The Florida legislature has passed, and Gov. Ron De Santis indicates he will sign, a bill reforming the operation of the policyholder feature known as assignment of benefits (AOB), widely criticized for encouraging inflated claims and tactical filings meant to obtain lawyers’ fees. [Amy O’Connor, Insurance Journal] In anticipation of likely savings, state-owned insurer of last resort Citizens Property Insurance Corp. has scaled back a 25 percent requested rate increase to 10 percent. [The Insurer] Earlier on assignment of benefits here and here.
Florida’s overdue insurance-law reform on the “assignment of benefits” issue had a carve-out excluding auto claims, and Sunshine State lawyers continue to ride auto-glass cases for automatic fee entitlements. A report from the Florida Justice Reform Institute “shows nearly all auto glass lawsuits come from just 15 law firms — one firm, Malik Law, accounts for nearly 30 percent of all such lawsuits filed this year. Additionally, the vast majority of auto glass lawsuits are in Hillsborough and Orange counties. FJRI speculates that’s due to higher attorney fee awards in those counties.” [Drew Wilson, Florida Politics, earlier]
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.
- Legislative relief finally in sight in Florida’s assignment of benefits mess? [Michael Moline, Florida Politics, Insurance Journal on this Insurance Information Institute white paper, Jim Saunders, News Service of Florida and more, Rocco English, Florida Daily, earlier]
- Update on 2018 developments in civil justice [Mark Behrens and Christopher Appel, Federalist Society] “Costs and Compensation of the U.S. Tort System” for 2016 [U.S. Chamber Institute for Legal Reform]
- In first case to reach trial blaming Monster energy drink for heart attack, jury deliberates 15 minutes and reaches defense verdict [Jessi Devenyns, FoodDive]
- Contributing to judges’ election funds taints a verdict? Can both sides play? [Jim Beck, ADA Journal on State Farm Illinois settlement]
- “The Rise of the Freedom To Arbitrate” [John McGinnis, Law and Liberty] “Trial Lawyers Find Unusual Allies In Fight Against Arbitration: Conservative State Treasurers” [Daniel Fisher, Legal NewsLine/Forbes]
- Accessibility complainant who turned out to be ambulatory without wheelchair drops two lawsuits after Post exposé [Julia Marsh, New York Post]
- “Baseball rule” win for Yankees at appeals court: “Court Rules Against Fan in New York State Foul-Ball Case” [Zach Spedden, Ballpark Digest]
- More on the downfall of the $417 million baby powder verdict against Johnson & Johnson [Steven Boranian/Drug & Device Law, Robert H. Wright/WLF, earlier]
- Dear SCOTUS: certification of a class action should be based on admissible evidence [Andrew Grossman, Ilya Shapiro, and Meggan DeWitt on Cato cert amicus brief in Taylor Farms v. Pena]
- What could make the Florida hurricane season even costlier in this year of Irma? Giving contractors legal authority to take over claims under assignment of benefits (AOBs) [Nicole Friedman and Leslie Scism, WSJ]
- “NY’s Scaffold Law Could Add $300 Million Needlessly To The Cost of the Gateway Rail Tunnel Project” [Common Good] Letter: law hinders Habitat for Humanity [Albany Times-Union] More: editorial, Utica Observer-Dispatch;
- C’mon, New Jersey courts, get Daubert and scientific evidence screening right, it’s important considering how many pharmaceutical cases you see [Andis Robeznieks, AMA Wire; Devin Griffin/Drug & Device Law]
- Recent easing of lawsuit crisis in U.S. owes much to rise of arbitration. Now organized litigation lobby is intent on taking that down, and Obama administration has helped with steps in labor law, consumer finance, and nursing-home care [James Copland, Manhattan Institute, related op-ed]
- SCOTUS should grant certiorari to clarify lawyers’ obligation to clients in class settlement, argues Lester Brickman [amicus brief courtesy SCOTUSBlog; earlier on Blackman v. Gascho]
- St. Louis, California, NYC asbestos litigation, south Florida and the Florida Supreme Court, and New Jersey are top five “winners” in latest annual “Judicial Hellholes” report, which also includes a focus on qui tam/whistleblower suits [American Tort Reform Association, report and executive summary]
- Deep pocket lawsuits remain systemic problem in America for political branches to address [David Freddoso, Washington Examiner investigation]
- Florida insurers struggle with secondhand suits under assignment of benefits doctrine [Insurance Journal]
- Storm lawsuits in Texas: “All Hail Breaks Loose” [Mark Pulliam, City Journal]