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Florida

A former No. 1 Judicial Hellhole, Florida took great strides towards improving its legal climate in 2019. Although there is much work to be done, the election of Governor Ron DeSantis (R) has heralded a sea change in Florida’s legal landscape, beginning with the appointment of several new Florida Supreme Court justices. This new court is deferential to legislative efforts to stop lawsuit abuse and poised to correct the course set by the prior activist court. As a result, the jurisdiction has dropped to the Watch List and ATRF will continue to keep a close eye on the Sunshine State.

FLORIDA’S NEW RESTRAINED SUPREME COURT

In years past, the Florida Supreme Court was known for its liability-expanding decisions and contempt for the lawmaking authority of the state legislature. But the court’s three activist members left the bench in January 2019 after reaching the mandatory retirement age. These three justices, along with the swing vote of Justice Jorge Labarga, constituted the court’s activist majority that signed onto many of the decisions increasing liability and nullifying civil justice reform legislation in Florida.

In January 2019, newly elected Governor Ron DeSantis replaced these three retiring justices with three texturalists, Barbara Lagoa, Robert Luck, and Carlos Muñiz. The three new justices join historically conservative justices Charles Canady, Ricky Polston, and Alan Lawson. With these new appointments, the Court has been called the “most conservative Florida Supreme Court in decades.”

Although it is still early in its tenure, the new Florida Supreme Court is beginning to correct the course charted by the prior, activist supreme court and is returning sense to Florida’s civil justice system. However, the Court’s composition is already in flux. In September, President Drumpf nominated Justices Lagoa and Luck for seats on the U.S. Court of Appeals for the Eleventh Circuit. Governor DeSantis now has two seats to again fill on the state high court. ATRF will continue to keep a close eye on the court to see if it continues its fair and balanced approach.

Rejecting the Prior Court’s Endorsement of Junk Science

In 2013, Florida’s legislature brought state law on the admissibility of expert evidence in line with the federal courts and the majority of state courts. That law adopted the standard established by the 1993 decision of the U.S. Supreme Court in Daubert v. Merrell Dow Pharmaceuticals. The statute effectively tasks judges with acting as gatekeepers to ensure that expert testimony presented to jurors is indeed reliable and not “junk science.”

As noted in the 2018-2019 Judicial Hellholes report, the earlier, activist Florida Supreme Court rejected the legislature’s efforts to improve Florida’s expert witness standard as encroaching upon the Court’s authority to set rules. Instead, it maintained an anything-goes approach to expert testimony, which allowed “pure opinion.” Less than five months after Governor DeSantis appointed the three new justices, the Supreme Court — of its own volition — adopted the Daubert standard as the governing standard for admissibility of expert evidence in Florida, observing that the prior court’s “constitutional concerns” with the law “appear unfounded.” The Court agreed that the adoption of Daubert “will create consistency between the state and federal courts with respect to the admissibility of expert testimony and will promote fairness and predictability in the legal system, as well as help lessen forum shopping.”

A REVITALIZED FLORIDA LEGISLATURE BEGINS ENACTING REFORMS TO ADDRESS THE STATE’S LIABILITY CLIMATE

With a new governor, new legislative leadership, and a shift in Florida’s courts, the state legislature finally enacted several reforms in 2019 designed to address lawsuit abuse that long had plagued the state. While progress was made, more work remains to be done in 2020.

REMOVING INCENTIVES TO FILE ASSIGNMENT OF BENEFITS LITIGATION

The Florida Legislature finally passed — and Governor DeSantis approved — much-needed legislation to curb abuse of assignment of benefits (AOB) in 2019.

Under an AOB, an insured transfers his or her insurance claim rights or benefits to a third party, most often a contractor such as a water mitigation company or a roofer, so that the third party may “stand in the shoes” of the insured and seek direct payment from the insurance company. Unfortunately, these arrangements have been exploited.

“South Florida has been the epicenter for the proliferation of a cottage industry led by water mitigation and restoration contractors focused on gouging insurance companies and taking advantage of innocent policyholders.”
– A Florida defense lawyer

As one Florida defense lawyer recognized, “South Florida has been the epicenter for the proliferation of a cottage industry led by water mitigation and restoration contractors focused on gouging insurance companies and taking advantage of innocent policyholders.” It is this cottage industry that has been the primary driver of increased insurance litigation in Florida — a “man-made litigation flood” — not storms.

According to a recent report from the Florida Justice Reform Institute, AOB lawsuits accounted for more than half of litigation against insurance companies statewide in 2018, and over the last decade, such lawsuits grew 900 percent. Holders of AOBs, like water mitigation companies, and their lawyers were incentivized to file these suits because of a one-way attorney fee statute, which allowed the assignee to file suit without the risk of having to pay the insurance company’s attorney’s fees in the event the assignee lost.

This increased litigation has resulted in high-dollar consequences for innocent insureds. For example, Florida homeowners paid an additional $1.38 billion in premiums between 2013 and 2018 due to the rising number of lawsuits stemming from AOB abuse.

In the 2019 legislation session, however, Florida enacted H.B. 7065 to address this crisis, after seven years of legislative efforts. The law applies to all AOBs signed after July 1, 2019.

The new law, a summary of which is available here, is expected to rein in out-of-control AOB litigation that has overrun Florida courts, “curtailing a longstanding legal abuse by plaintiff attorneys.” Among other things, the law replaces the one-way attorney fee for assignees with a defined prevailing party formula and provides additional protections for insureds in assigning insurance benefits.

NARROWING THE DANGEROUS INSTRUMENTALITY DOCTRINE

In the past, the Florida Supreme Court has imposed vicarious liability on companies that simply rent equipment used by others. In Newton v. Caterpillar, Anthony Newton, while working for an independent contractor to clear debris from a vacant, private lot, was injured when a tree stump was accidentally released from a loader and rolled across his hand. Newton blamed Caterpillar for his injury because the company had leased the loader that caused the injury. The Florida Supreme Court expansively interpreted the state’s “dangerous instrumentality” doctrine to find Caterpillar vicariously liable for the injury. The Court’s ruling greatly expanded the doctrine to include equipment and conduct not previously included within the doctrine.

In response, the legislature passed, and the governor approved, SB 862, which provides that the lessor of special mobile equipment (i.e., construction equipment) that causes injury, death, or damage while leased is not liable for the acts of the lessee or lessee’s agent or employee if the lease agreement requires documented proof of insurance coverage meeting certain limits.

DISCOURAGING UNNECESSARY BAD FAITH ACTIONS

In addition to targeting AOB litigation, the Florida Legislature also passed reforms in 2019 designed to curtail unnecessary bad faith litigation against insurance companies. This new law  is a good first step toward addressing bad faith abuse in the state and the legislature should consider taking additional action in 2020.  The bill provides a more reasonable time for insurers and their policyholders to resolve disputes through an appraisal process. Under the 2019 legislation, a person may not file a civil remedy notice—the first step to pursue a bad faith lawsuit against an insurance company—for 60 days after the right to an appraisal is invoked in a residential insurance dispute. The appraisal process is a form of alternative dispute resolution that may be invoked by the insurer or policyholder when they cannot agree on the value of a loss. If the insurer pays the appraised value within 60 days of a receiving a notice, a bad faith lawsuit may not be filed.

REFORMS STILL NEEDED

FIXING THE “NO-FAULT” PERSONAL INJURY PROTECTION SYSTEM

The history of fraud in Florida’s “no-fault” personal injury protection (PIP) system has been long chronicled in the Judicial Hellholes report. Under the current PIP system, insurers are required to pay up to $10,000 for medical expenses stemming from auto accidents no matter who is at fault. Florida lawyers and their associates have been abusing the system for years, contributing to why Floridians have some of the highest car insurance rates in the country. Legislators must come together and address the rampant fraud plaguing the system.

INFLATED AWARDS FOR MEDICAL EXPENSES

Plaintiffs’ lawyers have long abused what are known as “letters of protection.” Letters of protection are agreements between a person who needs medical care, his or her lawyer, and a healthcare provider under which the healthcare provider agrees to not seek to collect a fee for medical treatment from the patient, but wait to collect out of an expected settlement or judgment. Letters of protection can serve a legitimate purpose when a person is uninsured and unable to pay for medical expenses. However, some Florida lawyers recommend that their clients not use their insurance to cover medical expenses, but rely on a letter of protection.

Under Florida law, at trial, jurors learn the initially invoiced amount of medical expenses, which is essentially a “sticker price” that is often three or more times the amount that is ultimately accepted by the healthcare provider as full payment. After a verdict, Florida law requires judges to adjust the award to reflect the actual amount of medical expenses paid and accepted, a process called a “set off.” Florida’s personal injury lawyers often use letters of protection to avoid this set off. By avoiding evidence of the actual value of medical treatment, there is no amount paid for a judge to set off the award.

This type of abuse benefits no one but the lawyers and medical clinic that may be in cohorts with them. The lawyers get to inflate the damage award and collect a larger contingency fee. The medical provider gets paid a rate that is much higher than market value. The plaintiff, however, has these high rates taken from his or her share of the judgment, even if they would have been covered by insurance.

At a February 2019 hearing before a committee of the Florida House of Representatives, a representative of the popular supermarket Publix testified that the grocer’s costs run 65 percent higher per claim in Florida than in other states in which it operates, and 50 percent higher in South Florida than the rest of the state, precisely because of this type of abuse. Letters of protection, she noted, result in “manufactured medical damages that have no basis in reality.”

Legislation can ensure that jurors receive accurate information on the actual value of medical expenses and prohibit abuse of letters of protection. The legislature should also revisit the need to place reasonable constraints on subjective and unpredictable noneconomic damage awards, which are particularly important for preserving access to affordable medical care.

MISLEADING AND JURY-TAINTING LAWSUIT ADVERTISING

Trial lawyer advertisements flood televisions in homes across the Sunshine State. From July 1 to September 30, 2018 in the Tampa-St. Petersburg, Florida market, 57,000 lawsuit advertisements aired – at a cost of $4.6 million. In Miami and Fort Lauderdale, 29,000 ads aired – at a cost of $4.5 million during the same time period.

While these ads may be irritating, they also have negative effects further down the line. These advertisements affect jurors’ perceptions of certain issues or products and increase the chance that a juror will enter a case with preconceived notions they would not have otherwise held.

A survey conducted by Trial Partners, Inc. found that 90 percent of jurors would be somewhat or very concerned if they saw an advertisement claiming a company’s product injured people. Further, 72 percent of jurors agreed somewhat or strongly that if there are lawsuits against a company claiming its products have injured people then there is probably truth to the claim.

Jury bias is not the only issue caused by rampant trial lawyer advertisements. Many ads claim a certain prescription or medical device causes harm, and without consulting a doctor, viewers who are prescribed these medications may cease use due to the fear created by these exaggerated claims. As discussed in the Philadelphia Court of Common Pleas Judicial Hellholes section, these advertisements are having dangerous real-life consequences.

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