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On February 14, 2023, Florida’s Governor, the President of the Florida Senate and the Speaker of the Florida House of Representatives jointly appeared at a press conference to express their dissatisfaction with the state of certain aspects of Florida’s civil justice system and to announce a pre-filed bill for the upcoming legislative session, HB 837. The bill’s proposed changes are likely to benefit small businesses, large corporations and insurers alike, and would represent a substantial shift in the landscape for insurance coverage, third-party bad faith, and insurance defense law in Florida.
HB 837 would eliminate one-way attorneys’ fees and attorney fee multipliers for all lines of coverage, including surplus lines insurers. The Governor stated that the elimination of one-way attorneys’ fees would curb “activist attorneys” who prolong litigation to increase their ultimate recovery of attorneys’ fees. This follows on the heels of the bill passed in December of 2022, which eliminated one-way attorneys’ fees claims for property insurance cases and prohibited “Assignment of Benefits” agreements between insureds and contractors (which allowed the contractors to sue insurers directly).
While parties could still seek to shift fees through service of proposals for settlement, the legislation would also overturn a recent Florida Supreme Court decision that had substantially broadened the circumstances under which a contingency fee multiplier could be awarded. Instead, the legislation would instead codify a presumption that the lodestar fee is sufficient, with multipliers only being available in “rare and exceptional” circumstances.
Additionally, the proposed legislation seeks to “modernize” Florida bad faith law by codifying the existing common-law doctrine that negligence by an insurer – without more – is not enough to support a claim for bad faith. Moreover, the proposed statute would create a corresponding duty to act in good faith on the part of the insured. If the insured did not meet its obligation to act in good faith, the insured’s ability to recover in bad faith against its insurer would be impacted. The proposed statute would further make common-law bad faith claims subject to the prior notice and safe harbor requirements currently applicable only to statutory bad faith claims, and would raise the threshold for seeking punitive damages in a bad faith claim. It would also change the law in the context of multiple claimants to allow carriers to interplead limits or require binding arbitration to allocate insurance proceeds.
Perhaps one of the changes most worthy of attention is the proposed reform of Florida’s pure comparative fault statute. The legislation currently being contemplated would place Florida in the category of those states that follow a modified contributory negligence standard. In other words, if the plaintiff is found to be more than 50% at fault, they recover nothing. There are also provisions for additional transparency in the medical records and bills which may be presented to a jury such that the jury will know if the treating physician is offering his or her skills to the allegedly injured plaintiff under a “Letter of Protection” and whether the figure stated on the final invoice for all the medical treatment has been reduced by a recovery from another source. The bill would further remove attorney-client privilege as to communications relevant to the attorney’s referral of a client for medical treatment.
In short, Governor DeSantis, the Senate and the House are jointly poised to significantly revise the burden that the civil litigation rules, as we presently know them, have imposed for so long. The bill, as drafted, is proposed to take effect on July 1, 2023, and the start of the legislative session is fast approaching on March 7th. Is there relief in sight for the small businesses, corporations, and insurers writing coverage in Florida?
Insurance and reinsurance