Why do people continually sue property insurance companies? The simple answer, which keeps claims and litigation managers at Florida property insurance companies awake at night, is that it’s their own fault.
It seems counter-intuitive. Insurance companies should want to limit lawsuits. However, they often settle most first-party lawsuits rather than litigate aggressively. Thus, there’s an increase in claims.
From the plaintiff attorney’s side, there is an incentive. Because Florida has a statute providing attorneys’ fees for first-party property lawsuits, plaintiff attorneys file lawsuits because insurance companies often settle rather than go to trial. When insurance companies settle virtually every lawsuit, particularly those without merit, it spurs more lawsuits.
Certainly, when a lawsuit comes in that should have been paid on the front end, looks clearly underpaid, or involves claims decisions that could be misconstrued during discovery, settle it before the defense lawyer incurs fees. But first institute a system to evaluate each case from the beginning —don’t assume cases should always be settled. Blindly allowing insurance defense lawyers to litigate freely, and then maybe settle on the figurative courthouse steps, is not a sound business model.
I’ve heard plaintiff’s attorneys say “[this carrier] settles every case for $7,500 plus fees” or “I sue [this insurer] all the time — they like me and settle after initial discovery.” But what if an insurer earned a reputation for taking cases to trial, instead of automatically paying? The playing field would change enormously.
Claims and liability managers must combat frivolous lawsuits.
Plaintiff attorneys have finite resources to devote to their cases. If an institutional defendant has a reputation of defending claims, attorneys may be reluctant to bring suit unless there’s truly been an egregious oversight.
Plaintiff attorneys — like all attorneys — are eager to make money. So what is profitable? Continually filing lawsuits, regardless of the facts and merit, knowing that insurance companies will pay to settle them.
It’s time for that to change.
Full disclosure: I am a defense attorney, so aggressive defense litigation is good for business. But why do so many insurance companies tell me they hate lawsuits and their litigation budget is too high, yet they continually settle every claim that comes to them?
What I found quasi-amusing about a recent letter by Mr. Shaugnessy about attorney advertising was the settlement figure of a mere $150,000. In my neck of the woods (Buffalo, New York) the minimum advertised settlement/verdict amount is around $750,000, with most ads stressing the $1 million and up settlements and verdicts. Even better than the amounts advertised, though, are the former client testimonials in which a well-dressed, articulate person is standing in their new home explaining how because of their PI lawyer choice they are now “set for life.” The impression I always got from such ads was an implied “and I’m not even really that hurt!” Now that’s surely the PI lawyer I want.
Unfortunately these ads do indeed “help” individuals select a lawyer, notwithstanding the quickly spoken and/or flashed disclaimers that past verdicts and settlements are not indicative of what future clients might expect to receive. Indeed, when the girlfriend of an acquaintance became involved in an auto accident, I did not initially receive a phone call; they were off to the billboard lawyers who brag about the most success. I was deemed worthy, though, of being consulted for a free second opinion after their celebrity lawyers wanted them to agree to a high-low arbitration. Put an upper limit on what they might receive? Why would any lawyer agree to that?
With perhaps a touch of sour grapes, I quasi-politely advised that if they wanted my legal advice about the matter they should have retained me and that I was not really interested in second-guessing another lawyer where I had no involvement in working up the file.
This incident touches on another by-product of verdict/settlement advertising not touched on by Mr. Shaugnessy — client control. As these ads became more prolific and bolder, I did notice that it was getting harder to reel in referrals when I couldn’t opine their claims were worth $1 million and/or persuade some clients that accepting paltry five- or six-figure settlements were really in their best interests. I’m glad I’m a government attorney now and wish Mr. Shaugnessy the best of luck.
According to the December 1 News, our governor and attorney general, both champions of the free market, are supporting efforts to continue federal subsidies for high- risk waterfront building.
The examples given show the change in the economics of this industry and claim it is in peril without federal subsidies.
There is always some pain with such economic changes. The questions that must be answered are whether such non-economical endeavors should be subsidized at all, and, if so, who or what entity is to bear the burden.
If the free market is unwilling to issue affordable insurance coverage, then perhaps it is time for these property owners to accept the risk they bought along with their properties.
We cannot on one hand demand the federal government control its spending and reduce its payments to endeavors we consider undesirable or undeserving, then show up with our hand out. Congress already had this debate on this particular issue; it is time to accept the consequences.
Bruce E. Hoffman
Church and State
Last month, the U.S. Supreme Court heard oral argument in Town of Greece, N.Y., v. Galloway, about what I thought was a long resolved issue. The U.S. court of appeals had ruled that the town violated the First Amendment insistence on separation of church and state, because of the community’s use of an opening prayer at legislative meetings. That was said to have been unconstitutional under the circumstances.
My hometown city commission opens most sessions with an invocation by an invited clergyman or clergywoman. I am not certain, but I believe non-Christians at times have been selected for that honor. I had not heard many complaints about the practice for years.
However, I write that only as a preamble to my primary concern — that is, the separation of church and state as it is reflected in the Florida judicial system.
As a Jew, from time to time, I have been uncomfortable in the Florida judicial system. The first time I can recall such a reaction was upon approaching the closed door to the hearing room where I was about to present an argument. The door contained what I regarded as Christmas decorations, e.g., an angel, a Santa Claus, and other holiday symbols.
Last month, I was reminded of the reason for my discomfort by a syndicated column written by Rabbi Mark Gelman. Rabbi Gelman was writing about Halloween as a secular holiday to be enjoyed by all. But in that column he contrasted that day with Christmas. To Rabbi Gelman, Christmas is a religious holiday, a Christian holiday. He knows some Jews place Christmas trees in their homes. He is not one of them.
But that issue is only the tip of the iceberg of my discomfort with such seemingly minor intrusions into what I have regarded as the most secular of our three branches of government. Why do some judges and justices list their religious activities and duties in their official biographical descriptions?
When I have to appear in front of an appeals judge or justice, as a Jew, I am not happy to learn I will be acknowledging a man who notes that in addition to his judicial duties, he has other activities as an elder in his Christian church.
Justices also have the right under state law to declare judicial holidays, including religious days. This year, the court chose among other holidays, Good Friday and Rosh Hashanah. The local chief judge is entitled to add specified others. In the past, a previous chief had chosen Yom Kippur, the holiest day of the year for Jews. This year the chief judge did not specify any local holidays.
For the first time this year, the local bar association held an annual seminar on professionalism in the law at a church. I understand one topic was how to handle a lawyer who makes things difficult for others in the courtroom. Though I needed ethics credits, I did not attend.
Minimum Mandatory Drug Sentencing
Since the 1980’s the war on drugs resulted in stiff minimum mandatory sentences for drug traffickers caught with boatloads of drugs imported from foreign countries. Somehow the minimum mandatory drug trafficking sentences were amended to include as little as seven prescription pain pills. Somehow, someone addicted to pain medication after an injury was included in this web meant for big-time drug traffickers. This has to stop. We cannot economically handle the drain on our society to prosecute and warehouse these individuals who simply need some drug treatment. These people — our sons, daughters, brothers, and sisters — who suffer pain prescription drug medication addictions can more economically be counseled and treated, as opposed to being warehoused in our prisons and labeled convicted felons.
Rep. Katie Edwards, D-Plantation; Rep. Dave Hood, R-Daytona Beach; and Sen. Rob Bradley, R-Orange Park, have introduced bills which raise the quantity of oxycodone and hydrocodone levels of various minimum mandatory prison sentences. Chair of the Criminal Justice Committee, Rep. Matt Gaetz, R-Shalimar, has agreed to support this proposed legislation, with conditions. These legislators should be applauded by the people of the state of Florida for this display of courage and leadership.
President, Florida Association of Criminal Defense Lawyers