Commentary by Florida Consumer Attorney Rich Newsome
An interesting exchange occurred during last week’s hearing of the House Subcommittee for Civil Justice’s debate on HB 427, a bill to protect insurance companies from bad faith claims.
After the bill sponsor and all the other speakers for and against had delivered their pitch, the last presenter of the meeting, from the Taxpayers Against Insurance Bad Faith, announced, “I have figured it out.” The problem, he suggested, was that Representative Kathleen Passidomo distinctly misunderstood the effect of her own bill.
Repeatedly she had suggested that a Civil Remedy Notice could be filed by the policy holder or claimant at any time – “the claimant can file that the second the accident occurs,” she said. That would effectively mean that only insurance companies who offered their limits within 60 days could be guaranteed the immunity her bill granted.
Representative Kiar, himself an attorney, questioned this, asking essentially how a policy holder or claimant could fill out a Civil remedy Notice before the carrier was even given a chance to settle the claim. However, Passidomo, glancing over at the representatives from the carriers present, was absolutely adamant.
Ranking Member Richard Steinberg (D-Miami Beach) persisted with the questioning, suggesting this seemed completely inconsistent with the elements of the statute Passidomo quoted that required the filing to “state with specificity the facts and circumstances giving rise to the violation” if the claimant didn’t believe bad faith had been committed. Passidomo responded that “they just put down whatever they feel would be required to get the notice out,” which prompted a comment by Steinberg about not getting a straight answer.
The last person to address the committee was the president of the Taxpayers Against Insurance Bad Faith, a lawyer named Dale Swope, who has specialized in representing policy holders in bad faith claims for 25 years. Swope confirmed the Representative’s belief that Passidomo was completely, dead wrong.
He pointed to a Supreme Court decision, called Talat Enterprises vs. Aetna, which confirmed that the purpose of the 60-day period under the statute is to “cure” bad faith that has already occurred. The court wrote “It is plain that the 60 day period was a time in which the insurer could act to cure (emphasis added) a violation … about which it had been noticed.”
The actual name used in the statute for a Civil Remedies Notice, in fact, is “Notice of Insurer Violation.” However, there can be no notice of a violation until there is a violation. Furthermore, there can be no 60 days to cure bad faith until there is bad faith.
Of course, a piece of paper can be filed, Swope said, but it will have absolutely no legal effect to file it the day of the accident, or at any other time before the insurer has committed bad faith. That means this bill would give every insurance company ‘one free bite’ of bad faith on every single claim. “You are inviting every single claim against a Florida business to be handled in bad faith with a special get out of jail card that lets the insurance company escape with immunity, which its policy holder is left to pay the entire loss out of its own pocket,” Swope said.
Despite the power of this logic, and the obvious and clear words of existing law, Passidomo clung stubbornly to her statement that a valid Civil Remedy Notice could be filed “even a second after the claim,” so that the bill was nothing more than a 60-day safe harbor period for insurers to get claims settled. She seemed, genuinely, to believe this was true. But how could she?
One of the lobbyists who appeared to speak in favor of her bill was Charlie Wells, a lawyer who used to sit on the Supreme Court. He WROTE THE OPINION in the Talat case. He had to know Passidomo’s belief that a valid Notice of Insurer Violation could be filed ‘at any time’ was just wrong.
Presumably they worked together to get the bill ready for filing and presentation, and even to prep her to be able to explain it. So…did he ever accurately explain to her how her bill would actually work? And if not, was that her fault or his?
Most importantly, when Wells spoke to the committee after hearing the bill sponsor make such a glaring mistake about whether a Notice of Insurer Violation can be properly filed before an insurer violation occurs, why did he not correct the error? As the judge who wrote the very opinion that said the purpose of a Civil Remedies Notice is to give the carrier an opportunity to cure what it has (already) done wrong, how could he allow her and possibly others to remain confused about that?
It reminds one of the unintended consequences of term limits that keep legislators from being able to develop the same level of expertise as they previously had, basically forcing them to rely on paid lobbyists for that expertise. That new power elevates the importance of these paid lobbyists, even beyond the power of the moneyed interests they represent.
And with great power comes great responsibility.
Members of the House Civil Justice Committee who voted in favor of Passidomo’s bill included Chairman Eric Eisnaugle (R), Vice Chairman Larry Metz (R), Bill Hagar (R), Scott Plakon (R), Kelly Sturgel (R) and Michael Weinstein (R).
Members who voted against this bill include Richard Steinberg (D), Joseph Abruzzo (D), Bernard Mack (D), Matt Gaetz (R), Shawn Harrison (R), Martin Kiar (D), Jose Oliva (R), and Darren Soto (D).
Last week, Britax Child Safety, Inc. announced the voluntary safety recall of all of their Britax Chaperone Infant Car Seats with the following model numbers and colors:
These child restraint seats were manufactured between September 1, 2010 and April 30, 2011. 14,220 car seats are included in this recall.
This safety concern addresses a rivet that may have been improperly installed, which could allow the harness adjuster to separate from the car seat shell. If the harness adjuster does separate from the car seat shell, the straps may not properly secure the child during a crash, significantly increasing the risk of injury or death.
Proper child restraint devices are extremely important, particularly because automobile accidents represent one of the major causes of death and injury in children. The National Institutes of Health explains that parents should even avoid purchasing used car seats, as they often lack the safety instructions and may have cracks or other condition issues that make them unsafe. This is especially true if they were in a previous car accident and were damaged.
Many drivers underestimate the tremendous forces which are exerted on those involved in a car accident. This helps account for the common misconception that holding infants while driving is safer than putting them in a suitable infant car seat. Car-Safety.org explains that “forces in a crash can be hundreds of pounds or much more, too great for someone to hold a child safely.”
A document from Buckle Up Montana explains that the force needed to restrain occupants during a crash equals approximately the weight of the occupant multiplied by the pre-crash speed of the vehicle. That means a 10-pound infant involved in an accident that occurred when the car was moving at 30 mph would require at least 300 pounds of force to properly restrain them.
Consumers who own the Britax Chaperone Infant Car Seat and notice that the harness adjuster has detached are instructed to immediately discontinue their use of the product and contact the manufacturer. The company will provide a remedy kit which contains a harness adjuster clip and instructions detailing how to properly install it.
Although no injuries have been reported yet, the advisory notice from Britax goes on to explain that all owners of the Chaperone Infant Car Seat should “confirm whether their child restraint is affected by verifying the date of manufacture and model number.” The National Highway Traffic Safety Administration explains that repair kits will be mailed to drivers free of charge during the recall, which will occur on or around February 6, 2012.
This most recent recall from Britax follows an October 2010 safety recall of Chaperone Infant Car Seats manufactured between April 2009 and May 2010. In that safety notice, Britax explained that an incorrectly-produced chest clip was at risk for breaking apart due to its brittleness. This posed a laceration risk from the sharp edges of the broken plastic, as well as a choking risk if the plastic fragments were swallowed.
As reported today on the Brain and Spinal Cord Blog, tomorrow morning the Florida Legislature's House Civil Justice Sub-Committee is scheduled to take up a Bill that will give Insurance Companies protection against suits by their customers when they act in bad faith in handling claims.
The Big Insurance lobby horde has been clamoring for a bad faith bill for years. And for good reason. First, the lobbyists are paid incredibly well for the effort -- millions of dollars in lobby fees and campaign contributions every year. For years.
But second, is that the insurance industry hates, and I mean HATES, being exposed to bad faith claims. And for good reason. Why? Because regular people despise it when insurance companies treat their policy holders badly, or act in "bad faith." "Bad faith" is legalese for "failing to settle claims when they can, and should, under the circumstances." Seriously; that's actually the definition under current Florida law.
So what happens when insurance companies treat their policy holders badly by not settling a claim filed by another person? Typically the policy holder is exposed to what's called an 'excess verdict.'
Here's how it works: let's say there is a taxi cab company in Orlando who has a fleet of cabs. All of the cabs have insurance with Giant Insurance Conglomerate, or "GIC" for short. One day a cab driver is drunk and plows into a family minding their own business, crossing the street to on their way to visit Disney. Their three children are catastrophically injured, and will require, say, ten millions of dollars in future medical care (think dozens of surgeries, round the clock care, respirators, therapy, etc...).
The problem for the taxi company? They only have 5 million in coverage for ten million in exposure.
But Family needs care immediately and offers to take the 5 million if they can get it early in the case so they can pay for the kids' care and help cover the Family's lost wages since Dad and Mom have to stay at the hospital and help the children get through surgeries and rehab. Family tells the insurance company "pay the full policy limits now so we can get some money now, and we'll give the taxi company a full release."
Here's the rub: Giant Insurance Company doesn't pay. They sit on the policy money. 5 million earns a lot of interest every day. If you delay paying for 6 months or a year? You save yourself a few nickles. Or in this case, a lot of nickles. Seriously, this actually happens.
Family has to file suit against the taxi company. Both sides lawyer up. Money is spent. Depositions are taken. Finally, ten months go by and Giant Insurance Company finally sends the 5 million dollar policy check to the Family. But now the Family is pissed. They have gotten through the worst of the surgeries and have figured out a way to deal with the financial crisis created by their children's catastrophic injuries. And they are angry that the carrier delayed when everyone on both sides of the case knew that the case value was way more than the 5 million dollar policy.
So the Family sends the check back to the insurance company and asks the judge for a trial date. And the case goes to trial. As everyone expected, the jury finds that the Family has 10 million in future medical expenses and renders a verdict in that amount.
And here's where it gets messy: because the Family really needs the money to take care of their children -- the "levy and execute" against the taxi company. "Levy and execute" means that they take the judgment and get the Sheriff to take the taxi cab company's stuff. Literally go and pick it up to sell. And not just the cabs; they take receivables. And bank accounts. And furniture. And everything.
With all of their stuff gone, taxi cab company goes out of business. The 'excess verdict' -- the 5 million dollars over their policy -- wipes them out. Meanwhile, the insurance company sends their 5 million dollar policy to the Family and wants to walk away.
Except they can't under current Florida law. Because current Florida law allows the Taxi company to take their carrier to task for having acted in bad faith -- for failing to settle the Family's claim for the policy limits when they could have and should have under the circumstances.
At least for today.
Representative Kathleen Passidomo, who is actually a lawyer, has filed a bill at the request of Big Insurance to take away the rights of small businesses to bring bad faith actions against their own insurance companies. Under her bill, insurance companies will be allowed to act in bad faith unless and until a ‘civil remedy notice’ (which is a specific form that has to be filed out in a very specific way and sent to a very specific list of people and entities to be valid) was filed, calling the company out for bad faith. At that point, if the insurance company offers its policy limits, it will have complete immunity for damages that have been caused to its customer.
Might sound reasonable, right? The insurance lobby boys certainly say it is. Well, not if you're the taxi cab company that gets hit with the excess verdict. While the Giant Insurance Company will get immunity under Passidomo's bill, the taxi cab company will be still left holding the bag for the excess verdict. Crazy.
Especially crazy in light of today's economy. With a legislature and Governor who profess to be "pro business" and "pro jobs" this bill is the ultimate example of political hypocrisy. Sure the Passidomo bill is good for some businesses; the big carriers. For the rest of the businesses in Florida? The taxi cab companies, the restaurants, the myriad of other companies that create jobs outside of either the legislative lobby or insurance industries? Not so much.
The Passidomo bill is bad for everyone in Florida -- businesses and families alike -- with the exception of the insurance industry. Carriers must have incentives to continue to fairly and timely pay claims. If the Passidomo bill passes, this basic concept of fairness in claims handling will be turned on its head. Hopefully this bill will die in Chairman Eisnaugle's committee tomorrow and won't be heard from again.
All Floridians should watch the vote tomorrow, and see which way Representative Eric Eisnaugle, Representative Clay Ford, Representative Richard Steinberg, Representative Bernard Mack, Representative Matt Gaetz, Representative Bill Hager, Representative Shawn Harrison, Representative Marty Kiar, Representative Larry Metz, Representative Darren Soto, Representative Cynthia Stafford, Representative Kelli Stargel, Representative Greg Steube and Representative Michael Weinstein vote on this very very bad bill.
At the present time it's unclear what will happen with tomorrow's vote. However one thing is for sure: if this ridiculous bill does pass, the taxi cab companies and families of Florida will be very very angry next November.
Today Toyo Tires U.S.A. Corp announced a safety recall for approximately 68,763 Toyo Extensa A/S tires. This recall affects only specific tires in the Extensa line that are size P225/60R16 and marked “Made in the USA" on the sidewall.
These defective tires were produced in Toyo’s Georgia manufacturing plant and are further identified by the last four digits of the Tire Identification Number (TIN), which ranges from 3890 to 4410. They were manufactured from September 29, 2009 to November 6, 2010.
Toyo explains that “Tires manufactured before or after this period are not being recalled, nor are tires with the ‘Made in Japan’ or ‘Made in China’ mark.” The National Highway Transportation Safety Administration (NHTSA) explains this recall is expected to begin around February 2, 2012.
According to the safety recall notice, some of these tires may have been “produced with a kink in the bead area,” which could lead to the eventual development of a crack in this spot near the rim of the tire. If an undetected crack develops and is left unattended, dangerous tire failure may occur. This tire failure can potentially lead to a loss of vehicle control and heighten the risk of crashes, which poses a serious injury and death risk.
Toyo advises owners of these tires to contact the dealer they were purchased from, or the nearest Toyo dealer, in order to make an appointment to have them replaced. Failure to readily have these tires replaced will increase the risk of catastrophic failure. Drivers are also reminded to check their spare tires.
Replacement tires will be provided free of charge and include mounting, balancing, and taxes if returned on or before May 31, 2012. Tire owners are encouraged to take the Toyo recall letter with them to the dealer during their appointment to have their tires replaced.
A Consumer Reports article from last year echoed the importance of making sure tires are well-kept and defect-free, encouraging drivers to inspect them regularly to ensure proper vehicle handling, braking, and “overall highway safety.” They are the only part of vehicles in physical contact with the road, and ignoring their condition can have dire consequences.
Rich Newsome is a Florida attorney who represents consumers and families across the country who have been catastrophically injured by defective products. Rich is the immediate Past-President of the Florida Justice Association, is Past-President of the Central Florida Trial Lawyers Association, and is currently on the Executive Committee of the National Trial Lawyers Association. You can email Rich or follow him on Twitter.
From Our Twitter
201 South Orange Avenue, Suite 1500
Orlando, Florida 32801
407.648.5977
inquiry@newsomelaw.com
© 2012 Newsome Law Firm - All attorneys admitted
to practice law in the State of Florida.