Attorney fee limit backed in insurance cases

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High tide from offshore Hurricane Michael creeps up into the Sponge Docks in Tarpon Springs, Fla., Wednesday, Oct. 10, 2018 after the Anclote River backs up. (Jim Damaske/The Tampa Bay Times via AP)

TALLAHASSEE, Fla. (The News Service of Florida) — In the latest front in battles between insurers and trial lawyers, a Senate committee Tuesday approved a proposal aimed at limiting attorney fees in some property-insurance lawsuits.

The 5-3 vote by the Senate Banking and Insurance Committee came amid what bill sponsor Jeff Brandes, R-St. Petersburg, called a “proliferation” of lawsuits against insurers “that has had a radical impact on the industry as a whole.”

The bill (SB 914) would significantly restrict the award of what are known as “contingency risk multipliers,” which judges can award to increase fees for attorneys who represent property owners in cases against insurers. Brandes said the bill would bring Florida in line with federal courts and other states on the issue.

“We’re simply trying to reflect the jurisprudence of federal law and essentially what almost every other state does as it relates to contingency risk multipliers,” Brandes said.

But critics said restricting the fees could cause attorneys to shy away from taking cases involving relatively small amounts of money, leaving property owners unable to get representation as they tangle with insurers.

“I believe it limits access to the courts, and that access should not be restricted (to) who can afford it or who can afford the high-dollar lawyers or the high-dollar experts and the costs of prosecuting a claim where it’s been unreasonably denied by the insurance company,” said Sen. Darryl Rouson, a St. Petersburg Democrat and attorney.

Brandes’ bill comes after a major battle last year about the practice known as “assignment of benefits,” which involves policyholders signing over claims to contractors, who then seek payment from insurance companies. Insurers contended the process had become riddled with lawsuits, driving up property-insurance costs. Lawmakers passed a measure that included limits on attorney fees in so-called AOB cases.

Florida has long allowed plaintiffs to collect attorney fees when they prevail in cases against insurance companies, with the amounts typically set by a calculation of the number of hours spent on a case and reasonable hourly rate. But courts also have the ability to approve contingency risk multipliers that increase the fees.

Under Brandes’ bill, contingency risk multipliers could only be awarded “in a rare and exceptional circumstance with evidence that competent counsel could not be retained in a reasonable manner.”

Insurance industry officials praised the Senate committee for passing the bill.

“It’s time to curb use of the contingency fee multiplier allowing some greedy attorneys to essentially double dip on fees,” said Michael Carlson, president and CEO of the Personal Insurance Federation of Florida, which represents major insurance carriers.

But Chip Merlin, a Tampa attorney who represents policyholders against insurance companies, said the bill would prevent some people from finding lawyers to take cases.

“This doesn’t help out any policyholder in the state of Florida, whatsoever,” Merlin said.

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