Florida Court Rulings, Legislation Could Impact Insurers’ Claims Practices

Recent Florida legislation that has limited plaintiffs’ attorney fees and has raised the bar for bringing bad-faith claims against insurers appears to have already had an impact on the level of claims litigation in the state. Policyholder lawyers note that it has become more difficult to invest the time to combat alleged stonewalling and delay tactics by insurance lawyers.

“I fear the recent insurance bailout passed by Florida’s legislature is only going to incentivize these types of litigation tactics,” said Jacksonville attorney Robert Jameson, who recently won sanctions against Universal Property & Casualty Insurance Co. and one of its lawyers.

But it’s possible that recent court rulings and legislation could have other effects on insurance defense actions.

One of the central issues in insurance claims disputes in Florida has been over discovery of claims adjusters’ estimates and their notes. Several independent adjusters, who work on a contract basis for insurance carriers, have accused insurers of altering their estimates without telling them or the insureds.

See Mainbar: Florida Judge Slams Universal P&C for ‘Stonewalling’ in Litigation

Some plaintiffs’ attorneys have attempted to gain access to field and desk adjusters’ estimates and photographs, to show how damage reports may have been changed. “Stonewalling” by Universal Property & Casualty attorneys in order to block discovery of the adjuster’s notes and to depose the adjusters, in fact, is a chief reason behind some of the sanctions orders leveled against Universal in recent years.

Aside from frustration with alleged gamesmanship and non-compliance with court orders, Florida judges also are taking a dim view of insurers who claim that adjusters and their notes and manuals should be categorically protected from discovery.

In Homeowners Choice Property & Casualty Insurance Co. vs. Thomas and Linda Thompson, Florida’s 1st District Court of Appeal on Nov. 22 held that, for the most part, the carrier must allow access by the plaintiffs. It was the second time in less than two years the court had ruled that way.

“Simply put, ‘there is no categorical legal rule prohibiting discovery of underwriting manuals in breach of contract cases, especially if they are relevant,'” the 1st DCA judges wrote, quoting from the 2022 case, People’s Trust Insurance Co. vs. Foster.

“The insurer’s assertion of privilege was overly broad, just as was the assertion in Foster,” the November opinion reads. “Documents in claims and underwriting files are not automatically work product. The insurer did not argue or prove that the requested documents were prepared in anticipation of litigation; and to the contrary, the documents ordered produced were created just days after the hurricane and before any coverage determination had occurred. We find no departure from the essential requirements of law.”

Adjusters’ notes also are not considered trade secrets, to be kept confidential, the judges noted.

“I’m hoping this opinion will help stamp out some of the delay tactics we’ve seen,” said Brian Hancock, the policyholder attorney in the HCI vs. Thompson case.

He noted that he had to file three motions to compel HCI to provide information in that case after the insurer did not comply with his previous requests. HCI did not comment on the litigation.

A Florida bill signed into law in May, the Insurer Accountability Act, also now requires insurers to follow accepted claims-handling practices and to maintain claims-handling manuals that comply with statutes and customary industry practices.

Regulators may request copies of the manuals. If insurers fail to meet expectations, OIR may use its authority to protect policyholders, state Insurance Commissioner Michael Yaworsky said last summer. The manuals are probably considered trade secrets and won’t be publicly available, he said.