Our legislation is on the verge of gutting our auto personal injury protection (PIP) statutes to make it nearly impossible for policy holders to force their insurance company to abide by the terms of the policy. You see, every driver in Florida must have PIP, and it goes to pay medical expenses for the injured insured. Carriers have historically avoided their obligations by cutting off benefits illegally and stiffing healthcare professionals. When that has happened, the insured could force the carrier to do the right thing and also pay the insured attorney's fees as a deterrent to this illegal activity. But the insurance lobby has a friend in Gov. Rick Scott, and they want attorney's fees capped. They say it's part of an overall plan to get rid of fraud; it's really a plan to allow the carriers to go back to the business of screwing their insureds and the health profession without fear of reprisals.
A colleague of mine from Broward County wrote the following to help you contact your state rep and let them know why these changes are bad. The credit goes to Cris Boyar and is as follows:
Introduction as to why Florida Provides Legal Fees to a prevailing insured
In order to understand why artificial caps on attorney's fees in PIP cases are a bad idea it is necessary to look back and see why fees are awarded to people who sue their insurance company when the insurer wrongfully denied the claim. Early on our legislature recognized that unless something was done to level the playing field between insurer and their policyholders, the insurers could deny claim after claim with impunity.
Recognizing the unfairness of the system and the financial disparity between the insurance industry and its policyholders, the legislature enacted a law that allows policyholders the right to have his or her attorney's fees paid by the insurer in the event they had to sue the insurer and prevailed in their suit. These legal fees are paid only after the case is over and there is a determination the insured prevailed by proving the insurance company wrongfully denied the claim. It often takes years for a case to resolve, and the lawyer incurs all the fees and costs until he or she wins the case.
Much to the dismay of the insurance industry, the very vast majority of suits filed against insurance companies result in favorable outcome for the policyholders, requiring the insurers to pay claims they should have paid in the first place as well as the insured's attorney's fee. This has not resulted in deterring insurers from wrongly denying claims. Now, in the guise of saving policyholders money in premiums, there is an attempt to place a cap or limit on the amount of money an insurance company would be required to pay a policyholder who was forced to sue an insurer.
It should be pointed out that this cap would apply only to the amount of money an insurance company would have to pay for the policyholder's attorney fee and would allow insurance companies to continue to pay their own attorneys any amount necessary to "wage the war." The defense lawyers get paid regularly and even if they lose the case.
Why Capping Attorney Fees is a bad idea
Caps of legal fees will prevent injured citizens and healthcare providers from suing to recover insurance benefits that have been wrongfully withheld by PIP insurers. There is no evidence judges are awarding unreasonable fees and costs to a PIP lawyer that ultimately wins a case. Insurers should avoid denying claims. The best way to keep insurers honest is by forcing them to face the risk of paying the legal fees to the patient/provider if the insurer wrongly denies the claim. We know the State of Florida has no track record of assisting Floridians in getting insurers to pay claims.
The prospect of having to pay reasonable attorney's fees if the insurer is found by a court to have wrongfully failed to pay benefits is what keeps them honest. Without the potential for this adverse consequence, we will undoubtedly see an increase in denied claims, resulting in increased profits for insurers and hardship for Florida's citizens and small businesses owners.
In reality, doctors cannot afford to pay lawyers to force insurers to pay the medical bills for Floridians that are buying insurance that is mandatory. Insurers get the benefit of selling a product every driver must purchase. If they deny a claim, and they were wrong, it is only fair they pay the patient/medical provider's reasonable fees and costs.
Why limiting hourly rates is a bad idea
If you lower the hourly rates to an unreasonably low amount, it will deter the most qualified lawyers from accepting PIP cases. Why would a lawyer that can bill $300 an hour take on a personal injury protection case for just $200 an hour, then face reductions by a judge and be subject to a maximum recovery? PIP cases can be complicated. It is in the best interest of Floridians to have the most qualified lawyers representing the small business owners and individuals that take these cases where they recover a fee only if they prevail.
Why limiting or capping the total amount of fees is a bad idea
PIP insurers are virtually always the driving force in the number of hours spent prosecuting the PIP suit. We know an insurer can avoid paying legal fees if they pay the claim or pay the claim once they receive a pre-suit demand letter. The insurer can pay virtually no legal fees if they pay the claim once they are served with the lawsuit.
Then the insurer can limit what it pays in legal fees without legislative help. They can avoid invoking the rules of civil procedure in cases that are in small claims court. They do not have to demand a jury trial, like they do in virtual every case. They can avoid filing unnecessary affirmative defenses that causes hours and hours of litigation. During the litigation process, it is not uncommon for an insurer to schedule numerous depositions, hire expert witnesses, file countless motions, take appeals in the middle of the case and then appeal once the case is over. There is nothing in the house bill that would deter this activity or limit the legal fees of the defense lawyer that gets paid even if the insurer loses. Insurance companies have no motive to require their lawyers to narrow the issues and avoid unnecessary litigation because if the insurer loses, and has to pay the legal fees, the insurer simply uses these costs to raise premiums.
If the legislature were to cap the amount of fees without preventing the insurer from forcing unnecessary litigation then you will be encouraging insurers to engage in unfair litigation practices because they know the lawyer for the plaintiff would never be able to prosecute the case and fend off the unnecessary litigation. The longer the insurer drags out the litigation the less per hour the lawyer earns. This would discourage competent lawyers from taking these cases which is not in the best interest of Floridians.
Plus, PIP cases are often appealed in the middle of the case and at the end of the case. No lawyer would be able to handle a PIP case if the insurer was allowed to appeal, and the fees were capped. PIP cases can reach the Fl Supreme Court.
Fees cannot be based on the amount of the recovery.
The proposed House attorney fee caps also apply to cases where an insurer has denied coverage. The way the House attorney fee caps are written, the attorney fees are limited to the lesser of $200 per hour or 15 times the monetary amount recovered by the attorney, if the amount in dispute is less than $500. When an insurance company denies insurance coverage and the lawsuit is only to obtain a finding that there is insurance coverage, there is no monetary amount that will be recovered by the attorney. Under the House proposed attorney fee caps, insurance companies can deny coverage, and if they lose they pay zero attorney fees.
Comparing doctors as equal to an insurance company is wrong.
The argument that is made by some that this is litigation between two corporations, akin to litigation between IBM and Microsoft, is a fallacy. The vast majority of PIP providers in Florida are small business owners. These "corporations" typically have only a handful of employees and, as such, it is a fallacy that they have resources to match the behemoth insurance companies in litigation.
The argument that the provider can simply pay its own attorney's fees if it wishes to litigate is also disingenuous. Doctors cannot afford this prospect. If an insurer simply refused to pay a few hundred dollars to each provider, the insurer would save millions. This is the very result that the insurance companies desire. If this passes, insurance companies will be able to deny, delay and defend claims denials with virtual impunity.
Insurers can recover their fees in two ways.
If the insurer makes a reasonable offer and the patient/healthcare provider does not beat the offer by 25%, the insurer gets its fees and costs paid for by the patient/provider. If the lawsuit is determined to be frivolous, the insurer will get its fees paid by the patient/provider and the lawyer representing the patient/provider.
Limiting attorney fees does not prevent fraud.
There is no correlation between fraud and legal fees. There are no examples of cases where the lawyer was arrested for filing a PIP for treatment related to a staged car accident. According to the latest statistics provided by The Office of Insurance Regulation/Robin Westcott, on February 29, 2012, Plaintiff's attorneys' fees represented 2.4% of auto carriers' expenses. There is no reasonable argument that can be made that attorneys are part of the fraud, contribute to the fraud or that capping their fees will reduce fraud.
The reasonable attorney's fee provision currently in place under PIP was established to level the playing field between the Goliath insurance companies, which have unlimited resources, and the individual citizen or small business person, who would have no prospect of obtaining counsel to pursue wrongfully-denied claims in the absence of such a provision.