SB 2252 Ready for Governor’s Signature; Bill Expected to Simplify Liability Insurance Claims Reporting

After unanimous passage by the Florida Senate on April 23, the Florida House of Representatives also unanimously passed SB 2252 relating to Professional Liability Claims on April 29, 2009 after substituting its version, HB 511, for that of the Senate’s.   

SB 2252, which is expected to simplify regulation of liability insurance claims reporting by eliminating duplicate and frivolous claims reports, will now proceed to Florida Governor Charlie Crist, where, with his signature, it will become law on July 1, 2009.

Originally sponsored by State Senator Carey Baker (R-Eustis), SB 2252 clarifies existing law regarding closed claim reporting by defining the term “claim” and specifying circumstances when a claim will be considered “closed.”  

SB 2252 substantially amends section 627.912, Florida Statutes, in which it changes the conditions under which a claim against professional liability insurance must be reported to the State.  The bill provides a statutory definition for when a claim exists and creates a new set of reporting criteria for entities that must report claims activity to the Florida Office of Insurance Regulation (“OIR”). 

According to the OIR, the changes effected by the passage of SB 2252 will improve the quality of data it collects, as well as the OIR’s regulation of the affected parties at no additional cost. 

Analysis of SB 2252 by Section

Section 1

• Amends s. 624.424, F.S., clarifying a provision requiring that the Florida Financial Services Commission adopt rules to implement the subsections contained therein.

Section 2

• Amends s. 627.912(1), F.S., to eliminate the existing criteria requiring a claims report to be filed, and to provide new language to define “claim.”  The bill establishes new conditions that will trigger a claims report to be filed with the OIR.
• “Claim” is defined as the receipt of a notice of written intent to initiate litigation, a summons and complaint, or a written demand from a person or legal representative stating an intention to pursue an action for damages against those insured listed under paragraph (a) of the statute.
• The duty to report a claim arises at the earliest occurrence of the following:
  • Entry of any judgment against a provider identified in paragraph (a) of the statute, for which all appeals as a matter of right have been exhausted, or for which the period for filing such an appeal has expired.
  • The execution of an agreement to settle damages alleged to have arisen from the provision of professional services between a claimant and a provider, or any other entity with a duty to report under the statute.
  • That agreement must include payment of at least $1.  If applicable statutes require court approval before the agreement becomes effective, the duty to report does not arise until approval is given.
  • The final payment of any indemnity money on behalf of any provider for damages alleged in the provision of professional services.
  • Final disposition of a claim for which no indemnity payment was made on behalf of the insured, but for which there were loss adjustment expenses paid in excess of $5,000.  The “final disposition” means the insurer has brought down all reserves and closed its file.
• The bill provides that insurers listed under s. 627.912(1), F.S., with no claims in the preceding year, file a “No Claim Submission Report” by April 1 of the calendar year.  If the entity discovers that it made this report in error, it must notify the OIR promptly and take steps to correct the situation.
• Reports triggered by any one of the above four conditions must be filed with the OIR within 30 days of their earliest occurrence.
• If a claim closed without payment is later re-opened, that claim is treated as a new claim.  If a claim was closed with payment, and further payments are later made, then a corrective report must be made to reflect the additional payments.
• The bill’s effective date is July 1, 2009.

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

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