Senate Bill 2146

CODING: Words stricken are deletions; words underlined are additions.



    Florida Senate - 2000                                  SB 2146

    By Senator Holzendorf





    2-1402-00                                           See HB 843

  1                      A bill to be entitled

  2         An act relating to civil actions against

  3         insurance companies; providing legislative

  4         findings; prohibiting certain civil actions

  5         against insurers based on insurance code

  6         provisions or related rules under certain

  7         circumstances; prescribing certain conditions

  8         precedent to certain class actions; providing

  9         certain defenses in such actions; proscribing

10         awarding attorney's fees under provisions of

11         the insurance code in excess of certain limits

12         in certain actions; providing an effective

13         date.

14

15  Be It Enacted by the Legislature of the State of Florida:

16

17         Section 1.  Findings.--

18         (1)  Pursuant to the Legislature's constitutional power

19  to enact insurance legislation that might, as to other

20  subjects, be deemed an unconstitutional impairment of the free

21  flow of interstate commerce, and in recognition of the

22  importance and complexity of insurance, the Legislature has

23  enacted and amended an extremely detailed insurance code known

24  as the Florida Insurance Code.

25         (2)  Pursuant to provisions of the Florida Insurance

26  Code, the Department of Insurance has been given extensive

27  regulatory authority, including the authority to adopt rules

28  interpreting and administering the code, to approve or

29  disapprove various actions of insurers as complying or not

30  complying with the code or such rules, to examine insurers,

31  and to investigate insurers' conduct to determine compliance

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CODING: Words stricken are deletions; words underlined are additions.






    Florida Senate - 2000                                  SB 2146
    2-1402-00                                           See HB 843




  1  with the code and departmental rules, all for the protection

  2  of the public.

  3         (3)  When the Legislature created the Florida Insurance

  4  Code and granted the Department of Insurance such authority,

  5  the Legislature did not intend to discourage the transaction

  6  of insurance or add to the cost of insurance by creating

  7  exposures to litigation, and did not intend to subject

  8  insurers to exposure to litigation long after the fact as to

  9  actions taken in reliance upon administrative interpretations

10  of the code and rules adopted pursuant to the code.

11         (4)  It is in the public interest to recognize that the

12  Department of Insurance, in performing its duties under the

13  Florida Insurance Code, is the primary regulator of insurance

14  conduct in this state and to encourage insurers to facilitate

15  such regulation by enabling insurers to rely upon such

16  regulatory guidance when insurers seek and obtain such

17  guidance.

18         (5)  The Legislature has enacted various laws unique to

19  this state which regulate and mandate the automatic award of

20  reasonable attorney's fees in addition to other damages.  Such

21  laws provide that add-on fees automatically result in every

22  case in which an insured is successful but that such laws can

23  never be used by insurers, and the Legislature has reenacted

24  such laws after various court decisions upholding the

25  application of "loadstar" principles and multiplier factors.

26  In such actions, the Legislature intended to create a

27  deterrent to a potential practice of insurers arbitrarily and

28  generally denying claims in which the aggregate amount in

29  controversy was small.  However, the Legislature did not

30  intend to deter insurers from denying claims that insurers

31  reasonably believed to be excessive or to cause claims to

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CODING: Words stricken are deletions; words underlined are additions.






    Florida Senate - 2000                                  SB 2146
    2-1402-00                                           See HB 843




  1  become excessive by subjecting insurers to such multipliers

  2  when the insurer had a good faith and reasonable basis to

  3  believe that the insurer was correct in denying the claim, or

  4  when attorneys have aggregated small claims into large class

  5  actions and the addition of add-on fees is not necessary to

  6  secure counsel.

  7         Section 2.  (1)  No provision of the Florida Insurance

  8  Code and no rule of the Department of Insurance adopted

  9  pursuant to the code shall be the sole, partial, direct, or

10  indirect basis of any civil action against an insurer for

11  damages if the alleged course of conduct, action, form, or

12  practice of the insurer has been filed with and approved by or

13  accepted for use by the Department of Insurance as complying

14  with the code.

15         (2)  Prior to the accrual of any civil action in which

16  common questions of law or fact are alleged to exist, arising

17  from a form, act, or practice of an insurer, and in which:

18         (a)  Such form, act, or practice is in violation of any

19  provision of the Florida Insurance Code or rule adopted

20  pursuant to the code, or judicial decision construing the

21  code;

22         (b)  It appears that such form, act, or practice

23  alleged is one that would be contrary to the code; or

24         (c)  It appears that the form, act, or practice is

25  regulated by the code,

26

27  it shall be a condition precedent that any persons purporting

28  to represent a class must first secure a declaration, pursuant

29  to the provisions of s. 120.565, Florida Statutes, as to

30  whether the alleged form, act, or practice is in violation of

31  the code.  In any such action, it shall be a defense that the

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CODING: Words stricken are deletions; words underlined are additions.






    Florida Senate - 2000                                  SB 2146
    2-1402-00                                           See HB 843




  1  form, act, or practice was disclosed to the Department of

  2  Insurance and was approved or accepted for use under the code,

  3  or that after such disclosure the Department of Insurance has

  4  not found the form, act, or practice to be in violation of the

  5  code in such declaration.

  6         (3)  Attorney's fees shall not be awarded under any

  7  provision of the Florida Insurance Code:

  8         (a)  In excess of a reasonable hourly rate as

  9  determined solely upon hourly rates customarily charged by

10  attorneys in the area, with no "loadstar" or multiplier

11  factors, unless the court determines that the insurer acted

12  arbitrarily and without a reasonable basis to deny the claim

13  or the amount of the claim; or

14         (b)  In any class action as to which aggregate damages

15  requested as to all plaintiffs exceeds $100,000.

16         Section 3.  This act shall take effect upon becoming a

17  law.

18

19            *****************************************

20                       LEGISLATIVE SUMMARY

21
      Prohibits basing civil actions against insurers on
22    insurance code provisions or related rules after
      Department of Insurance approval. Prescribes conditions
23    precedent to class actions. Specifies defenses.
      Proscribes awarding attorney's fees under provisions of
24    the insurance code in excess of specific limits.

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