May 2, 2011
TALLAHASSEE, Fla., May 2, 2011 – Associated Industries of Florida today urged state legislators to end the “attorney fee windfall” that allows trial lawyers to more than double their fees in lawsuits involving Personal Injury Protection (PIP) auto insurance coverage.
Under current law, plaintiff’s attorneys can utilize a “contingency fee multiplier” that allows them to increase their legal fees by 250 percent in PIP cases. This fee multiplier incentivizes attorneys to file thousands of questionable lawsuits, and increases the cost of auto insurance for all Floridians.
On Sunday night, Senate Budget Chairman J.D. Alexander, R-Lake Wales, and House Appropriations Chairwoman Denise Grimsley, R-Sebring, demonstrated strong leadership by inserting language into a state budget bill to eliminate the contingency fee multiplier in PIP cases. AIF President Barney Bishop praised the two legislative leaders for their effort, and urged their colleagues in the House and Senate to follow their lead and support an end to the “attorney fee windfall” in PIP cases.
“The contingency fee multiplier is an unneeded outrage that doesn’t belong in Florida law,” Bishop said. “It has spawned a cottage industry of PIP litigation that generates billions of dollars in attorney fees, increases the costs of auto insurance for all consumers and makes it more expensive to do business in Florida. Even without this fee multiplier, there will be no shortage of trial lawyers willing to take on PIP cases.”
Bishop noted that a recent report by the Florida Office of Insurance Regulation found that between 2006 and 2010, the number of closed PIP claims rose 40 percent and claims payouts by auto insurers rose 66 percent – at the same time the Florida Highway Patrol was reporting that there were 33,000 fewer traffic crashes in Florida between 2005 and 2009.
“Lawmakers should ask themselves: How could the number of PIP claims and settlements go up at the same time that the number of auto accidents is going down?” Bishop asked. “The answer is that we’ve tolerated a legal compensation system that encourages the plaintiff’s attorneys to sue out of control.”
In the vast majority of PIP cases, the insured driver or passenger receives medical treatment for their injuries, but plaintiff’s lawyers’ press ahead with their lawsuits on behalf of medical providers or referral services, often over very small dollar amounts in dispute. In one case, Bishop noted, a dispute over a $209.97 medical bill yielded $19,500 in legal fees to the attorney in the case.
“The main reason that plaintiff’s attorneys are howling about this decision to eliminate their fee multiplier is that it will help end the abuse of the PIP legal system – these lawyers aren’t worried about consumers,” Bishop said. “While elected officials have paid a great deal of attention this session to rooting out fraud in the PIP system, they must also address the outrageous legal fee awards that are at the core of the problem.”