Florida House Panel Approves ‘Two-Way’ Attorney Fees, Aims at 2022 Reforms

Three bills that would chip away at or substantially reverse 2022 and 2023 reforms on attorney fees and medical damages passed Florida House subcommittees by wide margins on Thursday. But the consensus at the state Capitol is that most of the proposed changes won’t survive the Senate.

The House Commerce Committee’s subcommittee on insurance and banking voted in favor of House Bill 1551 with few “no” votes. The bill, sponsored by Rep. Hillary Cassel, a policyholder attorney, would change the calculus on attorney fees in insurance claims litigation. It would essentially alter key parts of the landmark 2022 legislation that ended one-way fees, a fee arrangement that insurers had blamed for incentivizing excessive lawsuits.

The bill instead would provide for “two-way” attorney fees and would allow courts to grant higher fees and costs to the prevailing parties in claims disputes. Cassel said it would bring balance to the litigation process after the 2022 reforms had swung the pendulum too far toward the insurance industry.

But insurance defense lawyers and lobbyists who spoke against the bill said it could trigger the property insurance crisis and a cottage industry of unnecessary lawsuits all over again.

“We do not believe a prevailing-party system is novel: Versions were tried and were still gamed, leading to continued market downturn,” said George Feijoo, a consultant representing the Florida Insurance Council and some of the largest property insurers.

The bill could end up having the opposite effect of being consumer-friendly, Feijoo said at the hearing. It could force policyholders to pay insurers’ fees if the carrier prevails by just one dollar.

“This bill is not about the pendulum swinging or making insureds whole. It’s about attorney fees for plaintiffs’ lawyers,” said Matt Lavisky, an insurance defense lawyer who spoke on behalf of the Florida Chamber of Commerce.

Committee member Rep. Michael Caruso, an accountant from Delray Beach, said plaintiffs’ attorneys, despite the loss of one-way fees in 2022, continue to advertise heavily on billboards across the state.

“Business must be good,” he said.

He voted against HB 1551. “I caution you to give the 2022 legislation time to work. It was good legislation. Rates have stabilized. Let’s see if rates go down.”

The nation’s largest property insurance advocacy group also weighed in after the meeting Thursday.

The American Property Casualty Insurance Association (APCIA) “is very concerned about several bills moving in the Florida House that would roll back the recently enacted legal system abuse reforms,” said Adam Shores, senior vice president of state government relations. “In particular, House Bill 1551 contains language that is ambiguous and could re-open the door to exorbitant fee awards for billboard lawyers.”

Often-cited research has shown that plaintiff lawyers are the real winners in insurance lawsuits, Shores said in a statement. At the height of the state’s property insurance crisis, a 2021 report found that insurers paid $15.3 billion for insurance lawsuits in Florida, from 2013 to 2020. Of that amount, 71% funded plaintiff lawyer fees and only 8% went to policyholders.

Despite the outcry Thursday, the subcommittee vote surprised few people in Tallahassee. Several House members have expressed concern about the plight of policyholders in the wake of recent Florida news reports. The reports have suggested that some insurance carriers may have diverted profits in recent years while allowing subsidiaries to become insolvent and while raising premiums on consumers.

HB 1551 has already passed the Civil Justice and Claims Subcommittee and has one more committee stop before it reaches the House floor, where it is likely to pass, insiders said.

But the state Senate may be less inclined, as few Senators have expressed support for watering down the 2022 reforms. It’s possible that some key facets of the bill could be folded into other measures as the legislative session moves along, however.

Meanwhile, in another meeting room at the Capitol on Thursday, the Civil Justice Subcommittee voted unanimously in favor of HB 1437. The measure, by Rep. John Snyder, R-Stuart, would allow prevailing parties to win attorney fees in motor vehicle personal injury protection lawsuits brought by medical providers against insurance companies.

It, too, has another committee hurdle before reaching the House floor.

The Civil Justice Subcommittee also approved HB 947, which would overturn part of a sweeping 2023 tort reform package. The bill, by Rep. Omar Blanco, R-Miami, would once again allow plaintiffs to seek damages based in part on potential, not actual, medical costs, something insurers and businesses have long complained about.

The bill would undo “the progress made to rebalance Florida’s civil justice system by reinstituting an abusive legal practice that artificially drives up medical damages and allows a handful of unscrupulous doctors and billboard trial lawyers to literally inflate verdicts and exploit the system at the expense of Florida families and local businesses,” Mark Wilson, president and CEO of the Florida Chamber of Commerce.

Insurance interests have said that damages should not be calculated on billed or future medical services, which may be inflated, but on paid costs.

Top photo: Rep. Caruso at the House Insurance and Banking Subcommittee Thursday. (The Florida Channel).