The 2023 Tort reform as intended has caused a decline in Personal Injury Protection litigation primarily due to the repeal of 627.428, Florida Statutes, which entitled a named insured or omnibus insured to reasonable attorney fees if they prevailed in an action for PIP benefits.

Despite the repeal of section 627.428, Florida Statutes, there still exists some avenues for recovery of attorney fees upon prevailing in litigation. Insurers may still face exposure to attorney fees in PIP litigation under section 86.121, Fla. Stat. This statutory section is a two way attorney fee provision which entitles the named insured, omnibus insured, or named beneficiary or insurer to reasonable attorney fees upon prevailing on an action for declaratory relief after an insurer has made a total coverage denial of a claim. The definition of what a total coverage denial is will likely be a hotly litigated issue. With the limited avenues to recover attorney fees available to Plaintiff attorneys, we can expect an increase in litigation on “full coverage denials.”

With the potential exposure to attorneys fees upon a full coverage denials, Examinations Under Oath (“EUO”) will become an even more important tool for insurers and thus should be utilized more often prior to denying coverage. It is important for insurance carriers to proactively identify and avoid potential pitfalls and pain points prior to denying coverage and to bolster and lock down their coverage denial.

One of the lesser-known pain points that can leave carriers exposed to attorney fees is improper notice of policy cancellation. Under section 627.728(2)(b), Florida Statutes, insurance carriers are permitted to cancel an insurance policy on the basis of a failure to appear. However, section 627.728(3)(a), Florida Statutes, requires that cancellation notices be mailed or delivered by the insurer to the first-named insured and to the first-named insured’s insurance agent at least 45 days prior to the effective date of the cancellation. If this statutory requirement is not followed perfectly, it could invalidate the cancelation and open up exposure. For example, if a PIP carrier mails a cancellation notice to its first-named insured, but fails to mail or deliver the cancellation notice to the insured’s insurance agent, a carrier may ultimately expose itself to attorney fees. A Plaintiff could successfully argue that failure to mail or deliver the notice to the insurance agent makes the notice of cancellation ineffective, which would then entitle them to attorney fees in an action a declaratory judgment.

So what can carriers do to protect themselves against this potential pitfall? PIP carriers should maintain reliable mailing practices to ensure that if they decide to cancel a policy on the basis of material representation or fraud, they can produce proof of mailing and/or delivery of the cancellation notice to both the insured as well as the insured’s agent. This can include such practices as utilizing certified mail rather than regular mail, and maintaining any certified mail receipts in their claim file records. Carriers that maintain reliable mailing and record keeping practices will set themselves up for success should they need to defend themselves in an action for declaratory judgment.