Florida Tort Reform Law: A Short Summary of Some of Its Consequences and Effects

On March 24, 2023, Florida’s Governor signed into law HB 837, transforming Florida tort law. With two important exceptions, the law applies to new lawsuits filed after March 24, 2023.

Salient Points of Select[1] Sections of the Law

·         Medical Bills. The law limits the introduction of evidence for medical damages at trial. The law limits evidence of paid medical bills and future medical care to the amount paid or needed for services regardless of the source of the payment:

o   Effects

• Defense experts on the appropriateness of the amount of medical bills required.

• Plaintiff-oriented doctors will rethink their medical treatment and billing approach.  

• Lower medical expenses should reduce non-economic damages awards and nuclear verdicts and increase settlements.

• More reasonable life care plans. 

• Reduced abuse of letters of protection.

·         Letters of Protection. If a Plaintiff receives medical services subject to a letter of protection, the plaintiff must disclose: a copy of the letter of protection; all billing for medical expenses, itemized and coded; whether the provider sold the accounts receivable to a third party, the name and dollar amount paid by the third party; whether the plaintiff had health insurance at the time of treatment and the identity of the health care coverage provider; and whether the claimant was referred for treatment under a letter of protection and, if so, the identity of the person who made the referral.

o   Effect

• Brings letters of protection out in the open. Before, the law stated that there was an attorney-client privilege in communications related to an attorney’s referral of a client for treatment. Juries will now hear about letters of protection, what they mean, the financial relationship they create and the doctor's financial interest in the case's outcome.  

Comparative Negligence. The law changes Florida's comparative negligence system from a pure comparative negligence system to a modified one, so that a plaintiff who is more at fault for their injuries than the defendant may not generally recover damages from the defendant.

o   Effect

• Avoids outsized awards against nominally negligent defendants.  In matters where the plaintiff was significantly at fault, plaintiffs will argue for more considerable damages so that defendants with low negligence pay an outsized portion of damages. However, defendants can now have a defense verdict if plaintiff found 51% at fault. 

Bad Faith. The law modifies bad faith law to allow an insurer to avoid third-party bad faith liability if the insurer tenders the policy limits or the amount demanded by the claimant within 90 days after receiving actual notice of the claim.

o   Effects 

• Ends “set-up” claims. Before this law, the system incentivized plaintiffs to devise situations that led to a bad faith claim to obtain larger settlements.   

• Reduce bad faith claims.  Allowing insurers enough time to evaluate a claim will result in more comprehensive claims handling and fewer bad faith claims.    

[1] For more information on Florida tort reform law, please feel free to reach out to me at mov@miamimaritimelaw.co or 305.377.3700.

Force Majeure Ruling in Miami Should Change How Contracts Are Written

In what is reported in the Daily Business Review to be the first ruling of its kind in Miami-Dade County, a popular retail store on Lincoln Road in Miami Beach is required to pay rent despite hardships caused by the COVID-19 pandemic. Guess? Retail Inc., the clothing store, alleged that the COVID-19 pandemic left it unable to pay its rent. The retailer refused to pay after it had to close its operations around March of last year — something Guess said was done to protect the health and safety of customers and employees, and comply with government safety guidelines. The Denison Corporation, a Miami Beach-based family business, sued in May for $291,162 in rent and other expenses owed over three months. But Guess turned around and countersued Denison. The retailer sought a refund on some payments it had made since March 17 and said it should get a break going forward, according to the suit.

The lease states that the term force majeure encompasses, “acts of God, labor disputes (whether lawful or not), material or labor shortages, restrictions by any governmental authority, civil riots, floods, or other cause beyond the control of the party asserting the existence of force majeure.” It also said, “Notwithstanding anything to the contrary in this lease, tenant shall not be excused from payment of base rent, operating costs, or any other sum due under this lease by reason of force majeure.”

Miami-Dade Circuit Court Judge Peter Lopez shot down Guess’ countersuit, saying the lease is clear that rent still has to be paid during force majeure events, including government-imposed closures for the pandemic. A force majeure clause is common in leases and can sometimes allow a party to not fulfill their contract when there is a circumstance beyond their control or an “act of God.”

At the time this decision was entered, it was reported to be a case of the first impression. It is likely to be relied upon by other jurists as litigation regarding force majeure provisions move through the Miami-Dade court system. The ruling is a clear win for landlords who still need that income to pay their taxes (no rebate there), expenses and to continue operations. It is hoped that parties facing these issues will attempt to work together to avoid these sorts of lawsuits, since the pandemic has caused hardships for everyone. In the meantime, lawsuits such as these will change the way all contracts are written in the future to make sure that pandemics are specifically named as an example of a force majeure incident and where the risk of such a situation should fall.

If you are interested in receiving Judge Lopez’ decision or wish to discuss the issue of force majeure further, please feel free to reach out to me at blog@miamimaritimelaw.co or 305.377.3700.

"A Contract is a Contract"--Why Settlement Negotiation Documents Need to be Thought Through

Back in 1997, R.J. Reynolds Tobacco (“Reynolds”) joined a handful of competitors in signing an historic $11.3 billion settlement agreement with the state of Florida to relieve itself from liability and health costs stemming from smoking-related illnesses in exchange for reduced advertising and 25 years worth of settlement payments to the state. However, Reynolds tried to renege on that agreement, arguing that wasn’t its problem anymore, as its parent company sold the cigarette brands in question—Salem, Winston, Kool and Maverick—to ITG Brands in 2015.

Since then, neither Reynolds or ITG has paid the government under the settlement agreement. ITG paid $7 billion for the brands but wasn’t part of the historic settlement, which took place years earlier. ITG did agree to use “reasonable best efforts” to negotiate with the government to join it, but those talks were reportedly futile.

To quote the appellate court, the Fourth District Court of Appeals, “ a contract is a contract, and…Reynolds continues to be liable under the contract it signed with the state of Florida,” the opinion said. The court simply was not swayed by Reynolds’ arguments, finding that its purchase agreement with ITG ”did not in any way vitiate the responsibilities and obligations of Reynolds under the first contract.” The appellate panel said it was compelled to affirm the settlement as it was clear, unambiguous, included no provisions for brand transfers and required all parties to approve amendments in writing.

Quoting former U.S. Supreme Court Justice Oliver Wendell Holmes, the opinion said the “duty to keep a contract at common law means a prediction that you must pay damages if you do not keep it—and nothing else.” The opinion went further and stated that “one contract did not alter the obligations of the other contract” as the purchase agreement was separate and involved different parties, and pointed to case law that says, “a corporation that acquires the assets of another business entity does not as a matter of law assume the liabilities of the prior business.” It did not help Reynolds that it had tried these same arguments in Texas and Minnesota, where the courts there snubbed the same argument.

The Fourth DCA also knocked down claims from Philip Morris USA, another party to the settlement, that ITG should be liable for the payments, finding that did not comport with the plain language in its purchase agreement with Reynolds.

Florida’s Fourth District Court of Appeal declined to rehear the case last week and said it would not certify the case to the state Supreme Court. This latest ruling means Reynolds must hold up its end of a historic $11.3 billion settlement struck with the state in 1997. The state has reported that the ruling will result in a one-time $92 million payment and roughly $30 million per year for the state.

This decision should not be a surprise. Because the contract between ITG and Reynolds was not a purchase of Reynolds’ liabilities, it is surprising that Reynolds thought it could walk away from a settlement reached with the state and that somehow, that left ITG holding the proverbial “bag.” However this case is a stark reminder that if a company reaches settlements such as this, it must consider them in any subsequent reorganization, sale or material change to the company.

If you are interested in receiving a copy of the initial decision or wish to reach out to me, you may do so by calling me at 305.377.3700 or by email at blog@miamimaritimelaw.co.

Florida Supreme Court Does 180-Degree Turn on "Daubert"

In Curiam, 2019 Fla. LEXIS 818 (Fla. May 23, 2019), the Florida Supreme Court reversed its course made in its earlier ruling that the ”grave constitutional concerns” were at play if the Daubert  standard were adopted in the State of Florida. See DeLisle v. Crane Co., 258 So. 3d 1221, 1229 (Fla. 2018).  In a nutshell, the ruling now finds that those “grave constitutional concerns” over adopting the more stringent Daubert  standard used in federal court now “appear unfounded.” The ruling made Florida the latest state (now the 37th state to do so) to adopt the Daubert  standard and reject Frye.

Daubert  (Daubert v. Merrell Down Pharm, Inc., 509 U.S. 579 (1993)) stems from a 1993 U.S. Supreme Court decision and includes a five-prong test to weigh the scientific validity of expert witness testimony. It creates a higher bar for experts, who, if challenged, may have to attend a hearing and pass judicial muster before they are permitted to testify at trial. Under the Frye standard, experts can testify based on their opinion, bringing evidence that could be somewhat new or novel, not necessarily repeatable or peer-reviewed.

The Florida Legislature passed the Daubert  standard as law in 2013, but the justices had previously ruled in Delisle that separation of powers invalidated that move because only the Court had the power to make it. But now, this apparently sudden “flip” has those of us taking cases to trial in the near future considering whether we now move to strike opposing parties’ experts for failing to meet the more stringent Daubert  standard.

The decision is still being editorially reviewed by the reporters, but we have the decision “hot off the presses.” If you wish a copy of the decision or wish to understand how this important ruling can affect a case you may have, please feel free to write us at blog@miamimaritimelaw.co.