SMALL CLAIMS, BIG IMPACTS: Surge in lawsuits drives up costs for Volusia-Flagler motorists
But something strange happened in 2017.
The number of small claims cases more than doubled, to over 12,000. And a single local law firm accounted for all of that increase -- and then some -- by filing 8,400 cases that year.
It's part of a statewide trend that is holding through the first half of 2018, and its effects are being felt not just in
Suddenly, small claim cases don't seem so small-time anymore.
So what gives?
The spike in cases is part of what insurance industry experts say is a move by some lawyers to make a high-volume business out of filing claims involving motorists in personal injury protection -- or PIP -- cases that help pay for medical care after accidents. Under
In most of the high-volume cases, the attorneys aren't even working on behalf of the injured party. Through a practice known as "assignment of benefits," the accident victim signs over any claim to repayment to the medical provider.
The law also provides for something called "one-way attorney's fees." That means if the insurance company loses the lawsuit or settles for terms unfavorable to it, it must pay the medical provider's attorney's fees. But if the medical provider loses, it doesn't have to pay the insurance company's legal bills.
The combination of assignment of benefits and one-way attorney's fees is prompting some law firms across the state to cash in by suing insurance companies over relatively small amounts that medical providers claim they are owed, said
"There's a whole cottage industry of law firms that have sprung up over several decades," Carlson said. "Their whole practice is not representing the consumer who has been hurt in a car accident. They are representing the medical provider who has provided some medical service to the consumer."
Across
"The point behind the litigation is to get big attorney's fees fighting over low dollar amounts. Unfortunately for your typical consumer of insurance, it means higher insurance premiums because of endless litigation," said
In
After lawyers with the firm filed 257 small claims cases in
When reached by the News-Journal,
Simoes and Davila did not respond to repeated attempts to seek comment for this story. When asked before a hearing in
While it might be easy to blame the lawyers for clogging the system or exploiting a loophole in the law, they aren't the only players. As other lawyers point out, you can't forget the insurance companies.
"It's fine to point the finger at the plaintiffs and say that we are all out trying to make money, but let's not kid ourselves and say that the insurance companies are looking out for anyone's interest but their own," Boltz said in a phone interview. "They always say it causes the premiums and such to increase. If they paid their claims fairly from the outset they wouldn't get sued."
And the insurance industry has been in no hurry to seek reforms, objecting to efforts in the
As a consequence, the
PIP
Personal injury protection, or PIP, provides coverage of up to
PIP claims decreased after the reforms, said
"The average cost of claim was bumping up against the maximum," she said.
State Rep.
Low awards, high attorneys fees
One-way attorney's fees were originally intended to give individual insurance holders, the little guys and gals with the actual policies, a fighting chance against powerful insurance companies that can afford platoons of lawyers.
Some experts believe the benefit of one-way attorney's fees should be limited to the original policyholder, saying a business like a pain clinic or chiropractor should not enjoy that advantage. Combining one-way attorney's fees with assignment of benefits creates too much incentive for lawsuits that are more about ginning up big fees than righting a wrong, said Large of the
The attorney's fees can really ring up the cash register. In one example, Advantacare of
Another case involved Boltz. The PIP lawsuit by Advantacare of
Boltz lay the blame with the insurance company, noting that if it had paid the initial bill, there wouldn't have been any attorney's fees for her to collect.
"We are deriving a benefit for our client," Boltz said. "We are pursuing payment for our client and we are also pursuing payment for ourselves. I'm not a nonprofit. I'm an attorney. I'm looking to make a business. I'm looking to grow a business."
The
"Until I sue them, and until I did their deposition, and until I made it apparent to them they erroneously denied these bills, they weren't going to pay," Boltz said.
Starting in the 1990s insurance companies became more aggressive in paying less on claims and outright denying claims, said
He said some insurance companies will delay paying claims because that allows them to make more money off of the interest from the investments they've made with the money consumers pay for their policies. Delaying payments also increases the chances that a policyholder will settle for less or just go away, Feinman said in a phone interview.
Attorney
"In many instances, the insurance companies don't pay the doctors what they are owed, so a lot of lawsuits get filed by doctors who don't get paid," Robinson said.
'Crushing' caseload
Until
"It is unusual. I'm not really aware of any other case type coming from one firm where we've seen such drastic numbers," Roth said.
"It really overwhelms your staff to triple your numbers in less than a year's time," Roth added. "It really burdens your staff. We've got it under control now, but it was really hard on us at first."
In
"When you multiply activity of this kind by 500, it's crushing to the County Civil Division," Bexley wrote. "I am hopeful these cases will move quickly and we can continue with business as usual."
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