The Judicial Hellholes® report calls attention to several additional juris- dictions that bear watching. These jurisdictions may be moving closer to or further away from a designation as a Judicial Hellhole®, and they are ranked accordingly.
While Governor Ron DeSantis and the Florida Supreme Court consistently take affirmative steps to address litigation abuses in the Sunshine State, the Florida Legislature lags in these efforts. We applaud the legislature for enacting reforms during a special session to address the ongoing property insurance crisis in the state, but much work remains to be done if the state is
to be removed once and for all from the Judicial Hellholes® report.
Lawsuit abuse and excessive tort costs wipe
out billions of dollars of economic activity annually. Florida residents pay an annual “tort tax” of $812.52
per person and more than 173,000 jobs are lost each year, according to a recent study by The Perryman Group. If Florida enacted specific reforms targeting lawsuit abuse, the state would increase its gross product by over $17.66 billion.
RISING COSTS OF LITIGATION IN THE STATE
Nuclear Verdicts Drive Up Cost Of Litigation
From 2010 to 2019, Florida produced the most nuclear verdicts (213) of any state in the country according to a recent study by the U.S. Chamber. The 213 verdicts totaled $35 billion. When the number of Florida’s nuclear verdicts is compared to population, the state fares even worse. Florida had, by far, the most nuclear verdicts per capita over the 10-year span. Florida barely edged out California (211) for the top spot; how- ever, the Sunshine State has almost half the population of the Golden State, making its No. 1 ranking even more concerning. Nearly two thirds of Florida’s nuclear verdicts in personal injury and wrongful death cases were in product liability and auto accident cases, which is far above the national average.
Two recent judgments levied against trucking companies exemplify the nuclear verdict risk for commer- cial drivers facing a personal injury lawsuit in Florida. In 2020, a jury delivered a $411 million verdict against Top Auto for a highway collision caused by one of the company’s truck drivers. In a similar case decided last year, another jury handed out a $1 billion verdict, inflated by $900 million in punitive damages.
The prevalence of nuclear verdicts in Florida can be attributed to a handful of issues including inflated medical damages, the abuse of letters of protection, and large punitive damages awards. According to the U.S. Chamber report, “Florida is also more prone to punitive damage awards than other states. Forty per- cent of nuclear verdicts in Florida included a punitive damage element compared to 26% nationally.”
Trial Lawyer Advertisements Fill The Airwaves
Trial lawyers are well aware of the Florida courts reputation for nuclear verdicts, and as a result, spend hun- dreds of millions of dollars on advertising trying to find their next “goose that lays the golden egg.”
From 2017-2021, viewers in Florida saw the most local legal services ads on television than viewers in any other state and trial lawyers spent more money on these ads than in any other state. During this five- year span, trial lawyers spent over $885 million on 9.35 million local advertisements on television, radio, and outdoor billboards and signs. Between January and August 2022, trial lawyers spent $94.6 million on more than 1.03 million local television ads alone.
LITIGATION ABUSES CONTRIBUTE TO STATE’S PROPERTY INSURANCE CRISIS
Florida is home to more property insurance lawsuits than the rest of the country combined. While Florida accounts for only 7 percent of the nation’s homeowners’ claims, the state accounts for 76 percent of the nation’s homeowners’ insurance lawsuits. In 2021 in Florida, there were 100,595 lawsuits resulting in $7.8 billion in damages. Outside of Florida, in 2021, there were 24,700 lawsuits resulting in $2.4 billion in damages.
The cost of defending these lawsuits in Florida has increased exponentially over the past several years. In 2016, insurers paid $1.5 billion defending these lawsuits and that number doubled to $3 billion in 2021. Unfortunately, the consumers are not reaping the benefits from this increase. 71% of the money goes to the plaintiffs’ attorneys while plaintiffs receive a mere 8 percent. The remaining 21 percent pays for the defense attorneys.
The property insurance crisis has a very real impact on Floridian property owners and insurers. As of August, five insurance companies had gone out of business in 2022, after 4 exited the market in 2021. This has led to a massive shortage of coverage at a time when Floridians impacted by Hurricane Ian are in des- perate need. Florida Citizens, the state’s insurer of last resort, has seen a huge spike in policy holders as a result. They issued 760,000 policies at the end of 2021 and are projected to have issued over 1.2 million by the end of 2022.
Losses from recent Hurricane Ian are projected to hit $67 billion, with high-end estimates coming closer to $74 billion. Within two weeks of the storm, over 500,000 claims were filed in Florida cumulatively claiming an insured loss of over $5 billion. Sadly, less than 20 percent of the homes in the most-heavily impacted Florida counties had flood insurance due to the recently rising rates. While many will rely on Florida Citizens, it is underfunded and most likely won’t be able to cover the massive losses from Hurricane Ian.
Litigation abuses are some of the driving forces behind the rising costs of litigation. State leaders, including Governor DeSantis, have recognized the impact the state’s civil justice system is having on the property insurance crisis.
The state’s litigation environment has bred
schemes arising out of Hurricanes Irma (2017) and
Michael (2018). The current property insurance
and housing crisis has been fueled by contractors
exploiting assignment of benefit loopholes in Florida insurance law and a run of assignee-friendly court decisions. “Florida is the most volatile property insurance market in the country, and it is on the verge of collapse,” said Mark Friedlander, spokesman for the Insurance Information Institute.
The scheme involves a contractor approaching a homeowner and asking if he or she wants the con- tractor to complete a free inspection from storm damage. After the inspection, the contractor tells the homeowner there is roof damage, but not to worry because the contractor can get a new roof for free through insurance and the homeowner doesn’t have to do anything. This typically leads the homeowner to assign his or her rights over to the contractor, who then files an insurance claim and sues the insurer when it balks at paying for the new roof. The insurance companies tend to settle for much more than the original claim value to avoid paying attorneys’ fees, especially because of fee shifting and contingency fee multiplier that massively increase costs if a court finds against the insurer. As pointed out by Senator Jeff Brandes, “Ultimately the victim is every Floridian who is buying their neighbors’ roofs.”