Tag Archives: Assignment of Benefits

Business Insurance

Florida Dropped From 2020 “Judicial Hellholes” List

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Each year the American Tort Reform Association (ATRA) publishes a list of “Judicial Hellholes”  — places where ATRA says laws and court procedures are applied in an “unfair and unbalanced” way in civil cases, usually to the disadvantage of defendants.

Since the issue of social inflation has been trending in recent months, it’s no surprise that the mention of ATRA’s report in our Daily newsletter garnered an unprecedented number of clicks.

Florida — a former number one Judicial Hellhole — doesn’t even make the cut this year.

“Florida took great strides toward improving its legal climate in 2019,” ATRA says “Although there is much work to be done, the election of Governor Ron DeSantis (R) has heralded a sea change in Florida’s legal landscape, beginning with the appointment of several new Florida Supreme Court justices. This new court is deferential to legislative efforts to stop lawsuit abuse and poised to correct the course set by the prior activist court.”

DeSantis in 2019 also signed into law a measure aimed at curbing assignment of benefits (AOB) litigation in the state. AOB is a standard insurance practice and an efficient, customer-friendly way to settle claims. As a convenience, a policyholder lets a third party – say, an auto glass repair company – directly bill the insurer. In Florida, however, legislative wrinkles have spawned a state of affairs in which legal fees can dwarf actual damages paid to the policyholder – sometimes tens of thousands of dollars for a single low-damage claim.

The measure DeSantis signed puts new requirements on contractors and lets insurers offer policies with limited AOB rights, or none at all. But it excludes auto glass repairs. The number of auto glass AOB lawsuits statewide in 2013 was over 3,800; by 2017, that number had grown to more than 20,000.

This year, the Philadelphia Court of Common Pleas took over the top spot for 2019. It is one of the preferred jurisdictions for asbestos litigation and home to an $8 billion product liability verdict. California, New York City, Louisiana, and St. Louis all rank in the top five.

Some of the trends noted in the ATRA report include:

  • the trial bar’s push to use public nuisance law to shift costs associated with public crises to businesses;
  • lead paint and climate change litigation;
  • the opioid and vaping crisis; and
  • new rights of action against employers.

Three Illinois counties – Cook, Madison, and St. Clair – made the list.  Antonio M. Romanucci, president of the Illinois Trial Lawyers Association, called the ATRA report misleading.  “The deceptively titled ‘Hellholes’ report is part of [ATRA’s] ongoing campaign to deny access to the court system that our tax dollars fund,” Romanucci told Illinois Radio Network. “ATRA’s annual publicity stunt demeans the U.S. Constitution and attacks citizens’ Seventh Amendment right to trial by jury.”

Romanucci said the number of civil lawsuits filed in Illinois has been declining since 2010 and was down 47 percent. And medical malpractice cases have dropped 32 percent since 2003.

Auto Insurance, Homeowners Insurance

Florida has passed AOB reform – but will it be enough?

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As we noted a few weeks ago, the Florida Senate has passed a bill designed to reform parts of the state’s insurance assignment of benefits (AOB) system. Governor Ron DeSantis has stated that he plans to sign the bill into law. (You can view the Senate version of the bill, SB 122, here).

Florida’s AOB system has long been in dire need of reform.

As we document in our report “Florida’s assignment of benefits crisis”, an assignment of benefits (AOB) is a contract that allows a third party – a contractor, a medical provider, an auto repair shop – to bill an insurance company directly for repairs or other services done for the policyholder.

The process is innocuous and common throughout the country. But as our report notes, Florida’s unique legal system richly rewards plaintiff’s attorneys and vendors when they submit inflated bills to insurance companies and then file lawsuits when those bills are disputed. Tens of thousands of lawsuits.

Reform only addresses property insurance

The new AOB bill is designed to curtail at least some of this abuse by addressing how AOBs can be executed and how plaintiff’s attorneys can be compensated. But it’s important to note that the bill addresses AOBs in property insurance.

For good reason: AOB abuse has been a growing problem in homeowners property insurance.

Other lines also face AOB abuse

However, AOB abuse is not limited to property insurance. As we document in our report, the abuse actually started in personal injury protection (PIP) claims in personal auto insurance and then spread to homeowners following PIP reform in 2012. The abuse also spread into auto glass coverage in the past few years, though there was a decrease in auto glass abuse in 2018.

The lesson here is that AOB abuse is not limited to one line of insurance. Indeed, reforms could push abuse into a different line, as was the case with homeowners and auto glass after PIP was reformed.

While reforming AOBs in property insurance could have a significant impact on the problem in Florida, it remains to be seen whether abuse overall will change with reform. Some have argued that the abuse could continue in other lines where the reform doesn’t reach, like auto glass. And perhaps it could move into another line that hasn’t even been abused yet, like businessowners insurance. There are also worries that abusive AOB claims could spike right before the reform comes into effect.

For more information about the scope of the problem, download our report here.

Auto Insurance, Homeowners Insurance

Florida legislature passes AOB reform

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Insurance Journal reports that the Florida Senate has passed a bill designed to reform parts of the state’s insurance assignment of benefits (AOB) system. Governor Ron DeSantis has stated that he plans to sign the bill into law.

Florida’s AOB system has long been in dire need of reform.

As we document in our report “Florida’s assignment of benefits crisis”, an assignment of benefits (AOB) is a contract that allows a third party – a contractor, a medical provider, an auto repair shop – to bill an insurance company directly for repairs or other services done for the policyholder.

The process is innocuous and common throughout the country. But as our report notes, Florida’s unique legal systems richly rewards plaintiff’s attorneys and vendors when they submit inflated bills to insurance companies and then file lawsuits when those bills are disputed.

Not just a few lawsuits. Lots of lawsuits. The numbers are staggering. There were roughly 1,300 AOB lawsuits statewide in 2000. There were more than 79,000 in 2013 and more than 153,000 in 2018, a 94 percent increase in just five years.

Inflated claims and massive volumes of lawsuits have the predictable result of driving up insurance companies’ legal costs. Insurers are forced to then pass those costs on to consumers. In the study, we estimate that Florida’s auto and homeowners policyholders have paid about $2.5 billion more for insurance over the past dozen years to cover the increase in legal costs.

That doesn’t even count the billions more in excess claim settlements that are at the heart of the problem.

The new bill seeks to address the problem by reforming how AOBs can be executed and how plaintiff’s attorneys can get paid for lawsuit settlements. If signed, the bill will come into effect on July 1, 2019.

You can download our report documenting the crisis here.

Auto Insurance, Homeowners Insurance

Florida’s assignment of benefits crisis: PowerPoint slides now available

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On December 11, 2018 the Insurance Information Institute (I.I.I.) published a report documenting Florida’s assignment of benefits crisis – what the crisis is, how it’s spreading and how it’s costing Florida consumers billions of dollars.

You can download and read the full report, “Florida’s assignment of benefits crisis: runaway litigation is spreading, and consumers are paying the price,” here.

Today we also published PowerPoint slides accompanying the report. We hope the slides will help illustrate the depth and breadth of the abuse. You can download the slides via this link.

An assignment of benefits (AOB) is a contract that allows a third party – a contractor, a medical provider, an auto repair shop – to bill an insurance company directly for repairs or other services done for the policyholder.

The process is innocuous and common throughout the country. But as our report notes, Florida’s unique legal systems richly rewards plaintiff’s attorneys and vendors when they submit inflated bills to insurance companies and then file lawsuits when those bills are disputed.

Not just a few lawsuits. Lots of lawsuits. The numbers are staggering. There were roughly 1,300 AOB lawsuits statewide in 2000.  There were more than 79,000 in 2013, and nearly 135,000 through November 9, 2018, a 70 percent increase in just five years.

Inflated claims and massive volumes of lawsuits have the predictable result of driving up insurance companies’ legal costs. Insurers are forced to then pass those costs on to consumers. In the study, we estimate that Florida’s auto and homeowners policyholders have paid about $2.5 billion more for insurance over the past dozen years to cover the increase in legal costs.

That doesn’t even count the billions more in excess claim settlements that are at the heart of the problem.

Many of these inflated bills and lawsuits are driven by a select number of contractors and their attorneys. Florida insurance customers can protect themselves – and their fellow citizens – by being very cautious when signing away their benefits under an AOB.