Tort Reform

HB 145 by Rep. Don Brown and its Senate companion SB 2006 by Sen. Dan Webster repeal the doctrine of joint and several liability and provide for meaningful tort reform in Florida.

As a member of the Florida Justice Reform Institute (FJRI), the FICPA has fought for the repeal of the doctrine of joint and several liability for nearly a decade. This is a huge victory for the business community and CPAs across the state.  The FICPA supported this legislation because:

• Joint-and-several liability is an unfair concept that lumps together the most responsible and the least responsible parties named as defendants into one lawsuit and holds them financially responsible at the same rate;
• Under current Florida law, a CPA could be forced to pay 100% of damages for a claim even if they are only partially or minimally responsible;
• A fair and equitable justice system would dictate that if an individual or business is 25% at fault, they should be liable for 25% of the damages – not for 100% simply because they have deep pockets.

At 12:35 p.m. on Thursday, March 30 the Senate voted 27 to 13 to pass HB 145 the House passed the bill by a vote of 93 to 27 on March 16.  It was signed by Governor Jeb Bush on April 26. HB 145 FICPA Legislative & Regulatory Policy Actively participate in the legal process of the 1999 tort reform/liability insurance legislation, and encourage the Florida Legislature to enact further tort reforms, including, but not limited to, the following:

• Repeal or replace the doctrine of joint and several liability with reasonable thresholds at which proportionate liability becomes effective.
• Reasonably limit punitive damage awards.
• Establish a maximum or reduced level for contingent fees, such as attorney’s fees.
• Support a uniform statute of limitations for actions against CPAs based on one year from the date the alleged act, omission or neglect is discovered, or should have been discovered by the exercise of reasonable diligence. However, in no event shall the action be commenced later than three years after the service for which the suit is brought has been performed, or the date of the initial issuance of the accountant’s report on the financial statements or other information, whichever comes first.

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Appeals Bond Caps

The FICPA worked diligently with a group of nearly 15 different companies and organizations to support caps on appeal bonds.  The two bills the group put forward were HB 841 by Rep. Frank Attkisson and SB 2250 by Sen. Daniel Webster.

When a party loses a judgment, bond must be posted equal to the amount of judgment in order to prevent the prevailing party from seizing the assets while the judgment is under appeal. With the increase in lawsuits and the increased judgments, the losing party can no longer afford the cost of the bond, which forces the business into bankruptcy or unfairly forces the business into a settlement to protect its business.

Originally HB 841 would have provided for a $25 million cap for an appeals bond for companies with more than 400 employees.  For individuals and companies with less than 400 employees, the appeal bond cap will be $1 million or one percent of net assets.  After working on a lobbying team with 15 organizations and companies supporting this change, many hours of negotiations between the House and Senate, and push back from the trial bar, the final product contained in HB 841 includes a $50 million hard cap on all appeal bonds, subject only to a yearly Consumer Price Index adjustment.  For judgments of less than $50 million, the judge is authorized to reduce or eliminate a bond for good cause shown, but not if insurance is available.

At least 25 states either have no bonding requirement at all or have enacted appeal bond reforms that cover all defendants and all types of judgments, including other southern states such as, Georgia, North Carolina, Texas and Virginia.

At least 11 other states have passed legislation capping appeal bonds in certain types of cases and for certain types of damages.  There are only 12 states in the union that have not enacted some form of appeal bond caps – though many of these states are considering reform now.  South Carolina is presently considering legislative reforms to lesson the burden of appeal bonds.

HB 841 passed the House 119-0 on May 2 and the Senate 40-0 on May 4 and is awaiting approval by the Governor.