Florida 2016 Legislative Session: Three Ways to Fix Lawsuit Abuse, One to Make Things Worse

As the Florida legislature’s 2016 session kicks off, lawmakers are expected to debate a handful of potential legal reforms that could help shape Florida’s legal system for the better. There are three different proposed reforms that, if passed, will help curb Florida’s lawsuit abuse problem.

1. SB 632 / HB 5, Bad Faith Lawsuits: The first potential reform deals with so-called “bad faith” lawsuits in which personal injury lawyers take advantage of loopholes in Florida laws to derail and jack-up accident settlements. Florida law does not set clear rules for settling with third parties (the defendant caused the accident, but the plaintiff files suit against the defendant’s insurer) in accident lawsuits. This lack of clarity allows personal injury lawyers to game the process and make it impossible to meet settlement demands. When these demands aren’t met, they then file a separate lawsuit alleging that the third party has acted in “bad faith”, which triggers additional damage awards well above what would have been awarded in the settlement for the accident. SB 632/HB 5 would make the rules clear for all parties and allow a legitimate chance to negotiate a settlement.

   
   

2. SB 1474 / HB 1271, Truth in Damages: Similarly, the legislature is expected to again consider “truth in damages” reform, which is an attempt to crack down on Florida’s “phantom damages” problem. Because current Florida law does not require the court to hear the amount of medical expenses that were actually paid in accident lawsuits, personal injury lawyers can sue for medical expenses than were never actually paid by the plaintiff. What happens is the personal injury lawyer submits medical costs that may be far above what was actually paid or the usual cost of service and doesn’t have to disclose how much was really paid for medical care. This creates abundant opportunity – and incentive – to submit inflated medical costs which drive up the amount of any settlement and the amount of legal fees. SB 1474/HB 1271 would bring much-needed transparency and fairness to this process by allowing the court to hear how much was really paid in medical expenses.

   
   

3. SB 596 / HB 1097, Assignment of Benefits: Another reform seeks to curtail one of the most troubling recent trends in Florida: Assignment of Benefits (AOB) abuse. In AOB abuse, which is quickly becoming a cottage industry in Florida, some unscrupulous repair contractors urge homeowners to sign over their insurance benefit and negotiating rights and “just let them take care of” getting a claim paid by the insurance company.  Once homeowners agree – or “assign their benefits” the repair contractor can then submit inflated repair costs in the insurance claim. If the amounts are challenged, they team up with personal injury lawyers to file lawsuits to force the inflated payment. This session’s reform bill, SB 596/HB 1097, would protect consumers by limiting the types of rights that can signed over and giving consumers an option to cancel any assignment of benefit agreement within three days. The bill would also require all AOB contracts to include a bolded notice so consumers are made aware of the potential risks.

Why do these reforms matter? These reforms would help stop the misuse of laws to inflate lawsuit damages and increase the size of lawsuit awards. And make no mistake, the gaming of these laws is about increasing lawsuit opportunities and fees for personal injury lawyers, not about expanding justice. The cycle of lawsuit abuse begins and ends with personal injury lawyers taking advantage of bad laws and then using their influence to prevent necessary reforms.

It’s not all good. Another bill that is backed by personal injury lawyers would make our legal climate worst. Pre-judgment interest would actually significantly worsen the state’s litigation environment. Currently, Florida judges can award interest on settlements in cases before the judgment is final, known as “pre-judgment interest.” This interest can begin accruing from the original date of injury. This year, the legislature will debate whether to expand the types of cases for which prejudgment interest can be applied. If they have their way, more defendants – including individuals and small businesses – could face mounting interest costs as part of any lawsuit in which they are involved. These costs roll into bigger overall lawsuit awards. This leads to a situation in which defendants may feel forced to settle as they could be on the hook for delays in court proceedings that are beyond their control, giving trial lawyers an incentive to delay final rulings, inflate the interest and increase their share. Expanding the types of cases for which prejudgment interest is applicable would only make things worse.

What can I do to help? While fighting the trial bar’s influence over legislators is already an uphill battle, we can’t move the needle unless our elected officials keep hearing about it from their constituents… you! 2016 could finally be the year that Florida makes significant progress in improving its legal climate, but it is going to be up to each and every one of us doing our part and consistently engage our legislators.

Stay tuned for more…