How Conservative is the Big Insurance Push for State Government Control of Attorneys’ Fees?

By Ryan Banfill
FJA Communications Director

When President Richard Nixon enacted wage and price controls in the early 1970s, iconic conservative economist Milton Friedman cautioned that the policy would spur inflation despite creating the illusion of price stability. Friedman – who won a 1987 federal case seeking plaintiff’s attorneys’ fees – was right.

Now, insurers are bringing a basket of bad ideas to lawmakers. Big insurance companies and their supporters in the business lobby are gaining steam in their years-long mission to have lawmakers reject free-market conservative theory and impose new government mandates on attorneys’ fees.

This well-coordinated, multi-pronged, and heavy-handed attack on the civil justice rights of Floridians is so brash in its expansion of government power, it would make Venezuela’s Socialist leader Nicolas Maduro blush.

During January’s second legislative committee week, the attack was on display at the Florida Capitol in workshops on attorneys’ fees in workers’ compensation and homeowners’ insurance rights. Witness after witness delivered the big insurance message. They fed lawmakers myths and distortions of the truth. They told the story of a workers’ compensation system plagued by higher claims costs.

The facts tell a different story of a system where the costs of claims have gone down. According to the Florida Department of Financial Services Division of Workers’ Compensation, in 2016, claims costs for all industries stood at $1.8 billion. Compare that to 2017 when claims costs for all industries fell to $1.1 billion.

The distortions are more egregious when it comes to homeowner’s insurance rights. Big insurance companies continue to push legislation to curb these rights that have been in place for nearly a century because they say lawsuits involving non-weather-related water claims are out of control.

Exhibit A in their case is an ominous looking, dark-colored chart from the corporate-created Florida Justice Reform Institute that shows the number of lawsuits increasing through the years to around 185,000 in 2016 with 100,000 related to assignment of benefits (AOB).

all lawsuits in database vs. total aob lawsuits

They say the increase in the number of claims with AOBs is forcing insurers to raise property insurance rates. It’s curious how the insurers provide no guarantee that rates will fall if the Legislature gives the insurance companies what they want.

When I was a kid growing up in Kansas, my grandmother and I would listen to Fred Huddleston deliver the Noon news on KFH-AM. After the weather and crop reports, he would introduce commentator Paul Harvey to deliver, “The rest of the story.”

Here’s the rest of the story. That chart is one of the most misleading corporate propaganda pieces I’ve seen in my 30 years of working in and around Florida state government.

When you do a little research, you will find out of the industry’s Mt. Everest depiction of the 185,000 lawsuits filed in 2016 – with 100,000 related to AOBs –only 9,210 were related to claims using an assignment of benefits. That number comes from data provided by Citizens’ Property Insurance.

citizens' property insurance litigation (with aob)

litigation (with aob) involving all other insurance carriers

A Senate committee recently held a workshop of a proposed bill to eliminate one-way attorney’s fees related to assignment of benefits lawsuits filed by contractors working for homeowners. The committee gave industry advocates – including a former Florida Supreme Court Justice – ample opportunity during the 90-minute meeting to sell their story to lawmakers. Civil justice advocates received about four minutes in rebuttal.

In a nutshell, the lack of focused scrutiny of the insurance industry’s highly questionable data combined with the AOB fatigue that has gripped many lawmakers, as well as members of the media is the challenge facing civil-justice advocates in the 2019 Legislative Session.

Civil justice advocates are watchful for legislative action involving insurer bad faith, medical malpractice, and other critical civil justice issues.

Still, the drumbeat from the “Blame the Attorneys” chorus of big insurance, corporate think tanks, and advocates for large corporations grows louder.

We can all agree, people deserve to be fairly paid for the work they do. Entrepreneurial attorneys who take complex cases on the promise that they will get paid if they win are no different. The successful trial lawyers I know accept the risk because they are driven by a greater mission: The defense of people’s Constitutional rights.

Thanks to the work they do to help hard-working people stand up to big corporations and hold them accountable in court, we live in a cleaner environment, we have better medicines, and we drive safer cars.

It’s important to remember Florida’s 1838 Constitution guaranteed Floridians access to the courts. That right is as old as the Magna Carta and endures today as Article I, Section 21 of the Florida Constitution. Combined with the U.S. Constitution’s Seventh Amendment championed by James Madison, Florida’s courts have rejected arbitrary government-mandated attorneys’ fee limits as unconstitutional barriers to people’s access to the courts.

The threat is here and it’s real.

The 2019 Legislature is at work and civil justice is on the line. Civil justice advocates must get engaged in shaping the issues important to their clients, law practices, and the preservation of civil justice rights in Florida. Learn more in the 2019 FJA ISSUES BOOK – the tool FJA’s leaders use in their meetings with legislators.

If big insurance can compel lawmakers to take away people’s Constitutional civil justice rights, what keeps them from going after our other freedoms?

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Ryan Banfill is communications director for the Florida Justice Association.

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