthcare providers – have a signed affidavit from a physician attesting COVID transmission came from the defendant before filing suit. Medical malpractice or nursing home-related claims would not require those affidavits. The bill has a good faith provision allowing judges to make the call whether defendants tried to substantially comply with government-issued health safety standards.
Before passing the bill on March 18, the Senate approved an amendment by Senator Brandes deleting a part of the bill that would have allowed businesses to claim immunity if “supplies, materials, equipment, or personnel necessary to comply with the applicable government-issued health standards or guidance at issue were not readily available or were not available at a reasonable cost.” The bill also has a sunset provision one year and a day after becoming effective and so only impacts lawsuits filed during that time period.
During the committee meetings, various amendments offered by Democrats failed, including one that would have changed workers’ compensation insurance laws to include a presumption for healthcare workers who test positive; another would have limited protection for nursing homes with a history of recent state or federal sanctions. The Senate had passed SB 72 in a 24-15 vote, with only one Democrat voting with the majority. The House vote was 83-31.
An early March poll by Mason-Dixon and Florida TaxWatch found that 74% of those surveyed say healthcare providers that act in good faith during the pandemic should have lawsuit protection (18% opposed) and 72% agreed that same protection should apply to regular businesses and organizations (20% opposed). (Return to Top of Page)
Motor Vehicle Insurance (PIP) ̶ PASSED ̶ After six years of failing to reach consensus, the Florida House and Senate negotiated on this bill until the last day of session Friday but eventually reached agreement. The House voted 100-16 and the Senate 37-3 to approve SB 54, doing away with Personal Injury Protection (PIP) coverage under Florida’s No-Fault insurance law and replacing it with bodily injury (BI) liability coverage for those other than the driver. The bill now goes to Governor DeSantis for his consideration. Both the American Property Casualty Insurance Association (APCIA) and the Personal Insurance Federation of Florida (PIF) are calling on the Governor to veto it, saying it will raise auto rates significantly (see below).
The final version removed language requiring mandatory $5,000 in MedPay to replace the driver protection under PIP. The bill now only requires an offer of MedPay coverage at limits of $5,000 and $10,000 with zero deductible, while allowing insurers to also offer limits at any amount greater than $5,000 and a deductible of up to $500. A $5,000 MedPay death benefit was also added to the final version. The MedPay aims to reimburse medical expenses due to bodily injury, sickness, or disease arising out of the ownership, maintenance, or use of a motor vehicle. The bill also requires that insurers must reserve the first $5,000 of MedPay benefits for 30 days to pay providers of emergency services or hospital inpatient care.
When it passed the Senate on April 14, Senator Jeff Brandes (R-Pinellas), the lone no vote, told his colleagues the bill could lead to more uninsured motorists on the road, especially because the MedPay is now mandatory, rather than optional. “You can’t go home and look your constituents in the eye and say this is going to lower your rates for your poorest constituents,” Brandes said. “It may raise their rates 15 or 20 or 70%. We don’t know. And that isn’t right.” Brandes was one of the three final votes against the measure this past Friday.
The bill also creates a new framework to govern motor vehicle claim handling and third-party bad faith failure to settle actions against automobile insurance companies, although there are questions on just how effective the bad faith provision would really be – and whether this bill will save most motorists money or cost more.
SB 54 repeals the No-Fault Law and its PIP coverage that has been in place since 1972 and replaces it, effective this January 1, with the following minimum financial responsibility requirements:
- For bodily injury (BI) or death of one person in any one incident, $25,000, and $50,000 for two or more people in any one incident. (For those with a household income of 200% or less of the federal poverty guidelines and for full-time students, there is a lower requirement of $15,000/$30,000.)
- Retains the existing $10,000 financial responsibility requirement for property damage.
- Repealing the No-Fault Law eliminates the limitations on recovering pain and suffering damages from PIP insureds, which currently require bodily injury that causes death or significant and permanent injury.
The previous mandatory MedPay provision, to cover any driver injuries was added earlier in session in an amendment by Senator Gary Farmer (D-Broward), a trial lawyer. It also added “the legal liability of an insurance company’s uninsured motorist coverage to include damages in tort for pain, suffering, disability or physical impairment, disfigurement, mental anguish, inconvenience, and the loss of capacity for the enjoyment of life experienced in the past and to be experienced in the future.”
The bill’s supporters insist it has the necessary bad faith provisions that insurance companies wanted as part of a PIP repeal. “The bill requires insurers to follow claims handling best practices standards based on long-established good faith duties related to claim handling, claim investigation, defense of the insured, and settlement negotiations,” according to the Senate President’s office release at the time.
But the American Property Casualty Insurance Association (APCIA) disagreed in a statement issued after the April 14 Senate vote. “Senate Bill 54 lacks any meaningful legal reforms to Florida’s bad faith laws, which will only serve to fuel the current cycle of lawsuit abuse, worsen Florida’s legal environment, and could lead to even higher costs for consumers.” APCIA also wrote the bill is “bad news” for drivers who carry minimum coverage. “In Florida, approximately 40% of drivers carry minimum limits that are below what would be required under SB 54. Under the current proposal, these drivers could see their auto insurance costs rise by $165 to as much as $876 a year….and result in more uninsured drivers on Florida’s roads,” according to the APCIA release.
Another amendment was added that adopted the House bill’s (HB 719) provisions that cover for-hire vehicles and excluded drivers. SB 54 authorizes the exclusion of a specifically named individual from specified insurance coverages under a private passenger motor vehicle policy, with the written consent of the policyholder. Mandatory Med Pay and bad faith provisions caused similar bills between the two chambers to fail in past sessions. In late February, the Florida Office of Insurance Regulation issued a report at the request of the Commerce Committee, noting that auto premiums continue to increase across all coverages in Florida. The report includes additional information on the potential impact that changes to PIP could have on premiums. (Return to Top of Page)
Motor Vehicle Insurance Coverage Exclusions ̶ PASSED ̶ The House took up the Senate’s bill, SB 420 by Senator Ed Hooper (R- Pinellas), passing it unanimously last Tuesday. The bill creates a named driver exclusion. It provides private passenger motor vehicle policies may exclude identified individuals from specified coverages and provides exceptions. The bill now goes to Governor DeSantis for his consideration. (Return to Top of Page)
Community Associations – PASSED – The House unanimously passed the Senate’s SB 630, a bill sponsored by the Rules and Regulated Industries Committees and Senator Dennis Baxley (R-Lady Lake) that prohibits insurance policies from providing specified rights of subrogation under certain circumstances. The bill now goes to Governor DeSantis for his consideration. The property insurance part of the bill limits subrogation in condominium policies. It prohibits a condominium unit owner’s policy from including subrogation rights against the condominium association if the association’s property policy does not allow subrogation rights against unit owners. So if a second floor unit owner made a water claim for damage caused by a third floor leak that was due to a lack of association maintenance, the insurance carrier would have limited redress under this bill. It would essentially revert the law back to pre-2010 statute. This has been a perennial effort before the legislature for the past several years but has been given a better chance of passing this year. (Return to Top of Page)
Hurricane Loss Mitigation Program – PASSED VIA PROVISO – Although the Senate’s SB 168 by Senator Ed Hooper (R- Pinellas) was not taken up by the House last week, it was put into proviso language in the appropriations bill (the state budget). And so continues a controversial program that while on its face appears to “harden” mobile homes from the threat of hurricanes, has been questioned by many mitigation experts who have said the effectiveness of the $2 million annual program is doubtful. We have been keeping 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 passed the Senate unanimously on April 21, clearing the way for House consideration. A similar bill in the House, HB 423 by Rep. Kaylee Tuck (R-Sebring), has been stalled in its committee stops. (Return to Top of Page)
Property Assessments for Elevated Properties – PASSED – The Senate last week joined the House in unanimously passing the House’s HJR 1377 by Rep. Linda Chaney (R-Pinellas). This proposed state constitutional amendment would exempt from property taxes any improvements made by homeowners to mitigate flood risk. The measure will now go on the 2022 ballot for Florida voters to ultimately decide. Improvements noted in this bill include elevating buildings and components, filling basements, and other waterproofing measures, including stormwater runoff mitigation. Such improvements would not be considered in determining assessed values if the work meets National Flood Insurance Program and Florida Building Code elevation requirements. The bills’ analysis notes FEMA statistics that more than 1.7 million properties in Florida are at risk of flooding in a 100-year storm. By passing the House measure, the Senate had set aside the identical SB 1186 and its linked proposed constitutional amendment SJR 1182, both by Senator Jeff Brandes (R-Pinellas). (Return to Top of Page)
Resilient Florida Grant Program – PASSED – The Florida Legislature in early April passed SB 1954 and SB 2514 that create and fund sea-level rise and flood resiliency efforts across the state up to $100 million a year. The bills were passed unanimously by the Senate and the House and are identical to the House’s HB 7019 and HB 7021 that are at the heart of House Speaker Chris Sprowls’ commitment to combat sea-level rise that spans several legislative bills he’s named the “Always Ready” plan. Following the vote, the Speaker said the package is “one of the most robust and bold proposals in the entire United States of America to tackle sea level rise and coastal flooding of any state.” Senate President Wilton Simpson said the bills will help Florida become “a national example of resilient communities.” The bills await Governor DeSantis’ signature to become law.
This follows the Governor’s announcement earlier this year that he’d like to spend $1 billion over the next four years on resiliency projects. The bills recognize that Florida “is particularly vulnerable to adverse impacts from flooding resulting from increases in frequency and duration of rainfall events, storm surge, and sea level rise…that pose economic, social, environmental, and public health and safety challenges to the state.”
The Legislature last week also passed SB 2512 to fund Speaker Sprowls’ and Senate President Simpson’s Plan to Invest in Florida’s Infrastructure that will use more than $400 million in real estate documentary stamp taxes currently dedicated to affordable housing to partially fund resiliency-related projects. During the upcoming fiscal year, affordable housing programs would receive approximately $200 million. Programs established to mitigate the impacts of sea level rise and enhance wastewater treatment programs would each receive about $111 million. You can read more in this release.
This measure did not receive the same unanimous approval (25-14 in the Senate and 78-38 in the House) out of concern that the Sadowski Trust Fund, dedicated solely to affordable housing but annually raided by the Legislature to fund other projects, was now being permanently raided. Opponents argued that federal stimulus money should instead fund the infrastructure projects. Within the bill though is a provision that prohibits raiding or “sweeping” affordable housing money in the future, which supporters argue creates a floor for affordable housing funding where none existed before.
SB 1954 would establish the Resilient Florida Grant Program within the Department of Environmental Protection (DEP) and set-aside up to $100 million a year by 2022-2023 for local governments to mitigate effects of rising sea levels through community resilience planning. It also requires the DEP to:
- Complete a comprehensive statewide flood vulnerability and sea level rise data set and assessment;
- Develop a three-year Statewide Flooding and Sea Level Rise Resilience Plan and annually submit the plan to the Governor and Legislature;
- Require water management districts to annually submit proposed projects and their requirements to DEP for inclusion in the plan; and
- Require DEP to implement a scoring system for assessing those projects.
The bill also requires the Legislature to review and approve funding for projects, subject to appropriation; authorizes local governments to create regional resilience coalitions to be funded by DEP; and establishes the Florida Flood Hub for Applied Research and Innovation within the University of South Florida College of Marine Science. The hub would be required to submit an annual report to the Governor and Legislature. The Office of Economic and Demographic Research would also be required to include specified information relating to inland and coastal flood control in certain assessments & analysis it performs.
SB 2514 establishes the Resilient Florida Trust Fund within DEP to fund the Resilient Florida Grant Program and the Statewide Flooding and Sea Level Rise Resilience Plan and all of the parts above.
“We are a low-lying state surrounded by water on three sides, and that water is flowing into places it shouldn’t. Flooding is a real threat to people’s homes, businesses and livelihoods,” said Speaker Sprowls in a news release following passage of the two house bills out of their first committee. “The success of our state is inextricably connected to the proper management of water.”
Rep. Cabrera, who sponsored the House bills, said that “The effects of flooding are felt all across the state in both coastal and inland communities, and we must address these threats using a coordinated statewide approach, and these bills do just that.”
Governor DeSantis has suggested that some of the new federal stimulus plan money going to Florida could be used to fund these resiliency proposals. Florida is reportedly set to receive about $8 billion in stimulus money. (Return to Top of Page)
Telehealth Practice Standards – DID NOT PASS – 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. The House bill was amended to allow telehealth visits to be audio only and also allow providers to prescribe controlled substances only for patients in hospitals, nursing homes, or receiving hospice care, or for treatment of a psychiatric disorder. The bill unanimously passed the Florida House on April 22 and was sent to the Senate but was never considered. A comparable Senate bill, SB 660 by Senator Manny Diaz (R-Hialeah) never received a hearing. (Return to Top of Page)
Florida Building Code – PASSED – The annual building code bill, HB 401 by Rep. Elizabeth Fetterhoff (R-DeLand) is on its way to the Governor for his signature. Among other things, it 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 previous version of the bill unanimously passed the Florida House on April 22 and was sent to the Senate, which tabled its own, SB 1146 by Senator Jason Brodeur (R-Lake Mary). The Senate bill has gone through different amendments in recent weeks, including: to allow private inspection of onsite sewage treatment and disposal systems, and a process for local zoning decisions to be reviewed by the Florida Building Commission; prohibiting a municipality, county, or special district from using preliminary maps issued by FEMA for any law, ordinance, rule, or other measure that has the effect of imposing land use changes; and defining “qualified private providers” for plan reviews and inspection services and requiring local jurisdictions reduce permit fees to reflect the cost savings of using such private providers. (Return to Top of Page)
Offers of Judgment – DID NOT PASS – 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 had its first hearing on February 15 before the Senate Judiciary Committee, which Senator Brandes chairs. There was lengthy debate on an amendment to clarify language, but the bill ultimately passed on a 6-4 vote. The bill passed 8-3 in the Banking and Insurance Committee on March 10 and awaits a hearing in the Rules Committee, its final stop before the full Senate. Committee staff prepared this updated bill analysis afterward. A similar bill in the House, HB 1533 by Rep. Fiona McFarland (R-Sarasota), differs in requiring arbitration in addition to a fee award hearing. The bill still awaits its first hearing. (Return to Top of Page)
Contingency Risk Multipliers – DID NOT PASS – 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 still awaits its first hearing. There is no identical bill in the House. While this bill is not in play, Senate Bill 76 has reforms to the application of the Contingency Fee risk multiplier and as we report this edition, SB 76 has passed the Senate and is awaiting a decision by House leaders. (Return to Top of Page)
Litigation Financing Consumer Protection – DID NOT PASS – SB 1750 is a second attempt by Senator Doug Broxson (R-Pensacola) to create a regulatory framework for litigation financiers who provide capital to firms who take cases on contingency, similar to a “factoring” company that buys receivables and pays an upfront, discounted fee for the right to assume the receivable at full value. The bill was scheduled to have its first hearing on March 24 before the Senate Banking and Insurance Committee but was postponed. A similar House bill, HB 1293 by Rep. Toby Overdorf (R-Stuart) awaits its first hearing. Senator Broxson’s bill last year never got a hearing; its counterpart in the House passed all three of its committees but was never heard by the full House and the Senate. (Return to Top of Page)
Medical Expenses – DID NOT PASS – SB 846 by Senator Jeff Brandes (R-Pinellas) is another legal reform bill that would require evidence of medical expenses in personal injury claims be based on the usual and customary charges for such treatment or the amount covered by the claimant’s health insurance and their share of expenses under insurance. Supporters say it will reduce the practice of inflating medical expenses in an attempt to obtain multi-million-dollar payouts for plaintiff attorneys. The bill awaits a hearing in the Health Policy Committee, its second of three stops. A similar bill, HB 561 by Rep. Randy Maggard (R-Pasco) is awaiting its first hearing before the House Civil Justice & Property Rights Subcommittee. (Return to Top of Page)
Demand Letters for PIP ̶ DID NOT PASS – 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 still awaits its first hearing. There is no identical Senate bill. (Return to Top of Page)
Resiliency ̶ DID NOT PASS – 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. The bill passed the Senate Environment and Natural Resources Committee unanimously on February 15 and awaits its second stop before the Appropriations Subcommittee on Agriculture, Environment, and General Government. An identical House companion in HB 315 is awaiting its first hearing. (Return to Top of Page)
Climate and Resiliency Task Force – DID NOT PASS – HB 1623 by Rep. Ben Diamond (D-Pinellas) establishes a Climate & Resiliency Task Force to be headed by the Florida Insurance Commissioner to consider the impact of climate change on the state’s insurance market. This is an exciting development in furtherance of much-needed flood protection and expanded insurance coverage. The Task Force would identify protection gaps in the state’s insurance market and assess and recommend risk-transfer mechanisms and other approaches for reducing, managing, and mitigating climate-related risk. Per the bill, the Task Force “shall consider mechanisms that improve access to affordable property and flood insurance for all residents of the state; apply technology and innovation to the mitigation of climate-related risks; encourage investment in natural infrastructure to reduce climate-related risks to communities; mitigate the effects of extreme heat on agriculture and other businesses throughout the state; and provide coverage for additional living expenses relating to flood damage.” The Task Force would produce a report every two years to the Governor, Cabinet, & Legislature. The bill was filed March 2 and awaits its first hearing in the House Insurance & Banking Subcommittee. A similar Senate bill, SB 1872 by Senator Darryl Rouson (D-Hillsborough & Pinellas), was filed two days later and awaits its first hearing before the Banking and Insurance Committee. (Return to Top of Page)
Telehealth – DID NOT PASS – 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 a hearing before the Senate Appropriations Committee, its final stop before the Senate floor. The bill now contains a series of amendments that further refine its language and among other things, permits pharmacists providing health care services through telehealth to be reimbursed; allows participation by out-of-state medical providers enrolled in Florida Medicaid; and clarifies that telehealth providers may not prescribe Schedule I controlled substances or issue a physician certificate for medical marijuana. House bill HB 247 (above) is considered comparable for requiring similar AHCA reimbursement. (Return to Top of Page)
Construction Defects – DID NOT PASS – SB 270 by Senator Keith Perry (R-Gainesville) revises and expands the mandatory procedures governing how construction defects disputes are resolved. The bill would define the term “material violation” in a warranty and require that a person submit a construction defect claim to the warranty provider before bringing a cause of action; require that a claimant submit a construction defect claim to the warranty provider before serving a notice of claim; authorize a person served with a copy of a notice of claim to perform a reasonable inspection of the property subject to the claim; require, instead of authorize, a person served with a notice to serve a copy of the notice to specified persons under certain circumstances, among other changes. You can read the bill analysis here. The bill passed the Senate Judiciary Committee on February 15 on a 9-1 vote and still awaits a hearing in the Community Affairs Committee, it’s second of three stops.
In the House, a similar bill, HB 21 by Rep. Alex Andrade (R-Pensacola) would also require a claimant to notify a mortgagee or assignee within a specified timeframe after settlement. You can read the bill analysis here. It has narrowly passed its previous committees and is awaiting a hearing before the Judiciary Committee, its last stop before going to the full House.
The Berger Singerman law recently published an interesting analysis of the bills, Does the Florida Legislature Finally Have a Fix to Construction Defect Law? (Return to Top of Page)
LMA Newsletter of 5-3-21