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Max Dorfman, Research Writer, Triple-I
Florida took center stage at JIF 2022, with a panel of panelists discussing growing court costs and an increase in legal system corruption.
“Legal system abuse is a combination of factors, including social inflation, nuclear verdicts, third-party litigation funding, tort reform rollbacks, cost-shifting programs, and attorney advertising,” said Rona Ruppelt, CEO of CLM & Claims Pages. .
Rappled added, “The Florida legal system is the poster child for corruption.”
The group surveyed the general landscape of these issues, and Florida became the epicenter of many of these issues.
In Florida, roof and windshield claims are part of this cottage industry, driven by recovery of plaintiff’s fees rather than the subject matter of the lawsuit. Even in the last three years the cost of roofing has increased dramatically. It is not primarily driven by disasters.
“In 2021, there were 116,000 property insurance claims pending in Florida,” Rupelt said. “The state is on pace for about 130,000 by 2022.”
Most states have only a few hundred. California, the most populous state in the U.S., had just 3,500 pending property insurance cases in 2021.
“The outstanding numbers are staggering,” said Fred Karlinski, partner and global co-chair of Greenberg Drurick, LLP. “It’s recognized at the highest levels of state government.”
In the recent gubernatorial election in Florida, this problem became even more apparent. Incumbent Ron DeSantis and his rival (and former Florida governor) Charlie Crist debated roof replacement costs and home insurance lawsuits.
“There may be a $10,000 judgment award, but a million dollar fee,” Karlinski said.
In fact, the property insurance market has become synonymous with health care, where benefits offered (AOBs)—in which the insured signs their benefits over to the medical provider—are paid by insurers. AOBs use unscrupulous contractors who come before insurers and “turn your home into a disaster zone.”
“Insurers have no way of knowing what the damage is, and now they have to fight these claims,” Karlinski added, noting that once an insurer enters the court system, it often results in nuclear verdicts.
“Florida is tough for adjusters,” noted Joseph Blanco, president of Crawford & Company. “After we confirmed Hurricane Irma, there were billboards everywhere saying don’t trust adjusters.”
Attacking the credibility of adjusters has made it more difficult for insurers, Blanco said. This only adds to unrealistic expectations for claims, making pre-litigation adjudication more challenging.
While the group acknowledged that this type of legal abuse began in the 80s and experienced upward trends in the 90s and early 2000s, there were calls for nationwide tort reform at the time. However, the lawyers involved in these cases have become more sophisticated, making it even more challenging to tackle this issue.
“The lawyers involved figure out the liability theory, find the litigation funders, create the ads, and then they do forum shopping,” said Harold H. Kim said. American Chamber of Commerce. “They’re rolling the dice to see if they can reach a settlement or a nuclear settlement that changes the value of the negotiations.”
“It’s very harmful for the corporate community to be in the crosshairs,” Kim added. “The stability of the rule of law and the ability to operate a business are critically challenged.”
Panel members agreed that issues related to legal abuse are still growing significantly.
“What we’ve seen is that the use of plaintiff attorneys goes from Florida to you,” Karlinski said. “AOBs and roof cases aren’t just going to be in the big states. We’re seeing them everywhere. The plaintiff’s bar doesn’t have the same restrictions as the insurance industry.”
“What happens in Florida doesn’t stay in Florida,” Kim concluded.
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