Tort Reform

Hypocritical Responsibility

The Academy of Florida Trial Lawyers President's Message
Alexander M. Clem President
January 1, 2005

Florida has been ranked by Chief Executive magazine as the third-best business state in the country. Nevertheless, the business special interests have made “tort reform” their number one priority for the upcoming legislative session. Associated Industries of Florida (AIF) has already begun advancing its 29-part, 122-page omnibus “tort reform” bill, more appropriately labeled AIF's “big insurance and big business welfare” bill. It covers a broad range of issues, from limiting insurers' duty of good faith, to abolishing joint and several liability, to drastically reducing a nursing home resident's rights. Some of the other issues AIF is pushing include limitations on lawsuits for negligent security and product liability, class actions and attorney's fee limitations.

AIF, along with over 40 other business organizations and companies who refuse to step forward and be identified, has created the Florida Coalition for Legal Reform to promote this draconian bill that one newspaper recently labeled, “the mother of all tort reform bills.” AIF President Barney Bishop acknowledged the legislation is an extreme wish list and he does not expect all of its 29 parts to pass. It is readily apparent that AIF is simply throwing these outrageous “tort reform” ideas on the wall to see what sticks. Simply put, the current push for “tort reform” is based upon bad politics, not good public policy.

There is No Tort “Crisis” in Florida – Insurance Companies are Making Record Profits  

AIF and the insurance industry claim these sweeping “tort reform” measures are necessary to protect Florida's businesses from high insurance premiums caused by litigation. However, contrary to these claims, insurance companies are posting record profits:

• U.S. property and casualty insurance companies increased profits by 1000 percent in 2003 over 2002 to $29.9 billion.(1) For the first half of 2004, the property and casualty insurance industry's after-tax net income was the highest ever: a record-breaking $23.5 billion.(2) And in 2004, the property and casualty industry's surplus reached over $370 billion, its highest level ever.(3)
  
• In November 2004, Florida's largest medical malpractice insurer, First Professionals Insurance Company (FPIC), reported that their yearly profits through September 2004, increased 81 percent ($21 million vs. $11.6 million) over last year's profits in the same period. Also in November, FPIC's stock climbed to the highest it had been since the summer of 1999.
  
• The nation's HMOs nearly doubled their net profits in 2003, earning $10.2 billion in 2003, up from $5.5 billion in 2002 (an 86 percent increase), according to Weiss Ratings.(4) Some examples of managed care companies' profits are:
  
  
  • Blue Cross Blue Shield plans – 63% increase in profit
    
  • Kaiser Foundation Health Plan – $995.5 million profit
    
  • Physicians Service – $314.2 million profit
    
  • Group Health Cooperative – $187.8 million profit
    
  • Aetna Health – $129.8 million profit

In 2003, these same insurance companies duped the Florida Medical Association into supporting bad faith reforms and caps on damages with the promise of lower premiums. Despite these promises, Florida's doctors received no insurance relief. We must expose the insurance industry's “Big Lie” to the Florida Legislature.

AIF is not alone in this “big insurance and big business welfare” movement. The Florida Chamber of Commerce recently created its own front group called the Florida Justice Reform Institute to promote other “tort reform” measures this session relating to product liability. These bills are more of a “Lobbyist Relief Act” than a call for needed reforms. The “tort reform” lobby has presented nothing but anecdotal evidence to support their claims and they have no statistical or empirical evidence that supports the need for reform, yet they persist with their unnecessary and absurd legislative proposals.

AIF and the insurance industry are waving the banner of “personal responsibility” to justify their push for big insurance and business welfare. At their press conference announcing the bill, AIF president Barney Bishop said, “There needs to be a sea change in Floridians' attitudes. Each of us must accept personal responsibility.” This begs the question, shouldn't insurance companies and businesses also accept personal and corporate responsibility? It is the ultimate hypocrisy for insurance companies and businesses to ask Florida's citizens to give up their rights when businesses are unwilling to do the same. Fairness in the marketplace, after all, has always been the American way.

The Bottom Line  

The big insurance and business lobbies only want to protect their financial bottom lines. If these businesses truly believe their cause is just, why are over 40 of the coalition members acting anonymously through AIF? This unnecessary debate on “tort reform” is designed to eliminate the “personal accountability” of these industries and eviscerate the rights of Florida's citizens. We cannot let this happen. We have fought this battle many times before and we must continue to do whatever it takes to defeat this arrogant assault on our civil justice system and the people of Florida.

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1 Insurance Services Office, Inc. (ISO), April 2004.
2 Insurance Services Office, Inc. & Property Casualty Insurers Assoc. of America, “Property/Casualty Industry's First-Half Income and Surplus Rose on Strong Underwriting Results and Investment Gains,” October 18, 2004.
3 Ibid.
4 Jacksonville Business Journal, “HMOs nearly double profits in 2003,” 08/30/04