Navigating Tort Reform and PIP Claims: Insights from HB 837

By Jessica Z. Martin and Michael A. Rosenberg

The recent enactment of House Bill 837 (HB 837) has brought significant changes to the landscape of insurance claims in Florida, particularly concerning third-party claims and Personal Injury Protection (PIP). During the FIFEC conference, we explored the implications of HB 837, focusing on how these reforms impact the handling of third-party claims and PIP cases. This article delves into the key aspects of these reforms and offers practical insights for insurance professionals.

Understanding HB 837

HB 837, signed into law on March 24, 2023, aims to counteract perceived biases in the legal system and level the playing field between plaintiffs and defendants. The law was enacted to address issues such as excessive litigation and inflated claims, which have contributed to rising insurance costs.

Key Provisions of HB 837

1. Reduction of Statute of Limitations: The statute of limitations for third-party claims has been reduced from four years to two years for actions accruing after March 23, 2023. This change necessitates quicker action on claims and emphasizes the importance of timely investigation and response.
2. Comparative Fault Adjustments: The introduction of a modified comparative fault rule states that any party found to be more than 50% at fault for their harm cannot recover damages. This shifts the focus to accurately assessing and proving fault in claims.
3. Transparency of Medical Damages: Section 768.0427 was created to increase transparency regarding medical damages. The statute mandates that evidence of past paid medical expenses is limited to the amounts actually paid, regardless of the source. This includes evidence of pending or unpaid medical bills and the potential payments by health insurance or factoring companies.
4. Letter of Protection (LOP) Disclosures: The statute requires detailed disclosures when a claim involves treatment under a Letter of Protection. This includes itemized billing, information on bill sales, and the health insurance status of the claimant.
5. Attorney-Client Privilege and Referrals: The law permits the disclosure of attorney referrals for medical treatment under an LOP, overturning the precedent set by Worley v. Central Florida YMCA. This includes the admissibility of the financial relationship between law firms and medical providers to assess potential bias.
6. Limits on Recoverable Damages: Damages for medical treatment are capped at the actual amounts paid, amounts due but unpaid, and amounts necessary for future treatment. This aims to curb inflated medical bills and reduce overall claim costs.

Practical Implications for Third-Party Claims

The changes brought by HB 837 significantly impact the handling of third-party claims. Insurance professionals must adapt to these new requirements to ensure compliance and effective claim management.

Timely Action and Documentation

With the reduction in the statute of limitations, it is crucial to act swiftly. Investigations must be thorough and prompt to gather all necessary evidence within the two-year timeframe. Proper documentation of all actions taken and communications with claimants is essential to defend against potential disputes effectively.

Assessing Comparative Fault

Accurately assessing fault is now more critical than ever. Insurance professionals must gather comprehensive evidence to establish the degree of fault for all parties involved. This includes detailed accident reports, witness statements, and expert testimony where necessary.

Managing Medical Damages

The transparency requirements for medical damages necessitate meticulous record-keeping. Ensure that all medical expenses are accurately documented and that evidence of payments, whether by health insurance or other sources, is readily available. Understanding the health insurance landscape and the implications of factoring companies in medical billing is also crucial.

Personal Injury Protection (PIP) Claims under HB 837

HB 837 also brings changes to PIP claims, affecting how insurers handle these cases.

Repeal of One-Way Attorney’s Fees

One of the significant changes is the repeal of Section 627.428, which previously allowed for one-way attorney’s fees. Now, Section 86.121 provides an exception, permitting one-way fees to an insured in an action for declaratory relief after a total coverage denial of a claim. This means insurers must be clear and precise in their coverage determinations to avoid unnecessary litigation and potential fee awards.

Defining Total Coverage Denial

The concept of a total coverage denial is not explicitly defined by the statute, leading to potential ambiguities. Legal precedents such as Walls v. Southern Owners Insurance Company and Mid-Continent Casualty Co. v. Basdeo provide some guidance. Insurers must differentiate between total and partial coverage denials and understand when a declaratory action is appropriate.

Practical Strategies for PIP Claims

To navigate the changes in PIP claims effectively, insurers should implement the following strategies:

1. Clear Communication: Clearly communicate coverage decisions to policyholders, including the reasons for any denials. Ensure that all communications are well-documented and adhere to statutory requirements.
2. Detailed Documentation: Maintain comprehensive records of all interactions, medical treatments, and payments related to the claim. This documentation is vital for defending against disputes and ensuring compliance with the new transparency requirements.
3. Expert Consultation: Engage legal and medical experts to review complex cases. Their insights can help ensure accurate assessments of medical expenses and coverage issues, reducing the risk of litigation.
4. Training and Education: Regularly train claims handlers on the new legal requirements and best practices for handling PIP and third-party claims under HB 837. Keeping the team informed and prepared is crucial for adapting to the reforms.

Conclusion

HB 837 introduces significant reforms to the handling of third-party and PIP claims in Florida. By understanding and adapting to these changes, insurance professionals can navigate the new legal landscape effectively. The insights shared during the FIFEC conference underscore the importance of staying informed and proactive in managing claims under the new regulations.

Key Takeaways

• Timely Action: Act quickly and thoroughly investigate claims within the new statute of limitations.
• Fault Assessment: Accurately assess and document the fault of all parties involved.
• Medical Damage Transparency: Ensure detailed documentation and transparency in medical billing and payments.
• Clear Communication: Clearly communicate coverage decisions and reasons for denials.
• Expert Consultation: Utilize legal and medical experts to navigate complex cases.
• Ongoing Training: Regularly train staff on the new requirements and best practices.

By following these guidelines, insurance professionals can effectively manage claims under HB 837, ensuring compliance and reducing the risk of disputes.