More Increases In Homeowner Insurance Rates…but why?

It’s interesting to me that the recent increase in sinkhole claims is one of the reasons why Citizens Property Insurance Corporation is asking the Office of Insurance Regulation for an average rate increase of 8.4% on private homes, according to a recent article in the Insurance Journal.

Recently, there has been some debate in the newspapers regarding the reasons why there have been an increase in sinkhole claims. Regardless, everyone agrees that the number of sinkhole claims has increased. In defending these types of property lawsuits, I continue to see a steady flow of new sinkhole lawsuits coming in. So, I have no doubt that the actuaries at Citizens accurately determined that the rate increase is needed. What I find most interesting is that Citizens is experiencing what many of Florida’s private insurers forecasted two years ago.

In 2008, State Farm asked for a rate increase that attracted the scrutiny of Governor Charlie Crist and others. Shortly thereafter, Nationwide announced that it was non-renewing 60,000 homeowners’ policies in Florida. At that time, it seemed that both the governor and the media tried to cast the insurers in a bad light, making it appear to be about corporate greed, rather than the rising costs of handling and litigating these claims. When it looked like State Farm may have to leave Florida, Crist made statements such as, “good riddance” and “Floridians will be much better off without them.” I couldn’t understand how he could truly believe it would be better for Floridians to decrease competition and lose our largest insurers.

After Nationwide made their announcement, I gave a lengthy interview to a local news station (that was highly edited down to a few sound bites). During the full interview, I made the point that if the government believed that Florida had sufficient private insurers, then government should let the market set the rates; otherwise, Floridians would no longer have the option to purchase insurance from some of the largest insurance companies.

I thought losing the big companies in Florida would be bad for Floridians…I thought the consumers should have the choice…I also thought this would still allow the “take out” companies to continue to grow as Citizens had a surplus inventory of policies that it could continue to move to these growing insurers.

Michael Bennett, a senator from Bradenton, helped sponsor a bill that would’ve deregulated insurance rates and provided Florida consumers with a choice of shopping rates when purchasing insurance. If a consumer wanted to pay less for homeowner’s insurance there were many companies that were simply willing to charge less. Despite voter approval for Senator Bennett’s bill by the people of Florida, Governor Crist vetoed it.

During the same time period, Governor Crist signed HB 1495 which allowed for a 10% increase in more than one million Citizens’ policies. The rates didn’t increase that much in 2009 and were capped at 10% through 2010. However, now that it looks as though Citizens needs another 8.4% increase in rates, it really seems to add credence to what the private insurers were saying two years ago. The reality is in Florida that the costs of hurricane claims and sinkhole claims are very expensive. Of course, Florida also has a large market of Public Adjusters and Attorneys, who make their livelihoods by litigating these claims; driving the costs of these claims even higher. I don’t think that there is any doubt that the expenses for these companies have escalated to the point of needing rate increases to stay in business. To really protect Florida consumers, the legislature needs to identify what is driving the increase in claims and expenses and act to eliminate those costs, which would prevent the necessary rate increases.

Author Judd Goodall

Increase in Florida sinkholes – or just in sinkhole claims?

To read various internet commentary or blogging websites (authored primarily by Plaintiffs’ attorneys), one might think that West Central Florida is suffering from uncontrollable sinkhole activity; and according to many of these attorneys, this epidemic is spreading throughout Florida. While there is little dispute that the sheer number of sinkhole claims has increased, the question we might be asking is; why are we seeing the increase in claims for these kinds of losses?

Is there really a significant increase in Florida sinkhole activity, or merely an increase of sinkhole claims? Is this due to Florida geology? Or are these claims driven by marketing tactics made by savvy Plaintiffs’ attorneys in the hopes of exploiting the fee shifting framework of Florida Statute §627.428 as part of their business model?…Hmmm.

There are tremendous marketing efforts targeting homeowners to make sinkhole claims with the assistance of a lawyer; where none existed in years past. For example, in the last few months, several Plaintiff oriented law firms have erected billboards in eastern Hillsborough County as well as many new similar billboards placed along major highways running into Marion & Alachua Counties. These areas had barely been touched until recently.

Without a second’s thought, I can personally name ten lawyers that have left the insurance defense practice to build a Plaintiff’s practice relating to sinkhole claims within the last year. Many of these lawyers have blogs, websites, billboards, and send out mass mailers to potential clients. Wouldn’t it be naive to believe that all of the Plaintiffs’ attorneys are looking out for the welfare of Florida homeowners, and not just simply increasing the numbers of claims? Working in this industry and understanding the tremendous profitability for those that represent homeowners in claims against the insurance industry, I have to a conclude the most compelling reason for the increase of these claims is simply due to the marketing efforts of Plaintiffs’ attorneys, Public Adjusters, and even some of the ground stabilization companies.

According to the Tampa Tribune, sinkhole claims have doubled for Citizens Property Insurance Corp. from 2005 – 2009. Recently, the Florida Office of Insurance Regulation (OIR) has undertaken an effort to determine why the number of sinkhole claims in Pasco, Citrus & Hernando Counties has increased and, why there are increasingly more claims in places such as Marion, Manatee, Hardee & Hillsborough Counties. It will be interesting to see if the OIR determines this problem actually lies beneath the surface or, once the surface of these claims is scratched, the support for these claims themselves collapse. Click here for article from Tampa Tribune.

Author Judd Goodall

Reporting Medical Errors

There are multiple beliefs as to how the reporting of “medical errors” affects the filing of malpractice lawsuits. One thing is certain: the error rates of hospitals will be tracked, and, in 2014, Medicare will cut payment by one (1) percent to hospitals with the highest rates of patient safety issues. In 2003, Minnesota became the first state to require reporting of events contained in a list drafted by the National Quality Forum (NQF). This list is made up of surgical, product of device, patient protection, care management, environment, or criminal events.

According to the NQF, Minnesota has since been joined by at least ten (10) other states, with others considering implementing a reporting requirement.

The State of Indiana recently released information concerning its reporting of “never events,” which are exactly what it says – events which should never occur. Indiana hospitals and surgery centers reported more than a ten (10) percent decrease in errors between 2008 and 2009, described as the state’s fourth year of reporting. This reduction will certainly be important in the attempts of Indiana’s hospitals to continue to receive the highest level of Medicare payment, a significant factor in increasing a hospital’s bottom line.

A recently released study, commissioned by the Society of Actuaries, revealed that medical errors and the resulting problems cost the U.S. economy $19.5 billion in 2008. The study provided that bed sores were responsible for the highest annual error cost, which was approximately $3.9 billion. This statistic certainly indicates one area in which all efforts for reduction of instances must be explored. In 2009, Indiana reported only twenty-two (22) instances of bed sores in statewide reporting by hospitals, surgery centers, abortion clinics and birthing centers, representing the fewest number since the inception of such reporting.

The implementation of an in-house reporting of medical errors system, similar to that discussed by the NQF, could prove to be useful to all medical providers. Looking at the Indiana example, the reporting and acknowledgment of certain problems, such as patients developing bed sores, assisted the medical providers statewide in reducing such instances. With statistics showing that the highest annual cost for medical errors is attributed to bed sores, placing a focus upon internal reporting as well as the development of means of prevention within hospitals and nursing homes is essential. During these times of transition and adapting to the new era of health care reform, quality improvement and efficiency are emerging as not only issues with respect to malpractice litigation but also as pertains to the continue receipt of Medicare funding. Even if internal reporting currently exists within a facility, conducting an analysis to make such reporting more efficient and effective will be beneficial in both the short and long term.

Author Drew Rothman

Chain of Command

On August 25, 2010, the Superior Court of New Jersey issued an Opinion in the medical malpractice case, Kowalski v. Palav (click here to view case). The Opinion raises the question of how a trial court should handle testimony that is relevant to the failure of a hospital staff to follow “chain of command” procedures but unduly prejudicial to the doctor who allegedly provided negligent treatment and care.

Plaintiff filed a lawsuit alleging among other things that the attending obstetrician was negligent for failing to perform a timely C-section which led to severe birth defects. Prior to the decision to perform a C-section, the attending nurse became worried about the viability of the baby due to her readings of the fetal monitoring strips. She appealed to the obstetrician to perform a C-section but he continued to believe it was not necessary. The attending nurse went up the chain of command to the charge nurse to overturn the decision of the obstetrician. The charge nurse did not bring the attending nurses concerns to anyone’s attention. As a result, the attending nurse sought out the director of nursing and requested she speak to the chief of obstetrics. The director of nursing did not. As a result, Plaintiff also filed a claim against the hospital alleging negligence due to the failure of the chain of command process to work as per hospital guidelines.

During trial, the defendants objected to the testimony of the attending nurse concerning her interpretations of the fetal heart rate after 9:01 p.m. The defendants alleged that the testimony would be highly prejudicial to the treating physician. The trial court permitted the testimony to establish the reason the attending nurse went up the chain of command but not to prove that the treating physician breached the applicable standard of care. The trial court suggested it would provide the jury with a limiting instruction consistent with the ruling. The Hospital objected to the plan and the trial judge asked the parties to reach a decision on what to do. When the parties could not reach a decision, the trial judge said “Let the chips fall where they will. I’ll say nothing.” A week later, the judge decided to issue the limiting instruction. Later, the attending nurse and the hospital were dismissed from the case. As a result, The trial judge instructed the jury that they could not consider the testimony of the attending nurse on the fetal monitoring strips after 9:01 pm for any reason.

The Superior Court reversed and remanded for a new trial. The Superior Court did recognize the relevance of the testimony of the attending nurse as to her factual observations but she was not qualified to present testimony that inferred that the physician deviated from the applicable standard of care. Since, the jury heard expert testimony concerning the fetal monitoring strips from Plaintiff’s experts and would hear such testimony from Defendant’s experts, the testimony should have been excluded as prejudicial. The Superior Court also noted there was sufficient non-prejudicial fetal heart rate evidence that exclusion of the prejudicial evidence would not affect the ability of Plaintiff to present that claim.

The Superior Court speculated that a contemporaneous limiting instruction would have been sufficient to quell the prejudicial effect of the testimony. However, the trial judge’s stated reason for the delay in providing a limiting instruction were unavailing. The trial judge stated he wanted to hear the obstetrician’s testimony about the fetal monitoring strips and determine whether the readings were reliable before offering the limiting instruction. The Superior Court was not persuaded since Plaintiff’s experts already testified to the unreliability of the fetal monitoring strips.

Author Marc Penchansky

Mental Lethargy

“Mental Lethargy”. What is this exactly? This morning, I read an old 1950’s case from the Florida Supreme Court wherein the court referenced a certain “mental lethargy” by motor vehicle drivers that produced an appalling accident rate. It made me think, what did the Florida Supreme Court justices think constituted such “mental lethargy”? In the fifties, would this be conversing with your passengers, looking out the window, or even daydreaming? Would listening to the radio or messing with its dial constitute a “mentally lethargic” act? And how would those judges view the distractions of today’s drivers – cell phones, texting, Facebook messaging, DVD players, MP3 players, Navigation systems…

In our ever evolving times, the judicial system is forced to keep up with technological advances where the legislature lags behind. Florida is an excellent example of a legislature woefully behind the times on this issue. While nearly 30 states have instituted various bans on using handheld cellular telephones or text messaging, Florida’s legislature remains silent on the issue therefore requiring judges to forge new territory. In Florida, at least, the issue arises in the context of an automobile accident where considerations of a driver’s cellular phone usage play a critical role in considering whether he safely operated the vehicle. In those cases, the court cannot point to a specific statutory violation and must determine whether, in the words of the 50’s Florida Supreme Court, the driver was exercising “the slightest attention to his surroundings…”

Interestingly, younger drivers seem confident in their ability to overcome such “mental lethargy” by multi-tasking and dividing their attention between such complex activities as texting, talking to their passengers, listening to the radio and, dare I say, DRIVING! Nevertheless, whether a younger generation possesses a seemingly superior mental vigor; until Florida’s legislature gets with the times, judicial maneuvering will have to suffice.

Author Kimberly Potter

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