The Florida Legislature recently enacted sweeping tort reform. The changes are effective immediately and impact various aspects of the civil justice system. The most salient features of this latest wave of tort reform are discussed below, along with a brief summary of anticipated effects of same.

Plaintiffs who are More than 50% at Fault Recover Nothing

Prior to the amendment of Florida Statute § 768.81, Florida was considered a pure comparative fault state, meaning that a claimant’s contributory fault diminished the amount of damages awarded in proportion to the claimant’s fault, but it did not bar recovery. Now, however, Florida is shifting to a modified comparative fault scheme. This means that although a claimant’s fault will still diminish the amount of damages awarded in proportion to their fault, a claimant will be barred from recovery if they are more than 50% at fault. This bar to recovery does not, however, apply to actions for personal injury or wrongful death arising out of medical negligence pursuant to Chapter 766.

The shift to a modified comparative fault scheme aligns Florida with the majority view in this country; 35 states (including Florida) are modified comparative fault states, while only 11 states have pure comparative fault statutes. The remaining four states follow a contributory fault scheme—which precludes recovery if the plaintiff is as little as 1% at fault.

Rebuttable Presumption that a Lodestar Fee is Sufficient

In cases where courts are authorized to award attorney fees, Florida courts have historically increased the lodestar amount (i.e., the reasonable hourly rate multiplied by the reasonable number of hours expended) by applying a contingency fee multiplier in certain cases. For instance, in cases involving tort or contract claims (including insurance cases), contingency fee multipliers have been applied if the plaintiff demonstrated a need for same. The size of the multiplier has generally varied, but the Florida Supreme Court has approved multipliers between 1.0 and 2.5. In so doing, it has considered the likelihood of success at the outset of the case; the greater the likelihood of success, the smaller the factor.

With the amendment of Florida Statute § 57.104, the Legislature has created a strong presumption that a lodestar fee is sufficient and reasonable in cases where attorney fees are determined or awarded by the court. This presumption may be overcome only in rare and exceptional circumstances, and evidence that competent counsel could not otherwise be retained is required. Hence, the Legislature has—in effect—virtually abolished the use of contingency fee multipliers except under very limited circumstances.

Near Elimination of One-Way Attorney’s Fees

Previously, insurers were generally required to pay attorney’s fees in first-party cases where the insured prevailed. This is no longer the case. Under the newly created Florida Statute § 86.121, an insurer is required to pay attorney’s fees only in declaratory actions, and only if (i) there has been a total denial of coverage, and (ii) the named insured, omnibus insured, or named beneficiary prevails in the declaratory action.

Notably, this statute does not apply in actions arising under a residential or commercial property insurance policy. Moreover, the right to recover attorney’s fees is neither transferable nor assignable. Furthermore, a defense offered by an insurer pursuant to a reservation of rights does not constitute a coverage denial of a claim.

Time for Commencing Action for Negligence Reduced From Four Years to Two Years

Historically, a party had four years to commence an action for a claim premised on alleged negligence. The time for commencing action for negligence has been cut in half; and parties now have two years to file under Florida Statute § 95.11(4)(a). The effect of this amendment is that the statute of limitations applicable to ordinary negligence claims now mirrors that applicable to claims for professional malpractice.

New Protections From Bad Faith Actions

The Legislature has added three new subsections to Florida Statute § 624.155. The new subsection (4) provides that a claimant may not bring an action for bad faith if the insurer tenders the lesser of the policy limits or the amount demanded by the claimant within 90 days after receiving actual notice of a claim which is accompanied by sufficient evidence to support the amount of the claim.

In the event that an insurer fails to tender as set forth above, a party may not introduce into evidence the following in any subsequent lawsuit for bad faith: the existence of the 90-day period, or the fact that no bad faith action could lie had the insurer tendered the lesser of the policy limits or the amount demanded by the claimant. Moreover, if the insurer does not tender within the 90-day period, the applicable statute of limitations is extended by 90 days.

Furthermore, pursuant to the new subsection (5), mere negligence alone does not constitute bad faith. Additionally, this subsection imposes on insureds, claimants, and their representatives a duty to act in good faith when furnishing information regarding claims, making demands of the insurer, setting deadlines, and attempting to settle claims. Although breach of this duty does not give rise to a separate cause of action, the trier of fact may consider the failure to act in good faith in reducing damages against the insurer for bad faith.

Additionally, under the new subsection (6), the Legislature has afforded broad protections to insurers in cases involving multiple third-party claimants. If multiple third-party claimants have competing claims arising out of a single occurrence, and if their claims may—in total—exceed the available policy limits of one or more of the insured parties, the insurer will not be liable beyond the available policy limits for failure to pay all or any portion of the available limits to one or more of the third-party claimants if the insurer does either of the following within 90 days after receiving notice of the competing claims: file an interpleader action pursuant to the Florida Rules of Civil Procedure, or submit the claim to binding arbitration.

With respect to filing an interpleader action, if the claims of the competing third-party claimants are found to exceed the policy limits, the third-party claimants are entitled to a pro-rated share of the policy limits as determined by the trier of fact. Significantly, an interpleader action does not alter or amend an insurer’s obligation to defend its insured.

With respect to binding arbitration, the following should be noted: the insurer and the third-party claimants must agree to arbitrate, the insurer must make the entire amount of the policy limits available for payment to the claimants, and the qualified arbitrator must be agreed to by the insurer and claimants (at the expense of the insurer). Moreover, the third-party claimants are entitled to a pro-rated share of the policy limits as determined by the arbitrator; the arbitrator must consider any comparative fault of the claimants and the total likely outcome at trial based upon the total of the economic and noneconomic damages submitted to the arbitrator for consideration. A third-party claimant whose claim is resolved by the arbitrator must execute and deliver a general release to the insured party.

Finally, the new subsection (8) precludes an award of punitive damages in civil actions against an insurer unless the acts giving rise to the violation occur with such frequency as to indicate a general business practice. Additionally, the acts must be willful, wanton, and malicious; in reckless disregard for the rights of the insured; or in reckless disregard for the rights of a beneficiary under a life insurance contract.

The Creation of Uniform Standards for Calculating Medical Damages in Personal Injury or Wrongful Death Actions

In the newly created Florida Statute § 768.0427, the Legislature has provided guidelines regarding the admissibility of evidence to prove past and future medical expenses in personal injury or wrongful death actions. Notably, evidence offered to prove the amount of damages for past medical treatment or services that have been satisfied is limited to evidence of the amount actually paid, regardless of the source of payment.

To prove the amount necessary to satisfy unpaid charges for incurred medical treatment or services, parties may introduce evidence as set forth below:

Insurance	Evidence which may be offered
Health care coverage other than Medicare or Medicaid	The amount which such health care coverage is obligated to pay the health care provider to satisfy the charges for the claimant’s incurred medical treatment or services, plus the claimant’s share of medical expenses under the insurance contract or regulation.
None, or Medicaid or Medicare	120 percent of the Medicare reimbursement rate in effect on the date of the claimant’s incurred medical treatment or services, or, if there is no applicable Medicare rate for a service, 170 percent of the applicable state Medicaid rate
Letter of protection	If the health care provider transfers the right to receive payment under the letter of protection to a third party, evidence of the amount the third party paid or agreed to pay the health care provider in exchange for the right to receive payment pursuant to the letter of protection.

In proving the amount necessary to satisfy unpaid charges, parties may also introduce evidence of reasonable amounts billed to the claimant for medically necessary treatment or medically necessary services. Significantly, the foregoing forms of evidence are not exhaustive under Florida Statute § 768.0427(2)(b) in proving unpaid charges.

As to future expenses, parties may introduce evidence as set forth below:

Insurance	Evidence which may be offered
Health care coverage other than Medicare or Medicaid—including if the claimant is eligible for such health coverage	The amount for which the future charges of health care providers could be satisfied if submitted to such health care coverage, plus the claimant’s share of medical expenses under the insurance contract or regulation.
None, or Medicaid or Medicare—including if the claimant is eligible for such health coverage	Evidence of 120 percent of the Medicare reimbursement rate in effect at the time of trial for the medical treatment or services the claimant will receive, or, if there is no applicable Medicare rate for a service, 170 percent of the applicable state Medicaid rate.

In proving the amount of future medical expenses, parties may also introduce evidence of reasonable future amounts to be billed to the claimant for medically necessary treatment or medically necessary services. The foregoing forms of evidence are not exhaustive under Florida Statute § 768.0427(2)(c) in proving future expenses.

Pursuant to Florida Statute § 768.0427(4), damages recoverable for the reasonable and necessary cost of medical services in actions for personal injury or wrongful death may not include an amount in excess of the evidence admitted, nor may they exceed the sum of (a) amounts actually paid by or on behalf of the claimant to a health care provider who rendered medical treatment or services; (b) amounts necessary to satisfy charges for medical treatment or services that are due and owing but at the time of trial are not yet satisfied; and (c) amounts necessary to provide for any reasonable and necessary medical treatment or services the claimant will receive in the future.

It should be noted that, in practice, if a physician does not accept any health insurance but the claimant has health insurance, there is no argument that the medical bills could be submitted to a health insurance carrier because said physician does not accept insurance. Under these circumstances, the defense will likely have to retain experts to address the reasonableness and necessity of the medical bills. The good news, however, is that under Florida Statute § 768.0427, the defense can bring into evidence the fact that the claimant had health insurance coverage.

Adding Transparency in cases Involving Letters of Protection

A letter of protection is a written agreement between a patient and a medical provider wherein the latter agrees to defer collection of any medical bills until the patient recovers in a lawsuit. The intent is for the medical provider to be paid from the proceeds of the lawsuit. Notwithstanding that a patient may be responsible for their medical bills even if they do not receive a judgment in their favor, the potential for financial bias exists where a letter of protection is executed.

Moreover, letters of protection are often executed after an attorney refers their client to a physician. The existence of a referral relationship is likewise relevant to potential financial bias. Nevertheless, in the landmark case of Worley v. Central Florida YMCA, 228 So. 3d 18 (Fla. 2017), the Florida Supreme Court held that a lawyer’s referral of a client to a medical provider is protected by the attorney-client privilege.

Under the newly created Florida Statute § 768.0427(3), the Legislature has completely abrogated Worley. As a condition precedent to asserting a claim for medical expenses in an action for personal injury or wrongful death, the claimant must disclose the following:

1. all letters of protection;

2. all billings for the claimant’s medical expenses (which must be itemized and, to the extent possible, coded as provided under the statute);

3. if the health care provider sells the accounts receivable for the claimant’s medical expenses to a factoring company or other third party, the name of the purchaser and the purchase price (including any discount provided);

4. whether the claimant had health care coverage at the time medical treatment was rendered and, if so, the identity of such coverage;

5. whether the claimant was referred for treatment under a letter of protection and, if so, the identity of the person who made the referral.

Of note, disclosure of referral is permitted even if the referral is made by the claimant’s attorney, and evidence of the referral is admissible notwithstanding the attorney client privilege set forth in Florida Statute § 90.502.

Adding Protection for Defendants in Negligent Security Cases

Previously, in actions for negligent security where a third party’s criminal acts (i.e., intentional torts) injured the plaintiff on the defendant’s property, the trier of fact was unable to apportion fault to the criminal actor because the comparative fault statute does not apply to an action based upon an intentional tort. Under the newly created Florida Statute § 768.0701, the trier of fact must consider the fault of all persons who contributed to the claimed injury in a negligent security action brought by a person lawfully on commercial or real property who was injured by a third party’s criminal act.

Moreover, under the newly created Florida Statute § 768.0706, there is a presumption against negligent security liability for the owner or operator of a multi-family residential building which substantially implements specified security measures—provided that the criminal actor is not an employee or agent of the owner or operator.

The Road Ahead

Although neither Senate Bill 236 nor House Bill 837 expressly state whether the tort reform described above applies prospectively or retroactively, the general rule is that changes in procedural law apply retroactively while changes in substantive law apply prospectively. As noted by the Florida Supreme Court in Smiley v. State, 966 So. 2d 330, 334 (Fla. 2007), procedural laws are those which “do not create new or take away vested rights, but only operate in furtherance of the remedy or confirmation of rights already existing,” and “a statute that achieves a ‘remedial purpose by creating substantive new rights or imposing new legal burdens’ is treated as a substantive change in the law.”

In anticipation of the aforementioned changes, plaintiffs have filed thousands of new lawsuits all designed to avoid the new laws. In the long-term, we anticipate that the legislative changes will reduce the number of cases that plaintiffs’ counsel will be willing to take on, especially in light of the shift to a modified comparative fault system, the rebuttable presumption that a lodestar fee is sufficient, and the near elimination of one-way attorney fees. There will be a huge reduction in negligent security cases, as well as bad faith actions, and the amount boarded for medical expenses will also see a dramatic reduction.