What do we think about when we hear the phrase “distracted driving”?

Texting, talking on a cell phone, e-mailing…all while driving?

This morning, while traveling Florida’s turnpike, I happened to look over to see a man in a SUV; with a cup of coffee on the dash, a newspaper draped over the dash and a razor in his right hand – all while traveling along at 70 mph. The disturbing part was that the man was in the driver’s seat of the SUV.

Distracted driving includes a whole bushel basket of things that drivers have been doing for a very long time, but only since we have been able to talk on the phone and text while driving have we been giving any considerable thought to the very real dangers they present.

Distracted driving may have begun before, but certainly it came into full being when the first radio was placed in the first car. For the first time, drivers had something in their vehicle that represented entertainment and a distraction from their driving. Or, was the first distraction a cigarette or a cigar; a passenger; or simply the first speedometer? All of these things represented “innocent distractions” from driving that no one really thought a great deal about until we introduced whole offices and entertainment centers into our automobiles.

Today, we have distractions from many, many sources, including (sadly not limited to):

The National Highway Transportation Safety Administration (NHTSA) reports that over 453,000 people were injured or killed on our nation’s roadways in 2009. This number included some amount of potentially avoidable deaths (5,474 in total); if we simply reduced or eliminated the use of cell phones in vehicles.

Distractions are no longer limited to the standard two types: visual and cognitive, when driving a car or other vehicle. A third type of distraction added to the dangerous mix is the manual demands of both driving the automobile or truck and completing distracted tasks. Similarly, distractions are evaluated based upon three critical reasoning categories:

Internal distraction — a situation requiring a response because his/her attention is directed to some event, object, person, or activity inside the vehicle. Relevant examples include tuning the radio, adjusting the heat/cooling system, engaging in a conversation with a passenger, using a cell phone, retrieving fallen objects, reading books/magazines/maps/invoices, etc.

External distraction – crashes in which the driver fails to recognize a situation requiring a response because his/her attention is directed to some event, object, person, or activity outside the vehicle. Relevant examples include searching for a street address, construction activity, looking at a building or scenery, looking at a sign, looking at a previous crash site, etc. Distractions are distinguished from inattention in that distractions induce the driver to focus attention on the distraction.

Inattention distraction — when the driver fails to recognize a situation that demands a response because his/her attention has wandered from the driving task for some non-compelling reason. In this circumstance, the driver is typically focusing on internal thoughts (i.e., daydreaming, problem-solving, worrying about family problem, etc.) and not focusing attention on the driving task.

What may also be added to these categories are the very unique mechanical “distractions” created by using certain devices in a certain way. For example, holding a cell phone to your ear requires you to change your field of vision, either slightly or substantially, it requires you to move your arm and hold it to your ear, and it requires you to limit your ability to move due to positioning. All of these things may seem minor, but collectively, you have demanded that your brain process 5 or more additional thought processes in addition to those already being demanded from driving. Studies have demonstrated (Angell, et al, 2006; Harbluk, Noy, et al, 2007) that seemingly minor tasks, such as holding and talking on a cell phone, impact driving attention significantly:

• Limiting visual scanning
• Limiting field of vision
• Neglecting peripheral vision demands
• Negative impact on processing roadway information

It seems pretty clear that the demands of operating a two ton vehicle all by themselves require as much mechanical freedom and mental processing as our brains are capable of delivering safely. Each task you add to your “built-in driving distractions simply adds to your error potential and increases the likelihood of an accident.

Distracted driving is a problem that can be seen in all types of people; teens, men, women, elder drivers, truck drivers; no class of driver is immune from driving while distracted.

What is “distracted driving”? I think we can all agree that it should be treated as any activity could divert the attention of the driver of a vehicle away from the primary task of operating that motor vehicle. Those activities probably are numerous, but they certainly include:

• Texting or e-mailing
• Using a cell phone
• Eating and drinking
• Talking to passengers
• Grooming
• Reading, including maps
• Using a navigation system
• Watching a video
• Adjusting a radio, CD player, or MP3 player

And any other similar activity. All of these activities fall into three general types of distractions: manual, visual and cognitive or any combination of them. You reach for the dial to change a radio station, you look at the dial, and you think about which radio station you want to tune – manual, visual and cognitive in just one act.

Many of us believe that we have the ability to “multi-task” effectively. Science proves otherwise and it seems pretty clear that our human brains simply can not do more than one thing at a time. Science tells us that our brains must process each function we ask of it by going through the following for each task:

1. Selection: the brain decides what information to focus on
2. Process: the brain begins to process through the visual, auditory and sensual data it is receiving
3. Encoding: the brain begins creating memory. The brain creates memory by screening out distractions and prioritizing attention.  During this phase, the brain is particularly affected by distractions and diversion of attention.
4. Storage: the brain begins storing information in short term memory. Not everything is stored in memory. The brain makes decisions during the encoding process what things are to be stored.
5. Retrieval: the brain must access stored information
6. Execute: the brain chooses and implements the course of action

For more in-depth information about the dangers of distracted driving, check out these sections of our website:

Do you know – Costs of Distracted Driving

Do you know – Texting While Driving — A Sobering Video

Do you know – The Human Brain Does Not Multi-Task

Do you know – What Drivers Must Focus On During an Average Drive

Do you know – Managing multiple tasks — driving causes processing issues for the brain

Do you know – Texting and Driving Requires More Cognitive Processing and Causes More Distraction Than Cell Phone Use

Do you know – How Good Are Your Powers of Observation?

If your group would like one of our attorneys particularly skilled in cases involving distacted driving to speak to you, feel free to contact us either by telephone at 561-686-6300 or by e-mail at jch@searcylaw.com.

Just do not try to contact us while you are driving!

The Surgeon General today released a new report on youth smoking.  The 2012 Report, entitled Preventing Tobacco Use Among Youth and Young Adults, updates the 1994 Report, which was the first comprehensive Surgeon General’s report on youth smoking.  In ‘94, the Surgeon General concluded that if young people can remain free of tobacco until age 18, most will never start to smoke, which has proven not to be that far off – in 2012, 80% of high school smokers will continue smoking into adulthood.

Some other troubling information contained in report:

• Each day in the U.S., over 3,800 kids under the age 18 start smoking
• Each day in the U.S., over 1,000 kids become daily cigarette smokers
• 88% of daily, adult smokers had their first cigarette by age 18.
• The vast majority of Americans who begin daily smoking during adolescence are addicted to nicotine by young adulthood
• Of every 3 young smokers, only one will manage to quit smoking, and one will die from a cigarette-related disease
• Given their developmental stage, adolescents are uniquely susceptible to social and environmental influences to use tobacco
• The tobacco companies spent nearly $10 billion in 2008 on advertising and promotional efforts; 277% more than the industry spent in 1998

Cigarette smoking remains the leading cause of preventable death in the United States, responsible for over 440,000 deaths per year (or 20% of all annual deaths).

It is clear that cigarette smoking and the destruction it causes is an epidemic.  And from the information published today by the Surgeon General of the Public Health sector, it will continue to be just that unless and until we can protect the young and most impressionable among us.

Since cigarette mass marketing and advertising began in 1913 with the introduction of Camel cigarettes, cigarette makers have targeted the youth.  Countless confidential, internal company documents bear this out and there is no indication that tobacco companies have discontinued trying to appeal to our nation’s youth.

Today, cigarette makers are sure to point to the company websites they have up and running, restrictions imposed by the Master Settlement Agreement regarding marketing to youth, and FDA regulation.  While that might sound good on paper, the Surgeon General’s conclusions indicate that the industries $10 billion a year advertising campaign is getting through to their most important demographic – the children of our country.

For many of our elderly, there comes a time when they can no longer care for themselves.  If that person purchased a long-term care policy, is wealthy or is indigent, his/her care should not be a problem.

Unfortunately many of our elderly fall into “the gap” – they make too much money to qualify for Medicaid and do not have enough money to privately pay for their care.  Oftentimes, if they have children, their children cannot care for them.  Most of our elderly have worked their entire lives, contributed to society and paid into the system.  When the time comes that an elderly person can no longer care for themselves, we should have a structure, which will provide long-term care regardless of their financial status.

Florida is certainly a state where we sadly see examples regularly of nursing and assisted living facilities that are understaffed, have poorly trained staff, and have a level of housekeeping that is less than any of us would accept for ourselves. We owe it to our elderly citizens. They have earned our obligation to keep them safe and cared for in facilities in which any one of us would not mind living.

We should, as family members and as citizens of this state, be vigilante that systems exist to protect our elderly citizens.

Nursing Homes and long-term care facilities should be inspected on a regular basis to ensure that their residents get quality care.  There is no justifiable reason for a resident of a nursing home or assisted living facility to suffer from bed sores, neglect or poor care. We have state agencies charged with the duty to assure that facilities are kept clean, are well staffed and are safe.

We can be vigilante as well. If we have loved ones or friends in facilities, we should be involved in making sure they get appropriate care. We should insist that nursing home staffs are reasonably responsive to the person’s needs and that their dignity is preserved.

The State of Florida provides a service of which many people are unaware: the Florida Ombudsman for the Department of Elder Affairs:

“An ombudsman is an advocate for people who live in nursing homes,
assisted living facilities and adult family care homes. All services are confidential and free of charge.”

Residents of nursing homes in Florida have certain rights granted to them by Florida statute and they include:

• Civil and religious liberties.
• Private and uncensored communication.
• Visitation by any individual providing health, social, legal, or other services and the right to deny or withdraw consent at any time.
• Present grievances and recommend changes in policies and services free from restraint, interference, coercion, discrimination, or reprisal. Includes the right to have access to the ombudsmen and other advocacy groups.
• Organize and participate in resident groups.
• Participate in social, religious, and community activities that do not interfere with the rights of others.
• Examine results of recent facility inspections by federal and state agencies including the plan of correction if applicable.
• Manage his/her own financial affairs. A quarterly accounting will be furnished to resident or legal representative.
• Be fully informed, in writing and orally, of services available at the facility and of related charges for such services.
• Refuse medication and treatment and to know the consequences.
• Receive adequate and appropriate health care, protective and support services within established and recognized standards.
• Privacy in treatment and in caring for personal needs.
• Be informed of medical condition and proposed treatment and be allowed participation in planning.
• Be treated courteously, fairly, and with the fullest measure of dignity.
• Be free from mental and physical abuse, corporal punishment, extended involuntary seclusion, and from physical and chemical restraints except those ordered by resident’s physician.
• Be transferred or discharged only for medical reasons, the welfare of other residents or nonpayment of a bill.
• Receive a thirty (30) day written notice of discharge or relocation, and challenge such notice.
• Choose physician and pharmacy.
• Retain and use personal clothing and possessions.
• Have copies of rules and regulations of the facility.
• Notification prior to room change.
• Information concerning bed-hold policy for hospitalization.

If you suspect a nursing home or assisted living facility of providing sub-standard care there are remedies. You can file a complaint with the state ombudsman, through the Dept. of Elder Affairs or by calling 1-888-831-0404 or any of the other agencies included on the Ombudsman website, including:

Long Term Care Ombudsman Program

Florida Abuse Hotline

Agency for Health Care Administration

Elder Helpline

Medicaid Fraud

Division of Medical Quality Assurance (Dept. of Health)

We should all take a moment and ask ourselves, “when the time comes and I can no longer care for myself, do I have a plan in place?”

Do insurance companies in Florida need a piece of bailout legislation?

Florida legislators seem dedicated to providing some legislation this year to deal with fraud occurring in the arena of Personal Injury Protection (PIP) insurance coverage.

PIP is a part of required coverage for auto owners in Florida. In the event of an accident, PIP provides up to $10,000 of payments for medical treatment and lost wages, regardless of fault. If someone hits me and I am injured, I do not have to rely on my health insurance (if I have it) or resort to suing the at fault driver in order to receive some amount of treatment.

Florida Republicans have bemoaned civil lawsuits; claiming that jury verdicts and the number of lawsuits are out of control. Putting aside that no reliable evidence to support this claim exists, the PIP legislation that most House members and our Governor want passed would place many in the position of being compelled to file a lawsuit in order to pay for medical treatment or to recoup lost wages.

In the midst of an economy in which paying for medical costs out of pocket or losing wages could devastate families, we have legislators who have spent enormous energies on trying to reform instead of enforce.

Fraud in the PIP system is clearly a reality. But, should consumers be punished for fraud for which they have no culpability?

Should insurance companies be provided with legislation that will allow them to more easily deny claims, limit coverage and better profit from premiums?

Do insurance companies have any responsibility for making efforts to combat fraud in a system in which they desire to make money? Would we bailout a retail chain if shop lifting became rampant or would we expect retailers to help themselves and enlist the aid of law enforcement?

The Senate’s version of the PIP legislation is not as severe as the House’s version. The House version would, from a practical standpoint, provide no coverage in a large percentage of cases.

When will we citizens stop accepting the better of two evils from our lawmakers? When will lawmakers begin looking out for us citizens?

Perhaps we need to make ourselves heard?

I have written previously regarding the hidden epidemic of prescription errors. For every error that makes the news I am certain there are thousands that go unreported.

The most recent report of a potentially disastrous pharmacy error is reported by ABC news and involves a child receiving Tamoxifen, a very potent breast cancer fighting drug, instead of fluoride, a simple vitamin to enhance dental health. This type of an error is simply inexcusable.

The known, serious side effects of Tamoxifen are many and include:

• blood clots
• strokes
• uterine cancer
• endometrial cancer
• cataracts

No child should be exposed to this type of preventable error. In CVS’s statement once again they ascribe this occurrence to:

“Prescription errors are a rare occurrence, however since any process involving people is not immune from the possibility of human error; we are committed to continually improving quality measures to help ensure that prescriptions are dispensed safely and accurately.”

If that is the case, we have a ready illustration that pharmacy consumers are those who will suffer from human error causing incorrectly filled prescriptions. Isn’t the real question about what can or should be done to further limit, if not eliminate, these dangers?

Perhaps one of the answers is to provide reliable information, which consumers can use in evaluating where they want to go to fill prescriptions. Why not have pharmacies actually post their statistics identifying the frequency and types of errors right there at the pharmacy counters for all their customers to see? Yeah, I don’t see that happening either.

CVS did conduct an “investigation” to determine if any other children were affected. It is a little unnerving that CVS indicates “most of the families we have spoken to did not indicate that their children received any incorrect pills.”

Well, that warms my heart that “most” of them didn’t get cancer fighting drugs instead of fluoride for their little teeth. Maybe that’s the catchy new slogan: “At CVS we mostly get it right….well, a lot of the time anyway.”

My concern is that, in the cases in which I have been involved, the pharmacy’s excuse in prescription miss-fill cases is this same old song and dance: mistakes were made… but we are real sorry; or some variation on that message.

I have never been involved in a case where it is admitted that a key causal factor is the volume of prescriptions being filled. And the pharmacy corporation will fight all efforts to discover that they are regularly understaffed or employing undertrained personnel. These causal factors are a critical part of the problem when negligence occurs in pharmacies.

Every corporation has safety systems in place; responsible corporations demonstrate real concern when those systems do not seem to be handling safety. Too often human error is used as an excuse in lieu of really looking in the mirror and trying to weigh the profit motive to grow fast, and fill faster, against consumer safety.

Don’t take my word it, though; ask any of the honorable employees in the pharmacy industry trying to keep up the pace. They will tell a story that, quite often, dictates profit over safety.

Listen I wasn’t there, but when CVS in its public statement only lists something like keeping similar looking medication away from each other, it tells me all I need to know. Why not simply add to that they will look at the staffing and volume of the store too? Sergeant Schultz from Hogans’ Heroes never stopped, or figured out, a prisoner escape either, and we all know why……he knew nothing!

CVS Caremark released a statement to ABC News that can be found here.

A problem with fraud exists.

In New York, officials believe that fraud is a crime and that the criminals perpetrating the crime should be arrested and punished.

In Florida, our lawmakers believe that fraud is a crime and that consumers should be punished.

So goes the course of a bill winding its way through the legislature, which will remove rights and benefits available to consumers under personal injury protection (PIP) insurance. It is not expected to reduce premiums paid by consumers for PIP coverage.

Apparently, Florida lawmakers like the bill. Given some of its provisions, the insurance industry has to absolutely be in love with the bill.

There is still uncertainty about the specific provisions of the bill, but there is one certainty: it will make insurance companies more profit than they already make and it will remove rights and benefits consumers currently have.

Some of the provisions harmful to consumers:

• You get NO coverage for your injuries in a car accident unless you go to an emergency facility within 72 hours of the accident.
• You will pay for $10,000 in PIP coverage, but if your injury is deemed “minor”, that limit goes down to $1500.

Since it is the insurance industry who is claiming they are hurt so horribly by fraud in PIP claims, why don’t they do something about it? It is cheaper for them to pay claims (a short term view) than to investigate and prosecute fraud (a long term view). So, the insurance industry and its lobbyists cooked up a bill that will maximize profits, maximize ability to deny claims and minimize coverage for consumers.

PIP fraud is likely to be pretty unsuccessful without a physician, an attorney and perhaps other professionals participating. Do I think that there are physicians and lawyers who are actively involved in pursuing fraudulent PIP claims and charges? I am sure there are some. Attorneys and doctors are no different than any other profession; they all have some “bad apples”.

In New York, the scheme to defraud under PIP laws involved a “cadre of corrupt doctors” – 10 in all, 100 phony medical clinics, and three lawyers.   New York Police Commissioner, Ray Kelly said “the ‘billing mills’ processed up to 150 purported patients each day, with doctors getting up to $10,000 a month “to show up once a week just to sign referrals.”

Why is the state of Florida and the insurance industry not getting together to discover and prosecute the “bad apples”? Because it is easier and cheaper to simply pass a law, which may reduce fraud, but at a cost to consumers and a net savings to the insurance industry.

If you are a patient at a hospital, don’t you think you should have the right to know whether anything bad happened to you while you were there?

For years, health care providers in Florida were able to withhold records from a patient that were created as a direct result of an adverse medical incident (when bad things happen) that occurred during that patient’s care.  In 2004, Floridians overwhelmingly voted against this practice, amending the State Constitution to give patients the right to access to all records made or received as a result of an adverse medical incident. That amendment is generally referred to as “Amendment 7” because it was the 7^th amendment when it was approved.

The pertinent part of Amendment 7 sets forth:

SECTION 25. Patients’ right to know about adverse medical incidents.—

(a)  In addition to any other similar rights provided herein or by general law, patients have a right to have access to any records made or received in the course of business by a health care facility or provider relating to any adverse medical incident.

(b) In providing such access, the identity of patients involved in the incidents shall not be disclosed, and any privacy restrictions imposed by federal law shall be maintained.

Records involving an “adverse medical incident” are any records pertaining to medical negligence, intentional misconduct, and any other act, neglect, or default of a health care facility or health care provider that caused or could have caused injury to or death of a patient.

Since the passage of “Amendment 7”, health care providers have asserted a laundry list of confusing and flawed objections in an attempt to continue withholding records of adverse medical incidents from their patients.  The obvious harm of this conduct was that the patient was still prevented from accessing records relating to adverse medical incidents concerning that patient’s care, even when the law mandated that the patient should have access to those records.  Secondarily, the different circuit and appellate courts throughout the State were faced with the task of ruling on these objections, which resulted in inconsistent rulings governing the production of the patient’s records depending on the jurisdiction.

Fortunately, on January 12, 2012, the Supreme Court of Florida put an end to the improper withholding of patient records related to adverse medical incidents in the case of WEST FLORIDA REGIONAL MEDICAL CENTER, INC., etc. vs. LYNDA S. SEE, et al. (No. SC09–1997).  The Court rejected all of the objections and arguments made on behalf of the hospital, and reaffirmed the unambiguous language and intent of Amendment 7, which serves to provide patient access to records concerning adverse medical incidents, without boundaries.

Even with the recent ruling from the Supreme Court, hospitals and health care providers will undoubtedly continue to create new ways to unlawfully withhold records from patients concerning adverse medical incidents.

If you or a loved one have been injured as a result of medical malpractice it is important for you to contact an attorney specializing in the field to obtain these records; they are often vital to your case and will not be provided to you without a fight.

Physician: Before I agree to treat you, I need you to sign an arbitration agreement and a limitation of liability agreement.

Patient: What are those and why do I need to sign them?

Physician: Oh, they are nothing really for you to worry about. They only apply to you if I make an error while I am treating you and cause you damage.

Patient: So, we are starting our relationship off with an assumption that you will hurt me while treating me and, if you do, I should limit your liability for that error?

Physician: Well, I guess you could put it that way, but I prefer to look at it as you agreeing that you have faith in me as a physician and that none of that will ever really matter anyway.

Patient: I prefer that I get to keep my constitutional rights and that you buy insurance in case you screw up while treating me and cause me big bucks in further medical treatment as a result of your error.

Physician: Well, if you are going to be disagreeable before I even start treating you, I am not sure I want you as a patient.

Patient: If you are more worried about yourself, I am certain I do not want you as my doctor.

Physician: Good luck finding another one – we are all together on this one!

And so will go the discussions had in doctor’s offices and in hospitals if Senate Bills 1316 or 1506 are passed by the legislature in Florida and allowed to become law by the governor.

These bills include (3) major changes in Florida law to, once again, favor doctors over patients. It was not sufficient for hospitals and doctors to have capped damages they may have to pay in the event they negligently harm a patient. That legislation went into effect several years ago.

Now your doctor wants:

• To be able to speak with your other physicians without your permission and without the presence of you or your attorney; if you make a claim against your doctor over negligent care.
• To make it much harder to prove a case of negligence by requiring the nearly the same standard of proof required in a murder case.
• To be able to convince patients to sign mandatory arbitration agreements preventing patients from being allowed to file a lawsuit for negligence.
• To convince patients to sign an agreement further limiting the amount of damages, which can be collected in the event the physician or hospital negligently harms the patient.

All in all, what a nice little bill for the protection of doctors and hospitals.

Once again, the medical profession is taking steps to protect themselves and their own best interests; while stealing away the rights of their patients.

What is the net effect of bills like this? They are chilling since they allow health care providers to apply the threat of no signature – no treatment to patients. If patients refuse to give up constitutional rights by signing the agreements with physicians and hospitals, they may find the ability to get treatment is difficult.

The practical problem with this type of procedure is that most patients blindly sign the forms given to them by physicians and hospitals without really giving them thought or considering the effect they could have upon them.

Physicians have long abandoned the credo contained in the Hippocratic Oath: “I will apply measures for the benefit of the sick according to my ability and judgment; I will keep them from harm and injustice.

Keeping their patients from “injustice” apparently was lost along the way.

Do you know what “force placed insurance” means?

With any luck you will never have to know what it means, but typically it translates to:

• No control
• Inflated premiums
• Very limited coverage
• Increased mortgage payments

Force placed insurance on your home can happen under a number of different circumstances.

For example, your homeowner’s insurance company tells you they will only insure your home for the value of the structures and will not include the land; let’s say $200,000. The mortgage company tells you they want coverage in the amount of the mortgage at minimum; let’s say $300,000.

Force placement can happen with your mortgage company purchasing a policy for you that provides $100,000 coverage in excess of the $200,000 policy you obtain and your mortgage company then pays for both policies through your mortgage payment; usually increasing it substantially. It can also happen by your mortgage company telling you they will obtain a policy in the amount of $300,000 and pay for it through your mortgage; again usually increasing your mortgage payment significantly.

These two scenarios may not sound all that terribly unreasonable, right? They do not until the homeowner sees the amount of the premium being charged by the force placed insurance company. Premiums for the force placed coverage can be 5 to 10 times more costly than homeowners insurance you and I might buy from an insurance company.

Let’s take the following example:

• $2000 per month mortgage payment
• $6ooo per year premium ($500 per month)
• $2500 per month mortgage & insurance payment
• Forced placement increases insurance premium to $18,000 per year ($1500 per month)
• $3500 per month new mortgage & insurance premium

A more than 30% per month increase in mortgage payments would send many homeowners directly into foreclosure.

Also, almost always, the only “person” covered is the mortgage company with no insurance protection given to the homeowner at all.

How can they do this? There are many factors driving this trend; some legitimate, some semi-legitimate and some possibly fraudulent.

Mortgage companies must be permitted to protect their mortgage amounts. In today’s insurance environment, a homeowner may have their insurance cancelled (through no fault of their own) and may not be able to find replacement coverage. It is unfair to the mortgage holder to be without insurance to protect their mortgage amount in the event of fire or other catastrophe.

Mortgage companies often must place insurance rapidly and in geographic areas not favored by the standard insurance industry company. In Florida, for example, between legislators and insurance companies, they have mucked up the insurance environment so badly that coverage can be difficult to obtain. So, when mortgage companies have had to place quick coverage, they have often gone to “surplus lines companies”.

Surplus lines companies, at least in Florida, have virtually no regulation; their premiums are unregulated, their premium increases are unregulated, their financial solvency is marginally monitored and there is no protection provided in the event of a surplus lines insurance company bankruptcy.

Recently, Florida legislators have been toying with the idea of kicking homeowners out of the state sponsored company, Citizens, and sending a number of them to surplus lines companies. This, of course, is a colossally stupid idea, but that fact is likely not going to sway Florida lawmakers.

The American Banker reports that Wells Fargo has gotten itself in a potential jam as a result of force placing insurance with OBE Insurance Company and then receiving as much as a 40% commission for placing the coverage.

It is estimated that, in Florida, we are talking about over $50 million in premiums and at 40%, Wells Fargo is making $20,000,000 on force placing coverage. More commonly commissions are in the area of 15% to 20%, but that still would represent a windfall of as much as $7.5 million to lenders engaging in this practice.

So, the case filed in the US District Court in the Southern District of Florida provides significant potential financial loss for Wells Fargo. Judge Robert Scola, Jr. is the judge overseeing the litigation (Williams v Wells Fargo) and he issued a warning to Wells Fargo concerning their treatment of homeowners going forward:

“Wells Fargo has unabashedly set out its threats to retaliate against any homeowner seeking to avoid alleged excessive and inflated force-placed insurance premiums,” Scola wrote. The judge added that he intends to prevent the bank from “establishing post-litigation, vindictive business practices.”

It is likely that Wells Fargo is not alone in these practices. The New York Times reports that the NY Department of financial Services has sent out subpoenas seeking information from lenders about their respective involvement. Subpoenas have been sent to lenders including:

• JP Morgan Chase
• CitiMortgage
• Bank of America
• Citigroup
• Morgan Stanley Mortgage Capital Holdings

Should the words “force place insurance” come out of your mortgage company representative’s mouth, ask questions. Try to obtain coverage on your own or through your insurance agent.

Ask the mortgage holder:

• Who are they placing the coverage through?
• Is it a surplus lines company?
• Will you be provided with coverage in addition to the mortgage holder?
• Will the mortgage holder or any of its subsidiaries be receiving commissions from the force placed coverage?
• How much will the premium be?
• Are there alternatives?

Demand complete answers to your questions. If necessary, contact an attorney who practices in lender or foreclosure law. Contact the Department of Financial Services in Florida or the Attorney General consumer affairs office.