[Liability Insurance] Fwd: FW: Senate Bill 1284

Wed Mar 6 18:36:17 PST 2013

Cary, I believe this bill is essentially the same one that has been proposed
for the last several years and has failed to gain enough support to pass.
It is the companion to HB 813.  The main idea is to remedy the "bad faith
setup" technique of a plaintiff's lawyer sending a policy limits demand with
a short fuse in the hope that the carrier will not respond in time and
create an extracontractual claim.  The bill seeks to treat third-party bad
faith claims in the same way that first-party claims are treated, in that a
notice of violation must be filed with the Department of Financial Services,
and the insurer has 60 days to respond before a bad faith claim can be
filed.  

The staff analysis for last year's version (HB 427; SB 1224) noted that the
change might be unconstitutional, in that it restricts the right of access
to the courts.  I am not constitutional scholar, so I will leave that
analysis to others.

As a policyholder lawyer, I am admittedly biased, but it seems to me that
this recycled bill should be put out to pasture for good.  The third-party
liability context is very different from the first-party property context.
While this "remedy" may seem simple, you cannot equate the process of
adjusting a property insurance claim - which is typically a dispute over the
cost of repair - with a liability insurance claim, where a defendant is
faced with an unknown and potentially ruinous liability, and is seeking its
insurer to protect it against that liability.  Liability policies give
insurers the right to control the defense of the case and decide when to
settle, and so the insurer has the fiduciary duty to act in the best
interests of its policyholder.  Although the insurer has this fiduciary
duty, it also typically defends under a reservation of rights, creating
potential conflicts with the policyholder, which continues to face liability
that is uncovered or excess of limits even as the insurer makes the defense
and settlement decisions.

An arbitrary 60-day review period does not take into account the complexity
of the case or the status of the case (i.e., recently filed v. eve of
trial).  Sixty days is far too long when the trial is 30 days away.  It may
not be enough when a policy limits demand is made soon after a complicated
series of events caused a catastrophic accident.  There are just too many
variables to try to standardize the timing of the insurer's response in the
liability context.

Florida courts can and do act in a gatekeeping role to dismiss bad faith
claims that result from obvious set ups.  From there, the standard is a
"totality of the circumstances" standard which takes into consideration a
variety of factors before an insurer can be found to have breached its
fiduciary obligations.  I can see no legitimate reason to change this
long-honored jurisprudence (which, as far as I am aware, is the law not only
in Florida but every other jurisdiction in the country) to create an
arbitrary and incongruous process for policyholders to have to follow to
hold insurers to their fiduciary obligations.

There is no safe harbor for a policyholder that faces bankruptcy due to an
excess judgment when its insurer refused to settle a case so that it could
roll the dice on a verdict.  Why should the legislature give the insurance
industry a get-out-of-jail-free card because the policyholder did not know
it was required to file a civil remedy notice, or because the plaintiff's
counsel decided to demand policy limits while the jury is out deliberating?
And, if every plaintiff's lawyer and policyholder lawyer files a civil
remedy notice in every third-party liability claim, as a way to create their
own "safe harbor" from a malpractice lawsuit, what is the point of this
notice at all?

Robert H. Friedman

Friedman P.A.

340 Royal Poinciana Way, Suite 317-202

Palm Beach, FL 33480

Phone: 561-800-2110

Fax: 561-246-3413

 <http://www.friedmanpa.com/> www.friedmanpa.com

 <http://www.insurancelawflorida.com/> www.insurancelawflorida.com

---------- Forwarded message ----------
From: Wright, Wm. Cary <cwright at carltonfields.com>
Date: Mon, Mar 4, 2013 at 9:23 AM
Subject: [Liability Insurance] FW: Senate Bill 1284
To: "liability_insurance at lists.flabarrpptl.org"
<liability_insurance at lists.flabarrpptl.org>

Everyone:

I am forwarding an email from Fred Dudley regarding a bad faith insurance
bill that has been introduced.  Please review and provide us any comment you
may have.

Fred, what sort of time-frame do you need comments by ?

Thanks,

Cary

From: fred.dudley at hklaw.com [mailto:fred.dudley at hklaw.com] 
Sent: Monday, March 04, 2013 8:28 AM
To: Wright, Wm. Cary
Cc: Pence, Scott
Subject: Senate Bill 1284

This "bad faith" insurance bill was filed last Thursday by Senator Thrasher,
an attorney and chair of the Senate Rules Committee. I thought our committee
should be aware of this and perhaps solicit comments from our members.

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