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Flood insurance, HMO liability legislation clear Senate committee

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A Senate committee approved bills Tuesday that would encourage Florida insurers to write flood insurance as an alternative to expensive federal coverage, and would allow patients to sue HMOs for declining to cover doctors’ treatment recommendations in bad faith.

“Why shouldn’t the HMOs be held liable for the decisions they make and the doctors aren’t making, and people are dying? I just don’t think that’s equitable,” said Sen. Greg Steube, the Sarasota Republican behind SB 262, the HMO bill.

Existing law exempts HMOs from liability for treatment decisions by doctors with whom them contract to treat patients.

“What other businesses are prohibited by law from being sued from decisions they make that actually kill people?” Steube said following the committee’s 6-3 vote to approve his bill.

The measure would repeal legal protections for HMOs for vicarious liability for medical negligence unless the doctor is an employee. It also would create a cause of action for bad-faith refusal to provide a treatment recommended by a doctor.

Sen. Gary Farmer, a Democrat and a trial attorney from Broward County, said he entered the law after the mother of the best man at his wedding died after being denied a new treatment for the fatal side effects of chemotherapy and radiation treatments.

“I just do not believe a good-faith argument can be made that in a situation like that, an HMO cannot be held liable,” Farmer said.

Representatives of a number of medical professional organizations endorsed the bill, while insurance and business interests warned it would inflate coats for insurance companies and the state, through Medicaid and Medicare.

Sen. Rene Garcia, a Hialeah Republican, expressed sympathy with those qualms.

“It’s going to increase costs to the state and policyholders,” he said.

Sen. Jeff Brandes sponsored the flood insurance bill — SB 420.

Existing law allows insurers to offer flood policies through 2019 without having to wait for the Office of Insurance Regulation to review their rates. Brandes’ bill would extend that until 2025.

Farmer said he agreed with Brandes in theory, but worried the measure would encourage growth of unregulated surplus lines insurance — designed for “sophisticated” customers to protect against unique risks — “Liberace’s fingers. Dan Marino’s knees. Things of that nature.”

“We want more admitted carriers to write,” Brandes said following the 7-1 vote in favor his his bill. He referred to policies requiring pre-approval by regulators.

“But we also understand that surplus line carriers are writing, as well.”

And the bill encourages regulated insurers to enter the market.

“We’re offering them more flexibility in rates and forms. We’re making sure they are well-capitalized companies. But we want to create the right ecosystem for them to thrive in Florida.”

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Michael Moline is a former assistant managing editor of The National Law Journal and managing editor of the San Francisco Daily Journal. Previously, he reported on politics and the courts in Tallahassee for United Press International. He is a graduate of Florida State University, where he served as editor of the Florida Flambeau. His family’s roots in Jackson County date back many generations.

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