AIA urges legislative fix to Florida state Supreme Court attorney fees ruling

The American Insurance Association (AIA) is speaking out against a state Supreme Court ruling in Florida that could lead to excessive litigation and attorneys’ fees, according to AIA.

Ron Jackson, AIA’s vice president for state affairs, southeast region said urgent legislative action is needed to reverse the Florida state supreme court’s decision in Castellanos v. Next Door Co.

“This ruling practically eliminated the long-standing attorneys’ fee schedule and is hastening a return of uncapped attorneys’ fees and excessive litigation that plagued the Florida market prior to reform,” Jackson said.

The Florida Supreme Court ruled in April 2016 that the mandatory fee schedule, which eliminates the requirement of a reasonable attorney’s fee to the successful claimant, is unconstitutional.

“Considering that the right of a claimant to obtain a reasonable attorney’s fee has been a critical feature of the workers’ compensation law, we conclude that the mandatory fee schedule in section 440.34, which creates an irrebuttable presumption that precludes any consideration of whether the fee award is reasonable to compensate the attorney, is unconstitutional under both the Florida and United States,” the ruling said.

Jackson said failure to adequately address the incentives for litigation will destabilize Florida’s workers’ compensation system and harm local businesses.

“It will trigger the type of crisis that resulted in the passage of the 2003 workers’ compensation reforms,” Jackson said. “We’ve already seen the adverse effect of the Castellanos decision with NCCI’s (National Council on Compensation Insurance) 14.5% rate hike which will hurt Florida businesses.”

AIA, working with Associated Industries of Florida, is urging Florida policymakers to remedy the crisis by joining the states where claimants are responsible for the payment of their attorneys’ fees.

Also on its legislative agenda, AIA would like to see Florida’s auto insurance system reformed. AIA believes Florida’s Personal Injury Protection (PIP) law should be repealed and replaced by a bodily injury liability system. AIA contends that this would help reduce flagrant fraud and abuse in the legal system.

AIA also believes Florida should reform the state’s third-party bad faith system and address the issue of uninsured motorists, which is addressed in the AIA-supported HB 461 bill sponsored by Rep. Bill Hager (R-FL).