Florida lawmakers seek to reduce costly court battles over auto insurance

Key state lawmakers say lawsuits over auto insurance disputes must be reined in and they will consider ways to cut back on the costly courtroom battles when they meet in March.

Auto premiums are going up in Florida, and one reason is the lawsuits, insurance regulators say.

"We've got to do something," said state Rep. Bryan Nelson, R-Apopka, chairman of the House insurance and banking subcommittee. "It's critical we really take a hard look at ways we can reduce the costs."

One proposal under consideration in Tallahassee is to limit the fees attorneys can collect when they win personal injury protection (PIP) suits. The fees can top $100,000 for disputes of a few thousand dollars or less, the Sun Sentinel reported this month.

"PIP has become a multibillion-dollar boutique industry," said Sen. Ellyn Bogdanoff, a Fort Lauderdale Republican who was a chief negotiator in legislation passed in 2007 that revised Florida's no-fault insurance system. "The whole purpose was to reduce the suits, and it's actually increased them."

"The people who are ultimately going to lose out are the Florida consumers," said Michael Gibson, an Orlando attorney who files PIP suits. "Insurance companies are going to delay paying bills that are owed, plain and simple."

All drivers in the state are required to carry PIP insurance, which pays up to $10,000 in medical expenses for injuries from car accidents.

Lawsuits are filed when insurance companies deny claims or underpay, even if by a few dollars. Insurers say they sometimes delay payment because accident victims and medical providers submit so many fraudulent claims.

On the other side, lawyers say insurers bring on the suits themselves by not paying what they owe and drive up legal costs by prolonging court cases.

Florida's top 10 auto insurers have raised their PIP insurance rates by as much as 83 percent over the past two years, state data show. The Office of Insurance Regulation plans to survey insurers about the costs of PIP claims and litigation for the upcoming legislative session.

In Broward County, the number of PIP suits increased 137 percent in 2010 over 2008. State Farm reported a similar increase statewide.

One Broward case involved a $2,000 award and $160,000 in attorneys' fees. It lasted 4 1/2 years.

"I think that PIP to a certain extent has gotten out of hand," said Rep. Mike Horner, R-Kissimmee. "There are some abuses. We'd like to take a look at how we can curtail those abuses."

Horner said he is working on a bill that likely would include some limit on attorneys' fees but that details have not been worked out.

"My goal is to lower folks' car insurance," he said. "This is driving costs up, and in this economy the citizens of Florida can't afford to pay excessive premiums."

Nelson, an insurance agent, said the Legislature limited attorneys' fees in workers' compensation cases in 2003 to a percentage of the benefits won.

"Workers' comp rates are down around 60 percent from what they were in 2003, and a good chunk of that is attorneys' fees," Nelson said. "I think if we can do attorney fees [in PIP cases] like workers' comp, that will help."

Lawyers who file PIP suits say any cap on fees will give insurers an unfair advantage in fighting the cases and create an incentive for them to deny more claims.

Bogdanoff, a lawyer, said lawmakers in 2007 had considered capping fees in PIP cases at three times the disputed amount or $10,000, whichever is greater.

"There are absolutely legitimate guys who practice in this field," she said. "The average fee is maybe $3,000 to $5,000. I think they could live with" that cap.

The cap proposed three years ago failed largely because of opposition by lawyers and other interest groups. The climate in Tallahassee has since changed, lawmakers said.

The Republican-controlled Legislature now appears more willing to consider changes to reduce excessive lawsuits, and Gov. Rick Scott singled that out as a priority in his inaugural address.

"It's going to boil down to, are we going to help our constituents reduce their premiums?" Nelson said. "We're not in a crisis but if we wait another year or two, we will be."

Edith Young is one South Floridian who wants legislators to rein in the lawyers who make a living suing over car accidents. The 85-year-old retired flight attendant from Plantation was in a "little fender-bender" in a parking lot in October.

"I've had four contacts from attorneys suggesting that I sue, and on the police report it clearly says no one was injured," Young said. "It's ridiculous."

By Sally Kestin, skestin@sunsentinel.com, 954-356-451, Sun Sentinel

Source: OrlandoSentinel.com