Florida House Civil Justice Subcommittee Report: April 4

During its meeting today, April 4, 2011, the House Civil Justice Subcommittee temporarily postponed HB 1187 Relating to Civil Remedies Against Insurers, sponsored by Representative Dennis Baxley (R-Ocala) and co-sponsored by Representative Charles Van Zant (R-Palatka), after questions were heard on two significant Strike-All amendments, one of which was eventually withdrawn.  Prior to the meeting, Rep. Baxley filed a “Strike All” Amendment, Amendment 10000, (hereinafter (“Strike All”), and Rep. Don Gaetz (D-Destin), filed an Amendment to the Amendment, Amendment 10001, (hereinafter “Substitute Amendment”).

The meeting began with Rep. Baxley’s introduction of HB 1187 which revises various provisions of Florida’s “bad faith” insurance law.  After a brief summary, the Strike-All Amendment was introduced. 

During questions on the Strike-All Amendment, Rep. Baxley was asked if the Strike-All contained a “safe harbor” provision.  Rep. Gaetz responded that yes, there was a safe harbor provision in both the Strike-All and in the Substitute Amendment that, with respect to third-party claims, allows an insurer 60 days to investigate and evaluate a claim after the insurer’s receipt of the third-party claimant’s written demand to settle, or 90 days after the insurer’s receipt of the notice of the claim, whichever is less.  Before moving into debate on the Strike-All Amendment, the Committee first moved to questions on the Substitute Amendment.

During questions on the Substitute Amendment, Rep. Richard Steinberg (D-Miami Beach), asked Reps. Baxley and Gaetz if the provision permitting the filing of a bad faith claim when an insurer acts “arbitrarily and contrary to the insured’s interests,” which was contained in the Strike-All Amendment, was also contained in the Substitute Amendment.  Rep. Gaetz responded that the provision was only in the Strike-All.  Rep. Steinberg also asked if, based upon the drafting of the provision, there were instances where the insurer could act “contrary” to the insured’s interests, but not arbitrarily, and hence, avoid bad faith liability.  Rep. Gaetz said yes, an insurer could act contrary, but so long as it was not arbitrary, it would not be in bad faith.

Following additional clarification questions from Rep. Bill Hager (R-Boca Raton), Rep. Gaetz summarized 3 key aspects contained in the Substitute Amendment that would help build the platform for solid bad faith reform, which included: the safe harbor provision; the interpleader provision; and alternative dispute resolution provision.  However, because the Substitute Amendment was not yet fully drafted as strong as it could be, Rep. Gaetz moved to withdraw the Substitute Amendment.

The Committee then turned back to Rep. Baxley’s Strike-All Amendment.  During questions on the Strike-All, Rep. Steinberg raised concerns regarding protections of the insured in instances where the third-party claimant is not cooperating.  Rep. Gaetz pointed to the safe harbor provision providing an additional 30 day allowance to protect the insured.  Rep. Kathleen Passidomo (R-Naples), echoed similar concerns regarding protection of insured and Rep. Gaetz reiterated the importance of the safe harbor provision.

Rep. Kelli Stargel (R-Lakeland), raised concerns that an insurer could be let off the hook for a bad faith claim if the third-party claimant does not provide “relevant documents” to the insurer, which she pointed out to be a vague term.  She also expressed concern that the third party claimant is required to provide a detailed explanation of coverage, but because they are not the insured, they might not be privy to such information.  Overall, Rep. Stargel expressed concern that as drafted, the Strike-All would give insurers a “golden ticket” out of bad faith liability.  Rep. Baxley noted that he agreed with her comments and welcomed an amendment reflecting such concerns.  Rep. Stargel responded that she did try to draft an amendment but since she is not an attorney, she felt that a person with a legal background was better suited to draft such a provision.

The Committee also raised concerns regarding the ambiguity of the binding arbitration provision, noting it was unclear if such arbitration was required.  Again, Rep. Baxley responded that the intent is to follow the terms of standard insurance contracts, which typically contain an arbitration provision.  Again, he welcomed an amendment or suggestion for tightening up the language.

Rep. Hager acknowledged that there are times in the insurance business where a claimant never intends to accept the insurer’s offer, regardless of policy limits.  To illustrate, he referenced a recent case from the Third District Court of Appeal, Estate of Levine v. United Auto Insurance Co., where the insurer acted promptly and swiftly, yet judgment was still entered against the insurer.  Rep. Baxley emphasized the magnitude of bad faith as a significant problem and that legislators cannot keep walking past just because it is a difficult topic to address.

Rep. Michael Weinstein (R-Orange Park), then asked Rep. Baxley for a “sense of where he is” in terms of drafting since the Substitute Amendment was withdrawn, and the Committee was back to considering the Strike-All Amendment.  Rep. Baxley said that it is an ongoing process, and based upon the Committee’s questions, he does not believe he has all of the correct provisions figured out yet.  He encouraged the Committee to continue considering the Strike-All so that it could hear testimony from interested parties today.

The Committee then opened the floor for public testimony.  Advocates in favor of the bill cited examples of how an insurer can be set up, including the recently released Florida Third District Court of Appeal opinion in Estate of Levine v. United Auto Insurance Co.  Opponents of the bill stated that abuses and set ups were not successfully litigated.  At the close of public testimony, the Committee Chair, Rep. Eric Eisnaugle (R-Orlando), afforded Rep. Baxley the option to temporarily-postpone the bill before entering into debate, which would likely be “heated,” in order to further develop various provisions of the bill.  Rep. Baxley closed, thanked the Committee for its time, and “begged” listeners to help him “write the right bill.”  But because he did not “bring [the Committee] the right bill,” he elected to temporarily postpone action on the legislation. Therefore, without objection, HB 1187 was temporarily postponed.

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