Bad faith

Florida Tort Reform Law: A Short Summary of Some of Its Consequences and Effects

On March 24, 2023, Florida’s Governor signed into law HB 837, transforming Florida tort law. With two important exceptions, the law applies to new lawsuits filed after March 24, 2023.

Salient Points of Select[1] Sections of the Law

·         Medical Bills. The law limits the introduction of evidence for medical damages at trial. The law limits evidence of paid medical bills and future medical care to the amount paid or needed for services regardless of the source of the payment:

o   Effects

  • Defense experts on the appropriateness of the amount of medical bills required.

  • Plaintiff-oriented doctors will rethink their medical treatment and billing approach.  

  • Lower medical expenses should reduce non-economic damages awards and nuclear verdicts and increase settlements.

  • More reasonable life care plans. 

  • Reduced abuse of letters of protection.

·         Letters of Protection. If a Plaintiff receives medical services subject to a letter of protection, the plaintiff must disclose: a copy of the letter of protection; all billing for medical expenses, itemized and coded; whether the provider sold the accounts receivable to a third party, the name and dollar amount paid by the third party; whether the plaintiff had health insurance at the time of treatment and the identity of the health care coverage provider; and whether the claimant was referred for treatment under a letter of protection and, if so, the identity of the person who made the referral.

o   Effect

  • Brings letters of protection out in the open. Before, the law stated that there was an attorney-client privilege in communications related to an attorney’s referral of a client for treatment. Juries will now hear about letters of protection, what they mean, the financial relationship they create and the doctor's financial interest in the case's outcome.  

Comparative Negligence. The law changes Florida's comparative negligence system from a pure comparative negligence system to a modified one, so that a plaintiff who is more at fault for their injuries than the defendant may not generally recover damages from the defendant.

o   Effect

  • Avoids outsized awards against nominally negligent defendants.  In matters where the plaintiff was significantly at fault, plaintiffs will argue for more considerable damages so that defendants with low negligence pay an outsized portion of damages. However, defendants can now have a defense verdict if plaintiff found 51% at fault. 

Bad Faith. The law modifies bad faith law to allow an insurer to avoid third-party bad faith liability if the insurer tenders the policy limits or the amount demanded by the claimant within 90 days after receiving actual notice of the claim.

o   Effects 

  • Ends “set-up” claims. Before this law, the system incentivized plaintiffs to devise situations that led to a bad faith claim to obtain larger settlements.   

  • Reduce bad faith claims.  Allowing insurers enough time to evaluate a claim will result in more comprehensive claims handling and fewer bad faith claims.    

[1] For more information on Florida tort reform law, please feel free to reach out to me at mov@miamimaritimelaw.co or 305.377.3700.

Florida Does Not Recognize a Common Law First Party Bad Faith Cause of Action

In Swanson v. State Farm Mutual Auto. Ins. Co., Case No. 6:2019-cv-00422 (M.D. Fla. Apr. 22, 2019), an insured sued its insurer for common law bad faith, alleging an improper denial of benefits. The insurer moved to dismiss and its motion was granted. Florida law recognizes first and third party causes of action against insurers for bad faith. However,  while a common law cause of action in third-party bad faith claims has long been recognized in Florida, a first party bad faith claim against insurers may be asserted pursuant to Florida Statute section 624.155.

The insured argued that Florida law recognizes common law first party bad faith claim, where the insurer’s actions are so egregious and outrageous it elevates what would have been an ordinary bad faith cause of action into an independent, willful tort action. The insured pointed to alleged misconduct during the course of the proceedings on the part of the insurer, which resulted in a mistrial. The court rejected the insured’s argument, pointing out that the Florida Supreme Court has repeatedly held that the state does not recognize a common law first party bad faith action. The court therefore dismissed the lawsuit.

If the insurer had arguably conducted itself improperly in the underlying action, why didn’t the insured seek sanctions with that court? Likely because the conduct did not itself rise to the level of bad faith or vexatiousness required by the rules to sustain any such claim. This insured attempted to obtain fees in another way and as the court made clear, there was simply no other way in this context.

If you are interested in obtaining a copy of this decision or wish to contact us, you may do so by writing to blog@miamimaritimelaw.co or call us at 3053773700.