Why Abuse Reforms Will Protect Florida’s Economy & Consumers

Florida’s legislature and Gov. Ron DeSantis took a big step forward during the 2023 Legislative Session with the signing of House Bill 837, which protects the state’s consumers and business owners from runaway legal costs that were threatening to derail growth in one of the nation’s largest and best-performing economies.

Although the much-needed reforms were mischaracterized as a “scam” and “bailout” of insurers by an odd-couple alliance between former President Donald Trump and the plaintiffs’ bar, the truth is that litigation abuse functions as a tax that cost the average Florida household more than $5,000 in 2020 — 40% above the national average, according to the U.S. Chamber of Commerce Institute for Legal Reform (ILR). The group calculates that litigation abuse cost home and business owners nearly $20 billion in 2020 and drivers an additional $19 billion — making auto and home insurance premiums in Florida among the highest in the country. Even doctors were hit with a $1.1 billion legal bill, driving up already high healthcare costs.

The ILR’s findings are consistent with previous reports suggesting that price and availability issues in Florida’s insurance markets are to a significant extent a manmade disaster. According to the Florida Office of Insurance Regulation, the Sunshine State accounted for more than 76 % of all homeowners insurance litigation nationwide in 2019 despite accounting for just 7 % of all homeowners insurance claims filed. Likewise, an analysis of insurer financial reports reveals that litigation defense costs as a share of homeowners premium written in Florida are five times what they are nationally.

Altogether, Florida’s tort tax sucked $40 billion out of the state’s economy in 2020 (equivalent to 3.6% of the state’s GDP), lining the pockets of the state’s plaintiff attorneys and funding a nonstop, 24/7, barrage of advertisements urging people to sue in even the most dubious of cases.

Florida’s reforms target exactly these abusive tactics.

Gone now are a host of egregious laws, including one that allowed plaintiff attorneys to recover damages even when the plaintiff was majority responsible for the accident. Now, a plaintiff cannot recover if more than 50% at fault. In a similar salute to personal responsibility and common sense, the reforms make it harder for someone injured in the conduct of a crime to sue the owner of the property where they were injured.

The reforms also promote fairness and transparency. Juries deciding injury cases will now be shown the actual amounts paid by medical providers rather than the amount billed — which is typically much larger. The hope is that awards, which are often determined as a multiple of treatment costs, will fall into alignment with actual economic damages, increasing fairness while lowering the cost of many types of liability insurance.

Gone too are “one-way attorney fees,” which allowed plaintiff attorneys to receive large, supplemental fee payments in addition to their cut of the award amount.

Battered by inflation and hurricanes, Florida’s legislature and governor delivered much-needed relief to Florida’s business owners and consumers. Florida’s legislative reforms should, over time, reduce liability costs. Improvements will be gradual because plaintiffs’ law firms filed more than 90,000 lawsuits in the days before Governor DeSantis signed the bill, clogging the courts. Moreover, the costs of litigation abuse — accumulated over the span of years — are deeply embedded in the price of virtually all goods and services in the state and will take time to unwind.

Florida’s reforms represent a rare victory for consumers and businesses over billboard attorneys. Preserving the benefits of those reforms is both a challenge and a necessity if Florida is to maintain its reputation as one of America’s greatest places to live and work.