Recent changes regarding Florida's Sinkhole law have effected the manner in which insurance companies defend sinkhole claims. Over the course of the last several years, the legislature, encouraged by heavy lobbying activity by the state's largest insurance carriers, has enacted several changes to the sinkhole law which alter the course of the trial of sinkhole cases. One such change is the alternative dispute resolution procedure, ostensibly known as, neutral evaluation.
Neutral evaluation was conceived as an alternative dispute resolution mechanism, similar in nature to mediation. The stated purpose of the neutral evaluation process was to avoid conflicts over disputed sinkhole claims and encourage settlement of claims. In addition to the alternative dispute resolution aspects of the statute, neutral evaluation also impacted the trial of sinkhole claims, because of two of the statute's provisions. While neutral evaluation is nonbinding, the report of the neutral evaluator is deemed admissible under the statute in any subsequent trial. In addition, the statute contains a mandatory stay provision, which requires the court to stay any litigation so that neutral evaluation can be completed.
Resoluting and nearly universally, insurers in all sinkhole cases have been seeking the mandatory stay and invoking neutral evaluation, in the hope of titling the playing field at trial in their favor, by having the evaluator, who is paid by the insurer, side with the insurer's investigating expert. The end result for trial practitioners is that the claimant may now be faced with two adverse experts, one described as neutral, testifying that no sinkhole activity exists. Many of the significant legal issues surrounding the neutral evaluation statute remain unresolved and there have been few test cases anywhere in the state to give trial lawyers guidance on the parameters of the neutral evaluator's role in the resolution of trial cases.
The neutral evaluation process, in my view, has had the opposite of its inteneded effect. Rather than promoting settlement of disputed claims, the process has re-invigorated insurers to deny claims entirely when the evaluator's report is favorable to the insurer and to manipulate the process to obtain an additional favorable opinion for use at trial against the insured. As a result, insurers have been more inclined not to settle cases and force insureds to trial, using the neutral evaluation process as both a sword and a shield.
Austin & Laurato, P.A. recently had the opportunity to partially try one of the first cases under the neutral evaluation statute in Hernando County. The neutral evaluator came out in favor of State Farm and found that no sinkhole activity was present at the property. State Farm relied heavily upon the findings of the neutral evaluator in the presuit process. Prior to trial, the trial judge made certain rulings favorable to State Farm, particularly that the neutral evaluator could testify and that his testimony would not be excluded as cumulative. In addition, the trial court ruled that neutral evaluator's report would be admissible, although the parties stipulated that all expert reports would be inadmissible. Accordingly, the neutral evaluator's testimony would be allowed, but his report would be excluded.
For reasons, unassociated with the neutral evaluator, the case was unable to be concluded and will be re-tried as provided for by law. The firm looks forward to raising the issues surrounding the neutral evaluator in front of the jury again and is encouraged by the experience gained thus far. The firm also looks forward to concluding the trial so that other claimants and lawyers in the field will be able to gauge the true impact the neutral evaluation statute may have on sinkhole claims statewide.
Michael V. Laurato, Esq.
Austin & Laurato, P.A.
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