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It has been said “the pen is mightier than the sword,” and that could not be more relevant to Florida tort reform and its recent implications. In this article we’ll look at recent tort reform in Florida - how it began, how it happened, what the changes are, and what insurance claims professionals in Florida can expect in the future.
Things started with a reform to windstorm claims driven by attorneys’ fees.1 Insurance companies have been fleeing the Florida property market, and many expected the next significant hurricane would drive out more. Then Hurricane Ian made landfall on September 28, 2022, devastating Southwest Florida and causing over $50 billion in damage.
In December 2022, the Florida Governor and the state’s Republican lawmakers, who held a supermajority in the House and Senate were concerned about an insurance industry collapse and successfully reformed the handling of property damage claims and litigation, including one-way attorneys’ fees that favored plaintiffs. After the favorable outcome, they moved on to personal injury litigation.2
Past efforts for sweeping Florida tort reform had fallen short. Historically, the plaintiffs’ bar’s lobbyists wielded considerable influence on the conservative majority, while the defense bar primarily remained on the sidelines.3 With the Florida Legislature moving further to the right, tort reform gained critical mass. The Florida Defense Association emulated the plaintiffs’ bar playbook, pushing tort reform through zealous lobbying and catching the plaintiff’s bar by surprise. The conservative political climate, an organized industry business coalition, and a defense bar that effectively articulated before one legislative committee after another why reform was necessary left an indelible mark on Florida tort law.4
1. Revocation of “One-Way” Attorneys’ Fees vs. Insurers – An unusual aspect of Florida insurance law was that a successful action against an insurance company resulted in the award of “one-way” fees directly to the Plaintiff’s attorney. This was in addition to the actual indemnity award. This change significantly reduces the recovery “pie” and, therefore, is expected to result in fewer questionable lawsuits being brought.
2. Removal of Contingency Risk Multipliers – For years, Florida bucked the federal standard of reasonable attorney’s fees and in many cases allowed a multiplier to apply to those fees for suits with even minor damage awards. This resulted in fantastically outsized attorney fee awards in small matters, sometimes even involving only a few dollars. This anomaly has been removed except for truly exceptional circumstances.
3. Reduction of Statute of Limitations – The statute of limitations for negligence claims was reduced from four years to two years. This does not apply to UM/UIM or first-party cases against insurers based on breach of an insurance contract.
4. Removal of “Pure” Comparative Negligence – Pure comparative negligence previously allowed recovery even if claimant bore most of the responsibility for an accident. Now, a claimant may not recover if more than 50% at fault. Previously, their claim was not barred outright, but their recovery was reduced by the comparative fault of other parties. This change applies to any causes of action filed after the bill went into effect. Medical malpractice is excluded from this requirement.
5. Bad Faith – This change modifies the bad faith framework to clarify that negligence alone does not demonstrate bad faith and requires a claimant to act in good faith regarding furnishing information and attempting to settle the insurance claim. Additionally, it allows the insurer 90 days (previously 60 days) after receiving actual notice of a claim accompanied by evidence to support the amount at issue to either tender the lesser of the policy limits or the amount demanded.5 The language attempts to rein in claimants and their attorneys who seek to fabricate bad faith claims by withholding information or imposing unrealistic deadlines.6
6. Multiple Competing Claims – This change allows an insurer to limit their bad faith liability by filing an interpleader action or entering into binding arbitration when there are multiple claimants from a single occurrence and the amount sought exceeds the available policy limits.
7. Uniformity and Transparency in the True Cost of Medical Treatment – Juries in bodily injury actions will now be shown the amounts actually paid to medical providers, as opposed to the amount billed – often outsized amounts reflected in so called “letters of protection” created by providers to bypass this requirement. Now, this information will be disclosed as well as the referral relationship with the health care provider. If applied as written, this may result in significantly lower total awards.
8. Premises Liability – Previously, this was notoriously difficult to defend due to the evidentiary handcuffs placed on the admissibility of the party responsible for committing the alleged criminal act. Now, there is a presumption against liability if the property owner takes certain safety precautions, such as securing video monitoring, lighting, and locks throughout. The bill expands immunity for property owners who are defending themselves from a lawsuit against a criminal actor who was injured on the property and requires a judge or jury to consider the fault of all persons who contributed to an injury.7
As word of the situation spread amongst plaintiffs’ firms, a flood of lawsuits ensued. These firms, looking to avoid the effects of the new laws, filed complaints for their pre-suit claims. Some estimates are that plaintiffs’ firms filed over 90,000 lawsuits before the governor signed the bill. This flood of filings will strain Florida courts, requiring insurers and defense firms to add to their teams and enhance training and litigation management to prepare for and effectively manage this onslaught of lawsuits.8
In order to address this deluge of lawsuits in an orderly manner, the Florida Defense Lawyers Association, among others, is calling on the Florida Supreme Court to issue an emergency order granting an extension of the required time to answer these complaints in the interest of justice and fair play.9 There have been recent rumblings regarding blanket statements that there will be no professional courtesy extended for extensions of time to respond to the massive amount of lawsuits filed; however, this violates the rules of professional conduct, and there are checks and balances in place to ensure these are not unilateral decisions.10
Resourcefulness will be key going forward. Developing protocols, checklists, and procedures for your team to effectively and efficiently litigate when handling numerous deadlines will be crucial in a state that was already one of the most difficult litigation climates.
Here are six things you can do:
Please feel free to reach out to your Claims Executive with any questions.
