House Staff Analysis: PCS for CS/CS/HB 895 Insurance (Commerce Committee)
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- 2020 2994 Commerce Committee Proposed Committee Bill Analyses Fn Pcs0895 Com
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- 2020 2994 Commerce Committee Proposed Committee Bill Analyses Fn Pcs0895 Com
Summary
A House of Representatives staff analysis of the PCS for CS/CS/HB 895, an insurance bill sponsored by the Commerce Committee, dated February 26, 2020. The summary analysis states that the bill creates a statutory good faith obligation on claimants in insurer bad faith actions, bars certain third-party bad faith suits when the insurer pays or tenders policy limits, and requires insurers to designate an email address for pre-suit notices forwarded by the Department of Financial Services. It also tightens the content requirements for personal injury protection (PIP) demand letters. The full analysis reviews Florida bad faith law under s. 624.155, F.S., and the section directory lists amendments to s. 624.155, s. 624.422 and s. 627.736, F.S., with an effective date of July 1, 2020. The fiscal analysis reports no impact on state or local government revenues or expenditures.
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“House Staff Analysis: PCS for CS/CS/HB 895 Insurance (Commerce Committee).”
Original at www.flhouse.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2020-2994-commerce-committee-proposed-committee-bill-analyses-fn-pcs0895-com/
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HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: PCS for CS/CS/HB 895 Insurance
SPONSOR(S): Commerce Committee
TIED BILLS: IDEN./SIM. BILLS:
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
Orig. Comm.: Commerce Committee Lloyd Hamon
SUMMARY ANALYSIS
The bill makes the following changes regarding insurance:
Civil Remedies against Insurers
Florida law imposes a duty of good faith on an insurer in negotiating the settlement of a claim with the insured
or a third party. This means the insurer must attempt in good faith to settle a claim when, under the
circumstances, it can settle if it acts fairly and honestly toward its insured and with due regard to his or her
interest. An insurer acting in bad faith may harm the insured party, by failing to settle a third party's claim
against the insured, exposing the insured to greater liability. It could also harm a third party to the insurance
contract by failing to settle its claim against the insured. Either an insured or a third party to the insurance
contract can sue the insurer for bad faith. A jury decides whether the insurer acted in bad faith and determines
the amount of damages.
Claimant’s Good Faith Requirement – The bill creates a statutory good faith obligation on the insured, claimant,
and the representative of the insured or claimant. In an action alleging insurer bad faith, the jury (or judge, in a
bench trial) must consider whether the plaintiff and their representative acted in good faith and if they failed to
so act, make a reasonable reduction in the damages awarded, if any.
Bar to Civil Remedy – The bill prohibits a third-party lawsuit for insurer bad faith in a liability claim, if there is a
single claimant and the insurer paid the lesser of the claimant’s demand or policy limits or if there are multiple
claimants and the insurer submits the matter at policy limits to the court for resolution of the claimant’s
percentage share of the policy limit amount either within 90 days following the second notice of claim or during
the 60-day cure period following receipt of the required pre-suit notice.
Filing of Pre-Suit Notice and Tolling of Statute of Limitation – Florida law requires a pre-suit notice to the
Department of Financial Services (DFS) and the insurer 60 days prior to suing on a bad faith claim, but no
particular insurer address is specified. The bill requires the insurer to designate an email address for delivery of
the notice and mandates that DFS forward notices to that email. It starts the 60 days from the day the insurer
receives the forwarded notice. Also, it extends the statute of limitation for 60 days, if the property appraisal
process is invoked in the claim.
Motor Vehicle Personal Injury Protection
Florida’s Motor Vehicle No-Fault Law requires motorists to carry no-fault insurance known as personal injury
protection (PIP) coverage. In exchange for a limited exemption from tort liability, drivers receive $10,000 in
emergency medical and disability benefits ($2,500 for non-emergency medical conditions) and certain other
benefits. Medical benefit payments are overdue if not paid within 30 days. Medical providers may sue insurers for
overdue payments only after filing a written pre-suit notice known as a PIP demand letter. The law specifies the
minimum content of the demand letter.
Pre-Suit Notice (Demand Letter) –The bill increases requirements governing the content of the demand letter,
including line item detailing of the amounts in dispute and proof of emergency medical condition, if applicable. It
requires the demand letter to substantially comply with statutory requirements. The bill bars a subsequent
lawsuit if the demand letter was not substantially compliant, the insurer fully paid the claim, or the charge was
not included on a demand letter.
The bill has no impact on state or local government revenues or expenditures. It may have a positive impact on
the private sector.
The bill is effective on July 1, 2020.
This document does not reflect the intent or official position of the bill sponsor or House of Representatives.
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FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Obligations of Insurer to Insured
A liability insurer generally owes two major contractual duties to its insured in exchange for premium
payments—the duty to indemnify and the duty to defend. The duty to indemnify refers to the insurer’s
obligation to issue payment either to the insured or a beneficiary on a valid claim. The duty to defend
refers to the insurer’s duty to provide a defense for the insured in court against a third party with respect
to a claim within the scope of the insurance contract.1 The Florida Supreme Court explained the
difference between indemnity policies and liability policies:
Under indemnity policies, the insured defended the claim and the insurance company
simply paid a claim against the insured after the claim was concluded. Under liability
policies, however, insurance companies took on the obligation of defending the insured,
which, in turn, made insureds dependent on the acts of the insurers; insurers had the
power to settle and foreclose an insured's exposure or to refuse to settle and leave the
insured exposed to liability in excess of policy limits.2
Historically, damages in actions for breaches of insurance contracts were limited to those contemplated
by the parties when they entered into the contract.3 As liability policies began to replace indemnity
policies as the standard insurance policy form, courts recognized that insurers owed a duty to act in
good faith towards their insureds.4
Common Law and Statutory Bad Faith
Florida courts for many years have recognized an additional duty that does not arise directly from the
insurance contract, the common law duty of good faith on the part of an insurer to the insured in
negotiating settlements with third-party claimants.5 The common law rule is that a third-party beneficiary
who is not a formal party to a contract may sue for damages sustained as the result of the acts of one
of the parties to the contract.6 This is known as a third-party claim of bad faith.
At common law, the insured cannot raise a bad faith claim against the insurer outside of the third-party
claim context.7 In 1982, the Legislature enacted s. 624.155, F.S. Section 624.155, F.S., recognizes a
claim for bad faith against an insurer not only in the instance of settlement negotiations with a third
party but also for an insured seeking payment from his or her own insurance company. This is known
as a first-party claim of bad faith.
Section 624.155, F.S., provides that any party may bring a bad faith civil action against an insurer, and
defines bad faith on the part of the insurer as:
Not attempting in good faith to settle claims when, under all the circumstances, it could and should
have done so, had it acted fairly and honestly toward its insured with due regard for her or his
interests;
Making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the
coverage under which payments are being made; or
1 See 16 Williston on Contracts s. 49:103 (4th Ed.).
2 State Farm Mutual Automobile Insurance Company v. Laforet, 658 So.2d 55, 58 (Fla. 1995).
3 Id.
4 Id.
5 Auto. Mut. Indem. Co. v. Shaw, 184 So. 852 (Fla. 1938).
6 Thompson v. Commercial Union Insurance Company, 250 So.2d 259 (Fla. 1971).
7 Laforet, 658 So.2d at 58-59.
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Except as to liability coverages, failing to promptly settle claims, when the obligation to settle the claim
has become reasonably clear, under one portion of the insurance policy coverage in order to
influence settlements under other portions of the insurance policy coverage.8
In order to bring a bad faith claim under the statute, a plaintiff must first give the insurer 60 days written
notice of the alleged violation. The insurer has 60 days after the required notice is filed to pay the
damages or correct the circumstances giving rise to the violation.9 Because first-party claims are only
statutory, a first-party insurer bad faith cause of action does not exist until the 60-day cure period
provided in the statute expires without payment by the insurer.10 Third-party claims, on the other hand,
exist both in statute and at common law, so the insurer cannot guarantee avoidance of a bad faith claim
by curing within the statutory period.11
In interpreting what it means for an insurer to act fairly toward its insured, Florida courts have held that
when the insured’s liability is clear and an excess judgment is likely due to the extent of the resulting
damage, the insurer has an affirmative duty to initiate settlement negotiations.12 If a settlement is not
reached, the insurer has the burden of showing that there was no realistic possibility of settlement
within policy limits.13 Failure to settle on its own, however, does not mean that an insurer acts in bad
faith. Negligent failure to settle does not rise to the level of bad faith. Negligence may be considered by
the jury because it is relevant to the question of bad faith but a cause of action based solely on
negligence is not allowed.14
Third-Party Claims of Bad Faith
A third-party bad faith claim arises when an insurer fails in good faith to settle a third party’s claim
against the insured within policy limits and exposes the insured to liability in excess of his or her
insurance coverage.15 The Florida Supreme Court has described an insurer’s duty to its insureds:
An insurer, in handling the defense of claims against its insured, has a duty to use the
same degree of care and diligence as a person of ordinary care and prudence should
exercise in the management of his own business. For when the insured has surrendered
to the insurer all control over the handling of the claim, including all decisions with regard
to litigation and settlement, then the insurer must assume a duty to exercise such control
and make such decisions in good faith and with due regard for the interests of the
insured. This good faith duty obligates the insurer to advise the insured of settlement
opportunities, to advise as to the probable outcome of the litigation, to warn of the
possibility of an excess judgment, and to advise the insured of any steps he might take
to avoid same. The insurer must investigate the facts, give fair consideration to a
settlement offer that is not unreasonable under the facts, and settle, if possible, where a
reasonably prudent person, faced with the prospect of paying the total recovery, would
do so. Because the duty of good faith involves diligence and care in the investigation
and evaluation of the claim against the insured, negligence is relevant to the question of
good faith. The question of failure to act in good faith with due regard for the interests of
the insured is for the jury.16
In light of this heightened duty on the part of the insurer, Florida courts focus on the actions of the
insurer, not the claimant.17 Whether an insurer acted in bad faith is determined by the totality of the
circumstances:
8 S. 624.155(1)(b)1.-3., F.S.
9 S. 624.155(3)(d), F.S.
10 Talat Emterprises vv. Aetna Casualty and Surety Company, 753 So.2d 1278, 1284 (Fla. 2000).
11 Macola v. Government Employees Insurance Company, 953 So.2d 451 (Fla. 2006).
12 Powell v. Prudential Property and Casualty Insurance Company, 584 So.2d 12, 14 (Fla. 3d DCA 1991).
13 Id.
14 DeLaune v. Liberty Mutual Insurance Company, 314 So.2d 601,603 (Fla. 4th DCA 1975).
15 Opperman v. Nationwide Mutual Fire Insurance Company, 515 So.2d 263, 265 (Fla. 5th DCA 1987).
16 Boston Old Colony Insurance Company v. Gutierrez, 386 So.2d 783, 785 (Fla. 1980)(internal citations omitted).
17 Berges v. Infinity Insurance Company, 896 So.2d 665, 677 (Fla. 2005)(explaining that “the focus in a bad faith case is not on the actions of the
claimant but rather on those of the insurer in fulfilling its obligations to the insured”).
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In Florida, the question of whether an insurer has acted in bad faith in handling claims
against the insured is determined under the totality of the circumstances standard. Each
case is determined on its own facts and ordinarily the question of failure to act in good
faith with due regard for the interests of the insured is for the jury. 18
The focus in a bad faith case is on the conduct of the insurer but the conduct of the claimant is relevant
to whether there was a realistic opportunity for settlement.19 A court, for example, will look at the terms
of a demand for settlement to determine if the insurer was given a reasonable amount of time to
investigate the claim and make a decision whether settlement would be appropriate under the
circumstances. One court held that dismissal of a bad faith claim was proper where the settlement
demand in question gave a 10-day window, pointing out that “[i]n view of the short space of time
between the accident and institution of suit, the provision of the offer to settle limiting acceptance to 10
days made it virtually impossible to make an intelligent acceptance.”20 Although in this particular
circumstance the court found that 10 days was not enough, it is not clear exactly what time period or
other conditions for acceptance would be permissible, because courts look at the facts on a case-by-
case basis and the current statute is silent on this point.
In Berges v. Infinity Insurance Company, dissenting justices expressed concern that there “is a strategy
which consists of setting artificial deadlines for claims payments and the withdrawal of settlement offers
when the artificial deadline is not met.”21 It was argued that it is a “common practice for a party
contemplating litigation to submit a settlement offer that remains outstanding for only a finite period and
that a person injured by a policyholder may set any deadlines he desires—even an arbitrary or
unreasonable one.”22 Justice Wells concluded that set time periods in which all insurers must make
decisions on claims and issue payments are needed.23
The majority in Berges held that courts must look to the totality of the circumstances. “The question of
bad faith in this case extends to [the insurer’s] entire conduct in the handling of the claim, including the
acts or omissions [of the insurer] in failing to ensure payment of the policy limits within the time
demands.”24 Another court argued that setting a “minimum amount of time before any finding of bad
faith is possible runs counter to the analysis of ordinary care and prudent business practice… Juries
are empaneled to apply the appropriate criteria to the particular facts of a given situation and to decide
whether the insurer acted prudently.”25
In Harvey v. Geico General Insurance Company,26 the Florida Supreme Court explained that the critical
inquiry in a bad faith case is whether “the insurer diligently, and with the same haste and precision as if
it were in the insured’s shoes, worked on the insured’s behalf to avoid an excess judgment.”27 The court
said an insurer has an affirmative duty to initiate settlement negotiations in cases where liability is clear
and a judgment in excess of policy limits is likely.28 The court said the lower court misapplied precedent
when it said an insurer could not be liable for bad faith when the insured’s own actions were at least in
part responsible for the excess judgment.29
The Good Faith Duty in a Multiple Claimant Situation
In 2003, the Fourth District Court of Appeal considered how an insurer should carry out its duty of good
faith in a case with multiple claimants where the total damages far exceeded policy limits.30 In that
18 Berges, 896 So.2d at 680 (internal quotations and citations omitted).
19 Barry v. GEICO General Insurance Company, 938 So.2d 613, 618 (Fla. 4th DCA 2006).
20 DeLaune v. Liberty Mut. Ins. Co., 314 So.2d 601, 603 (Fla. 4th DCA 1975).
21 Berges, 896 So.2d at 685 (Wells, J., dissenting).
22 Id. at 692 (Cantero, J., dissenting).
23 Id. at 686 (Wells, J., dissenting).
24 Berges, 896 So.2d at 627.
25 Snowden ex. rel. Estate of Snowden v. Lumbermans Mutual Casualty Company, 358 F.Supp.2d 1125, 1129 (N.D. Fla. 2003).
26 Harvey v. Geico General Insurance Company, 259 So.3d 1 (Fla. 2018).
27 Id. at 7.
28 Id.
29 Id. at 11.
30 Farinas v. Florida Farm Bureau General Ins. Co., 850 So.2d 555 (Fla. 4th DCA 2003).
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case, the insured caused an automobile accident where five teens were killed and seven more were
seriously injured. The insurance company settled with three of the claimants and exhausted policy limits
on those settlements. Numerous claimants filed third-party bad faith claims against the insurer alleging
the insurer entered into settlements without due regard for the interests of the insured.31
The court held that the same duties of good faith set forth in Boston Old Colony applied when there
were multiple claimants. The insurer must investigate all claims, keep the insured informed, and
minimize the amount of excess judgments by reasoned claim settlement. The insurer may still decide to
settle some claims and exclude others but the decision must be made “in keeping with its good faith
duty.”32
In Hernandez v. Travelers Insurance Co.,33 the court considered whether an insurance company, which
may be liable to several persons because of the negligence of its insured, could file an interpleader
action (an action where the court determines the distribution of the funds up to policy limits). The court
held that interpleader is not allowed under such circumstances. The court explained:
The plaintiff insurance company has only the derivative liability from its insured. One of
its liabilities is to defend its insured in the courts. It may not discharge that liability by
depositing a sum of money and saying to the courts, “divide it up.” If the defendants
were all claiming the proceeds of a single fund and liability could exist as to only one of
the claimants, an interpleader would be appropriate. In the present cause, one action
cannot determine the entire controversy and liability may exist as to more than one
claimant.34
Pre-Suit Notice and Tolling of the Statute of Limitation
In order to bring a bad faith claim under the statute, a plaintiff must first give the insurer and the
Department of Financial Services (DFS) 60 days’ written notice of the alleged violation.35 The 60-day
period begins on the date the notice is filed. While the notice is required to be provided to both DFS
and the insurer,36 the statute is silent on what constitutes filing and whether the filing date is the date
the notice is received by DFS or the date it was received by the insurer.37
The notice must include:
The statutory provision which the insurer allegedly violated;
The facts and circumstances giving rise to the violation;
The name of any individual involved in the violation;
Reference to specific policy language that is relevant to the violation, unless the person bringing the
civil action is a third party claimant; and
A statement that the notice is given to perfect the right to pursue a civil remedy.38
The statute of limitation for the filing of a lawsuit under s. 624.155, F.S., is tolled for 65 days following
the issuance of the notice described above. This extends the claimant’s right to sue the insurer until
31 Id. at 557-558.
32 Id. at 561.
33 356 So.2d 1342 (Fla. 3rd DCA 1978).
34 See Hernandez, 356 So.2d at 1344.
35 S. 624.155(3)(a), F.S.
36 Filing of the notice with the correct insurer has been held to be a condition precedent to maintaining a bad faith suit against the insurer. Lopez v.
GEICO Casualty Co., 968 F.Supp. 2d 1202, at 1209 (S.D. Fla. 2013). In Lopez, the plaintiff filed the notice with Government Employees Insurance
Company, a similarly named sister company instead of the actual insurer, GEICO Casualty Company. Because the statute of limitation had run out
following the flawed delivery of the notice, the Lopez case was dismissed with prejudice.
37 Filing of the notice with DFS has been held to establish the date that starts the 60-day cure period. Harper v. GEICO Gen. Ins. Co., 272 So. 3d 448
(Fla. 2nd DCA 2019). In Harper, the plaintiff filed the notice with DFS electronically on Dec. 19, 2013, and mailed the notice to GEICO with it
being received by GEICO on Dec. 26, 2013. When GEICO later paid the claim on Feb. 21, 2014, the payment was 65 days from the date DFS
received the notice, but 57 days from the date GEICO received the notice. The trial court held that GEICO paid the claim within the 60-day cure
period. On appeal, the Second DCA held that the 60-day cure period ran from the date DFS received the notice. The result allowed the plaintiff to
pursue a bad faith claim against GEICO for untimely payment of the claim.
38 S. 624.155(3)(b), F.S.
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after the conclusion of the 60-day period following the notice within which the insurer may respond to
the notice by addressing the alleged violation.
Effect of the bill
Claimant’s Good Faith Requirement
The bill creates a statutory good faith obligation on the insured, claimant, and the representative of the
insured or claimant. They must act in good faith in providing claim information, their demands against
the insurer, including setting deadlines that the insurer is expected to abide by, and in negotiating
settlement opportunities.
In any action claiming insurer bad faith under s. 624.155(1)(b)1., F.S., the jury (or the judge, in the case
of a bench trial) must consider whether the insured or claimant, as applicable, or their representative
made good faith efforts to cooperate with the insurer’s claim investigation. If the jury or judge, as
applicable, determines that they failed to act in good faith, then the jury or judge must make a
reasonable reduction in the damages awarded.
Bar to Civil Remedy against Insurers
In a third-party action for insurer bad faith regarding a liability claim, the action is barred, if:
There is a single claimant and the insurer pays the claimant’s demand or offers the policy limits,
whichever is less, during the pendency of the claim through the end of the 60-day cure period
following receipt of the required pre-suit notice.
There are two or more claimants related to a single event whose combined claims exceed policy
limits and the insurer submits the matter to the court to allow the court to determine the each
claimant’s relative share of the policy limits. Submission of the matter to the court must occur within
90 days of the second claimant filing a notice of claim or during the 60-day cure period that follows
insurer receipt of the required pre-suit notice. Nonetheless, the insurer remains obligated to defend
the insured.
Filing of the Pre-Suit Notice and Tolling of the Statute of Limitation
The bill provides that DFS must forward the required pre-suit notice via email to the insurer. It also
requires the insurer to designate an email address for the purposes of receiving such notices forwarded
by DFS. Additionally, the bill clarifies that the 60-day cure period runs from the date the insurer receives
the notice from DFS at the designated email address, rather than following “filing,” which is not
currently defined. Since the notices will no longer be mailed and emailing them is a nearly
instantaneous process, the bill changes the statute of limitation tolling period from 65 days to 60 days,
thus removing the 5 days allotted for physical mailing through the postal service.
Motor Vehicle Personal Injury Protection – Pre-Suit Notice (Demand Letter)
Florida’s Motor Vehicle No-Fault Law (No-Fault Law)39 requires motorists to carry no-fault insurance
known as personal injury protection (PIP) coverage. The purpose of PIP coverage under the No-Fault
Law is to provide for medical, surgical, funeral, and disability insurance benefits without regard to who
is responsible for a motor vehicle accident. In return for assuring payment of these benefits, the No-
Fault Law provides limitations on the right to bring lawsuits arising from motor vehicle accidents. Florida
motorists are required to carry $10,000 of PIP coverage.40 However, motorcycles are excluded from
this requirement.
39 Ss. 627.730-627.7405, F.S.
40 S. 627.7275, F.S. Under Florida’s Financial Responsibility Law (ch. 324, F.S.), motorists must also provide proof of ability to pay monetary
damages for Bodily Injury and Property Damage liability at the time of motor vehicle accidents or when serious traffic violations occur. The
Financial Responsibility Law requires $10,000, per person, and $20,000, per incident, of Bodily Injury coverage, and $10,000 of Property Damage
liability coverage.
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PIP General Provisions
Required Coverage All owners or registrants of motor vehicles with four or more wheels,
except school buses, limos, and taxicabs, are required to carry PIP.41
Individuals Covered The named insured, relatives living in the same household, persons
operating the vehicle, passengers in the vehicle, and persons struck
and injured while not occupying the vehicle.
Tort Limitation Limited exemption from tort liability; injured persons may pursue
certain tort claims as specified by the PIP law.
Benefits $10,000 in emergency medical and disability benefits (limited to
$2,500 in medical benefits for non-emergency medical conditions) and
$5,000 in death benefits. Coverage of 60 percent of lost income due
to disability, not to exceed the $10,000 overall benefit limitation.
Timely Treatment Medical benefits are paid only if initial treatment is received within 14
days of the accident.
Timely Payment Payments are overdue if not paid within 30 days of insurer receipt of
written notice.
Medical Reimbursement 80 percent of reasonable medical expenses paid to eligible medical
providers.42
Excluded Treatment Massage and acupuncture are not PIP medical benefits. Services,
supplies, or care that is not reimbursable under Medicare or workers’
compensation is not required to be reimbursed by the insurer.
Attorney Fees Prevailing insureds and beneficiaries may receive a reasonable
attorney fees award.
Pre-Suit Notice (Demand Letter)
Before anyone can sue for benefits under PIP coverage, they must file a written pre-suit notice with
insurer. The pre-suit notice cannot be filed until the claim payment is overdue. The notice must include
the following:
The phrase “demand letter under s. 627.736”;
The name of the insured;
A copy of assignment of rights, if the matter is brought by a third-party;
The claim number or policy number;
And the following, if the circumstances apply:
o Name of the medical provider (for treatment, services, accommodations, or supplies);
o An itemized statement specifying:43
The exact amount;
Date of treatment, service, or accommodation; and
The type of benefit due;
o If the demand letter is responding to a withdrawal of pre-payment for services:
A copy of the insurer’s notice of withdrawal; and
An itemized statement of the type, frequency, and duration of future treatment claimed to be
reasonable and medically necessary.
41 This includes non-resident owners who keep a vehicle in Florida for more than 90 days during the previous 365 day. S. 627.733(2), F.S.
42 Insurers may limit reimbursements to a fee schedule tied to the Medicare allowed amount. S. 627.736(5)(a)1., F.S. For many services, 80 percent
of 200 percent of the Medicare allowed amount is the standard reimbursement under this fee schedule.
43 A completed claim form [CMS 1500 form, UB-92 form (HICFA 1450), or form adopted by the Office of Insurance Regulation, as applicable] or
lost wage statement previously submitted to the insurer may be used as the itemized statement. S. 627.736(10)(b)3., F.S. The CMS 1500 form and
UB-92 form (HICFA 1450) are standardized medical billing forms.
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The demand letter must be sent by certified or registered U.S. Mail, return receipt requested.44 The
letter must be sent to the name and address designated by the insurer for receipt of PIP demand letters
pursuant to statute.45
Civil actions on the claim detailed in the demand letter are barred if the insurer pays the overdue claim,
along with a 10 percent penalty and interest (not to exceed $250), within 30 days of receipt of the
letter.46 The insurer is not liable for the claimant’s attorney fees if they timely comply with these
requirements.
The filing of a demand letter tolls the applicable statute of limitations for 30 days.
Effect of the bill
The bill applies the demand letter requirements to any related relief (i.e., attorney fees), in addition to
the PIP benefits sought by the claimant. It also adds the following requirements:
The demand letter must also include:
o A copy of the signed assignment of rights, if the claimant is not the insured;
The assignment must predate the treatment, service, or accommodation, as applicable;
o Both the claim number and the policy number, rather than one or the other;
o The itemized statement must:
Identify each treatment, service, or accommodation provided to the insured;
Specify, using the previously billed line items, the:
Date of each treatment, service, or accommodation;
Amount charged; and
Include the CMS 1500 form, UB-92 (HICFA 1450 form), or OIR form, as applicable;
Identify all billed line items in dispute;
State:
The factual or legal basis for the contention that the underpayment or non-payment is
incorrect;
The amount that the claimant contends the insurer is required to pay, including
penalties, interest, and postage due.
If the claimant contends that the insured sustained an emergency medical condition, the demand letter
must include documentation of the emergency medical condition from a medical provider allowed under
the PIP law to determine such conditions.47
The demand letter must substantially comply with the statutory requirements. If it does not substantially
comply:
The penalty and interest due under the statute are waived; and
The civil action is barred.
The civil action is also barred if the insurer timely issues full payment within the time allowed to respond
to the demand letter with payment, or if the civil action is for a claim for non-payment or underpayment
that was not identified on a demand letter.
44 The postal costs may be recovered from the insurer, if they are requested in the demand letter. S. 627.736(10)(c), F.S.
45 “Each licensed insurer, whether domestic, foreign, or alien, shall file with the [Office of Insurance Regulation] the name and address of the
designated person to whom notices must be sent which the [Office of Insurance Regulation] shall make available on its Internet website. The name
and address on file with the [Office of Insurance Regulation] pursuant to s. 624.422 is deemed the authorized representative to accept notice pursuant
to this subsection if no other designation has been made.” S. 627.736(10)(c), F.S.
46 In cases where the letter responded to a withdrawal of pre-payment of services, the action is barred if the insurer provides a written agreement
within 30 days to pay for such services and to pay a 10 percent penalty (not to exceed $250) when the insurer pays for the future treatment. S.
627.736(10)(d), F.S.
47 Under PIP, non-emergency benefits are limited to $2,500, while emergency medical conditions may increase coverage to $10,000.
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B. SECTION DIRECTORY:
Section 1: Amends s. 624.155, F.S., relating to civil remedy.
Section 2: Amends s. 624.422, F.S., relating to service of process; appointment of Chief Financial
Officer as process agent.
Section 3: Amends s. 627.736, F.S., relating to required personal injury protection benefits; exclusions;
priority; claims.
Section 4. Providing an effective date of July 1, 2020.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
If litigation rates and costs are reduced, consumers may experience lower insurance costs.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. This bill does not appear to require counties or municipalities to spend funds or take
action requiring the expenditure of funds; reduce the authority that counties or municipalities have to
raise revenues in the aggregate; or reduce the percentage of state tax shared with counties or
municipalities.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
The bill neither authorizes nor requires the adoption of rules.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
STORAGE NAME: pcs0895.COM PAGE: 9
DATE: 2/26/2020
IV. AMENDMENTS/ COMMITTEE SUBSTITUTE CHANGES
STORAGE NAME: pcs0895.COM PAGE: 10
DATE: 2/26/2020
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