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					                                                                                      THE DEFENDER
                                     INSURANCE INDUSTRY LAW BRIEF
                 SUMMER 2005                                                                         www.gray-robinson.com



GRAYROBINSON LITIGATOR WINS
IMPORTANT VICTORY BEFORE THE                                                                              IN THIS ISSUE
FLORIDA SUPREME COURT                                                                                     GRAYROBINSON LITIGATOR
                                                                                                          WINS IMPORTANT VICTORY
                               Daniel P. Mitchell, litigation shareholder with the                        BEFORE THE FLORIDA
                               Tampa office of GrayRobinson, won a significant
                                                                                                          SUPREME COURT . . . . . . . . 1
                               victory before the Florida Supreme Court on Thursday,
                               April 28, 2005 regarding a collateral source/contractual
                               write-off issue. Last year, the Second District Court of
                                                                                                          FLORIDA STATUTORY
                               Appeal had certified the issue to the Florida Supreme                      UPDATES . . . . . . . . . . . . . . 2
                               Court as a matter of great public importance. The
                               Florida Supreme Court agreed with Mitchell's argument                      CASE NOTES . . . . . . . . . . . . 3
                               that the tort defendant should be entitled to a set-off
                               under section 768.76, Florida Statutes for the                             WHAT HAPPENS AT
      Daniel P. Mitchell
                               contractual adjustments made by the plaintiff's HMO.                       MEDIATION, STAYS AT
The final resolution on this issue will have an astonishing financial impact on the                       MEDIATION . . . . . . . . . . . . 5
liability insurance industry, and may cause health care insurers to rethink how
they write their HMO/PPO provider contracts and subrogation clauses.
The plaintiff in Goble v. Frohman, 2005 WL 977016, Fla. L. Weekly 5280 (Fla. April 28, 2005), was billed $574,554 by his health
care providers for medical treatment resulting from a motorcycle accident. But because of contracts between the providers and
Goble's HMO, Aetna U.S. Healthcare, the providers only received $145,970 from Aetna, plus $15,000 in co-pays from Goble.
Goble brought suit against the firm's client, Frohman, alleging that Frohman's negligence caused the accident. As part of his
damages, Goble demanded the entire $574,554 in medical bills. The jury awarded the amount claimed, because of the common-
law "collateral source rule," which prevents the defendant's introduction into evidence of payments made by third-parties on
the plaintiff's behalf toward his or her expenses incurred in consequence of the tort defendant's fault.
However, GrayRobinson Litigation attorney Robert H. Bonanno, Jr., persuaded the trial judge that the jury's award
constituted a windfall to the plaintiff, since neither the HMO nor the providers had a right to recover the amounts written down.
On appeal, Senior Tampa Litigation Department Shareholder Daniel P. Mitchell argued that the write-offs were "payments
made on the claimant's behalf," within the meaning of section 768.76, Florida Statutes, entitled "Collateral Sources of
Indemnity." This statutory provision is part of the 1986 Tort Reform Act, aimed on antiquated legal rules which have the effect
of driving up liability insurance premiums. The appellate court accepted this logic, and affirmed the lower court's decision.
The Florida Supreme Court's published opinion will constitute controlling law in Florida. It will prevent tort plaintiffs from
relying on an archaic, common-law damage rule to support their recovery of amounts that they were billed by their medical
providers, but for which they were never responsible. As may be seen from the sums claimed in the Goble case, it will result in
substantial savings to liability insurers, and therefore to the premium-paying public at large. The opinion is not final until
expiration of time to file or disposition of any rehearing motion.

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       CLERMONT       FORT LAUDERDALE JACKSONVILLE KEY WEST LAKELAND MELBOURNE NAPLES ORLANDO TALLAHASSEE                              TAMPA
                                           800.338.3381          WWW.GRAY-ROBINSON.COM
       THE DEFENDER                                INSURANCE INDUSTRY LAW BRIEF


FLORIDA STATUTORY UPDATES                                                                               For more information please
By Robert H. Bonanno, Jr.                                                                               contact one of our insurance
                                                                                                        attorneys below:
                                                                                                        Robert "Chip" Birthisel
                                  HB 0423 RELATING TO WORKER'S COMPENSATION                             rbirthisel@gray-robinson.com
                                                                                                        813-273-5188
                                  AND EMPLOYEE DEFINITION (EFF. 7/1/05)                                 Robert H. Bonanno, Jr.
                                                                                                        rbonanno@gray-robinson.com
                                  HB 0423 is yet to be signed but is planned to take effect July 1,     813-273-5150
                                  2005. This bill amends §440.02, Florida Statute, relating to          Henry B. Campbell
                                  the definition of "employee" for the purposes of workers'             hcampbell@gray-robinson.com
                                                                                                        863-284-2200
                                  compensation. The amendment redefines the term "employee"
                                                                                                        Chadley W. Clements
                                  under Workers' Compensation Law and revises an exemption              cclements@gray-robinson.com
                                  relating to owner-operators of motor vehicles. The most               321-727-8100
                                  significant change in §440.02(15)(d)4 is if the motor carrier         Christine A. Donoghue
                                                                                                        cdonoghue@gray-robinson.com
                                  advances costs to the owner-operator, but pursuant to the             813-273-5134
                                  written contract, the owner-operator has an obligation to             William A. Gillen, Jr.
                                                                                                        wgillen@gray-robinson.com
                                  reimburse the motor carrier' advance, then the owner-                 813-273-5084
                                  operator will not be considered an "employee."              The       Jack P. James, III
                                  amendment narrows the definition of "employee" and will               jjames@gray-robinson.com
                                                                                                        863-284-2200
                                  affect the relationship between a motor carrier and owner-
                                                                                                        Benjamin J. LeFrancois
                                  operator transporting property.                                       blefrancois@gray-robinson.com
                                                                                                        863-284-2200
SB 0436 PROTECTION OF PERSONS AND USE OF FORCE (EFF. 10/1/05)                                           Jason O. Lowe
                                                                                                        jlowe@gray-robinson.com
SB 0436 has been signed and takes effect on October 1, 2005. This bill brings about a Legislative       863-284-2200
change to §§ 776.012, 776.013, 776.031 and 776.032 Florida Statutes. The most significant               L. Robin McKinney
change to the statutes is the elimination of the duty to retreat before the use of deadly force in      rmckinney@gray-robinson.com
                                                                                                        813-273-5045
self-defense. With its enactment, SB 0436 will allow individuals to stand their ground and meet
                                                                                                        Daniel P. Mitchell
force with force. The change also allows for some presumptions that make the use of deadly              dmitchell@gray-robinson.com
force justifiable. For example, anyone an individual is presumed to have a reasonable fear of           813-273-5100
imminent peril of death or great bodily harm to him/ herself or another if the person the against       Richard E. Mitchell
                                                                                                        rmitchell@gray-robinson.com
the defensive force is directed is in the process of unlawfully and forcefully entering, or had         407-843-8880
unlawfully and forcibly entered a dwelling, residence or occupied vehicle; or if that person had        Stephen F. Myers
                                                                                                        smyers@gray-robinson.com
removed or was attempting to remove another against their will from a dwelling, residence or            813-273-5281
vehicle. This, of course, does not include law enforcement officers acting in the performance of        Brian K. Oblow
their official duty, emergency personnel, or individuals with a lawful right to be in/ at the           boblow@gray-robinson.com
                                                                                                        813-273-5102
dwelling, residence or vehicle. A person using deadly force consistent with these statutes is
                                                                                                        Clinton Paris
immune from criminal prosecution and civil action. An attorney fee provision is also included           cparis@gray-robinson.com
for all defendants in civil actions brought by plaintiffs, where the courts find that the               813-273-5092
defendants' were immune from prosecution. This amendment will have long reaching effects into           Gary S. Rabin
                                                                                                        grabin@gray-robinson.com
home and automobile security, especially in "road rage" type incidents.                                 863-284-2200
                                                                                                        Neil A. Roddenbery
HB 0523 EVIDENCE/ DECEASED AND INCOMPETENT PERSONS (EFF. 7/1/05)                                        nroddenbery@gray-robinson.com
                                                                                                        863-284-2200
HB 0523 amends §90.804, Florida Statutes and adds another Hearsay
                                                                                                        Jonathan B. Trohn
Exception when the declarant is unavailable. Now, any similar statement                                 jtrohn@gray-robinson.com
by a deceased or ill declarant shall fall under this exception, if a similar                            863-284-2200
written or oral statement made by the unavailable declarant was                                         Robert L. Trohn
                                                                                                        rtrohn@gray-robinson.com
previously offered by an adverse party and admitted into evidence. This                                 863-284-2200
amendment allows parties to get statements before the trier of fact that                                Michael J. Vitoria
                                                                                                        mvitoria@gray-robinson.com
were not permitted before its enactment. The amendment does not define                                  813-273-5014
the term "similar" and I foresee a lot of litigation seeking to clarify this                            Michael A. Zuppa, Jr.
ambiguous term.                                                                Robert H. Bonanno, Jr.   mzuppa@gray-robinson.com
                                                                                                        813-273-5062

                                                                  2

      CLERMONT    FORT LAUDERDALE JACKSONVILLE KEY WEST LAKELAND MELBOURNE NAPLES ORLANDO TALLAHASSEE                     TAMPA
                                       800.338.3381          WWW.GRAY-ROBINSON.COM
      THE DEFENDER                                INSURANCE INDUSTRY LAW BRIEF


CASE NOTES
By Michael J. Vitoria and L. Robin McKinney

ATTORNEY'S FEES – OFFER OF JUDGMENT.                                   D538 (Fla. 3d DCA February 23, 2005). The trial court
Alfred Vincent Hess, M.D. v. Walton, 30 Fla. L. Weekly D731            properly determined that a builder's commercial general
(Fla. 2d DCA March 16, 2005). The Second DCA held that                 liability policy did not provide coverage for homeowner's
separate offers of judgment or proposals for settlement for            claim against a builder for replacement and repair of deficient
unequal amounts made to a physician, the active tortfeasor,            construction, which was based on discovery that builder had
and to a physician's employer, who is vicariously liable for           constructed home below Federal Emergency Management
physician's negligence, were permitted by the language of              Agency and county elevation requirements, and that a stop
Florida Statute 768.79 and Rule 1.442 of the Florida Rules of          work order would not be removed until structure was either
Civil Procedure. In this case, the Plaintiff proposed to settle        elevated or demolished. The particular claims were expressly
with the active tortfeasor/physician for $100,000 and with the         precluded by the work product, business risk, and
physician's employer for $15,000. These proposals were                 professional services exclusions contained in the commercial
rejected and the Trial Court properly assessed attorney's fees         general liability policy. The Third DCA quoted a prior
against the employer alone after the jury returned a verdict in        decision, LaMarche v. Shelby Mutual Insurance Company,
favor of the plaintiff for $23,500, an amount which was at least       390 So.2d 325, 326 (Fla. 1980), for the proposition that
25% greater than the offer to the employer. The Second DCA             commercial general liability insurance policies like the one in
certified the following question as a question of great public         this case do not cover claims for defective or deficient
importance to the Florida Supreme Court: "Does a strict                workmanship, as "the purpose of . . . comprehensive liability
construction of Rule 1.442 and § 768.79, Florida Statutes              insurance coverage is to provide protection for personal
(2003), require a common law outcome when a plaintiff                  injury or for property damage caused by the completed
makes two separate proposals for settlement to two                     product, but not for the replacement and repair of that
defendants when one defendant is only vicariously liable for           product."
the other?"                                                            BAD FAITH – DISCOVERY OF CLAIM FILE MATERIALS.
                             INSURANCE – UNINSURED                     Allstate Indemnity Company, et al. v. Ruiz, So.2d, No. SC01-
                             MOTORIST – BAD FAITH.                     893 (Fla. April 7, 2005). The Florida Supreme Court recedes
                             Galante v. USAA Casualty                  from its previous decision in Kujawa and takes a "fresh look"
                            Insurance Company, 30 Fla. L.              and determines that any distinction between first- and third-
                            Weekly D525 (Fla. 4th DCA                  party bad faith actions with regard to discovery purposes is
                            February 23, 2005). The Fourth             unjustified. The prior distinction was without support under
                            DCA held that there was no error           § 624.155, Florida Statutes, and created an overly formalistic
                            in dismissing an insured's first-          difference between substantively identical claims. The
                            party bad faith action with                Florida Supreme Court concluded that the better practice is to
                            prejudice where it was undisputed          recognize the legislature's mandate that the insurer's good
                            that underinsured motorist's               faith obligation to process claims establishes a similar
                            insurer paid the contractual               relationship with the insured requiring fair dealing, as has
                            amount due to the insured within           arisen in third-party context. Thus the claim processing file
                            60 days of receipt of the civil            materials are now discoverable under a claim for first-party
                            remedy notice, in compliance with          bad faith, just as they previously were in third-party actions.
                            the safe harbor provision of §             There is simply no basis upon which to distinguish between
                            624.155(3)(d), Florida Statutes.           first- and third-party cases with regard to the rationale of the
                                                                       discoverability of claim file-type material.
                            INSURANCE – COMMERCIAL
                            LIABILITY – DUTY TO                        INSURANCE – UNINSURED MOTORIST – EVIDENCE.
                            DEFEND.                                    State Farm Mutual Auto. Ins. Co. v. Revuelta, 30 Fla. L.
                            Sekura v. Granada Insurance                Weekly D1206a Fla. 2d DCA (May 11, 2005). The Third DCA
                            Company, 30 Fla. L. Weekly                 reversed the trial court's decision not to grant defendant's
                                                                       motion for a new trial, after plaintiffs made improper

                                                                   3

      CLERMONT   FORT LAUDERDALE JACKSONVILLE KEY WEST LAKELAND MELBOURNE NAPLES ORLANDO TALLAHASSEE                      TAMPA
                                      800.338.3381          WWW.GRAY-ROBINSON.COM
      THE DEFENDER                               INSURANCE INDUSTRY LAW BRIEF


CASE NOTES...cont.
By Michael J. Vitoria and L. Robin McKinney

                                       arguments regarding        filed a cross-appeal of the determination in favor of
                                       economic disparity         Lexington. Lexington moved to dismiss the cross-appeal.
                                       between the parties at     The Third DCA found that plaintiffs should have directly
                                       the trial of a claim for   appealed the separate judgment against them, rather than
                                       uninsured motorist         cross-appealed, even though the judgments were part of the
                                       benefits. The trial        same order. The appellate court further held that, despite a
                                       court initially denied     later amendment to FWUA policies, und er the plain
                                       defendant's motion in      language of the original FWUA policy in effect at the time of
                                       limine seeking to          the damage, the plaintiffs' loss was subject to the exclusion.
                                       prevent       plaintiffs   The Third DCA, therefore, reversed the summary judgment
                                       from arguing a long        against FWUA.
                                       history of paying
                                       premiums. Plaintiff's
                                       counsel then asked
                                       the wife of the injured
                                       driver whether the
                                       family had medical
                                       insurance to cover a
                                       surgery. Finally, in
                                       closing, the plaintiffs
argued that because they had a long history of paying
premiums to defendant, they were now entitled to the benefits
for which they paid. The trial court denied defendant's
motion for a new trial, but the appellate court reversed and
remanded the case, finding that the premiums argument
improperly insinuated bad faith on the part of the defendant,
where plaintiffs had not made a claim for bad faith. Finally,
testimony regarding the plaintiff's lack of heath insurance
was irrelevant and improperly offered to invoke the
sympathy of the jurors.
INSURANCE – WINDSTORM – HOMEOWNERS.
Fla. Windstorm Underwriting v. Gajwani, 30 Fla. L. Weekly
D1213a (May 11, 2005). The Third DCA reversed a summary
judgment entered in favor of plaintiff homeowners regarding
coverage for damages resulting from "wind-driven rain" that
occurred during Hurricane Irene in 1999. Plaintiffs had a
homeowner's insurance policy with Lexington Insurance
Company and a windstorm insurance policy with Florida
Windstorm Underwriting Association (FWUA). FWUA
denied coverage based on a "wind-driven rain" exclusion,
while Lexington denied coverage based on a "windstorm"
exclusion. The trial court found that FWUA later admitted
that its wind-driven rain exclusion was inappropriate, and
granted summary judgment in favor of plaintiffs and against
FWUA, and in favor of Lexington but against Plaintiffs.
FWUA filed a timely notice of appeal, while the plaintiffs                                  Michael J. Vitoria   L. Robin McKinney

                                                                  4


     CLERMONT   FORT LAUDERDALE JACKSONVILLE KEY WEST LAKELAND MELBOURNE NAPLES ORLANDO TALLAHASSEE                   TAMPA
                                     800.338.3381          WWW.GRAY-ROBINSON.COM
       THE DEFENDER                                 INSURANCE INDUSTRY LAW BRIEF


WHAT HAPPENS AT MEDIATION, STAYS AT MEDIATION
By Clinton Paris

                     Just like in Las Vegas, what happens at         The newly added section 44.405(1) Florida Statues (2004)
                     mediation should stay at mediation. At          clarifies and expands the confidentiality provisions to include
                     least that is what the Florida Legislature      any participant in mediation. Section 44.405(1) provides:
                     has tried to ensure by revising, in 2004,
                                                                     (1) Except as provided in this section, all mediation
                     the provisions of Chapter 44, Florida
                                                                     communications shall be confidential. Mediation participants
                     Statutes. The Mediation Confidentiality
                                                                     shall not disclose a mediation communication to a person
                     and Privilege Act gives the courts,
                                                                     other than another mediation participant or a participants
                     litigants and mediation participants
                                                                     counsel. A violation of this section may be remedied as
                     enhanced remedies when there is a breach
   Clinton Paris                                                     provided by section. 44.406. If the mediation is court
                     of mediation confidentiality.
                                                                     ordered, a violation of this section may also subject the
For years, the courts have only had section 44.102(3), dealing       mediation participants to sanction by the court, including,
with court-ordered mediation, available to protect the               but not limited to, costs, attorney’s fees, and mediator’s fees.
confidentiality of the mediation process. Section 44.102(3)
                                                                     Additionally, subparagraph (2) provides:
provides that each party involved in a court-ordered
mediation proceeding has a privilege to refuse to disclose,          (2) A mediation party has a privilege to refuse to testify and
and to prevent any person present at the proceedings from            to prevent any other person from testifying in a subsequent
disclosing, communications made during proceedings. The              proceeding regarding mediation communications.
new statute provides that all oral or written communications
                                                                     These provisions limit the information that individuals
in the mediation proceeding, other than an executed
                                                                     present at mediation and can disclose to persons that did not
settlement agreement, are exempt from the requirements of
                                                                     participate in the mediation. The confidentiality restrictions
Chapter 119 and shall be confidential and inadmissible as
                                                                     added by Section 44.405, limiting the disclosure of
evidence in any subsequent legal proceeding unless all parties
                                                                     information to just the mediation participants, restricts the
agree otherwise. Section 44.102, Florida Statutes (2004).
                                                                     Third District Court of Appeal’s ruling in Yacht Club
There are necessary exceptions to this privilege that permit
                                                                     Southern, Inc., v. Sunset Harbour North Condominium
disclosures when either party attacks the mediation
                                                                     Association, Inc., 843 So.2d 964 (Fla. 3rd D.C.A. 2003),
proceedings, but for years this section has protected
                                                                     where the court ruled it was not a breach of section 44.102(3)
mediation communications.
                                                                     to disclose mediation information to parties in interest that
While creating a privilege and making it a violation under           were not present during mediation. In Yacht Club Southern,
certain circumstances to disclose mediation communications,          Inc., the condominium association and the developer failed
Section 44.102(3) does not include remedies, leaving courts          to reach an agreement during mediation. Subsequently, the
with broad discretion on how to remedy a violation and               developer disclosed mediation communications regarding
exposing litigants to inconsistent results. While rare,              settlement offers to the individual condominium unit owners
breaching the confidentiality provisions of section 44.102 has       that were not present at mediation. The court ruled this was
proven fatal to litigation. In Paranzino v. Barnett Bank of          not a violation of section 44.102 because the unit owners were
South Florida, N.A., 690 So.2d 725, (Fla. 4th D.C.A.), rev.          parties in interest. Pursuant to section 44.405, the disclosure
denied, 705 So. 2d 9 (Fla. 1997), the trial court dismissed the      in Yacht Club Southern, Inc., to non-mediation participants
Plaintiffs' lawsuit with prejudice after the Plaintiff, her          is arguably a violation.
attorney and daughter revealed confidential mediation
                                                                     Now, when either section 44.102 or 44.405 is breached, the
communications to the Miami Herald. In Paranzino, the
                                                                     participants and the court are guided to remedy the violation
parties executed a mediation agreement that acknowledged
                                                                     by newly added section. 44.406. This section provides
the confidentiality provisions of Section 44.102. The trial
court exercised its broad discretion by dismissing the               (1) Any mediation participant who knowingly and willfully
Plaintiffs' lawsuit with prejudice. While this decision heavily      discloses a mediation communication in violation of s. 44.405
reflected the courts’ ire at the Plaintiffs' disregard for a court   shall, upon application by any party to a court of competent
order, Section 44.102 was the basis for the mediation order          jurisdiction, be subject to remedies, including:
and the sanctions.
                                                                 5


     CLERMONT      FORT LAUDERDALE JACKSONVILLE KEY WEST       LAKELAND MELBOURNE NAPLES ORLANDO TALLAHASSEE             TAMPA
                                        800.338.3381                WWW.GRAY-ROBINSON.COM
       THE DEFENDER                                 INSURANCE INDUSTRY LAW BRIEF


WHAT HAPPENS AT MEDIATION, STAYS AT MEDIATION…cont.
By Clinton Paris

  (a) Equitable relief.                                                  court-ordered mediation under Chapter 44, Florida Statutes,
                                                                         mediation has developed into a viable alternative dispute
  (b) Compensatory damages.
                                                                         resolution process relied upon by the Florida court system. All
  (c) Attorney's fees, mediator's fees, and costs incurred in the        Florida circuit courts have some type of court-ordered
       mediation proceeding.                                             mediation program to assist with reducing the cost of litigation
                                                                         and judicial caseloads. Florida litigants have come to expect
  (d) Reasonable attorney's fees and costs incurred in the
                                                                         that at sometime during the litigation process they will be
      application for remedies under section.
                                                                         ordered to attend confidential mediation before the case
By adding this section, the legislature has expanded the                 is tried.
available remedies to include civil remedies along with court
                                                                         As expected, the new sections of Chapter 44 have not
sanctions for breach of the court’s order. Under section
                                                                         undergone judicial scrutiny yet, however; the courts have
44.406, any person coming within the gamut of section. 44.405
                                                                         shown a willingness to use its power to protect the sanctity of
is also subject to the potential civil remedies of section 44.406.
                                                                         the mediation process. With the additions of section 44.405
Arguably, these remedies go beyond just court ordered
                                                                         and 406 to Chapter 44, what happens at mediation will
mandatory mediation to include mediation that is pre-suit or
                                                                         continue to stay at mediation.
otherwise voluntary mediation.
Since 1987, when the Florida Legislature gave the courts
power to order litigants in civil matters to attend mandatory

                                                                     6




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