Florida Tort Reform HB 837 - What insurers need to know
Several aspects of the law are effective immediately and will affect bad faith claims, comparative negligence and attorney fee awards.
On March 24, 2023, Florida Governor Ron DeSantis signed HB 837 into law, a wide-sweeping tort reform bill that served to overhaul Florida’s litigation landscape. This legislation has a slew of effects on the judicial system and is of particular relevance to lawsuits against insurers and personal injury cases.
These new changes went into effect immediately upon the bill being signed by the Governor. The bill notes, however, that certain provisions will apply to causes of action accruing after the effective date and that rights under current insurance contracts will not be affected.
The anticipation of the passage of this legislation and the immediate effective date resulted in a massive rush to file new lawsuits prior to the bill being signed. This influx is likely to result in delay over the next several weeks and months, as court staff addresses the high volume of filings.
Aside from these delays, the substantive elements of this legislation made some very significant changes.
Transition to modified comparative negligence framework
HB 837 transitions Florida from a pure comparative negligence system to a modified comparative negligence system. Prior to March 24, 2023, a plaintiff could recover in proportion to the defendant’s percentage of responsibility for his injuries regardless of the plaintiff’s own liability. Thus, a plaintiff could be 90% at fault for his own injuries but could still recover 10% of his damages from the defendant(s). Now, under modified comparative negligence, a plaintiff is barred from recovery if he is more than 50% at fault for his injuries. This change does not apply to actions based upon medical negligence.
Two-year negligence statute of limitations
The legislation has shortened the statute of limitations for actions founded on negligence from four years to two years. This applies to causes of action that accrue after the effective date. Pursuant to § 95.031, Florida Statutes (2022), a cause of action accrues when the last element constituting the cause of action occurs.
Limits to bad faith lawsuits against insurers
HB 837 creates Florida Statute § 624.155 (4)(b), under which the insured, claimant, and representatives of the insured or claimant have a duty to act in good faith in furnishing information regarding the claim, in making demands of the insurer, in setting deadlines, and in attempting to settle the claim. Under the new standard, mere negligence is insufficient to show bad faith against an insurer. Moreover, there is no separate cause of action for bad faith of an insurer, instead, the trier of fact may consider bad faith, or lack thereof, in apportioning the amount of damages awarded.
If multiple claims arising out of a single occurrence exceed the policy limits, the insurer is not liable beyond the policy limits for failure to pay any or all of the policy limits if within 90 days: (a) the insurer files an interpleader action under the Florida Rules of Civil Procedure, and if the claims are found in excess of policy limits, distribute to each claimant a prorated share of the policy limit; or (b) the insurer, pursuant to binding arbitration, makes the entire policy limit available to competing third-party claimants whose prorated share is determined by the arbitrator.
Changes to admissibility of medical evidence
HB 837 makes changes to what constitutes admissible evidence in establishing past, present and future medical expenses. Now, the admissibility of evidence at trial of past medical treatment is limited to the “amount actually paid, regardless of the source of payment.”
Evidence offered to prove the amount necessary to satisfy unpaid charges for incurred medical treatment or services is limited to the following categories: (1) if the claimant has health care coverage, the amount which such health care coverage is obligated to pay the health care provider to satisfy the charges for the health care; (2) if the claimant has health care coverage, but obtains treatment under a letter of protection or otherwise does not submit the charges for health care coverage, evidence of the amount the health care coverage would pay the provider; (3) if the claimant does not have health care coverage, evidence of the Medicare reimbursement rate in effect at the time of trial for the claimants incurred medical treatment or services, or, if there is no applicable Medicare rate for a service, 140% of the applicable state Medicaid rate; (4) if the claimant obtains medical care under a letter of protection and the health care provider subsequently transfers the right to receive the payment to a third party, evidence of how much the third party paid the healthcare provider in exchange for the right; and (5) any evidence disclosed related to the letter of protection.
Evidence offered to prove the amount of damages for future medical treatment and services is limited to: (1) if the claimant has health care coverage but obtains treatment under a letter of protection or does not submit charges, evidence of the amount that health care coverage would have paid to satisfy charges, or, if a claimant does not have insurance, evidence of the effective Medicare reimbursement rate in effect at the time of trial or if there is no applicable rate for the service, 140% of the applicable state Medicaid rate.
Changes to attorney fee awards
HB 837 also makes changes to how attorneys’ fees are calculated and awarded by the court. Previously, Florida law allowed for courts to consider and award contingency fee multipliers to attorneys’ fees, based on factors that included: the relevant market if contingency fee multipliers were required to obtain competent counsel; whether the attorney mitigated the risk of nonpayment; the amount involved, the results obtained, the type of fee arrangement between the attorney and client; and the likelihood of success at the outset of the action. Now, pursuant to newly enacted Florida Statute § 57.104(2), there is a strong presumption in favor of the lodestar method in considering whether or not to award a contingency fee multiplier. Specifically, “[i]n 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.” This can only be overcome in rare and exceptional circumstances in which evidence has been presented that competent counsel could otherwise not have been retained.
Additionally, HB 837 repeals many of the statutes that provide for one-way attorney’s fees in actions involving insurers. While one-way attorney’s fees are still available in declaratory judgment actions for the determination of insurance coverage against an insurer after a denial of coverage of a claim, they are no longer available in suits against surplus lines insurers, suits against insurers to enforce an insurance policy, and several other categories of suits involving insurers.
Presumption against liability of property owners
HB 837 creates a new section of the Florida Statutes, which creates a presumption against liability for owners and operators of multifamily residential property in cases based on criminal acts upon the premises by third parties. The presumption applies to such owners who implement certain security features, including but not limited to lighting in common areas, a one-inch deadbolt in each dwelling unit door, window locks, and gates around pool areas. The legislation also creates a new statutory section replacing joint and several liabilities with comparative negligence in certain negligent security matters against property owners.
Jessica Zelitt is an associate in the Sarasota, Florida office of Adams and Reese. She practices as a litigator representing clients within the construction, commercial, and real estate arenas in all phases of the litigation process. Contact her at jessica.zelitt@arlaw.com. Kevin McKendry is a law clerk with Adams and Reese.
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