The Florida House voted Friday to abandon a 130-year old commitment to help ordinary policyholders take insurance carriers to court when they handle claims in bad faith, over Democratic objections that the measure would harm average Floridians.
The bill (HB 837), a priority for House Speaker Paul Renner and supported by Gov. Ron DeSantis, fulfills the dearest wishes of business and insurance interests, including repeal of a “one-way” attorney fee law the Legislature passed in 1893. That law lets policyholders force carriers to pay any attorney fees they rack up if forced to sue to enforce claims.
Similar legislation is awaiting action on the Senate floor.
The House approved an amendment on Thursday making the bill more generous than earlier drafts to insured people or other beneficiaries if carriers flatly deny claims; they could file separate legal actions to determine the limits of coverage and recover the attorney fees arising from those.
The bill otherwise eliminates Florida’s one-way attorney fee. Instead, each side would bear its litigation costs.
That 1893 law was “misguided,” bill co-sponsor Tommy Gregory, a Republican civil litigator from Manatee County, said, because it encouraged policyholders to file lawsuits.
By contrast, he continued, the bill seeks to establish three principles: That each party to litigation should pay its own attorney fees; that “the person who causes you harm, that’s the person who pays for your damages” and not “those with the deepest pockets,” whether a business of insurance company; and to “trust the juries.”
Co-sponsor Tony Fabricio, also a Republican civil attorney but from Miami-Dade County, noted that the bill does nothing to cap damages, even punitive damages. It does promote transparency as to damages suffered by requiring plaintiffs to provide evidence of the medical costs they’re actually paying, less any discounts or waivers, he said.
‘All the information’
“We want the juries to be armed with all the information. We want the juries to be able to go back to that jury room, deliberate based on the numbers that both sides present,” Fabricio said.
Democrat Mike Gottlieb, a criminal-defense lawyer from Broward County, conceded the state needs tort reform, but warned that the bill’s limits on medical payouts would discourage doctors from treating injured people on the basis of a future insurance recovery.
“This is going to bolster a very important defense that insurance companies have, which is delay, deny, defend. Insurance companies are going to have no responsibility toward the people who they’re supposed to insure. They’re not going to be paying claims,” Gottlieb said.
Democrat Anna Eskamani, of Orange County, complained the bill lacks any guarantee of lower premiums.
“I can’t vote on hope. I need facts. I need to see that savings will be passed down to consumers,” Eskamani said.
A tort is a wrongful act or infringement of a right for which the injured party can seek redress in a court of law. Supporters of the legislation claim that existing law makes it too easy to recover inflated claims.
That makes Florida a “judicial hellhole,” they argue, hurting businesses and inflating the costs of various forms of insurance, including medical malpractice, health, disability, auto policies, and premises liability (covering people injured through accidents or criminal attacks on a business’ property).
Under the measure, policyholders couldn’t sue carriers for bad faith if the carriers offer at least the minimum amount payable under the policy or whatever the policyholder is demanding within 90 days. “Mere negligence alone is insufficient to constitute bad faith,” the measure stipulates.
Either side could accuse the other of acting in bad faith if the evidence supports it. Judges could reduce payouts to policyholders found to have acted in bad faith.
The bill allows separate court proceedings to divide payouts between policyholders and any third parties, such as auto passengers, injured in any accident. The carrier wouldn’t have to pay third parties any amount in excess of the policy limit.
But all parties, including third parties, would have to cooperate in good faith. Hillary Cassel, a Democrat from Broward County, argued that provision would allow those third parties, by refusing to cooperate with someone who harmed them, to muddle the claim.
“Good faith now would require that family that lost a family member to work in good faith with this person who hurt their family member. And if that person who’s been injured doesn’t cooperate in the manner in which the insurance company sees fit, that impacts that business’ insurance,” Cassel said.
“Is that common sense?”
Regarding medical costs, if the injured person is covered under Medicare only, they could recover only 120 percent of what Medicare would pay. If the injured person is not Medicare, they could recover 170 percent of what Medicaid would pay.
Claimants would have to disclose whether their attorneys referred them to specific doctors who are going to provide evidence in claims litigation, lest that compensation color their testimony.
“You can’t hide behind evidence of inflated damages,” Gregory said.
Blame the criminal
The bill allows insurers in premises-liability cases to try to attach a share of the blame, and therefore any payout, to whoever perpetrated a criminal act that caused the injury. Whether criminals could be made to pay their share the bill does not address.
Business owners including landlords could limit their liability by installing security devices including cameras and lighting, and training staff in security measures.
Gottlieb complained the language would allow negligent parties — for example, the school district and police officers who failed the Marjory Stoneman Douglass students and teachers killed by Nicolas Cruz, to hide behind his criminal acts.
“An adept [defense] lawyer is simply going to say, ‘Blame it on Nicolas Cruz.’ And a jury is going to say, ‘Yeah — he came here, he shot everyone, and it’s his fault, and there’s going to be zero compensation,” Gottleib said.
No policyholder could claim compensation if found more than 50 percent responsible for their injuries. Under existing law, damages are prorated according to relative blame.
“We’re giving insurance companies a get-our-of-jail-free card,” said Democrat Ashley Gantt of Miami-Dade County.
Awards of attorney fees are limited to the “lodestar” rate, meaning a reasonable fee multiplied by a reasonable number of hours worked.
Republican Toby Oberdorf, representing parts of Martin and St. Lucie counties, argued that tort litigation is strangling Florida’s courts, with a backlog extending for up to 2 years. In 2022 alone, five plaintiffs’ lawyers filed 106,000 tort claims, he said, imposing a “tort tax” of he estimated at $5.50 on every one of the 22.2 million people who live in Florida.
The system, Oberdorf added, is encouraging barratry, which he defined as “the practice of exciting and encouraging or maintaining lawsuits.”
“I understand the judiciary used to punish barratry. However, based on current statutes, the courts are now engaged in it. So, is it any wonder that Florida is drowning in a flood of lawsuits?” he said.
Eskamani, meanwhile. reminded the House of the dozens of everyday Floridians who’d suffered injuries and who testified in committee about how the bill would have interfered with their insurance claims had it been in effect, including by making it hard to hire attorneys because of its curbs on attorney fees.
“I do not consider this to be eliminating a, quote, tort tax; I see this as protecting the profits of giant insurance companies like State Farm, Allstate and Florida Blue. It’s not about stopping litigation; it’s about stopping litigation against specific companies,” Eskamani said.