Anyone who cares about the civil justice system in Florida has to be deeply
concerned at the moment. So-called reform bills are coming out of the
new legislature so fast that members of the bar and judiciary have their
heads spinning. It’s impossible to address them all here, so I will
focus on just one: proposed changes to insurance bad faith law.
Current law requires an insurance company to act in good faith and protect
the person or business it insures. If a jury finds it did the opposite
– acted in bad faith – it has to pay for the legal consequences
of its wrongful conduct. This legal principle has been established in
Florida for decades and has been a powerful deterrent to insurance company
This is not to say that insurance companies always lose bad faith cases.
They can and do win them regularly in Florida courts. Members of juries
have shown themselves capable of understanding the difference between
cases of true bad faith and cases of innocent or isolated mistakes. Juries
do not automatically find against insurance companies, and the current
legal standards work well for everyone.
In spite of that, a new bill in the Florida legislature proposes substantial
changes to this law. Actually, “changes” may be too weak a
word, because the new law would completely gut an insurance company’s
duty to act in good faith. There are so many exceptions, obligations imposed
on others, and “safe harbors” crammed into the bill that it
would make insurance bad faith virtually extinct.
These changes will not just eviscerate the rights of people injured by
the wrongful acts of others. They will also hurt people and businesses
who could have previously expected their insurance companies to protect them.
In other words, the proposed changes only shield insurance companies. They
do nothing for people paying the premiums to those companies for liability
protection. That means that if an insurance company fails to settle a
claim and protect its policyholder, it will be protected from the consequences
of that failure. However, the policyholder will not.
To illustrate what this means, suppose you are the owner of a plumbing
business. You have 15 employees and several work vans. On the way to a
job site, one of your employees carelessly runs a red light, causes a
terrible car accident, and renders a young man quadriplegic. Your employee’s
fault for the accident is clear, medical care for the paralyzed man will
cost millions of dollars, and the validity of the claim in undisputed.
Nightmare scenarios like this are what lead people to buy insurance in
the first place. They pay premiums with an understanding that their insurance
company will protect them from financial disaster.
Unfortunately, under the new law, only the insurance company would get
a pass. If it fails to properly protect you, you’ll get hit with
a financial liability which will ruin your business. But the insurance
company will walk away, insulated from liability by the gift from our
lawmakers in Tallahassee.
It’s hard to conceive of a bigger sellout to the big insurance lobby.
Of course, this is the same legislature
St. Petersburg Times columnist Howard Troxler recently referred to as the “utter Whore
of Babylon.” Troxler said this because it just resurrected a law
allowing direct payments by interest groups and lobbyists into campaign
slush funds run by legislative leaders. Troxler explained that these slush
funds (euphemistically called “leadership funds”) will result
in our elected representatives “walking around with open gunny sacks,
selling the democracy, frankly, proudly, wickedly, shamelessly, [and]
amorally.” Troxler argued the funds will essentially institutionalize
bribery and corruption.
If this is what our democracy looks like, it’s no surprise that the
big insurance companies have been able to push for these changes. Nonetheless,
we believe there are still enough legislators on the side of ordinary
Floridians to defeat them. We urge everyone to contact their legislators
and tell them big insurance does not need a handout. We also urge you
to visit the website for Taxpayers Against Bad Faith to get more information
about the proposed changes and how you can help stop them.