Changes to Florida Tort and Bad Faith Laws
Legal Development 27 March 2023 27 March 2023
On March 24, 2023, Governor Ron DeSantis signed HB 873 into law which resulted in significant changes to Florida’s tort and bad faith laws.
These changes were part of a movement by the Republican party in Florida “to decrease frivolous lawsuits and prevent predatory practices of trial attorneys who prey on hardworking Floridians.” (See “Governor Ron DeSantis Signs Comprehensive Legal Reforms into Law” (March 24, 2023), https://www.flgov.com/2023/03/24/governor-ron-desantis-signs-comprehensive-legal-reforms-into-law/ (Last visited March 27, 2023)). The Governor was quoted as saying, “Florida has been considered a judicial hellhole for far too long and we are desperately in need of legal reform that brings us more in line with the rest of the country.” Id. The changes brought about by this bill took effect once it was signed into law on March 24, 2023.
Several statutes that regulate negligence actions were revised in an effort to reduce large verdicts that have been on the rise across Florida. For example, the statute of limitations for negligence actions accruing after the effective date of the statute was reduced from four years to two years. Florida Statute § 95.11. The most significant change was to the comparative fault statute, which now states that a claimant who is greater than 50% at fault for his or her own injuries cannot recover any damages. Florida Statute § 768.81. However, this “comparative fault” change does not apply to medical malpractice actions.
Florida Statute § 768.0427 was added to provide new guidelines for the admission of evidence related to past and future medical expenses in a negligence action. The statute provides that “Evidence offered to prove the amount of damages for past medical treatment or services that have been satisfied is limited to evidence of the amount actually paid, regardless of the source of payment.” It also states that proof of unpaid medical treatment can be shown by what the party’s health care provider was contractually obligated to pay or 120% of the Medicare reimbursement rate if the claimant does not have healthcare coverage or has healthcare coverage through Medicare or Medicaid. If there is no applicable Medicare rate for a service, the claimant can present 170 percent of the applicable state Medicaid rate. If the claimant obtains medical treatment or services under a letter of protection and the health care provider subsequently transfers the right to receive payment under the letter of protection to a third party, a defendant can present evidence of 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 letter of protection. This also applies to future medical expenses. There are also new requirements for letters of protection and the information that must be included within them to be considered valid.
This change is aimed at combatting “phantom damages” that are regularly seen in bodily injury suits where a claimant presents the amount of medical expenses charged, even though a lesser amount is paid by private health insurance or Medicare. Even though post-trial the damages were adjusted to account for amounts actually paid, the effect of admitting higher medical bills at trial often influenced and inflated pain and suffering damages. The previous system also encouraged claimants to seek treatment under letters of protection to obtain higher payments for medical services. In sum, this new law should reduce damages by limiting medical expenses to amounts actually paid or the amounts that should have been paid.
Negligent Security Actions
In a premises liability case related to allegations of negligent security, Florida Statute § 768.0701 now states that an intentional tortfeasor can be allocated fault on the verdict form. This will have a significant effect on negligent security cases as a jury can now assign a percentage of fault to the criminal actor who caused the harm. This was previously not allowed under Florida case law.
The bill further adds a presumption against liability in residential housing cases for an owner or manager in Florida Statute § 768.0706. The law states that this presumption arises when the owner or manager of residential housing implements defined security protocols such as the use of security cameras, lighted parking, lighted walkways, deadbolts for each unit, locked windows, locked gates, peepholes, a crime prevention design assessment and crime deterrence and safety training. The burden of proof will rest with the owner or manager, but this new law provides a valuable defense by defining the standard or care for residential property owners in negligent security actions.
Bad Faith Actions
The bill also modified the award of attorney fees in bad faith actions. Florida Statute § 86.121 adds that a prevailing party is only able to obtain attorney fees where the insurer disclaims coverage and there is a declaratory judgment action. In other words, an award of fees is no longer automatic just because an insured prevails on an argument. Furthermore, § 86.121 states that a prevailing party’s attorney’s fee claim cannot be assigned. This section also codifies the principle that issuing a reservation of rights letter is not a disclaimer.
There were also several changes made to Florida Statute § 624.155. First, there is a new safe harbor provision for bad faith claims which states that there is no claim for bad faith if the insurer tenders the policy limits or amount being demanded within 90 days of being provided with sufficient information. The safe harbor protocol cannot be used as evidence in bad faith claims. If any insurer fails to utilize the safe harbor period, the statute of limitations is extended by 90 days. Furthermore, in a major change to existing law, “mere negligence” can no longer constitute bad faith. The insured and the claimant have a reciprocal duty to act in good faith in providing information and setting deadlines. A court can also now consider comparative fault in bad faith suits. Additionally, where there are multiple claimants and insufficient limits, the insurer can file an interpleader action where the court will determine the prorated share. Finally, if the insurer and insured agree to binding arbitration, an arbitrator can decide allocation at the expense of the insurer. Any party that receives an allocation of funds must provide the insurer with a release.
Florida Statute § 672.727 was also modified to state that prevailing party attorneys’ fees are now allowed against uninsured/underinsured motorists.
The bill modified Florida Statute §57.104, which sets out the computation of attorney fees. The bill adds a “strong presumption” that a lodestar fee is sufficient and reasonable in the computation of attorney fees and it can only be overcome in rare and exceptional circumstances with evidence that competent counsel could not otherwise be retained. This new provision will make it more difficult to obtain a multiplier on a claim for attorney fees.
Finally, in construction matters, the prevailing party can now obtain attorney fees in litigation against a surety insurer.
While the changes to Florida law are significant, it is of note that in anticipation of this new law, claimant’s lawyers recently filed thousands of personal injury suits in order to avoid its effects. Several jurisdictions could not keep pace with the filings and the online portal systems crashed or were having significant lags. While not specifically stated in the bill, the new laws will likely not apply retroactively. Therefore, it is anticipated that this massive deluge of lawsuits will be subject to the prior law while lawsuits filed after March 24, 2023, will be subject to these new provisions.