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Casualty Litigation

House Bill 837: Big Change to Florida’s Motor Vehicle No-Fault (PIP) Law: Attorney’s Fees

House Bill 837: Big Change to Florida’s Motor Vehicle No-Fault (PIP) Law: Attorney’s Fees

On March 24, 2023, Florida Governor Ron DeSantis signed House Bill 837 into law making a major impact on Florida’s tort landscape. It is likely that this new Tort Reform Act will have a significant impact on the future of Florida’s Motor Vehicle No-Fault Law, also known as the “No-Fault Law,” or “Personal Injury Protection (PIP).” Generally, under the PIP statute coded under Fla. Stat. §627.736, every owner of a motor-vehicle in Florida is required to carry $10,000.00 in PIP coverage. See Id. at (1). The benefits are to be paid for each injured person for medical services without regard for who was at fault in causing the accident. Id.; See also Fla. Stat. §627.731.

Right to Attorney’s Fees

Most notably, as it pertains to the No-Fault Law, House Bill 837 removed the provision pertaining to Fl. Stat. §627.428, which provided for the right to an entitlement of attorney’s fees for plaintiff(s) who are successful in their breach of contract claim against insurance carriers in PIP suits.

Specifically, the Bill changes the No-Fault Statute by amending Subsection (8) of Fl. Stat. §627.736, to read as follows:

627.736 Required personal injury protection benefits; exclusions; priority; claims.— (8) APPLICABILITY OF PROVISION REGULATING ATTORNEY FEES.— With respect to any dispute under the provisions of ss. 627.730- 627.7405 between the insured and the insurer, or between an assignee of an insured’s rights and the insurer, the provisions of s. 768.79 ss. 627.428 and 768.79 apply, except as provided in subsections (10) and (15), and except that any attorney fees recovered must: (a) Comply with prevailing professional standards; (b) Not overstate or inflate the number of hours reasonably necessary for a case of comparable skill or complexity; and (c) Represent legal services that are reasonable and necessary to achieve the result obtained.

By eliminating Fla. Stat. §627.428, the applicable provision entitling successful plaintiffs to attorney’s fees, the Legislature has completely changed Florida’s No-Fault Law in the hopes that the number of PIP actions filed by plaintiffs going forward will decrease.

Since it was enacted in Florida in 1971, the No-Fault Law has been known as an area of law often riddled with fraud and leaving behind an abundant trail of frivolous and/or low-value lawsuits. Currently, and prior to the passage of House Bill 837, Florida courts have been saturated by an enormous amount of PIP-based lawsuits.  Often times, these PIP suits are based on claims for damages of extremely low-value amounts just to get closer to the bigger prize-attorney’s fees. Before Fla. Stat. §627.428 was repealed, plaintiffs in PIP suits were entitled to an award of attorney’s fees if they were successful in any PIP-based contract claim—no matter how small the claim. This is why it is not uncommon to encounter PIP cases for claimed damages of less than $100.00, or in some cases, less than a $1.00. 

As such, the influx of these low-value and often-frivolous PIP lawsuits is seen by some as a direct result of certain plaintiffs and attorneys who have been incentivized to file these kind of suits pursuant to the one-way attorney’s fee provision. By removing the plaintiff’s right to attorney’s fees pursuant to Fla. Stat. §627.428, the Florida Legislature hopes that plaintiffs and attorneys will now bring forth fewer, but more legitimate, PIP claims.

Fla. Stat. §768.79: Offer of Judgment and Demand for Judgment

However, the changes brought forth by the Legislature did not completely remove a plaintiff’s right to an entitlement to attorney’s fees in a PIP suit. By leaving in Fla. Stat. §768.79, plaintiffs still have an avenue to win an award of attorney’s fees but there is a caveat.  Fla. Stat. §768.79(1) “Offer of Judgment and Demand for Judgment” states that:

“…If a plaintiff files a demand for judgment which is not accepted by the defendant within 30 days and the plaintiff recovers a judgment in an amount at least 25 percent greater than the offer, she or he shall be entitled to recover reasonable costs and attorney’s fees incurred from the date of the filing of the demand.”

Keep in mind, plaintiffs cannot serve a proposal for settlement any earlier than 90 days from the date the defendant was served with the complaint, and no later than 45 days from the trial date (or first day of the trial docket) See Fla. R. Civ. P. 1.442. Therefore, it will be in the insurance carrier’s best interest to try and resolve these newer cases early on, and if possible, before a proposal for settlement is served.  For insurers, the first 90 days in these PIP actions will now be particularly crucial. Additionally, insurance carriers can equally utilize §768.79 in order to receive an award for attorney’s fees based upon a successful defense of the case- so long as the unaccepted proposal is not served earlier than 90 days after the action commenced.

The New Statute

House Bill 837 also created a new statute – Fla. Stat. §86.121—which may be another attorney’s fee statute commonly utilized by plaintiffs involving PIP claims, but only in instances where coverage is completely denied by the insurer. Specifically, the new statute requires the court to award attorney’s fees to an insured, omnibus insured, or named beneficiary who is successful in an action for declaratory relief and where there has been a complete denial of coverage by the insurer. Therefore, if an insurance carrier wants to avoid these types of suits, it would be wise to fully investigate a claim before making a decision regarding coverage.

Further, when looking at Statute §86.121, it is important to note that it mentions, “This right may not be transferred to, assigned to, or acquired in any other manner by anyone other than a named or omnibus inured or a named beneficiary.” See Id. at (1) (b).  As such, only the actual insured party or named beneficiary is entitled to utilize this attorney’s fee provision. This is a potential issue for many plaintiffs because a majority of PIP cases are filed on behalf of medical providers- not the insured or named beneficiary. Usually, since these medical providers only became entitled to bring forth suit pursuant to an assignment of benefits received from the claimant, these medical-provider plaintiffs may not be entitled to attorney’s fees under Fla. Stat. §86.121.

Looking Forward

House Bill 837 states that it shall apply to causes of action filed after the effective date of March 24, 2023. However, under Florida case law, if a court determines that the recent changes to the PIP statute implicate substantive issues, then it may be possible that the statute in effect at the time the insurance contract was executed will govern those issues instead.

In the days before House Bill 837 was signed into law, plaintiff lawyers across the state quickly filed tens of thousands of new lawsuits, including many PIP suits, in order to try and avoid the new rules. Once the surplus of these new cases settles down, we will get a better look at the new face of PIP. Will the new amendment actually further the Legislature’s intended purpose of lessening the massive strain of cases within Florida’s courts or will the recent change have no effect at all? What are the unforeseen consequences? RumbergerKirk’s Casualty Litigation team will keep watching to see how things develop over the next few months.