Category(s): Florida - 02/01/2012

On December 7, 2011, in Bay Farms Corp. v. Great American Alliance Ins. Co., 2011 WL 6099367, the U.S. District Court for the Middle District of Florida granted an insured's motion for partial summary disposition, ruling that Senate Bill 408's ("SB 408") amendment providing a definition for the term "structural damage" could not be retroactively applied to the insurance policy in that case.  The relevant policy defined a sinkhole loss as: "structural damage to the building, including the foundation, caused by [sinkhole activity]." The policy did not define structural damage and incepted before SB 408 was enacted.

The parties filed cross-motions for partial summary judgment on the issue.  The Court ruled that the amendment is not a true "clarification" of existing law, and that it is a substantive amendment that cannot be applied retroactively.  Premising its decision on the fact that this amendment provided an entirely new definition for a previously undefined term, the Court also relied on the fact that the Florida Legislature amended this section several times without providing a definition of the term "structural damage."  The Court agreed with Bay Farms' argument that, simply by using the term "structural damage" in 2005, the Legislature could not have intended the highly technical definition provided by SB 408.  While the Court found that SB 408's definition does not apply retroactively, it did not define the meaning of the term structural damage prior to SB 408, inasmuch as the carrier conceded that coverage would have been afforded if SB 408's definition did not apply.

This decision is not appealable at this stage of the litigation.  However, the Court may always reverse this decision later in the litigation, and depending on the outcome, Great American may file an appeal.  Additionally, because this is only a trial court decision, it is not binding authority on other cases.

Richard J. Fidei, Esq. - GREENBERG TRAURIG LLP, (954) 592-5530

Category(s): Florida - 02/01/2012

Florida Insurance Consumer Advocate Robin Smith Westcott presented the final report from her Personal Injury Protection Working Group to the Florida House and Senate leadership on December 15, 2011.   She had assembled the Working Group at the request of Florida Chief Financial Officer, Jeff Atwater, to address the skyrocketing cost of PIP insurance coverage to Florida consumers.  The Working Group meetings yielded the data presented in the report, which can be viewed by clicking here.  Related data can be accessed by clicking here.

Richard J. Fidei, Esq. - GREENBERG TRAURIG LLP, (954) 592-5530

Category(s): Florida - 02/01/2012

Personal Injury Protection (PIP) insurance reform has been a hot topic in Florida’s 2012 legislative session.  Fraudulent claims plague the market, causing rates to increase.  After significant study, the legislature seeks to revise Florida’s PIP laws to deter fraud while ensuring that emergency care remains available.

Travis L. Miller, Esq. - RADEY LAW FIRM, (850) 425-6654 , tmiller@radeylaw.com

Category(s): Florida - 02/01/2012

In Cruz v. Cooperativa De Seguros Multiples De Puerto Rico (Fla. 2d DCA, December 30, 2011), the Second District Court of Appeal has upheld the neutral evaluation process for sinkhole claims established in section 627.7074, Fla. Stat.  This case is the state's first appellate decision to construe the statute since its enactment in 2006.  In Cooperativa, the carrier and the insured disagreed over a sinkhole claim and the carrier invoked "neutral evaluation."  The insureds, however, sued the carrier for breach of contract.  Pursuant to the neutral evaluation statute, the trial court entered an order staying the lawsuit until completion of the evaluation process.  The insureds sought to lift the stay, arguing that the neutral evaluation conference was not completed within 45 days as mandated by statute thereby denying the insureds access to the courts.  The insureds also argued that the stay provision of the statute was a procedural rule and, therefore, was unconstitutional and an infringement on the Florida Supreme Court's rule-making authority.

The Second District Court of Appeal held that any delay or inconvenience while the neutral evaluation process is completed does not demonstrate sufficient irreparable harm to invoke the appellate court's certiorari review.  The court found that neutral evaluation process is intended as an alternative dispute resolution, and is non-binding, so there is no validity to the insureds' argument of lack of access to courts. The court further held that the stay provision is sufficiently intertwined with substantive provisions so that it is not an unconstitutional violation of separation of powers.

The court added that even though the statute requires that neutral evaluation "shall" be completed with 45 days, the lapse of that period does not bar any statutory or contractual policy right of the carrier to neutral evaluation.  The court reasoned that the evaluation is an informal process in which formal rules of evidence and procedure need not be observed, which suggests that the legislature intended no sanction for failure to strictly adhere to the time period.  The decision is not final until the time expires to file rehearing motion.

To view the opinion, click here.

Richard J. Fidei, Esq. - GREENBERG TRAURIG LLP, (954) 592-5530

Category(s): Georgia - 02/01/2012

On February 10, 2012, the Georgia Department of Insurance adopted Regulation 120-2-20-.03. This regulation prohibits contract provisions in agreements between healthcare providers and insurers that: (i) grant an insurer the option to prohibit a provider from contracting with another party at a lower rate than the payment or reimbursement rate specified in the contract; (ii) grant the insurer the option to require a provider to accept the lower payment or reimbursement rate if the provider agrees to provide healthcare services to another party at a lower rate or gives the insurer the right to terminate; (iii) allow an insurer to renegotiate an existing contract based on another party receiving lower rates than it receives; or (iv) require a provider to disclose the provider's contractual payment or reimbursement rates with other insurers.  The definition of provider includes physicians, hospitals or other person who is licensed or otherwise authorized in the state to furnish healthcare services. The regulation does not apply retroactively, but the Department has stated that it will act if it finds that any insurer is enforcing a most favored nation clause.

Tony Roehl, Esq. - BAKER HOSTETLER LLP, (404) 256-8419 , troehl@bakerlaw.com

Category(s): Georgia - 02/01/2012

The Georgia Court of Appeals held that the trial court did not abuse its discretion in prohibiting any mention of Werner Kralick’s (“Kralick”) failure to add an ATV involved in the accident at issue to his automobile policy. The Court of Appeals held that Kralick’s failure to add the ATV to the policy had no bearing on the issue of coverage because the accident occurred two weeks after Kralick acquired the ATV and his automobile policy, issued by GEICO, contained an automatic insurance clause pursuant to which coverage of newly-acquired vehicles was effective during a 30-day notice period irrespective of whether notice of acquisition had been given.  The Court of Appeals also affirmed the grant of a directed verdict to GEICO as to Kralick’s umbrella policy because the evidence established that Kralick received the policy, which contained an amendment excluding from coverage motorized vehicles designed primarily for off-road use.

Brian T. Casey, Esq. - LOCKE LORD LLP, (404) 870-4638 , bcasey@lockelord.com

Category(s): Louisiana - 02/01/2012

The Louisiana Department of Insurance has released a Notice of Intent in the January edition of the Louisiana Register proposing Regulation 100 pertaining to the recently enacted Coverage of Prescription Drugs through a Drug Formulary Subpart of the Louisiana Insurance Code. Proposed Regulation 100 includes provisions intended to clarify and implement the Drug Formulary Subpart, which establishes certain restrictions and requirements for health insurance companies issuing health benefit plans that cover prescription drugs and that use one or more drug formularies to indicate the prescription drugs covered under such plans.

The Drug Formulary Subpart requires a notice in "plain language" to each enrollee of any affected health plan that the plan uses a drug formulary and certain other information. Proposed Regulation 100 uses this requirement as the basis for the first of "three different and distinct types of notice" that a health insurance plan issuer must provide to its enrollees.

The full Notice of Intent regarding Louisiana Department of Insurance Regulation is available here.

Van R. Mayhall, III - Investar Bank, (225) 227-2309 , van.mayhall@investarbank.com

Category(s): Tennessee - 02/01/2012

Two Haslam Administration bills proposed by the Tennessee Department of Commerce and Insurance are under active consideration by the Tennessee General Assembly, with passage expected later this Spring.  The first measure (SB 2201/HB 2339) permits the Commissioner of Commerce and Insurance to share confidential information with other state, federal or foreign regulators provided the recipients maintain confidentiality and also modifies the definition of “company level action event,” and the second bill (SB 2202/HB 2240) permits broker/dealers as well as insured depository institutions to serve as custodians to insurers.

T. Stephen C. Taylor, Esq. - BASS, BERRY & SIMS, PLC, (615) 742-7758 , staylor@bassberry.com
Robins H. Ledyard, Esq. - BASS, BERRY & SIMS, PLC, (615) 742-6259