The time has arrived for tort reform in the Sunshine State

As the New Year gets underway, so too does the annual Florida legislative session.   A topic that can’t be discussed soon enough is tort reform in Florida, which has become a hotbed of insurance fraud, particularly as it relates to automobile no fault coverage.   

To better understand the dynamics of the problems facing Floridians, it is important to recognize that Florida is just one of thirteen states to mandate no fault coverage.   In fact, since the advent of no fault in the early 1970’s, multiple states including Georgia, Connecticut and Colorado have abolished this costly mandate.   Another state, Pennsylvania, gives customers the choice of purchasing auto no fault or having the right to sue.  

Conceptually, no fault looked good on paper.   When a party is hurt in an accident they go after their own coverage instead of fighting with the tortfeasor’s insurance company.   The underlying premise was that costs would go down as the result of decreased litigation.  Sadly, this is not the case in Florida where frivolous litigation abounds as the result of “soft tissue” injuries. 

In the United States there is only one no fault state that remotely resembles the founding premise of this first party coverage. Michigan provides unlimited benefits to injured parties while limiting the right to sue to only the most serious cases, such as death, and only after getting approval from a judge rather than a much less informed jury.   Of course, Michiganders pay dearly for their no fault with some of the highest premiums in the nation. 

The problem in Florida is substantial.   First, the threshold for determining whether a party may sue has been watered down by the courts over the years meaning that virtually any injury, irrespective of how minor it actually is, can be adjudicated.   While this is appropriate in states without a no fault statute, it is inappropriate in Florida where such determinations should be made by judges rather than juries.   This should be done with a strict interpretation of the statutory language that allows for pain and suffering only the event of death, permanent disfigurement or permanent impairment of a body function.  

Secondly, Florida is considerate a pure comparative negligence state.   This means that a person is able to sue for any percentage of damage for which they were not at fault.   Even if a person is 99.9% at fault, they are able to sue for damages.  A more sensible approach, such as the one Michigan adopted during their tort reform, would be the modified comparative negligence law followed by the majority of states which bars a person from suing if they are more than 50% at fault.  

Next, there is the element of fraud that is costing Florida policy holders billions of dollars annually.   According to the Insurance Information Institute, the “fraud tax” levied on Florida drivers was $549 million dollars in 2010 was expected to double in 2011.   This fraud comes in all shapes and sizes from staged accidents to burying deductibles to claiming injuries that are nothing more than pre-existing conditions.   

Florida has become a national hotbed for staged accidents. PIP costs associated with staged accidents increased 77 percent from 2009 to 2010, while billings for services not rendered increased 32 percent, according to Insurance Information Institute estimates.

In a purely staged accident, a “capper” will organize the scenario and give each of the “victims” a “script” of what to say to the insurance company. The “case” is then sold to an attorney who works in conjunction with a doctor to create falsified bills that are submitted to an insurance carrier.  

Florida is also one of a just handful of states that doesn’t require bodily injury liability coverage which pays for the personal injury caused to others.   This is nonsensical in a state that defines an automobile as a dangerous instrumentality.   As a result, responsible Floridians pay a significant amount for uninsured motorist coverage to cover them in the event of an accident with drivers who carry no liability coverage, or  worse yet no coverage at all.

In Florida, the latter comprise 23% of all drivers on the road.  Despite their breaking the law, these people are still allowed to sue in the event of an accident.  A common sense approach taken by a number of states is to bar the uninsured from having the right to sue.   It is important to remember that driving is not a right, it is a privilege. 

It is time for the legislature to enact meaningful tort form, including capping attorney fees and damages.   There should also be careful deliberation to abolishing no fault, as was done in Colorado or making the coverage optional, as was done in Pennsylvania.  

Another option is to keep no fault but strictly enforce the law so that only those who are truly killed or maimed in accidents have the right to sue for pain and suffering.    Consideration to having caps, such as those associated with Medicare and worker’s compensation, on treatment for soft tissue injuries which comprise the vast majority of cases clogging our courts.

Finally, law enforcement needs to have the teeth necessary to take a bite out of crime, insurers need to be held harmless while investigating these crimes and the criminals need to spend time in jail, a rare occurrence today.

The Florida legislature has spent years trying to fix these problems, to no avail.   It is time to look at steps being taken by other states where successful reform has mean a corresponding reduction in premiums, litigation and fraud.     

Christopher Tidball is an executive claims consultant and author of Re-Adjusted: 20 Essential Rules To Take Your Claims Organization From Ordinary To Extraordinary!   He is a twenty plus year industry veteran and a contributing writer for Claims Magazine.  To learn more please visit www.christidball.com or e-mail chris@christidball.com.

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