On March 23, 2023, the Florida Legislature passed HB 837, a bill enacting major reforms to Florida tort law. Gov. Ron DeSantis wasted no time, signing the bill into law shortly after the bill was presented to him the next morning. Below is a summary of the many significant changes made to Florida laws, including changes to Florida’s bad faith law, the repeal of one-way attorneys’ fee statutes, a reduction of the statute of limitations applicable to negligence actions, and the adoption of modified comparative fault, among other changes.

Changes to the Florida Bad Faith Law

The bill explicitly states that negligence alone is insufficient to constitute bad faith.

The bill imposes a duty of good faith upon insureds, claimants, and their representatives in providing information to an insurer regarding a claim, making demands on insurers, setting deadlines, and engaging in settlement negotiations. If the trier of fact finds that an insured, claimant, or their representative has not acted in good faith, then the trier of fact may reduce the amount of damages awarded against the insurer. The bill prohibits bad faith actions involving a liability insurance claim, explicitly including both bad faith actions brought pursuant to section 624.155 and actions brought under the common law, where the insurer tenders the lesser of the policy limits or the amount demanded by the claimant within 90 days of receiving actual notice of the claim and sufficient evidence to support the claimed amount.

Where an insurer does not make a qualifying tender within the 90-day period, the fact that the insurer could have made such an offer but did not is inadmissible in an action seeking to establish bad faith.

The bill extends “any applicable statute of limitations” for 90 days in any action in which an insurer does not make a qualifying offer within the 90-day period.

Where an action involves two or more third-party claimants with competing claims that may exceed the available policy limits, the bill caps at the policy limits the liability of an insurer for failure to pay all or a portion of the limits to a claimant if, within 90 days of receiving notice of the competing claims, the insurer either files an interpleader action or the insurer and third-party claimants enter binding arbitration. If in an interpleader action the third-party claimants are found to be entitled to an amount in excess of the policy limits, then their award is to be a prorated amount of the policy limits. If the parties instead arbitrate their claims, the parties are entitled to a prorated share of the policy limits. Third parties whose claims are resolved by arbitration must execute a general release of the insured party.

Repeal of One-Way Attorneys’ Fee Statutes

The bill repealed four statutes providing for the “one-way” award of attorneys’ fees against insurers upon the rendition of a judgment in favor of a named or omnibus insured or the named beneficiary under an insurance policy.

Attorneys’ Fees Recoverable in Coverage Actions After a Total Denial of Coverage

Although the bill repealed the general one-way attorneys’ fee statutes, the bill created a new statute that authorizes courts to award reasonable attorneys’ fees to the named insured, omnibus insured, or named beneficiary upon the rendition of a declaratory judgment in their favor where the insurer has made a total denial of coverage for a claim. The bill prohibits the transfer of the right to attorneys’ fees to anyone other than the named insured, omnibus insured, or named beneficiary, and further specifies that an insurer’s provision of a defense to an insured pursuant to a reservation of rights does not constitute a coverage denial for purposes of this section. The bill limits the fees that may be awarded to those incurred in the declaratory action to determine coverage.

Notably, the bill’s authorization of attorneys’ fee awards does not apply to actions arising under a residential or commercial property insurance policy.

Attorneys’ Fee Awards – Strong Presumption Lodestar Fee Is Sufficient

The bill establishes a “strong presumption” that the lodestar fee is sufficient and reasonable in any action in which attorneys’ fees are awarded by a court. The presumption may be overcome only in “rare and exceptional circumstances” with evidence that competent counsel could not otherwise be retained.

Negligence Statute of Limitations Reduced to Two Years

The bill reduces the statute of limitations applicable to negligence actions from four years to two years.

Adoption of Modified Comparative Fault

The bill prohibits any party to a negligence action found to be greater than 50% at fault for his or her own harm from recovering any damages. However, this prohibition does not apply to actions for damages for personal injury or wrongful death arising out of medical negligence.

Evidence of Medical Expenses, Letters of Protection, and Limits on Damage Awards

The bill restricts evidence of the amount of damages for medical treatment or services in personal injury or wrongful death actions.

Evidence offered to prove the amount of damages for past medical treatment or services that have been satisfied is limited to the amount actually paid, regardless of the source of payment. Evidence offered to prove the amount necessary to satisfy unpaid charges is subjected to different limitations depending on whether the claimant is covered by health insurance and the type of insurance (i.e., private health insurance, Medicare, or Medicaid).

If the claimant has health care coverage but obtains treatment under a “letter of protection,” defined by the bill as “any arrangement by which a health care provider renders treatment in exchange for a promise of payment for the claimant’s medical expenses from any judgment or settlement of a [claim],” then the evidence is limited to the amount the claimant’s health care coverage would pay to satisfy the unpaid medical charges, plus the claimant’s share of medical expenses.

If the claimant obtains treatment under a letter of protection but the health care practitioner subsequently transfers its right to receive payment under the letter to a third party, then the evidence includes the amount the third party paid or agreed to pay the health care provider in exchange for its rights under the letter.

The evidence may also include reasonable amounts billed to the claimant for medically necessary treatment or services provided to the claimant.

Similar limits are imposed on evidence of amounts of damages related to future treatment or services to be provided to the claimant.

In personal injury or wrongful death actions that involve medical treatment or services provided pursuant to a letter of protection, the claimant must disclose the letter of protection and all billings for the claimant’s medical expenses, which must be itemized and coded according to certain prescribed classification systems. If the health care provider sells the accounts receivable to a third party, the claimant must disclose the name of the party that bought the accounts receivable and the amount paid for them. The claimant must also disclose whether he or she had health care coverage available to them at the time the medical treatment was rendered and identify the coverage. Finally, the claimant must disclose if he or she was referred for treatment under a letter of protection, and if so, the identity of the person who made the referral, including referrals made by his or her attorney. The bill further specifies that the financial relationship between a law firm and a medical provider, “including the number of referrals, frequency, and financial benefit obtained, is relevant to the issue of the bias of a testifying medical provider.”

The damages that may be awarded are limited to the amounts established by the admissible evidence, as described above, and the amounts actually paid to a provider that rendered medical treatment, the amounts necessary to satisfy charges for medical treatment that are due and owing, and amounts necessary to provide for any reasonable and necessary medical treatment or services the claimant will need in the future.

Limits on Premises Liability Arising From Criminal Acts of Third Parties

Owners or operators of multifamily residential properties that implement security measures prescribed by the bill, including installation of security cameras, maintenance of lighting systems, and deadbolts on dwelling doors, are entitled to a presumption against liability in connection with criminal acts occurring on the premises and committed by third parties who are not employees or agents of the owner or operator.

Such properties must undergo security assessments as prescribed by the bill and employees must be provided deterrence and safety training to qualify for the presumption.

Offers of Judgment

The bill specifies that the provisions of Florida’s offer of judgment statute (section 768.79) apply to any civil action involving an insurance contract.

Effective Date and Applicability

The bill’s provisions took effect upon being signed into law by Gov. DeSantis. The bill specifies that the amendments to the statute of limitations apply to causes of action accruing after the bill’s effective date. The bill also states that it shall not be construed to impair any right under any insurance contract, and to the extent that it does, the bill applies only to insurance contracts issued or renewed after the bill’s effective date. Finally, the bill specifies that it applies to causes of action filed after the bill’s effective date.