Florida House Insurance-Related Bill Action: April 29, 2011

On Friday, April 29, 2011, the Florida House of Representatives considered a series of insurance-related bills. 

The House passed HB 535, relating to the Hurricane Loss Mitigation Program, and amended and passed CS/HB 1087, relating to insurance and CS/HB 1007, relating to insurer insolvency. 

In addition, the House amended and rolled to Third Reading CS/CS/CS/CS/HB 479, relating to medical malpractice and CS/CS/HB 1227, relating to surplus lines insurance.  CS/HB 391, relating to expert testimony, also was read for the second time and rolled to Third Reading.

HB 535 by Representative Frishe relating to the Hurricane Loss Mitigation Program.  Representative Frishe introduced his bill, explaining that the bill would allow the Florida Hurricane Catastrophe Fund to remain tax exempt by extending the repeal date of the Hurricane Loss Mitigation Program.  There were no amendments, no questions, and no debate on the bill.  The bill was then read for a third time and passed by a vote of 116 to 0.

CS/HB 1007 by Representative Bernard relating to insurer insolvency.  Representative Bernard introduced his bill, explaining that the bill addresses the Florida Insurance Guaranty Association (FIGA) and the Florida Workers’ Compensation Insurance Guaranty Association (FWCIGA). 

Two amendments to the bill were filed.  Amendment 970025, filed by Representative Bernard, was explained by Representative Bernard as (1) modifying the Insurance Capital Build-Up Incentive Program to allow insurers to renegotiate surplus notes in certain circumstances; (2) conforming Florida law to NAIC model act reinsurance requirements; and (3) amending the Department of Financial Services’ duties with respect to title insurers in rehabilitation.  This amendment was adopted.

Amendment 642907, filed by Representative Wood, was explained by Representative Wood as clarifying FIGA’s obligation to pay valid insurance policy or contract claims and the exemption from liability for certain civil actions.  This amendment was adopted.

Following adoption of the amendments, the bill was rolled to Third Reading.  A vote was taken and CS/HB 1007 passed the House by 115 to 0.

CS/HB 1087 by Representative Holder, relating to insurance.  Representative Holder introduced his bill, explaining that it addresses a number of insurance-related provisions, including provisions applicable to workers’ compensation insurance.

Several amendments to the bill were filed and the following actions were taken:

• Amendment 490723, filed by Representative Boyd, addresses personal injury protection (PIP) fraud by increasing penalties for persons convicted of committing insurance fraud.  This amendment was adopted.
• Amendment 663971, filed by Representative Hager, requires notice to policyholders when applicable that they are agreeing to surplus lines coverage, which is not protected under FIGA.  Representative Kriseman asked whether the amendment would expand the type of insurable interests that surplus lines carriers can write, to which Representative Hager answered, “No.”  This amendment was adopted.
• Amendment 392891, filed by Representative Holder, amends the exemption from licensure for certain persons selling service warranties and states that premium audits are not required for workers’ compensation coverage unless otherwise indicated.  This amendment was adopted.
• Amendment 838901, filed by Representative Holder, deletes a provision regarding service agreements.  This amendment was adopted.
• Amendment 463331, filed by Representative Nelson, conforms Florida law to the NAIC model law requiring managing general agents to hold funds collected for insurers to be held in a bank insured by the Federal Deposit Insurance Corporation.  This amendment was adopted.
• Amendment 020153, filed by Representative Holder, amends provisions regarding the Special Disability Trust Fund.  This amendment was adopted.
• Amendment 305825, filed by Representative Holder, addresses captive insurance.  This amendment was withdrawn.
• Amendment 678927, filed by Representative Horner, would have eliminated the contingency risk multiplier from applying to attorney fee awards.  This amendment was withdrawn.
• Amendment 564651, filed by Representative Horner, would have sunsetted Florida’s No Fault law effective July 1, 2013.  When asked why he filed such an amendment, Representative Horner explained the difficulties he faced with his failed PIP bill.  Ultimately, he conceded that the bill would be weighed down by such an amendment and withdrew it.

Following action on the amendments, the bill was rolled over to Third Reading, read for a third time, and passed by a vote of 111 to 4.

CS/CS/HB 1227 by Representative Hager relating to surplus lines insurance.  Representative Hager introduced and explained his bill as addressing the collection of surplus lines premium taxes to conform to new federal law.  He noted that failure to pass this legislation could cost Florida approximate $30 million in lost revenue. 

Two amendments to the bill were considered.  (A third amendment filed by Representative Gaetz, amendment 230911, was withdrawn prior to being called up on the House floor).  Amendments 895673 and 195255, both filed by Representative Precourt, were explained by Representative Precourt as ensuring Floridians will not pay any higher surplus lines premium taxes than are currently assessed.  These amendments were adopted.

Following adoption of the amendments, the bill was rolled to Third Reading.

CS/CS/CS/CS HB 479 by Representative Horner relating to medical malpractice.  Representative Horner introduced his bill as something that would create a better environment for doctors to operate and attract more doctors to the state, as well as having the effect of reducing medical malpractice insurance premiums.

Representative Kriseman raised several questions on the bill, the first of which related to the imposition of a clear and convincing burden of proof standard with respect to claims resulting from the failure to order or perform supplemental diagnostic tests.  Representative Horner indicated that due to the medical malpractice atmosphere, doctors practice defensive medicine and order a number of diagnostic tests, many of which may not be necessary, which only serves to drive up costs.

Representative Kriseman then inquired about certificates that would be issued to out of state medical practitioners authorizing them to serve as expert witnesses in Florida and whether other states had similar provisions.  Representative Horner answered in the affirmative.  Representative Kriseman then asked why this only applied to out of state practitioners.  Representative Renuart noted that the purpose of the certificate was to give out of state practitioners a “license” to provide expert testimony and to subject certificate holders to discipline by the Board of Medicine.  These provisions already exist for in-state practitioners.

Representative Kriseman also asked about the provision that would allow a practitioner to have veto power over any settlement recommended by the insurer.  Representative Horner indicated this would result in reduced premiums and make Florida more attractive to practitioners. 

Representative Rouson asked whether the bill would limit the right of injured patients to recover damages, or if the bill contained any limitations on a contingency risk multiplier on attorney’s fees.  Representative Horner advised that the bill did not contain such provisions.  Further, in addressing Representative Rouson’s question regarding definition of the term “malpractice,” Representative Horner stated that his bill does not change anything with respect to the definition.

Representative Rouson then questioned whether it was true that only a small number of doctors stated that they do not want to practice in Florida due to medical malpractice liability.  Representative Horner rejected this assertion, stating that liability is the number one reason for doctors not wanting to practice in this state.

Both Representatives Randolph and Steinberg asked a series of questions regarding the provisions that would exempt hospitals from liability for the negligence of health care providers, other than providers that are employed by (as opposed to contracted with) the hospitals.  It was asked what type of notification would be provided to hospital patients regarding doctors that did not carry malpractice insurance.  While the bill does not provide for any type of notification, it was stated that even if a doctor does not carry malpractice insurance, the doctor must still meet financial responsibility requirements. 

Other questions centered on a hospital’s liability in instances where the care provided failed to meet the level with which the hospital advertised.  Representative Horner indicated if the hospital did nothing wrong, the injured patient’s recourse would be against the doctor if the doctor was negligent. 

With respect to contracted physicians, such as anesthesiologists, who are typically required to maintain certain levels of malpractice insurance pursuant to their contract with the hospital, it was questioned whether hospitals would reduce these requirements if the hospitals were no longer liable for the doctor’s actions.  Representative Horner stated that maintaining hospital liability would only further encourage frivolous claims, since hospitals are seen as deep pockets.

Representative Schwartz asked whether the insurance industry had an opinion on the bill, to which Representative Horner advised that the industry believes this measure would reduce frivolous suits which, in turn, would result in lower premiums.

Representative Rehwinkle Vasilinda asked whether the bill had any consumer provisions.  Representative Horner indicated that every element of the bill was pro-consumer as it would malpractice insurance premiums, reduce the cost of care, and attract doctors to the state.

Representative Rehwinkle Vasilinda then asked whether the provision that would allow prospective defendants or their legal representatives to interview the claimant’s treating providers without the presence of the claimant or the claimant’s legal representative would have a chilling effect on claims.  Representative Horner advised that it would not.  The provision is about providing equal access to witnesses and was to provide a HIPPA waiver. 

Several amendments to the bill were filed and discussed.

• Amendment 506531 by Representative Horner would change the time for which an application for an expert witness certificate to be approved from 7 to 10 business days.  It was also noted that an application is approved by default if not acted upon within the required timeframe.  The amendment was ADOPTED.
• Amendment 239945 by Representative Kriseman regarding the provision of expert testimony was WITHDRAWN.
• Amendment 662323 by Representative Kriseman that would delete language concerning incidents resulting from recognized specific risks described in a signed consent form was WITHDRAWN.
• Amendment 041779 by Representative Kriseman was similar in nature to Amendment 662323 and was also WITHDRAWN.
• Amendment 767519 by Representative Kriseman would allow medical malpractice insurers to settle, without admission of the practitioner’s liability, claims within policy limits, without the permission of the insured doctor.  Representative Kriseman stated that insurers should be able to settle claims for less than policy limits if they can.  Allowing practitioners to veto settlements results in increased legal fees and costs as well as delays for the injured to obtain recovery.  Representative Renuart spoke in opposition to the amendment, stating that this provision would result in more frivolous suits being filed, since insurers would be prompted to settle claims, since settling claims is often cheaper than fighting them.  Representative Costello agreed, stating that the physician’s right to veto settlements served to stop frivolous suits.  After Representative Horner described the amendment unfriendly, the amendment FAILED.
• Amendment 290895 by Representative Kriseman would change the clear and convincing burden of proof standard for claims concerning a failure to conduct supplemental diagnostic tests to a preponderance of the evidence standard, which is the standard under current law.
• Representative Steinberg offered a substitute amendment 067903 that, in addition to providing for a preponderance of the evidence standard, would give the claimant or their representative the right to attend the prospective defendant’s interview with the claimant’s treating physician.  The substitute amendment FAILED, as did Representative Kriseman’s amendment described above.
• Amendment 586349 by Representative Kriseman would allow doctors who held within the preceding two years an active and valid license to practice (in addition to current licensees), to provide expert testimony on the standard of care.  Several Representatives spoke in opposition to the amendment, stating that only active doctors should be permitted to provide such testimony.  The amendment FAILED.
• Amendment 022651 by Representative Kriseman (a substitute amendment for Amendment 542017) would change the standard of proof for claims against volunteer team physicians from a wanton and willful conduct, to a reckless disregard standard.  The amendment FAILED.  Representative Kriseman then proceeded to WITHDRAW amendment 542017.
• Amendments 643127, 534431 and 146091 by Representative Kriseman relating to liability for volunteer team physicians were WITHDRAWN.
• Amendment 366275 by Representative Horner provided that a contingency fee risk multiplier may not be applied to any attorney’s fees awarded under Section 627.428, Florida Statutes, was WITHDRAWN.  Representative Gaetz filed an amendment to amendment 366275 (611731), which was also WITHDRAWN.

Following discussion of the amendments, HB 479 was rolled to Third Reading.

CS/HB 391 by Representative Metz relating to Expert Testimony also was considered on the House floor for Second Reading.  Representative Metz introduced his bill indicating that it would amend two portions of the Florida Evidence Code with respect to the introduction of expert testimony at trial.  The bill would conform Florida law to the federal evidence rules and set forth a three prong test to be applied in trial courts.  The bill would allow trial judges to be the “gatekeepers” concerning what expert testimony was presented to the jury.

There was discussion of whether judges would be adequately equipped to rule on testimony that was scientific in nature where the judges themselves are not scientists.  Whether the proposed changes would result in additional, and more costly legal proceedings than under the current law was also discussed.

Following this discussion, HB 391 was rolled to Third Reading.

 

Should you have any questions or comments, please contact Colodny Fass.

 

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