Lawyers milk Florida accident-bill law for one-way fee entitlements

A Florida law allows persons who have undergone treatment after auto mishaps to sign over to the medical provider their right to sue their insurer under so-called PIP (personal injury protection) auto coverage. Under the provisions of this assignment of benefits (AOB) law, when the medical provider sues, it is entitled to one-way attorney’s fees (payable if it prevails, but not if it loses). These attorneys’ fees can dwarf the underlying sums being sued over — amounting to about $40,000 following a $790 win in one extreme case.

Now Florida attorneys are rolling out tens of thousands of AOB suits, many of small enough quantum that they can be filed in small claims court, even if the fee entitlement thereby triggered is not so small. In Volusia County, where small claims filings more than doubled to over 12,000 cases in 2017, “a single local law firm accounted for all of that increase — and then some — by filing 8,400 cases that year…. In one example, Advantacare of Florida, represented by Kimberly Simoes, filed a lawsuit against State Farm saying the company had not paid it for services it rendered to Stephen Smith. Advantacare was awarded $789.62 according to court files. Simoes was awarded $39,985 in attorney’s fees. Attorney Mark Cederberg was awarded $3,500 for his expert testimony regarding whether Simoes’ fees were reasonable. About a month after the attorney’s fees were awarded, Advantacare dismissed the lawsuit.” [Frank Fernandez, Daytona Beach News-Journal; earlier here and here]

As I have written elsewhere, the true two-way loser-pays systems that operate in most other legal systems take care to avoid the fee-escalation incentives that typify many one-way fee entitlement laws in the U.S. In particular, they tend to hold fee recoveries below actual outlays, and often decline to reimburse fees unnecessarily expended.

One Comment

  • I wonder what’s going to happen to personal injury protection insurance prices and availability in Florida in the near future.

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