In March, I blogged about Florida's new PIP law that had been approved by the Florida Legislature on March 9, 2012. (New Florida PIP Law (Effective 1/1/13) Hammers Consumers.) I believe that many aspects of the law are anti-consumer, however, I limited my blog conversation to an issue concerning medical benefits.
Another aspect of which I disapprove concerns the award of attorney fees to insureds' attorneys when carriers wrongly deny benefits, in other words, breach the insurance contract. The new law sharply limits the fees.
One of the most powerful tools insureds have to force carriers to honor contracts is the threat of having to pay sizable attorney's fees. Accordingly, limiting the fees reduces the leverage consumers have against their insurance companies. This is an important subject.
From time to time, I will reproduce in my blog letters and articles written by other people. I am reproducing here a letter on the subject of fees written by my good friend and superb South Florida lawyer Cris Evan Boyar. The letter was published in the April 1, 2012 issue of The Florida Bar News:
Don't Cap Fees
For 100 years our Legislature recognized that unless something was done to level the playing field between the insurer and their policyholders, the insurers could deny claim after claim with impunity. Recognizing the unfairness of the system that forces Floridians to buy PIP coverage and the financial disparity between the insurer and its policyholders, the Legislature enacted a law that sanctions the insurer by forcing the insurer to pay their policyholders' attorneys' fees if the policyholder prevails. These legal fees are paid only if there is a determination the insurance company wrongfully denied the claim.
If an insurer simply refused to pay a few hundred dollars to each provider, the insurer would save tens of millions. This is the very result that the insurance companies desire. Legal fees caps will prevent injured citizens and healthcare providers from suing to recover insurance benefits that have been wrongfully withheld by PIP insurers. There is no evidence judges are awarding unreasonable fees and costs to a PIP lawyer that ultimately wins a case. The best way to keep insurers honest is by forcing them to face the risk of paying the legal fees to the patient/provider if the insurer wrongly denies the claim.
If you lower the hourly rates to an unreasonably low amount, it will deter the most qualified lawyers from accepting PIP cases. It is in the best interest of Floridians to have the most qualified lawyers representing small business owners and individuals that take these cases where they recover a fee only if they prevail.
The insurer can limit what it pays in legal fees without legislative help. Insurers typically invoke the rules of civil procedure, demand jury trials, hire numerous experts, schedule numerous depositions, file numerous defenses and motions, and then appeal. There is nothing in the House bill that would deter this activity or limit the legal fees of the defense lawyer that gets paid even if the insurer loses.
If the Legislature were to cap the amount of fees without preventing the insurer from forcing unnecessary litigation, then the insurers will be encouraged to engage in unfair litigation practices because they know the lawyer for the plaintiff would never be able to prosecute the case and fend off the unnecessary litigation. The longer the insurer drags out the litigation the less the lawyers earn per hour.
The proposed fee caps also apply to cases where an insurer has denied coverage. The way the House attorneys' fee caps are written, the attorneys' fees are limited to the lesser of $200 per hour or 15 times the monetary amount recovered by the attorney, if the amount in dispute is less than $500. When an insurance company denies insurance coverage and the lawsuit is only to obtain a finding that there is insurance coverage, there is no monetary amount that will be recovered by the attorney. Under the House proposed attorneys' fee caps, insurance companies can deny coverage and if they lose, they pay zero attorneys' fees.
If the insurer makes a reasonable offer and the patient/healthcare provider does not beat the offer by 25 percent, the insurer gets its fees and costs paid for by the patient/provider. If the lawsuit is determined to be frivolous, the insurer will get its fees paid by the patient/provider and the lawyer representing the patient/provider.
According to the latest statistics provided by the Office of Insurance Regulation/Robin Wescott, on February 29, plaintiff's attorneys' fees represented 2.4 percent of auto carriers' expenses There is no reasonable argument that can be made that attorneys are part of the fraud, contribute to the fraud, or that capping their fees will reduce fraud.
Cris Evan Boyar
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Jeffrey P. Gale, P.A. is a South Florida based law firm committed to the judicial system and to representing and obtaining justice for individuals - the poor, the injured, the forgotten, the voiceless, the defenseless and the damned, and to protecting the rights of such people from corporate and government oppression. We do not represent government, corporations or large business interests.