Florida House of Representatives’ Civil Justice Subcommittee Votes Down Bad Faith Bill (HB 427)
Jan 26, 2012
At its meeting today, January 26, 2012, the Florida House of Representatives’ Civil Justice Subcommittee (“Subcommittee”) took up House Bill 427 relating to Civil Remedy Against Insurers by Representative Kathleen Passidomo (R- Naples).
In briefly explaining her bill, Representative Passidomo explained that it would provide for insurers to have 60 days to investigate an alleged bad faith claim. HB 427’s third-party claims language mirrors the current law in relation to handling first-party bad faith claims.
Expressing serious concerns with the bill, several committee members asked questions about it.
Representative Kiar asked when could a claimaint file a notice of violation and when the 60-day time limit would begin to run. Representative Passidomo replied by stating that the 60-day time frame would only be triggered when the notice is filed. Further a complainant would be able to file the notice immediately after the alleged accident.
Representatives Richard Steinberg and Mack Bernard further questioned Representative Passidomo on the issue of notice and what elements are required in the written notice.
Representative Steinberg then presented specific examples with the goal of determining how the proposed new law would apply to his examples. Ultimately, Representative Passidomo explained that, if the demand for policy limits was accepted by all parties, then a release would be signed, the case would be resolved, and there would be no need for further litigation.
Representative Darren Soto inquired “what was wrong” with the current law, to which Representative Passidomo explained that, under the current common law system, there are no standards for how to deal with third-party complaints. This leads to fraudulent complaints, increased litigation, and an inability to settle cases-ultimately costing small businesses valuable time and money. Representative Passidomo said she believes HB 427 would have a positive impact on small businesses.
In response to Representative Matt Gaetz’ request for specific examples of bad faith cases, Representative Passidomo cited the Burgess v. Allstate case as an example where the insurer attempted to tender policy limits and was unable to reach and pay the claimant. Ultimately, the insurer was found to have been in bad faith. Representative Gaetz followed up with questions regarding the transferring of bad faith claims to federal courts under diversity jurisdiction.
Lastly, Representative Mike Weinstein asked Representative Passidomo to compare this year’s bill with the 2011 version, HB 1187. Representative Passidomo replied that last year’s bill had multiple provisions, which were quite confusing and complicated. In addition, the bill had a safe harbor provision and 90 days to review bad faith complaint as compared with this year’s 60-day provision.
Public Testimony
Numerous public comment cards were submitted, prompting Chair Eric Eisnaugle to limit the time members of the public could address the Subcommittee. Public testimony in support of the bill included comments from Justice Charles T. Wells, as well as an attorney defending bad faith claims, representatives from numerous small business associations, and in-house counselors from Travelers, Nationwide and Liberty Mutual insurance companies.
Several attorneys expressed their opposition to the bill, focusing their comments on the lack of crisis in the bad faith arena as evidence that the current system is working.
Debate
The Subcommittee members then debated the bill. Many of the concerns raised through prior questions and public comments were reiterated. Representative Kiar, Steinberg, Shawn Harrison, Jose Oliva and Gaetz all spoke in opposition of the bill, while Representatives Bill Hager, Larry Metz, Scott Plakon and Weinstein spoke in favor of the bill. Many Subcommittee members acknowledged a pressing need to address bad faith reform, however, they questioned if HB 427 was the correct vehicle to make the necessary changes.
Representative Passidomo then closed on the bill, during which she attempted to clarify some of the issues and concerns raised by Subcommittee members during debate and questions.
Representative Metz then moved to temporarily postpone the bill. The motion failed and the Subcommittee then proceeded to a vote on the bill.
A vote was taken and the bill failed by a vote of 7 to 8.
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