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Where is Disbarred Attorney from Bubba Case now? Still Tied to Courtroom
Where is disbarred attorney from Bubba case now? Still tied to courtroom
Adam Filthaut started a glass-replacement company and began filing assignment-of-benefits lawsuits almost immediately, both before and after his disbarment.
Author: Noah Pransky
Published: 5:03 PM EST November 20, 2017
Updated: 1:15 PM EST November 25, 2017
In the months Adam Filthaut spent delaying his disbarment for setting up a rival attorney on a DUI charge years earlier, the disgraced lawyer was also busy setting up his next controversial career.
Filthaut started a glass-replacement company and began filing assignment-of-benefits lawsuits almost immediately, including both before and after his disbarment.
Filthaut’s company, Glassmetics, filed nearly 600 small claims lawsuits against insurance companies between May 2016 and October 2017 – an average of more than seven per week. However, Filthaut wasn’t the attorney-of-record on the suits, so it did not violate the orders of his August 2016 disbarment, ordered by the Florida Supreme Court.
Assignment-of-benefit lawsuits have exploded in Florida in recent years, with glass-related suits alone soaring 3,000 percent between 2011 and 2016, according to the Florida Justice Reform Institute. Florida is one of only three states that guarantees policyholders free replacements for damaged windshields, with no deductible, as long as they have comprehensive insurance coverage.
But when consumers sign their assignment-of-benefits over to glass vendors, the vendors can charge whatever they want for the repairs. If the insurance company disagrees with the billing, the glass company will often sue for the difference.
Even when those billing differences are less than $100, the suits are often settled with the insurance company paying thousands of dollars in attorneys’ fees, making the legal side of the transaction much more lucrative than the glass side of it.
When asked why he got into the business, Filthaut told 10Investigates, “I think its obvious.” But he refused to elaborate and deferred all further questions to his attorney, Anthony Prieto, who is well-versed in suing insurance companies over glass disputes.
“I don’t know the answer why Glassmetics got into business; I can only tell you they are a company that does it the right way,” Prieto said, adding that Filthaut isn’t involved at all in the lawsuit preparation. “If it’s done properly, there’s money to be made.”
Glassmetics appears to have opened more than a dozen locations statewide in its short existence – many of them inside Carsmetics body shops – but even with hundreds of lawsuits a year, Prieto said they are “just a dot” in the big picture of glass replacement companies fighting insurance companies’ “corporate bullying.”
However, state leaders and the insurance industry alike have accused attorneys like Prieto of abusing a consumer protection and causing rate hikes for all Floridians.
“It impacts the rates; it makes a difference in what we pay for auto insurance,” said Lynne McChristian, director for the Center for Risk Management at Florida State University and also a spokesperson for the Insurance Information Institute. “It’s not the glass repair; it’s the lawsuit that results from the glass repair.”
Prieto said Glassmetics was a natural fit for Filthaut since he sued insurance companies when he was practicing law at Adams and Diaco.
Filthaut was one of three attorneys from the firm disbarred in 2016 – along with Robert Adams and Stephen Diaco – when the attorneys schemed to set up the opposing attorney in their Bubba the Love Sponge v. “MJ” Schnitt shock jock trial on a DUI. Melissa Personius, a paralegal for the firm, encouraged the opposing attorney to drink, then drive home after she found him at a Tampa bar.
Personius was one of the first employees Filthaut later hired at Glassmetics. According to LinkedIn, she worked as a “business development manager,” but Prieto said she no longer works for the company.
In fact, neither does Filthaut. Shortly after 10Investigates began asking questions, Filthaut changed the name of the company to “Fix it Fast Auto Glass.”
Last week, Prieto said Filthaut sold the company because he “couldn’t keep up with invoices” and it wasn’t profitable, even though Prieto said in September, “if it’s done properly, there’s money to be made.”
Prieto said he did not know whom his client sold the company to, but he would continue to represent Glassmetics in court.
© 2018 WTSP
AOB in Focus
AOB in focus
Ted Bunker – November 20, 2017
Florida lawmakers recently began another effort to rein in abuses of the Sunshine State’s assignment of benefits policy, which lets repair contractors stand in an insured’s place in pursuing claims for things like non-storm related water damage.
Whether reformers have a chance of succeeding remains an open bet, but the odds don’t look good.
The industry has been clamoring for reforms for years. An attempt to mitigate some of the abuse faltered earlier this year when a state Senate panel failed to take up reform proposals that had passed in the House of Representatives.
But renewed movement suggests hope remains. On Tuesday, the House Judiciary committee passed a new reform bill 13-5, sending it to the chamber’s leadership to decide where it goes from there. The next legislative session begins in January.
In the state Senate, lawmakers have kicked around the idea of interposing an alternative dispute resolution process such as mediation or arbitration to head off lawsuits over disputed claims, including those that arise from AOB situations.
The panel, led by Senator Anitere Flores, a Miami Republican, blocked the reform effort that emerged from the House last Spring. Flores cited concerns that the bill favored insurers over consumers.
Meanwhile, rates for many homeowners, especially in the area around Miami, continue to rise.
Insurer of last resort Citizens has asked for 10.5 percent and 10.4 percent average rate increases in Dade and Broward Counties in the Miami metro area, as well as 9.3 percent in nearby Palm Beach County.
About 9 in 10 property insurers are seeking rate hikes for 2018 compared with fewer than half just three years ago, state insurance regulator David Altmaier told a conference earlier this month, according to the Palm Beach Post.
Citizens CEO Barry Gilway told Altmaier in an August rate hearing that without AOB reform, homeowners’ premiums may rise for years to come.
Average water claims costs have doubled to $20,000 since 2015, Gilway said, noting that nearly two-thirds of policyholders are facing rate hikes compared with fewer than a third three years ago.
Making matters worse for consumers, some insurers are starting to wall off South Florida – simply walking away from the market by refusing to write new homeowners’ business there, citing the skyrocketing costs stemming from AOB abuse.
It’s hard to argue that there’s no need for reforms, but whether voters feeling the pinch of double-digit rate increases in the Miami area can outweigh the influence of trial lawyers who stand behind AOB claimants remains to be seen.
A study released early this year by the Florida Justice Reform Institute said that just 11 lawyers filed a quarter of all AOB-related lawsuits from 2013 to 2016, including one who brought more than 30,000 cases. As Gilway has commented, some lawyers are making a mint on AOB.
And when it comes to elections, money talks. According to data collected and analysed by the National Institute on Money in State Politics, lawyers and lobbyists gave almost $8.5mn to Sunshine State political campaigns in the 2016 election cycle, the most of any industry group.
Money can’t vote, but it can buy a lot of advertising and fund campaign events, which can produce a decisive edge at the ballot box. And 2018 is an election year.
Attorney Fee Cap Passes First House Hurdle
Wednesday, November 15, 2017
Attorney Fee Cap Passes First House Hurdle
By J. Todd Foster
The Florida House Commerce Committee on Tuesday passed a bill that would cap claimants’ attorney fees at $150 an hour.
The 18-8 vote was largely along party lines — with Republicans in favor and Democrats opposed — for Proposed Committee Bill 18-01. The measure will receive a regular bill number before it advances to other committees.
One Democratic lawmaker on the Commerce Committee said that even if the proposed legislation is passed into law, the state Supreme Court will strike it down as unconstitutional because it conflicts with the high court’s Castellanos decision.
Justices ruled in April 2016 in Marvin Castellanos v. Next Door Co. that Florida’s statutory fee schedule was unconstitutional because it did not allow for “reasonable” fees in unique circumstances, such as in complex, labor-intensive cases.
“I think the bottom line is we’re going to see this bill, even if it passes, get struck down because it seems to conflict with the Supreme Court ruling because it has attorney fee caps. Some things in the bill are probably worth doing, but I still think it’s premature,” said Rep. Joseph Geller, D-Aventura.
He added that the cost impacts of the Castellanos decision will not be known until at least a year.
“But the way we passed it today, we might as well have done nothing,” Geller said.
The bill mostly mirrors House Bill 7085 from last session. It would allow judges of compensation claims to award claimants’ attorneys an hourly fee of up to $150 if they qualify for payment outside the statutory fee schedule.
The current formula is for claimants’ attorneys to receive 20% of the first $5,000 in benefits secured, 15% of the next $5,000, 10% of the remaining amount of benefits secured during the first 10 years after a claim is filed, and 5% of the benefits secured after 10 years.
To qualify for a so-called “departure fee” outside the schedule, the statutory fee would have to come out to less than 40%, or greater than 125%, of the customary amount a defense attorney would have earned in the same locality, based on an analysis of local defense attorneys’ hourly rates.
Florida Workers’ Advocates issued a statement saying the proposed bill “would turn the workers’ compensation grand bargain to protect injured workers into a grand illusion.”
The organization argues that any workers’ compensation reforms should include converting Florida into a loss-cost system instead of an administered pricing system that requires all carriers to charge the same rates.
FWA President Mark Touby, a Miami claimants’ attorney who represented Castellanos, said his group “will continue to work to ensure that increased competition, more transparency and other essential components of meaningful workers’ compensation reform are included in any legislation that ultimately passes.”
The National Council on Compensation Insurance recommends full rates to regulators in Florida and three other states — Arizona, Idaho and Iowa. Massachusetts and Wisconsin also have administered pricing for workers’ compensation, but each state has its own rating bureau.
The Castellanos ruling triggered the vast majority of a law-only 14.5% rate hike effective Dec. 1, 2016, based on NCCI projections. But NCCI followed that rate increase with a 9.8% rate decrease that was approved by the Office of Insurance Regulation last week based on favorable carrier experiences for policy years 2014 and 2015, before the Castellanos ruling.
The National Federation of Independent Business said the bill that passed Tuesday was essentially the same bill it supported fewer than six months ago as legislators wound down their 2017 session.
But NFIB/Florida Executive Director Bill Herrle said in an emailed statement Tuesday that the recent rate decreases — 9.5% for the statewide overall rate level and 9.8% for the overall premium level — were unexpected and could dull the business community’s call for a cap on claimants’ attorney fees.
Herrle said that if the bill that passed the Commerce Committee on Tuesday is the final bill, his group would support it, however.
“If it represents just an opening bargaining position, then we’ll probably end up with a bill we cannot support,” he said.
William W. Large, president of the Florida Justice Reform Institute, which champions tort reform, said the Commerce Committee bill doesn’t go far enough and that lawmakers need to wait for post-Castellanos experience data one to two years from now.
“After the Castellanos data comes in, I think the Legislature will find that an approach that makes the employee/claimant have some skin in the game by paying a portion of the fees will be the most prudent approach,” Large said. “But, right now, everyone needs to slow down and take a deep breath and wait until the post-Castellanos actuarial data rolls in.”
In addition to capping claimants’ attorney fees at $150 an hour, the Commerce Committee bill would require attorneys to file at least five days before the pretrial and final hearings statements verifying their hours on the case and specifically allocating the hours worked on each benefit claimed.
The proposed 41-page bill contains many other revisions to Florida’s workers’ compensation system by:
• Increasing the duration of temporary total disability benefits to 260 weeks from the 104-week cap that the Supreme Court in June 2016 declared unconstitutional in Westphal v. City of St. Petersburg.
• Authorizing within five business days after receipt of a request a one-time second opinion by a physician of the employee’s choice who is not professionally affiliated with the previously authorized physician. After the second opinion, the employee would be required to write the carrier naming the physician he or she has selected.
• Making the injured worker responsible for remaining attorney fees if required by a retainer agreement.
• Allowing carriers to reduce premiums by up to 5% if they disagree with the filings made on their behalf by NCCI.
• Eliminating charge-based reimbursement of outpatient medical care in favor of reimbursement at 200% of the Medicare rate for unscheduled care and 160% of the Medicare rate for scheduled surgery.
• Allowing carriers to wait 45 days to pay claimants’ attorneys instead of the current 30.
• A House staff analysis cites a preliminary estimate by NCCI of the impact of many provisions of the Commerce Committee bill, including that it would trigger “moderate to significant” decreases in overall workers’ compensation costs.
NCCI defines a moderate decrease as between 1% and 3% of system costs, and a significant decrease as 5% and greater.
Reprinted courtesy of WorkCompCentral.
Lawmakers to Make Another Run at Capping Claimants’ Attorney Fees
Thursday, November 9, 2017
Lawmakers to Make Another Run at Capping Claimants’ Attorney Fees
By Todd Foster
A month after saying a nearly double-digit rate decrease would preclude the need to regulate claimants’ attorney fees in 2018, a lawmaker has revived legislation that would cap those fees at $150 an hour.
House Commerce Committee Chairman Rep. Jim Boyd, R-Bradenton, will bring up Proposed Committee Bill 18-01 for consideration when the committee meets at 1 p.m. Tuesday.
The proposed bill, which mostly mirrors House Bill 7085 from the last session, would allow judges to award claimants’ attorneys an hourly fee of up to $150 if they quality for payment outside the statutory fee schedule.
To qualify for the “departure fee,” the statutory fee would have to come out to less than 40%, or greater than 125%, of the customary amount a defense attorney would have made in the same locality, based on an analysis of local defense attorneys’ hourly rates.
That provision is aimed at bringing the state into compliance with the April 2016 state Supreme Court ruling in Castellanos v. Next Door Co. The high court ruled that the statutory fee schedule was unconstitutional because it did not allow for “reasonable” fees in unique circumstances, such as in complex, labor-intensive cases.
The 41-page bill would make myriad revisions to the workers’ compensation system, including:
· Increasing the duration of temporary total disability benefits to 260 weeks from the 104-week cap that the Supreme Court in June 2016 declared unconstitutional in Westphal v. City of St Petersburg
· Making the injured worker responsible for remaining attorney fees if required by a retainer agreement.
· Allowing carriers to reduce premiums by up to 5% if they disagree with the filings made on their behalf by the National Council on Compensation Insurance.
· Eliminating charge-based reimbursement of outpatient medical care in favor of reimbursement at 200%of the Medicare rate tor unscheduled care and 160% of the Medicare rate tor scheduled surgery.
· Allowing carriers to wait 45 days to pay claimants’ attorneys instead of the current 30.
Orlando claimants’ attorney Paolo Longo said the bill’s “sole purpose” is to dissuade injured workers from retaining legal representation by imposing the $150-an-hour cap and by placing onerous paperwork requirements on lawyers.
For example, the bill would require claimants’ attorneys to file attestations detailing their hours and specifying how much time they spent working on obtaining various benefits. Those filings would have to occur before pretrial hearings and again before final hearings.
“I think it’s beyond ridiculous,” Longo said. “It’s clear that Tallahassee is trying to legislate representation for injured workers out of the statutes. All this bill would do is create more litigation because no one will be able to calculate a fee.
“All the judges would be doing is spending all day calculating statistics of average fees… instead of actually adjudicating claims, which is what they are intended to do,” he said.
West Palm Beach defense attorney H. George Kagan said requiring claimants’ lawyers to file their hours twice before the merits of the case are even decided would be “beyond onerous.”
“The most galling thing to me is the insane complexity they’re getting into in order for attorneys to get a measly $150 an hour,” Kegan said. “The whole game is tor $150 an hour. Just make it $150 an hour and shut up. We’re already burdened with myriad deadlines and oaths and certifications.”
Chairman Boyd was busy Wednesday and had no time to answer questions, a staffer said.
Rep. Joseph Geller, D-Aventura, repeated his call from last month that workers’ compensation should not be touched until a year from now, when data will show the effects of the Castellanos court decision and whether it has driven up attorney involvement substantially.
“I think this bill is misguided and won’t have the desired effects, and very possibly could restrict the ability of injured workers to get access to the services they need,” Geller said in a telephone interview. “I think we should wait and see how things come out from this latest go-around” with the pending rate decrease. “Let’s get some data before we go rushing into this.”
Earlier this month, Insurance Commission David Altmaier ordered a further reduction in the decrease proposed by NCCI, finding the rate-maker had built in a profit factor that was 0.15% too high.
NCCI complied with Altmaier’s order to refile by Tuesday, and his direction of a slightly higher decrease of 9.5% for the statewide overall rate level and 9.8% for the premium level
There filing is here (click download in the bottom right-hand corner), and the rates would be effective Jan. 1.
The Florida office of the National Federation of Independent Business worked with Chairman Boyd to push for the attorney fee cap, said Executive Director Bill Herrle.
“We’ve told Chairman Boyd that we are there to help them move this bill through the process,” Herrle said. “I’ll allow the House to speak for themselves, but it looks like they’re eager to put the burden on the Senate to initiate further action on comp. It looks like they want to move this bill fairly rapidly.”
He conceded the sense of urgency is not there because of the pending rate decrease.
“Business owners are not going to be as concerned about what’s going on behind the scenes when the bill in their mailbox is going down. That’s just a fact of life,” Herrle said. “But that doesn’t change the reality – the business community and their advocates in the Capitol still believe very strongly that attorney fees need to be capped or those chickens are going to come home to roost and rates will go up and will be driven by litigation.”
The Florida Justice Reform Institute, which opposes trial lawyers, wants claimants’ attorney fees capped, but President William Large said the latest bill falls short.
Large said the bill “creates terms and definitions that would eventually be litigated. The bill, in its current form, simply isn’t helpful.”
David Langham, deputy chief judge of the Office of Judges of Compensation Claims, said the new bill give his judges “at least a modicum of discretion” on the attorney fee issue.
Langham noted that the West Virginia Supreme Court of Appeals took a different approach to claimants’ attorney fees last month when it rejected constitutional challenges to fee constraints similar to Florida’s.
On Oct 10, the court rejected Thomas Sandy’s argument that a statute capping attorney fees for appealing the denial of medical treatment to $2,500 for the life of a claim is unconstitutional because it interferes with claimants’ access to the judicial system. The case was Bandy v. Murray American Energy Inc.
“While we recognize Mr. Sandy’s frustration with the statutory maximum attorney fee contained in West Virginia Code §23- 5-16(c), the Legislature is the appropriate branch of government with whom Mr. Bandy should raise his grievance,” the five West Virginia justices wrote.
Reprinted courtesy of WorkCompCentral.
‘PIP’ Repeal Speeds Toward House Floor
‘PIP’ repeal speeds toward House floor
By Jim Turner, News Service of Florida – Posted: 5:39 PM, November 07, 2017
TALLAHASSEE, Fla. – An attempt to end the state’s no-fault auto insurance system is on the fast track in the Florida House.
As in past years, the legislation, which has been projected to save motorists an average of about $80 a year, faces opposition from some insurers, business groups and medical providers.
Meanwhile, the House and Senate are comparing different models to change the system.
The House Commerce Committee voted 18-7 on Tuesday to back a measure (HB 19) by Rep. Erin Grall, R-Vero Beach, that would end the no-fault system, which requires motorists to carry personal-injury protection, or PIP, coverage to help pay for medical care after accidents.
Under the bill, motorists would instead be required to carry bodily-injury coverage.
The change would fully open drivers at fault in accidents to liability for damages and could shift some costs to health-care premiums.
“I understand that it’s going to be difficult and that change is hard,” Grall said. But she added that “we will have more adequate levels of coverage for the severity of accidents on our roads.”
Grall, an attorney, did not want to add issues to the bill, such as increasing enforcement of uninsured motorists and making changes in the state’s bad-faith laws.
Bad-faith lawsuits typically involve allegations of misconduct by insurers that handle claims and can be costly.
Grall said a number of interests are trying to make the proposal “more complicated than it needs to be.”
The Personal Insurance Federation of Florida, the Florida Justice Reform Institute and the Institute for Legal Reform, an offshoot of the U.S. Chamber of Commerce, are among those that want a no-fault repeal to also address changes in the bad-faith laws.
“Florida’s third-party insurance bad faith laws create a perverse incentive for persons injured in auto crashes to game the system in order to set up an insurer for a bad faith claim that could greatly exceed the amount of coverage purchased by the insured,” said Michael Carlson, president of the Personal Insurance Federation of Florida.
With approval Tuesday from the Commerce Committee, Grall’s bill is positioned to go to the House floor when the 2018 legislative session starts in January.
The House has considered bills annually since 2013 that would have repealed PIP, with the House passing a Grall bill during the 2017 session. The bill died in the Senate.
Under no-fault, motorists must carry $10,000 in PIP coverage, an amount that essentially hasn’t changed since 1979. The system is designed to help limit lawsuits stemming from traffic accidents.
Lawmakers in 2012 passed a package of changes — championed by Gov. Rick Scott and then-state Chief Financial Officer Jeff Atwater — that were considered a last-ditch effort to maintain the system after rates increased due to an increase in fraudulent claims.
Repealing PIP would eliminate the system’s limits on lawsuits. Drivers at fault in accidents would be fully liable for damages, with the minimum bodily-injury coverage under Grall’s proposal being $25,000 for damages for injury or death of one person and $50,000 for injury or death of two or more people.
In the Senate, Thonotosassa Republican Tom Lee is sponsoring a measure (SB 150) that differs in the way it would revamp the system. Among the differences are in the levels of required bodily-injury coverage.
With the House bill ready for the floor, Grall said she hopes to have time to talk with Lee about their conflicting proposals.
https://www.news4jax.com/news/politics/florida-legislature/pip-repeal-speeds-toward-house-floor
Florida Chamber Insurance Summit Tackles Industry’s Hottest Topic; AOB Abuse
Florida Chamber Insurance Summit tackles industry’s hottest topic, AOB abuse
PETER SCHORSCH – November 2, 2017, 2:54 pm
One of the hottest topics in Florida’s insurance market today is assignment of benefits, its use — and abuse — throughout the state.
Beginning Thursday in Orlando, Florida Chamber of Commerce’s Insurance Summit features industry leaders who hope 2018 will be the year the state Legislature will finally address the issue of AOB abuse.
The event brings together legislators, insurance executives and political insiders who will tackle some of the most pressing issues facing the state’s insurance industry, business and consumers: workers’ compensation, AOB, CAT Fund and more. This year’s theme of the two-day summit is “Weathering the Storms: Irma, AOB, Workers’ Comp, and the Work That Lies Ahead.”
On the summit’s opening day is “AOB: The problem — and the solutions — are clear!” a panel of insurance experts to examine the topic, its effect on the insurance market, and possible solutions to protect the state and policyholders throughout Florida.
Assignment of Benefits is a document allowing third-party contractors — such as water extraction company, roofers, plumbers and the like — to “stand in the shoes” of the insured to receive payment directly from the insurance company for work performed.
Moderated by Liz Reynolds, State Affairs Director of the National Association of Mutual Insurance Companies, panelists include:
— Arthur Randolph, principal and consulting actuary of Pinnacle Actuarial Resources;
— Jon Ritchie, senior vice president of operations for the American Integrity Insurance Company of Florida;
— Wesley Todd, chief executive officer of CaseGlide and
— William Large, president of the Florida Justice Reform Institute.
AOB, which has been part of the state’s insurance market for more than a century, is a widespread practice in water and roof claims throughout Florida and is once again coming under scrutiny after Hurricane Irma.
The clash over AOB puts insurers facing repair contractors and attorneys. Insurance companies blame contractors for inflating repair bills; contractors blame insurers for lowballing payouts. The problem has been most acute in Miami-Dade, Broward, and Palm Beach counties.
According to the Florida Office of Insurance Regulation (OIR), loopholes in the way AOB is used in the marketplace drives up costs to homeowners, mostly through “unnecessary litigation” associated with specific claims.
In 2006, Florida produced 405 AOB lawsuits across all 67 counties in the state; in 2016, that number jumped to nearly 28,200. OIR’s 2016 Data Call Study found claims with an AOB have a “much higher severity” than applications without one. The frequency and severity of water claims have also risen sharply by 46 percent since 2010, with a jump in severity by 28 percent.
The Chamber Insurance Summit is through Friday at the Ritz-Carlton Grande Lakes, 4040 Central Florida Pkwy. in Orlando. For information and full agenda visit FLChamber.com.
Florida Homeowners Need Break from Assignment-of-Benefits Lawsuits – Opinion
Florida homeowners need break from assignment-of-benefits lawsuits | Opinion
By Harold Kim – November 7, 2017
Florida consumers are used to paying higher insurance premiums in the wake of devastating hurricanes. But an entirely preventable, human-driven phenomenon is now driving rates even higher: Assignment-of-benefits (AOB) claims, in which home-improvement contractors and other vendors submit inflated bills to insurers with the help of fee-motivated lawyers.
Consumers are typically innocent pawns in this game. Soon after a big storm or flood, vendors approach them with a promise to fix the damage now, in exchange for signing over any insurance benefits they may receive later.
What few consumers see buried in the contracts they unwittingly sign is that they are also agreeing to sue their insurance company if it balks at paying the often-inflated bills the vendor submits. But even that isn’t the most expensive part: Under a Florida statute originally intended to level the playing field between individual consumers and insurance companies, “their” attorney — working for the vendor, not the consumer — can collect hundreds of dollars an hour in fees if a court awards as much as a dollar above the insurance company’s initial offer to settle the case.
This “one-way” fee statute gives vendors and their lawyers a strong incentive to perform substandard work and then submit inflated and fraudulent claims, confident the insurer will pay them rather than engage in drawn-out litigation where the legal fees eventually will dwarf the amount of the original claim.
The damage from AOB litigation is clear. In 2000, there were roughly 460 AOB lawsuits. By 2016, there were a staggering 28,000 claims, according to the Florida Office of Insurance Regulation. While the number of claims is alarming enough on its own, AOB claims tend to be particularly expensive. One study of more than 80,000 Florida insurance claims showed the average AOB claim was $17,000 — 50 percent more than non-AOB claims.
Defying the laws of nature and probability, these cases tend to be concentrated in a few specific parts of the state including Miami and Tampa. These are, not surprisingly, where lawyers who specialize in AOB litigation advertise and concentrate their activities. Just 11 attorneys accounted for a quarter of all AOB lawsuits from 2013 to 2016. Without AOB reform, Florida regulators predict property insurance rates in Miami-Dade County will rise more than 50 percent by 2022.
And it’s not just home repairs. The AOB scam has proliferated with cracked windshields. Glass repair shops have begun actively seeking out AOB arrangements, sometimes even throwing in $100 gift cards to sweeten the deal. Unfortunately, the handful of vendors who account for most claims tend to charge 100 percent more than nationally-known vendors — even before legal fees.
Pro-lawyer judges helped create the AOB mess, but the Florida Legislature has the power to fix it. Reforms are needed now to eliminate the incentives for crooked vendors to collude with plaintiff lawyers and raid the one-way attorney fee cookie jar. And, in fact, sensible reform bills have been considered in the Florida Legislature that would limit the fees attorneys can charge insurance companies when they are working for an outside vendor, not the policyholder. But pro-trial lawyer legislators have killed these bills again and again. In 2017, a Senate committee refused to even hear a bill.
It’s a shame a few influential legislators can block AOB reform in Florida, especially given the rising costs, fraud, and excessive attorney fees. There was a time not long ago when Florida was a beacon of lawsuit reform, reforms that were meant to unclog the courts, help the truly injured find justice, and prevent a handful of lawyers from gaming the system. It’s long past time for the Legislature to take up that mantle again.
Harold Kim is executive vice president of the U.S. Chamber Institute for Legal Reform. Learn more at www.instituteforlegalreform.com