Each year, FAIA's advocacy staff develops succinct summaries of insurance-related issues to help lawmakers, the media, and the public better understand these often-complicated insurance topics.
Consumer Advocate's LegislationBad Faith ReformWorkers' Compensation ReformSmall Group Full Time Employee DefinitionAccuracy in Damages Private Flood Insurance
PROBLEM: Vendors, remediators,
and contractors are abusing assignment of insurance benefits by escalating the
scope and cost of repairs well beyond the actual damage. This abuse only serves
to line the pockets of unscrupulous individuals and their attorneys, and, in
turn, drives up the cost of insurance for all Floridians. The current insurance
claims handling process is also poorly understood by consumers.
BACKGROUND: A workgroup created by
the Florida Insurance Consumer Advocate examined the claims handling process
and found four areas where statutory reform is needed to protect the rights of
both insurers and policyholders: (1) abuses in the area of post-loss assignment
of benefits; (2) the practice by a handful of carriers in denying claims or
canceling insurance policies based solely on the use of credit information; (3)
policyholders who, because of a lack of information, are unsure of their rights
after a loss; and (4) regulation of mediators and neutral evaluators involved
in the claims handling process.
SOLUTION: House Bill 743 by Rep. Hood addresses the four problem areas. (1)
The proposed legislation provides that an agreement assigning benefits for
repair or replacement is valid only if the agreement allows an insurance policy
to prohibit post-loss assignment, except when:
The bill prohibits insurers from denying claims or canceling an insurance
policy or contract solely based on credit information available in the insured’s
credit report if the insurance policy or contract has been in effect for more
than 90 days. (3) It creates a detailed Homeowner Claims Bill of Rights that
must be delivered to the insured within 14 calendar days after a claim is
reported. (4) It gives the Department of Financial Services the ability to
investigate mediators and neutral evaluators in a manner similar to how it
investigates insurance agents and agencies.
CS/Senate Bill 708 by Sen. Bean currently addresses only problem areas 2–4, but Sen. Bean is hoping to reach consensus on the assignment-of-benefits issue.
CALL TO ACTION: Support
passage of HB 743 and CS/SB 708.
PROBLEM: Fear of being hit with awards far in excess of policy limits forces many insurers to settle and pay claims even when the insurer doubts the validity of the claim, increasing the premiums for everyone.
BACKGROUND: Under the current provisions of §624.155, F.S., any person—not just the insured—can bring a civil action against an insurer for failure of that insurer to, in good faith, settle a claim within policy limits.
Plaintiffs’ attorneys demand policy limits in almost every case, even those where liability of the insurer is doubtful, and the insurer usually has only 60 days in which to investigate the claim and make a decision on whether or not to pay. On top of that, some courts grant a “multiplier” or enhancement when granting attorney fees. The threat of almost unlimited damages far in excess of policy limits, coupled with extravagant attorneys’ fees, often forces insurers to pay policy limits even in cases where liability is in doubt. This is especially true given the case law trend that merely losing in a court case is often equated with bad faith. These forced settlements lead to increases in the overall cost of insurance for everyone.
SOLUTION: Senate Bill 1494 by Sen. Thrasher and House Bill 187 by Rep. Passidomo address the problem by:
This legislation is a very good and reasonable first step toward bad faith reform, taking the law back to its original intent: to punish egregious behavior.
CALL TO ACTION: Support passage of SB 1494 and HB 187.
PROBLEM: The way workers’ compensation
“stop-work” orders (SWOs) are applied often results in lengthy work stoppages
that ultimately hurt the people the workers’ compensation (WC) system is
designed to protect: employees, who now have no place to work.
BACKGROUND: The Florida Department of
Financial Services (DFS) Division of Workers’ Compensation identified a number
of problems with the way SWOs are applied in cases where employers do not have
proper WC coverage for their employees.
DISCUSSION: If an employer fails to comply
with WC coverage requirements, the DFS must issue a SWO, which requires an
employer to cease all business and pay one-and-a-half times what the employer
should have been paying in WC premiums for all periods of non-compliance over
the previous three years, or $1,000, whichever is greater. To determine if
proper coverage was in place, the employer must produce three years’ worth of
records and has only five days from the DFS request to do so. Finding records
going back that far is often difficult, especially for small businesses. The
SWO remains in effect until proper coverage is obtained and the DFS issues a
release, which is contingent upon either paying the assessed penalty, or
agreeing to a re-payment schedule.
SOLUTION: Senate Bill 444 by Sen. Galvano
and CS/CS/House Bill 271 by Reps. Cummings and Broxson propose legislation that
strikes a balance between making firm penalties for non-compliance with WC
coverage and providing ample opportunity for employers to come into compliance
and continue to provide jobs. The legislation:
CALL TO ACTION: Support passage of SB 444 and
PROBLEM: A discrepancy between
the federal and state definitions of a full-time employee could confuse
employers and create market disruption in the small group health insurance
BACKGROUND: The Patient Protection
and Affordable Care Act (PPACA) defines a full-time employee for large and
small groups as one who works at least 30 hours a week. But §627.6699(3)(h),
F.S., defines a full-time employee for small groups as one who works at least
25 hours a week. The PPACA definition is used to define eligibility in the
small group exchanges, also known as the SHOP Marketplace. As PPACA implementation
continues, the inconsistency could create confusion as employers attempt to use
the exchange to purchase coverage.
full-time employees are defined is critical to the group health insurance
market, as these definitions govern who is eligible for coverage. Groups must
meet participation requirements before a group policy can be issued; currently,
70 percent of eligible employees must enroll in the plan offered in order for an
employer to participate in the SHOP Marketplace at any point during the year.
SOLUTION: House Bill 969 by Rep.Cummings and Senate Bill 1364 by Sen. Bradley amend §627.6699(3)(h), F.S. to
reflect the PPACA-created federal definition of a full-time employee by
defining an “eligible employee” as an employee who works full time, having a
normal work week of 30 or more hours.
CALL TO ACTION: Support passage of HB
969 and SB 1364.
PROBLEM: Florida law allows juries
in personal injury cases to only see the amountbilled for medical treatment. This
amount does not reflect the actual cost,
because medical providers typically discount their standard billing rates for
the benefit of Medicaid, Medicare, or an insurance company. The inflated standard
billing rate greatly overstates the injury to the claimant, creating a false
impression that misleads a jury as it determines total damages..
BACKGROUND: The greatest cost drive of
economic damages in a personal injury lawsuit is often the cost of medical
treatment and the effect it has on other damage awards. In Florida, the general
rule is that only the billed amount of medical treatment is admitted into
evidence and considered by a jury. But since the claimant owes a treating
medical provider only the reduced charges that are actually accepted by that
provider, the compensation of those charges should be the actual amount paid,
not the inflated amount billed. Additionally, under Florida law, if a defendant
is liable for causing a claimant’s injuries, that defendant (and his/her
insurer) is also liable for a medical provider’s alleged malpractice that
aggravates the claimant’s injuries, even if the treatment was unnecessary. This
principle invokes the so-called “Stuart instruction,” which directs a jury to
award additional damages resulting from negligent, unskillful, or unsuccessful
SOLUTION: Senate Bill 1128 by Sen.Richter and House Bill 379 by Rep. Hood ensure that the evidence
considered in a case is not misleading and that a fair verdict is rendered. The
legislation divides medical bills into two categories: (1) those that have already
been paid; and (2) those where an outstanding balance is due or has not yet
been billed due to a “letter of protection” (LOP), where the provider agrees
not to bill the claimant for medical services until the lawsuit has concluded.
In the first category, the actual amount paid is the maximum amount recoverable
and a jury cannot see the difference between the billed amount and the actual
amount paid. In the second, the parties may introduce into evidence for the
jury to see the usual and customary charges of medical providers in the same
geographic area for similar services; amounts billed by the provider, or those un-billed
charges held back under a LOP; and any amounts the provider receives in
compensation for selling the rights to a LOP. As to payment for unnecessary
treatment, the bill provides that if a defendant proves by the preponderance of
the evidence that treatment was not medically necessary, the defendant is not
liable for damages resulting from the medically unnecessary treatment.
CALL TO ACTION: Support passage
of SB 1128 and CS/HB 379.
PROBLEM: Dramatic increases in flood insurance premiums mandated by passage of the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) could paralyze the real estate market in Florida, where nearly 40 percent of all National Flood Insurance Program (NFIP) policies are written.
BACKGROUND: The NFIP is approximately $24 billion in debt, due to what the federal government contends is inadequate premium rates. To address this shortfall, Congress passed BW-12, which requires, among other things, that the NFIP raise rates to reflect “true flood risk.” That translates to premium rate increases for some, but not all, policyholders, and in some cases, increases as high as 1,000 percent.
President Obama signed HR3370, the Homeowner Flood Insurance Affordability Act of 2014, on March 21, 2014, that softens the impact of these dramatic spikes, but it does not totally solve the problems. With the NFIP being the only game in town, some think the long-term solution is free market competition. To that end, Florida lawmakers are considering legislation, Senate Bill 542 by Sen. Brandes and CS/House Bill 879 by Rep. Hooper, to incentivize a private flood insurance market in Florida as an alternative to the NFIP.
DISCUSSION: Before a Florida market-based plan becomes law, answers are needed to several important questions, including:
FAIA applauds the efforts of Florida lawmakers to assist consumers, and will work with the bills’ sponsors to ensure the legislation does not create unintended consequences.