• Bad-Faith is Back in Florida’s Legislative Crosshairs
  • November 15, 2011 | Author: Judd W. Goodall
  • Law Firm: McCumber, Daniels, Buntz, Hartig & Puig, P.A. - Tampa Office
  • Bad-faith reform has been discussed in Florida for several years. With the advent of Governor Rick Scott winning his gubernatorial campaign in 2010 on a platform of reforming insurance and bad-faith litigation, insurance reform became a major topic of debate during Florida’s 2011 legislative session. One area of proposed major reform ultimately revamped the insurance code relating to property insurance.  Another significant area of proposed reform was focused to protect insurers from the perpetual threats of “bad-faith” and the uncertainty of impending lawsuits.  The debate over Senate Bill 408 (SB 408), relating to property insurance, grew larger and became more tangled than most anticipated. By the time SB 408 was finalized and the rewrites were completed, significant time and energy had been expended, but the agreed-upon legislation was signed into law by Governor Rick Scott. In contrast, although bad-faith legislation had been introduced in several forms, the debate remained limited. The 2011 “bad-faith” discussion lost momentum, and the bills relating to the subject died. 

    While the new property bill is complicated and seems to raise many new questions, it appears that the legislature has very little appetite to address further statutory property insurance concerns in the 2012 legislative session and is satisfied with what was accomplished in the last session. Accordingly, there is a renewed push to engage in bad-faith reform. This will likely launch explosive debate between the Florida trial attorneys and the insurance lobby.

    Currently, an insurer may be found to act in bad-faith for failing to settle a claim when it could have and should have settled. The challenge for insurers is how to protect themselves when a claimant or insured makes demands that cannot reasonably be complied with; which raises the question, “Was the claimant or his representatives even making the demand in good-faith?”  As a condition precedent to filing a statutory bad-faith action, Florida Statute §624.155 requires , the claimant to provide the insurer with sixty (60) days written notice of the alleged violation and provides that “no action shall lie, if within the (60) days after filing the notice, the damages are paid or the circumstances giving rise to the violation are corrected.” In Florida, however, there are no such notice or cure provisions related to claims for common law bad faith.

    Representative Kathleen Passidomo is seeking to change that. On October 20, 2011, She introduced House Bill 427 (HB 427) in anticipation of the upcoming legislative session. HB 427 proposes adding language to Florida Statute §624.155 to include a condition precedent to a claimant bringing an action in common law for bad-faith. The focus of HB 427 is to create the notice requirement to the insurer for the alleged violation and provide an opportunity for the insurer to cure the alleged violation within (60) days for common law bad-faith claims. The proposed legislation also provides that in a third-party liability claim, if a claimant files a notice and the insurer pays the amounts demanded, or the applicable policy limits, the insured is entitled to a release from the claimant.

    Significantly, it also provides that if the insured files the notice and the claimant accepts the insurer’s tender, the insured is also entitled to a release from the claimant.

    Not only will these proposed changes provide fuel for some explosive debate, we can also expect competing bills in both the House and the Senate. As noted above, shouldn’t the common law claimant also have a duty to make a demand in good-faith? As every contract in Florida imposes on each party to the contract a requirement of good faith and fair dealing, the current form of §624.155 should, perhaps, be updated to equal the playing field. This reciprocal requirement of good-faith was introduced in various forms of the 2011 proposed legislation. As we know, however, bad-faith reforms died last session...likely, in part, because of the behemoth property insurance reforms that were accomplished in 2011.

    In sum, because they died during the last session, we should expect that bad-faith reforms will be one of the targets for the upcoming Florida legislative session.  Be sure to work with your representatives to get your views in front of the legislature because this may be the best opportunity to get these much needed reforms passed into law.