Tort reform update: Florida passes comprehensive tort reform that has potential to fundamental alter civil litigation in Florida.
On March 24, 2023, Governor DeSantis signed into law House Bill 837, a comprehensive bill aimed at creating significant tort reform that has the potential to fundamentally alter civil litigation in Florida. HB 837 shortened the statute of limitations for negligence, modified the comparative fault scheme, eliminated categories of attorney-client privilege, and adopted a series of new disclosures and models for assessing past and future medical expenses in personal injury and wrongful death cases. The new laws also comprehensively modify the statutes concerning entitlement to attorneys fees and effectively create a new bad faith litigation scheme.
These comprehensive changes and new laws went into effect immediately upon the Governor’s signature. A copy of the reforms as codified can be read here.
I. Statute of limitations shortened to two years for negligence.
The statute of limitations for negligence has been shortened. An action founded on negligence must now be brought within two years. Under the prior law, negligence actions were subject to a four-year statute of limitations.
II. Pure comparative fault eliminated. Modified comparative fault is the new standard.
HB 837 modified Florida’s comparative fault scheme found at section 768.81, Florida Statutes. Under the prior scheme, Florida utilized a “pure” comparative fault system. Pure comparative fault reduces the amount of damages awarded by the percentage the party seeking damages was at fault. In pure comparative fault jurisdictions, a party could recover damages—albeit at a reduced proportion—even when the party seeking damages was found to be primarily at fault.
Section 768.81 has been amended to create a “modified” comparative fault scheme. Under the new scheme, in a negligence action, “any party found to be greater than 50 percent at fault for his or her own harm may not recover any damages.” § 768.81(6), Fla. Stat. Thus, for example, while under the old scheme a plaintiff who was found to be 51% at fault, would simply have the total damages awarded to him reduced by 51%, under the new “modified” comparative fault scheme, that plaintiff would be barred from recovery. Practitioners should note that 768.81(6) does not apply to personal injury or wrongful death cases arising out of medical negligence pursuant to chapter 766.
III. New required disclosures regarding letters of protection and certain communications are no longer considered privileged.
HB 837 created a new section in the Florida code, section 768.0427. Section 768.0427(3) creates new mandatory disclosures concerning letters of protection. In a personal injury or wrongful death action, as a condition precedent to asserting any claim for medical expenses for treatment rendered under a letter of protection, the claimant must disclose: (i) a copy of the letter of protection; and (ii) all billings for the claimant’s medical expenses, which must be itemized and, to the extent applicable coded. The claimant must also disclose whether, at the time the medical treatment was rendered, the claimant had health care coverage, and if so, the identity of such coverage.
Additionally, it must be disclosed whether the claimant was referred for treatment under a letter of protection and, if so, the identity of the person who made the referral. If the referral is made by the claimant’s attorney, disclosure of the referral is permitted, and evidence of such referral is admissible notwithstanding section 90.502, Florida Statutes. Phrased differently, such information in not subject to the attorney-client privilege. The law further provides that the financial relationship between a law firm and a medical provider, including the number of referrals, frequency, and financial benefit obtained, is relevant to the issue of the bias of a testifying medical provider.
Finally, if the health care provider sells the accounts receivable for the claimant’s medical expenses to a factoring company or other third party, additional disclosures are required. These disclousres include: (i) the name of the purchasing company; and (ii) the dollar amount for which the company purchased the account, including any discounts provided below the invoice amount.
IV. Limits on the admissibility of evidence to prove past and future medical expenses.
The new 768.0427(2) established limitations on the admissibility of evidence to prove the amount of damages for past or future medical treatment in personal injury and wrongful death cases.
Evidence offered to prove the amount of damages for past medical treatment or services that have been paid is limited to evidence of the amount actually paid, regardless of the source of payment.
For past medical care that has not yet been paid, 768.0427(2)(b) explains that evidence depends on whether the claimant is insured and whether the claimant has entered into a letter of protection (“LOP”).
If the claimant is insured by something other than Medicare and Medicaid, then the evidence is limited to the amount the insurance is required to pay for the service plus the claimant’s share of medical expenses under the insurance contract, such as co-payments or co-insurance.
If the claimant is insured but obtains treatment under a LOP or does not submit charges to the insurance, the evidence is limited to the amount the insurance would have paid the provider for the service under the contract plus the claimant’s share of medical expenses under the insurance contract.
If the claimant is uninsured or insured through Medicare or Medicaid, the evidence is limited to establishing 120 percent of the Medicare reimbursement rate in effect at the date of treatment. If no Medicare rate is applicable to the service received, then the evidence is limited to 170 percent of the applicable state Medicaid rate.
If the claimant is treated under an LOP and the provider subsequently transfers the right to receive payment under the LOP to a third party, the evidence is limited to the amount the third party paid or agreed to pay the health care provider in exchange for the right to receive payment pursuant to the LOP.
Evidence of reasonable amounts billed to the claimant for medically necessary treatment or medically necessary services provided to the claimant is also admissible.
The statute provides a similar scheme concerning evidence of future medical expenses. See § 768.0427(2)(c), Fla. Stat.
Section 768.0427(4) provides that damages that may be recovered by a claimant in a personal injury or wrongful death action for the reasonable and necessary cost or value of medical care rendered may not include any amount in excess of the evidence of medical treatment and services expenses admitted pursuant to subsection (2), and also may not exceed the sum of: (i) amounts actually paid by or on behalf of the claimant to a health care provider who rendered medical treatment or services; (ii) amounts necessary to satisfy charges for medical treatment or services that are due and owing but at the time of trial are not yet satisfied; and (iii) amounts necessary to provide for any reasonable and necessary medical treatment or services the claimant will receive in the future.
V. Bad faith litigation scheme modified.
HB 837 amended section 624.155 to add new sections concerning bad faith litigation against insurers.
First, under the amended law, a statutory or common law bad faith action cannot be sustained where insurer tenders the lesser of the policy limits or the amount demanded by the claimant within 90 days after receiving actual notice of a claim which is accompanied by sufficient evidence to support the amount of the claim. § 624.155(4)(a), Fla. Stat. The law further explains that the existence of the 90-day period and that no bad faith action could lie had the insurer tendered the lesser of policy limits or the amount demanded by the claimant is inadmissible in any bad faith action. § 624.155(4)(b), Fla. Stat.
Second, the amended law codifies that mere negligence alone is insufficient to constitute bad faith. § 624.155(5)(a), Fla. Stat.
Third, the amended law established a procedure if two or more third-party claimants have competing claims arising out of a single occurrence, which in total may exceed the available policy limits of one or more of the insured parties who may be liable to the third-party claimants. An insurer is not liable beyond the available policy limits for failure to pay all or any portion of the available policy limits to one or more of the third-party claimants if, within 90 days after receiving notice of the competing claims in excess of the available policy limits, the insurer complies with either of the following:
(i) The insurer files an interpleader action under the Florida Rules of Civil Procedure. If the claims of the competing third-party claimants are found to be in excess of the policy limits, the third-party claimants are entitled to a prorated share of the policy limits as determined by the trier of fact.
(ii) Pursuant to binding arbitration that has been agreed to by the insurer and the third-party claimants, the insurer makes the entire amount of the policy limits available for payment to the competing third-party claimants before a qualified arbitrator agreed to by the insurer and such third-party claimants at the expense of the insurer. The third-party claimants are entitled to a prorated share of the policy limits as determined by the arbitrator, who must consider the comparative fault, if any, of each third-party claimant, and the total likely outcome at trial based upon the total of the economic and noneconomic damages submitted to the arbitrator for consideration. A third-party claimant whose claim is resolved by the arbitrator must execute and deliver a general release to the insured party whose claim is resolved by the proceeding.
VI. Comprehensive restructuring of attorneys fees provisions.
Finally, HB 837 provided a comprehensive overhaul to the attorneys fees provisions in the state of Florida.
First, the bill amended section 57.104, Florida Statutes concerning the computation of attorneys fees. Section 57.104(2) now provides that in any action in which attorney fees are determined or awarded by the court, there is a strong presumption that a lodestar fee is sufficient and reasonable. Under the lodestar method for calculating a reasonable attorney fee award, a trial court is required to determine a lodestar figure by multiplying the number of hours reasonably expended on the litigation by a reasonable hourly rate for the services of the prevailing party’s attorney. Although there is not a categorical ban on awarding a fee multiplier, the law provides that the lodestar presumption may be overcome only in a rare and exceptional circumstance with evidence that competent counsel could not otherwise be retained.
Second, the bill created section 624.1552, which provides that the provisions of section 768.79—Florida’s offer of judgment and demand for judgment statute—apply to any civil action involving an insurance contract.
Third, the bill created section 86.121, which provides for the awarding of attorneys fees in actions for declaratory relief to determine coverage after a total coverage denial of claim. Under 86.121(1)(b), the court shall award reasonable attorney fees to the named insured, omnibus insured, or named beneficiary under a policy issued by the insurer upon rendition of a declaratory judgment in favor of the named insured, omnibus insured, or named beneficiary.
However, the right to fees may not be transferred, assigned, or acquired in any other manner by anyone other than a named or omnibus insured or a named beneficiary. § 86.121(1)(b), Fla. Stat. Further, a defense provided by an insurer under a reservation of rights does not constitute a coverage denial of a claim entitling a party to fees under the statute. Id. Additionally, section 86.121 does not apply to any action arising under a residential or commercial property insurance policy. Id. at (2).
Fourth, the billed repealed the one-way attorneys fees provisions under section 627.428 and 626.9373. Section 627.428 provided that upon the rendition of a judgment or decree by any of the courts of this state against an insurer and in favor of any named or omnibus insured or the named beneficiary under a policy or contract executed by the insurer, the trial court or, in the event of an appeal in which the insured or beneficiary prevails, the appellate court shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured’s or beneficiary’s attorney prosecuting the suit in which the recovery is had. Section 626.9373 provided similar language concerning surplus lines of insurance. Previously, both sections were amended to specifically not apply to residential or commercial property insurance cases. HB 837 completely repealed these fee statutes.
VII. Conclusion.
It remains to be seen how these changes will shape Florida civil litigation and the insurance industry. For now, attorneys, claimants, and carriers will watch with a keen eye to see whether these reforms reduce insurance litigation and result in decreases in premiums for policyholders.
Regardless of which side you are on, FIDJ’s seasoned trial and appellate litigators can help you. For more information on how we can assist in your appellate or trial support needs, contact us at 305-350-5690 or info@fidjlaw.com