This document does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h0959z1.DOCX
DATE: 5/26/2022
HOUSE OF REPRESENTATIVES STAFF FINAL BILL ANALYSIS
BILL #: CS/CS/CS/HB 959 Department of Financial Services
SPONSOR(S): Commerce Committee; Finance & Facilities Subcommittee; Insurance & Banking
Subcommittee; LaMarca
TIED BILLS: IDEN./SIM. BILLS: CS/CS/SB 1874
FINAL HOUSE FLOOR ACTION: 113 Y’s
0 N’s GOVERNOR’S ACTION: Approved
SUMMARY ANALYSIS
CS/CS/CS/HB 959 passed the House on March 4, 2022, as amended, and subsequently passed the Senate
on March 4, 2022.
The bill makes changes to programs of the Department of Financial Services (DFS).
Amends several laws related to a multi-year upgrade to the state’s financial systems, known as the
PALM Project (Planning, Accounting, and Ledger Management).
Makes employees of the Division of Rehabilitation and Liquidation part of the State Group Insurance
Program.
Reduces penalties and creates educational tools within the Division of Workers’ Compensation:
o Changes the definition of “employer” used in workers’ compensation law;
o Requires an online tutorial for persons seeking an exemption from the workers’ compensation law;
o Lengthens a deadline for non-compliant employers to submit payroll records for penalty calculation;
o Reduces penalties for employers with no prior incidents of non-compliance;
o Provides that a required notice of rights may be sent to employees by mail or email; and
o Eliminates a requirement for in-person payroll audits of some construction businesses.
In the Division of State Fire Marshal, the bill updates boiler regulations and deletes a $50 exam fee;
changes the certification requirements for firefighters and fire safety inspectors; permits the use of grant
funding to pay for tools and protective clothing; and increases penalties for violations of laws related to
fire protection systems.
Amends licensing requirements for embalmers and funeral directors regulated by the Division of
Funeral, Cemetery, and Consumer Services.
Makes process served upon the Chief Financial Officer (CFO) binding on an insurer when DFS notifies
the insurer that process is available on a secure online portal.
Amends laws of the Division of Insurance Agent and Agency Services to:
o Add an exemption to the examination requirement for the all-lines adjuster license;
o Provide additional authority for investigation of licensees;
o Allow unaffiliated insurance agents to adjust claims without surrendering their appointments;
o Revise statutes related to the use of fingerprints in background checks, to comply with federal law;
o Create notice requirements for insurance agencies that stop doing business; and
o Modifies existing laws for public adjuster compensation, qualifications and bonding requirements.
Transfers the Florida Patient’s Compensation Fund to the CFO until dissolution by December 31, 2023.
The bill has an indeterminate fiscal impact on state and local government and the private sector.
The bill was approved by the Governor on May 25, 2022, ch. 2022-138, L.O.F., and will become effective on
July 1, 2022, except as otherwise provided.
STORAGE NAME: h0959z1.DOCX PAGE: 2
DATE: 5/26/2022
I. SUBSTANTIVE INFORMATION
A. EFFECT OF CHANGES:
Planning, Accounting, and Ledger Management (PALM) Project
Since 2014, the Department of Financial Services (DFS) has been upgrading its financial systems,
known as the Cash Management Subsystem (CMS) and the Florida Accounting Information Resource
subsystem (FLAIR), which were developed in the 1970s and implemented in the 1980s.
1
Effect of the Bill
Amendments reflect the transition to the new financial system, called Florida PALM (Planning,
Accounting, and Ledger Management) which has begun. A task force that developed a business plan
for the new financial and cash management system is disbanded. Technical changes are made
because agencies will no longer need to post a journal transfer to notify the Chief Financial Officer
(CFO) that a charge-back is needed. The term “Cash Management Subsystem” is replaced with
“Financial Management Subsystem.”
2
Division of Rehabilitation and Liquidation
The DFS Division of Rehabilitation and Liquidation serves as the receiver whenever an insolvent
Florida insurer is ordered into rehabilitation or liquidation. The division has 51 employees and 14
retirees who participate in the Florida Retirement System; these persons have not been part of the
State Group Insurance Program (SGI Program), because their salaries and benefits are funded by
assets managed by the division rather than state appropriations. To be eligible for participation in the
SGI Program, an employee must be paid by a state warrant. The SGI Program includes health and
welfare insurance benefits for active and retired state employees and their families, including: health
insurance; flexible spending and health savings accounts; life insurance; and dental, vision, and
supplemental insurance products.
3
Effect of the Bill
The bill makes full- and part-time state employees, retired employees, and surviving spouses of
employees of the Division of Rehabilitation and Liquidation eligible for the SGI Program, beginning with
the 2023 plan year.
The bill amends the definitions for full- and part-time state employees, retirees, and surviving spouses
to make such persons eligible for benefits even though employees of the Division of Rehabilitation and
Liquidation are not paid by state warrant. The cost of employee health insurance would continue to be
paid by estates that are liquidated by the division; therefore, no state appropriations are needed. The
division would no longer have the administrative burden of procuring health insurance on its own in the
private market.
The division would be responsible for paying the monthly premiums that currently apply to early
retirees, as follows:
1
S. 17.0315, F.S.
2
Florida Department of Financial Services, Florida PALM, https://www.myfloridacfo.com/floridapalm/ (last visited Feb. 14,
2022).
3
S. 110.123, F.S.
STORAGE NAME: h0959z1.DOCX PAGE: 3
DATE: 5/26/2022
Current Premiums for "Early Retirees"
4
Monthly Cost
High Deductible Plan – Individual $736.80
High Deductible Plan – Family $1,632.05
Standard Plan – enhance benefits – Individual $805.12
Standard Plan – enhance benefits – Family $1,801.08
Division of Accounting and Auditing
Every state and local government entity provides its financial information to DFS annually, so DFS can
prepare annual financial statements for the state of Florida and provide an online clearinghouse for the
financial statements of every county, municipality, and special district in Florida. The Florida Open
Financial Statement System is open to public inspection.
5
Effect of the Bill
The bill changes the name of the state’s annual report from “comprehensive annual financial report
6
” to
“annual comprehensive financial report.” The bill also specifies the electronic file format (XBRL) local
governments must use to file audits and financial reports with the Florida Open Financial Statement
System. This is intended to create efficiencies in local government financial reporting and implement
the recommendations of the OPPAGA Local Efficiency Task Force.
7
Division of Workers’ Compensation
Workers’ compensation is a no-fault system that provides medical benefits and compensation for lost
wages when an employee is injured or killed in the course of employment. Employers must secure
coverage, and may do so by purchasing insurance from an authorized carrier or through an employee-
leasing agreement, qualifying as a self-insurer, or purchasing coverage from the Florida Workers’
Compensation Joint Underwriting Association, Inc. (FWCJUA)
8
, which is the state-sponsored insurer of
last resort. In return for providing compensation, the employer is relieved of liability for workplace
injuries and may only be sued for intentional acts that result in injury or death.
9
Definition of Employer
Chapter 440, F.S., includes a specific definition of “employer” for the purposes of workers’
compensation, at s. 440.02(16)(a), F.S., which states:
“Employer” means the state and all political subdivisions thereof,
all public and quasi-public corporations therein, every person
carrying on any employment, and the legal representative of a
deceased person or the receiver or trustees of any person.
“Employer” also includes employment agencies, employee leasing
companies, and similar agents who provide employees to other
persons. If the employer is a corporation, parties in actual control
of the corporation, including, but not limited to, the president,
officers who exercise broad corporate powers, directors, and all
shareholders who directly or indirectly own a controlling interest in
the corporation, are considered the employer for the purposes of
ss. 440.105, 440.106, and 440.107.
4
Ch. 2021-36, Laws of Fla., pp. 425-426.
5
S. 218.32(1)(h), F.S.
6
S. 216.102(3)(b), F.S.
7
Department of Financial Services (DFS), Agency Analysis of 2022 CS/CS/House Bill 959, pg. 6 (Feb. 1, 2022).
8
S. 627.311(5)(a), F.S.
9
Ss. 440.015, 440.09, 440.10, 440.38, and 627.313, F.S.
STORAGE NAME: h0959z1.DOCX PAGE: 4
DATE: 5/26/2022
The meaning of the words “similar agents” was disputed in a lawsuit brought against the FWCJUA,
which refused to issue a policy to an out-of-state talent agency doing business in Florida because the
talent agency was not licensed in Florida as an employee leasing company.
The question of whether the FWCJUA was required to issue a policy to the talent agency was not
resolved, but the First District Court of Appeal held that the use of the words “similar agents” in the
definition of employer supported the conclusion that the talent agency was an employer subject to the
workers’ compensation law, even though the talent agency was not an employee leasing company
subject to licensure in Florida.
10
Effect of the Bill
The bill deletes the works “similar agents” and rephrases the statutory definition of employer used in the
Workers’ Compensation Law.
11
The new definition, in relevant part, states:
The term also includes employee leasing companies, as defined in s.
468.520(4), and employment agencies that provide their own employees
to other persons.
Exemptions
All private sector non-construction businesses with four or more employees must have workers’
compensation coverage for employees, and may provide coverage by purchasing insurance or
qualifying as a self-insurer. In the construction industry, coverage is required for every employee, even
if a business consists of a sole proprietor.
12
Corporate officers identified in a charter or articles of incorporation filed with the Division of
Corporations of the Department of State may elect an exemption from Florida’s Workers’
Compensation Law
13
by electronically submitting a form and paying a $50 fee to the DFS Division of
Workers’ Compensation (DWC). By doing so, the exempt officer indicates that he or she is not covered
by workers’ compensation insurance, and not entitled to benefits in the event of injury. In the
construction industry, no more than three corporate officers may elect such exemptions.
14
If a corporate officer elects an exemption, or DWC revokes an exemption, DWC sends a notice to any
carrier the corporate officer identified in his or her application for exemption.
15
Effect of the Bill
The bill adds an online tutorial to the exemption application process to ensure that business owners
receive accurate information and understand the penalties that can result from violations of the
coverage and compliance requirements. Corporate officers would have to complete the online tutorial to
obtain an exemption. DWC has videos on a variety of topics posted on its website.
Additional changes include:
Applicants must provide the Federal Employer Identification Number of their business rather
than a personal Social Security number;
10
Florida Workers’ Compensation Joint Underwriting Association, Inc. v. American Residuals and Talent, Inc., 284 So.3d
1115, 1119 (Fla. 1st DCA 2019).
11
See ch. 440, F.S.
12
S. 440.02(17)(b)2, F.S.
13
Ch. 440, F.S.
14
Ss. 440.02(15)(a) and 440.05, F.S.
15
S. 440.05(3), F.S.
STORAGE NAME: h0959z1.DOCX PAGE: 5
DATE: 5/26/2022
A notice would be added to the Certificate of Election to be Exempt, stating that the certificate is
not a license issued by the Department of Business and Professional Regulation.
A provision that requires exempt corporate officers in the construction industry to maintain
business records would be deleted.
And DWC would send electronic notice that a corporate officer has elected an exemption, or
has been issued a notice of revocation only upon the request of an insurance carrier, and thus
avoid the cost of mailing notices (which can be retrieved online) to any carrier(s) the corporate
officer identified in his or her application for exemption.
The proposed effective date for changes to s. 440.05, F.S., is January 1, 2023.
Compliance
DWC investigators visit worksites around the state to identify businesses that are required to secure the
payment of workers’ compensation for their employees but fail to do so.
If an investigator identifies employees who are not covered by workers’ compensation insurance and do
not have an exemption from the law, the investigator issues a stop-work order and advises the
employer that business records reflecting payroll during the two years prior to the stop-work order are
due within 10 business days.
16
If there is reason to believe an employer has materially misrepresented the number of employees on
the payroll, concealed information about injuries or accidents that would affect the amount of premium
due to the insurer, or misclassified employee duties to avoid paying appropriate premium, the
investigator issues a request for business records to determine if a penalty is warranted. If the employer
does not produce business records within 10 business days, the investigator serves a stop-work
order.
17
Stop-work orders cannot be released until the employer pays the penalty in full.
18
However, stop-work
orders may be conditionally released if the employer secures compensation for all employees and
provides proof of insurance to DWC, pays a $1,000 down-payment toward the assessed penalty, and
enters into a payment agreement or pays the penalty in full.
19
DWC will not enter into a payment
agreement with an employer that has defaulted on a prior payment agreement; in such cases, DWC
reinstates a stop-work order that had been conditionally released.
20
DWC posts information about stop-
work orders on its website for five years and is required to update such orders daily.
21
Penalties must be equal to the greater of: two times the premium the employer would have paid,
according to the employer’s payroll records, based on the approved manual rates for every non-exempt
employee who was not covered by workers’ compensation insurance during any period of time within
the two years prior to service of the stop-work order; or $1,000.
22
If an employer fails to submit business records for the calculation of a penalty, or the employer’s
business records are not sufficient to determine an employer’s payroll during the two years prior to
16
S. 440.107(3)(a)(c) and (f), and 440.107(7)(a), F.S.
17
S. 440.107(3)(a)(b)(c) and (f) and 440.107(7)(a), F.S.
18
S. 440.107(7)(a), F.S.
19
Id.
20
R. 69L-6.025, F.A.C.
21
S. 440.107(7)(a), F.S.
22
S. 440.107(7)(d)1, F.S
STORAGE NAME: h0959z1.DOCX PAGE: 6
DATE: 5/26/2022
issuance of a stop-work order, the law directs DWC to calculate a penalty for each employee, corporate
officer, sole proprietor, or partner based upon the statewide average weekly wage
23
multiplied by 1.5.
24
The law provides two credits that may reduce a penalty assessed by DWC:
An employer who has not previously been issued a stop-work order or order of penalty
assessment, and has purchased insurance to comply with the workers’ compensation law, may
receive a credit equal to the initial payment of the estimated annual policy premium, so long as
proof of coverage and payment of the initial premium is provided to DWC within 28 days of
service of the stop-work order or penalty assessment.
25
An employer who has not previously been issued a stop-work order or order of penalty
assessment may receive a 25 percent reduction in the assessed penalty if the employer
provides business records to DWC within 10 business days of receipt of a written request for
such records.
26
DWC must reinstate the stop-work order and make the unpaid penalty immediately due if the employer
fails to pay the penalty or enter into a payment agreement with the division within 28 days of the stop-
work order.
27
Penalty orders are rarely calculated and served within 28 days of the stop-work order;
thus, the law requires the employer to enter into a payment agreement before the employer knows the
amount of the penalty.
Effect of the Bill
The bill makes changes to workers’ compensation enforcement and compliance laws to increase the
likelihood of compliance and make penalties better reflect the type of violation the law addresses.
Specifically, the law makes business records due 21 days after receipt of a written request from DWC
(rather than 10 business days), and makes payment of the penalty, or execution of a payment
agreement, due within 21 days of service of the penalty assessment (rather than 28 days after service
of the stop-work order).
The two-year penalty period used for calculation of penalty would be reduced to one year for employers
who have not previously been issued a stop-work order and order of penalty assessment. The penalty
period would remain two years for employers that have previously been issued orders for non-
compliance with workers’ compensation law.
DWC would continue to post stop-work orders on its website for five years, but the requirement that the
website be updated daily would be eliminated.
Credits that may reduce a penalty would be adjusted:
The credit for the initial payment for workers’ compensation insurance would be allowed so long
as proof of payment is provided within 21 days of service of the penalty assessment, rather than
28 days of service of the stop-work order or penalty assessment.
And the 25 percent penalty reduction for employers who have not previously been issued a
stop-work order or order of penalty assessment would be allowed so long as the employer
provides business records within 21 days of receipt of a written request for such records.
23
Pursuant to s. 440.12(2)(b), F.S., the “statewide average weekly wage” means the average weekly wage paid by
employers subject to the Florida Reemployment Assistance Program Law as reported to the Department of Economic
Opportunity (DEO) for the four calendar quarters ending each June 30, which average weekly wage shall be determined
by DEO on or before November 30 of each year and shall be used in determining the maximum weekly compensation
rate with respect to injuries occurring in the calendar year immediately following.
24
S. 440.107(7)(e), F.S.
25
S. 440.107(7)(d)1.a., F.S.
26
S. 440.107(7)(d)1.b., F.S.
27
S. 440.107(7)(a), F.S.
STORAGE NAME: h0959z1.DOCX PAGE: 7
DATE: 5/26/2022
The bill creates one new credit: An employer who takes an online tutorial at a DWC worksite, and
correctly answers 80 percent of the questions, may receive an additional 15 percent reduction in the
penalty assessed by DWC.
The bill adds a requirement that an employer cannot enter into a payment agreement if the employer
has previously been assessed a penalty that remains unpaid. This is addressed in rules promulgated
by DWC but has not been required by statute.
DWC is funded by quarterly fees applied to net premiums and paid by insurance carriers and
employers that self-insure to the Workers’ Compensation Administration Trust Fund (WCATF). Fines
and penalties levied by DWC are also paid to the WCATF. DWC anticipates minimal fiscal impact,
because the collection rate may increase as the cost of assessed penalties decreases. Data provided
by DWC shows that less than one-third of penalties issued by DWC between 2015 and 2019 were paid
in full.
The proposed effective date for changes to s. 440.107, F.S., is January 1, 2023.
Notice of Rights to the Employee
When an employee suffers an injury in the course of employment, the employee must notify the
employer of the injury within 30 days, and the employer must report the injury to its insurance carrier
within seven days of such notification. The employer also must mail the injured worker an informational
brochure explaining the employee’s rights, benefits, and obligations, and the process for accessing
workers’ compensation benefits.
Effect of the Bill
The bill permits delivery of the brochure by mail or email and changes the mailing deadline from three
days to three business days.
Payroll Audits
The cost of workers’ compensation insurance is based primarily upon an employer’s payroll and the
types of duties employees perform. Employers pay an estimated premium at the commencement of a
workers’ compensation policy and receive a refund or a bill for additional premium due at the end of the
policy year, based on a payroll audit conducted by the insurance carrier.
The law requires payroll audits every other year for non-construction businesses. Businesses in the
construction industry that are large enough to have an experience rating factor applied to their premium
(meaning the policy is based on Florida premium of $5,750 in the prior year or $11,500 in the prior two
years) must be audited annually and the audit must take place at the employer’s worksite.
28
The Office of Insurance Regulation (OIR) promulgates rules for payroll audits that are adopted by the
Financial Services Commission. The rules require:
An annual physical audit for policies with premium of $10,000 or more, regardless of governing
classification;
A physical audit for all new businesses that have construction classifications, regardless of
premium; and
An annual physical audit for renewal policies that have construction classifications if the estimated
annual premium is $5,000 or more.
29
28
S. 440.381, F.S.
29
R. 69O-189.003(b)1, F.A.C.
STORAGE NAME: h0959z1.DOCX PAGE: 8
DATE: 5/26/2022
Other audits may be conducted by mail. Audits conducted by telephone are not permitted in lieu of mail
or physical audits.
30
Effect of the Bill
The bill requires in-person audits for construction businesses only if the construction business has an
estimated annual premium of $10,000 or more. Adoption of the bill would require changes to OIR rules
that require physical audits for all new construction businesses and for construction businesses that
have an annual premium of $5,000 or more.
Division of Funeral, Cemetery, and Consumer Services
The Division of Funeral, Cemetery, and Consumer Services has authority over pre-need burial
contracts as well as funerals and burial services. The division licenses funeral directors, embalmers,
and sales agents, and also conducts annual inspections of cemeteries and related facilities.
31
Fees for Services
In general, the price charged for burial rights, merchandise, and burial services is left to the
marketplace, but Florida law places limits on fees charged for certain related services, including the
transfer of burial rights from one purchaser to another, which may not exceed $50.
32
Effect of the Bill
The bill eliminates the $50 limit for fees paid for transferring burial rights, meaning the parties may
agree to a negotiated rate. This change has no impact on DFS revenues.
Licensing of Embalmers
To be licensed as an embalmer in Florida, an applicant must:
Complete coursework in mortuary science;
Complete coursework in communicable diseases;
Complete a one-year internship under a licensed embalmer;
Pass a written exam on the disposal of dead bodies;
Pass a licensing exam;
Submit fingerprints for a background check; and
Submit an application and pay an application fee.
33
For persons who are licensed to practice embalming in a state other than Florida and wish to be
licensed by DFS, there are two options:
Option One: The applicant must have been licensed in a state where the requirements are
substantially equivalent or more stringent than the requirements in Florida, and:
Provide documentation showing coursework in communicable diseases;
Pass a written exam on the disposal of dead bodies;
Submit fingerprints for a background check; and
Submit an application and pay an application fee.
34
30
R. 69O-189.003(b)3, F.A.C.
31
Ch. 497, F.S.
32
S. 497.277(2), F.S.
33
S. 497.368, F.S.
34
S. 497.369(b)1, F.S.
STORAGE NAME: h0959z1.DOCX PAGE: 9
DATE: 5/26/2022
Option Two: The applicant must have:
Practiced as a licensed embalmer for at least one year;
Passed a state licensing exam during the 10 years prior to application;
Provide documentation showing coursework in communicable diseases;
Pass a written exam on the disposal of dead bodies;
Submit fingerprints for a background check; and
Submit an application and pay an application fee.
35
Effect of the Bill
The bill simplifies requirements for persons who are licensed embalmers in another state and wish to
be licensed in Florida under Option One. Instead of demonstrating current licensure in a state where
the requirements are substantially equivalent or more stringent to those in Florida, the applicant must
show that he or she has worked full-time as a licensed embalmer in another state for no less than five
years.
Duties of Funeral Directors
Persons who sell and make financial arrangements for funeral services (including the disposition of
human remains through embalming, cremation or other means) must be licensed as funeral directors
and be affiliated with a licensed funeral establishment.
36
Certain duties may only be performed by licensed funeral directors, including setting the time of
services, acquiring the services of a clergy, obtaining vital information needed to file death certificates,
and obtaining burial transit permits. The funeral director must directly or indirectly supervise any
memorial service held prior to or within 72 hours of burial or cremation, if such memorial service is sold
or arranged by a licensee.
Licensure is not required for persons who perform related services, like ordering flowers, furnishing
price lists, and transporting bodies.
37
35
S. 497.369(b)2, F.S.
36
S. 497.372, F.S.
37
Id.
STORAGE NAME: h0959z1.DOCX PAGE: 10
DATE: 5/26/2022
Effect of the Bill
The bill eliminates the requirement that only licensed funeral directors can set the time of services,
acquire the services of a clergy, obtain vital information needed to file death certificates, and obtain
burial transit permits. Additionally, the bill requires that the funeral director directly or indirectly
supervise all memorial services sold or arranged by a licensee.
Licensing of Funeral Directors
To be licensed as a funeral director, an applicant must:
Have an associates’ degree in mortuary science or an associates’ degree in another subject
and also have completed an approved course of study in mortuary science;
Complete a course on communicable diseases;
Complete a one-year internship under a licensed funeral director;
Pass an exam on the disposal of dead bodies;
Pass a licensing exam;
Submit fingerprints for a background check; and
Submit an application and pay an application fee.
38
For persons who are licensed as a funeral director in a state other than Florida and wish to be licensed
by DFS, there are two options:
Option One: The applicant must have been licensed in a state where the requirements are
substantially equivalent or more stringent than the requirements in Florida, and:
Complete coursework in communicable diseases;
Pass a written exam on the disposal of dead bodies;
Submit fingerprints for a background check;
Submit an application and pay an application fee.
39
Option Two: The applicant must have completed a licensing exam in another state that is substantially
equivalent or more stringent than the licensing exam in Florida, and:
Have an associates’ degree in mortuary science or an associates’ degree in another subject
and also have completed an approved course of study in mortuary science;
Complete coursework in communicable diseases;
Complete a one-year internship under a licensed funeral director;
Pass a written exam on the disposal of dead bodies;
Submit fingerprints for a background check; and
Submit an application and pay an application fee.
40
Effect of the Bill
The bill changes the licensing requirements for persons who are licensed funeral directors in other
states and seek licensure in Florida. Applicants seeking licensure under Option One must show that
they are in good standing in their state of licensure and that they have practiced as a licensed funeral
director for no less than five years. Applicants seeking licensure under Option Two may be licensed if
they hold a certificate from an accredited program in mortuary science but have not earned an
associate’s degree.
38
S. 497.373, F.S.
39
S. 497.374(b)1, F.S.
40
S. 497.374(b)2, F.S.
STORAGE NAME: h0959z1.DOCX PAGE: 11
DATE: 5/26/2022
Division of State Fire Marshal
The State Fire Marshal protects people and property throughout Florida and has authority to inspect
buildings, structures, equipment, vehicles, and chemicals when there is reasonable cause to believe a
violation of the Florida Fire Code has occurred.
41
The State Fire Marshal has two bureaus:
The Bureau of Fire Prevention conducts safety inspections and reviews construction plans for all
state-owned buildings, regulates fireworks and the fire sprinkler industry, inspects and licenses
boilers, and certifies persons working in the fire suppression industry; and
The Bureau of Firefighter Standards and Training approves curricula and training at the Florida
State Fire College and certifies that fire service members meet industry standards. Persons may be
certified as a volunteer firefighter, firefighter, or administrator of a fire service provider (i.e., fire
chief, fire coordinator, fire director, or fire administrator).
42
Boiler Inspections
The State Fire Marshal performs inspections to ensure the safety of boilers in public buildings.
43
Effect of the Bill
The bill updates boiler inspection requirements to reflect current industry standards:
Requires carbon monoxide detectors in public lodging establishments that use boilers;
Deletes a $50 fee for a required exam that is now offered by the National Board of Boiler and
Pressure Vessel Inspectors;
Clarifies the type of information needed to obtain a boiler permit;
Clarifies that a fee is required if an inspector is required to make a special trip to conduct a testing
and verification inspection; and
Adjusts compliance deadlines if an insurance company authorized to sell boiler and machinery
insurance or an inspection agency accredited by the National Board of Boiler and Pressure Vessel
Inspectors fails to perform required inspections in a timely manner or fails to correct a violation
within 30 days.
Certification of Fire Inspectors
State and local fire inspectors may enter and inspect any buildings subject to fire safety laws.
To be certified as a fire inspector by the State Fire Marshal, a person must complete a 200-hour fire-
safety inspector training program and pass a fire-safety inspector certification examination or
demonstrate that he or she has had equivalent education and training in another state.
44
Additionally,
the applicant must be in good physical condition, as determined by a medical examination, and have
good moral character, as determined by a background investigation that includes the processing of
fingerprints for a national criminal background check. The applicant must provide a sworn affidavit
stating that he or she does not use tobacco.
45
41
Chs. 554 and 633, F.S.
42
Department of Financial Services, Division of State Fire Marshal, What We Do, https://myfloridacfo.com/Division/SFM/
(last visited Feb. 14, 2022).
43
Department of Financial Services, Division of State Fire Marshal, Boiler Safety Section,
https://www.myfloridacfo.com/Division/sfm/BFP/BoilerSafety/default.htm (last visited Feb. 14, 2022).
44
S. 633.216, F.S.
45
S. 633.412, F.S.
STORAGE NAME: h0959z1.DOCX PAGE: 12
DATE: 5/26/2022
Certificates are valid for four years; a certified fire safety inspector must complete 54 hours of
continuing education during the four-year period or pass an examination to renew the certificate.
46
Effect of the Bill
The bill eliminates the option of passing an exam, rather than completing 54 hours of continuing
education, to renew a fire safety certificate. Thus, the fire safety inspector certificate could only be
renewed if the certificate-holder completes 54 hours of continuing education during the four-year
certification period.
Certification of Firefighters and Commanders
To be certified as a firefighter, a person must complete a minimum standards course and exam
established by the State Fire Marshal or show proof of equivalent training in another state, and pass an
exam within one year of completing the minimum standards course. Additionally, the applicant must be
in good physical condition, as determined by a medical examination, and have good moral character,
as determined by a background investigation that includes the processing of fingerprints for a national
criminal background check. The applicant also must provide a sworn affidavit stating that he or she
does not use tobacco.
47
To serve as an administrative and command head of a fire service provider, or to work in a position
directing incident outcomes, a certified firefighter must earn a Special Certificate of Compliance. Such
person must be active as a firefighter, maintain a valid fire service instructor certificate and teach at
least 40 hours of instruction during a four-year period, and complete a Firefighter Retention Refresher
Course prior to expiration of the four-year period.
48
A certified firefighter who is employed as a fire chief, fire coordinator, fire director, or fire administrator
must obtain a Special Certificate of Compliance within one year of beginning employment.
49
Effect of the Bill
The bill deletes specific requirements for the Special Certificate of Compliance and instead provides
that the requirements to obtain and renew the Special Certificate of Compliance shall be established by
rule.
Renewing a Firefighter’s Certificate
Firefighter certificates of compliance are valid for four years. To renew a certification, a firefighter must:
Be active as a firefighter, meaning the certificate holder was employed as a firefighter or served
as a volunteer firefighter for at least six months during a four-year period; or
Hold a fire service instructor certificate and instruct at least 40 hours during a four-year period,
or
Complete a Firefighter Retention Refresher Course during the six months before the four-year
period expires, or
Retake and pass the Minimum Standards Course examination during the six months before the
four-year period expires.
50
Effect of the Bill
46
S. 633.216(4), F.S.
47
S. 633.408(4), F.S.
48
S. 633.408(6), F.S.
49
Id.
50
S. 633.414, F.S.
STORAGE NAME: h0959z1.DOCX PAGE: 13
DATE: 5/26/2022
The bill provides that the special certificate of compliance has the same renewal requirements as a
firefighter certificate of compliance. The bill also changes the definition of an active firefighter. Instead
of requiring at least six months of active service during a four-year certification period, the bill provides
the following definition:
As used in this section, the term “active” means being employed as a firefighter
or providing service as a volunteer firefighter as evidenced by the individual’s
name appearing on a fire service provider’s employment roster in the Florida
State Fire College database or a letter by the fire service provider attesting to
dates of employment.
Thus, to renew a certification, a firefighter would have to be included in a fire service provider’s
employment roster or provide a letter from a fire service provider attesting to the firefighter’s dates of
employment.
Additionally, the bill permits completion of the Firefighter Retention Refresher Course or passage of the
Minimum Standards Course examination at any time prior to expiration of the certificate.
Firefighter Assistance Grants to Local Fire Departments
The Office of the State Fire Marshal also oversees the Firefighter Assistance Grant Program which
awards grants to fire departments based on an annual needs assessment survey and restricts funding
to training, personal protective equipment, breathing equipment, and fire engine pumper equipment.
51
Effect of the Bill
The bill expands the types of equipment and tools that can be purchased with funds provided by the
Firefighter Assistance Grant Program. This allows the use of state grant funds for equipment and tools
that improve fire safety and rescue capabilities, and for protective clothing and equipment that complies
with standards of the National Fire Protection Association.
Fire Protection Contractors
The State Fire Marshal enforces laws related to the installation and maintenance of fire alarms and fire
protection systems, and licenses contractors who install, service, and repair such systems.
52
The term
“fire protection system” refers to any system designed to protect a structure from fire, and includes
things like sprinkler systems, foam extinguishing systems, fire hydrants and mains, hoses connected to
sprinkler systems, and tanks that supply water or pump fuel.
53
Any business engaged in the installation, sale, or service of fire protection systems must have at least
one employee who is certified as a contractor and use equipment and procedures that comply with
nationally accepted standards.
54
The State Fire Marshal may order a fire system suppression contractor to correct any violation of the
fire prevention and control laws, or suspend or revoke the license of such contractor.
55
The types of
activities that may lead to penalty include: failing to supervise or improperly servicing, repairing, testing,
or inspecting a fire protection system; rendering a fire protection system or water supply main
51
S. 633.135, F.S. and R. 69A-37.502, F.A.C.
52
Ss. 633.104, 633.316, and 633.318, F.S.
53
S. 632.102(11), F.S.
54
Ss. 632.102(11), 633.332 and 633.334, F.S.
55
S. 633.316(1), F.S.
STORAGE NAME: h0959z1.DOCX PAGE: 14
DATE: 5/26/2022
inoperative; violating building codes; or failing to maintain insurance coverage.
56
Additionally, a fire
protection contractor may not employ or otherwise permit work that is done by an unlicensed person.
57
Effect of the Bill
The bill increases penalties for contractors and unlicensed persons who violate laws related to fire
protection systems, by authorizing an administrative fine of up to $10,000 in addition to or in lieu of
suspension or revocation of a fire protection contractor certificate. The bill directs the State Fire Marshal
to adopt rules that provide for a range of penalties based on the severity and repetition of specific
offenses and mitigating and aggravating circumstances.
Division of Insurance Agent and Agency Services
The DFS Division of Insurance Agent and Agency Services is responsible for the licensing and
regulation of insurance agents, adjusters, insurance agencies, as well as related personnel and
business entities.
58
Service of Process
Every insurer licensed to do business in Florida must appoint the Chief Financial Officer (CFO) as
agent for service of legal process in any civil action or proceeding in Florida and provide the name and
e-mail address of the person to whom process received by the CFO should be forwarded.
59
The CFO also serves as the agent for service of legal process against any nonresident agent,
60
reinsurance intermediary,
61
nonresident health insurance agent,
62
nonresident independent or public
adjuster,
63
surplus lines insurer,
64
unauthorized insurer,
65
and viatical settlement provider.
66
Florida law requires that process be served upon a state officer, and then forwarded to the regulated
entity, to ensure that the regulator is aware of lawsuits served upon regulated entities. This is a
standard practice that is recommended by the National Association of Insurance Commissioners and
used in many states.
67
Effect of the Bill
The bill amends existing law, to clearly state that service of process is valid and binding on the insurer
on the date the insurer is notified that such information is available on a secure online portal.
Additionally, the bill states that service of process submitted through the secure online portal is the sole
method of service of process upon an insurer authorized to do business in Florida.
Unaffiliated Insurance Agents Adjusting Claims
56
Ss. 633.338(2), F.S.
57
S. 633.336(2), F.S.
58
Ch. 626, parts I, II, III, IV, V, VI, VIII, IX, and XIII, F.S.
59
S. 624.423(3), F.S.
60
S. 626.742, F.S.
61
S. 626.7492, F.S.
62
S. 626.836, F.S.
63
S. 626.8736, F.S.
64
S. 626.937, F.S.
65
S. 626.909, F.S.
66
S. 626.9912, F.S.
67
See National Association of Insurance Commissioners, Company Licensing Best Practices Handbook 2022, at 71
https://content.naic.org/sites/default/files/publication-clh-op-licensing-practices-handbook.pdf (last visited Feb. 14, 2022);
and National Association of Insurance Commissioners, Uniform Consent to Service of Process/Form 12,
https://www.naic.org/documents/industry_ucaa_form12.pdf (last visited Feb. 14, 2022).
STORAGE NAME: h0959z1.DOCX PAGE: 15
DATE: 5/26/2022
Unaffiliated insurance agents are licensed agents who work as independent consultants, analyzing
policies and providing advice or recommendations on insurance products for a fee. Such persons may
not be affiliated with an insurer, insurer-appointed insurance agent, or insurance agent contracted with
or employing insurer-appointed insurance agents.
68
Insurance agents who are licensed to sell and service insurance must be appointed by an authorized
insurer who sells the type of insurance the agent is authorized to sell.
69
The law was intended to prohibit conflicts of interest that would allow unaffiliated agents to compel
payments for referrals from affiliated agents or companies.
70
Effect of the Bill
The bill permits an insurance professional who holds both unaffiliated insurance agent license and an
adjuster license to obtain an adjuster appointment while continuing his or her work as an independent
consultant in the insurance industry. After a catastrophic storm, for example, the adjuster could be
appointed to adjust claims for an insurer without surrendering his or her unaffiliated agent
appointments.
Specifically, the bill amends the definition of unaffiliated insurance agent to state that a licensed
adjuster who is also an unaffiliated insurance agent may obtain an adjuster appointment while
simultaneously holding an unaffiliated appointment on his or her agent license.
Additionally, the bill amends the scope of the licensing law for insurance agents, to permit unaffiliated
agents who also hold an adjuster license to obtain an adjuster appointment and be compensated for
adjusting claims while maintaining his or her license as an unaffiliated insurance agent.
Fingerprints for Background Checks
The Florida Insurance Code authorizes DFS to investigate any applicant or licensee, and further states
that licensing statutes which require an evaluation of an applicant’s character or fitness must include
the submission of fingerprints for a national criminal records check.
71
Applicants and licensees submit
fingerprints to FDLE, which forwards the fingerprints to the FBI for a national background check.
72
National background checks conducted for non-criminal purposes are subject to Public Law 92-544,
which was enacted by Congress in 1972 and permits states to receive criminal history records from the
FBI so long as the state has enacted a law that requires the submission of fingerprints for appropriate
licensing and employment purposes.
The FBI processes fingerprints only if the criteria established by the U.S. Department of Justice has
been satisfied. To satisfy federal law, a state licensing statute must identify the specific categories of
licenses that require the submission of fingerprints as part of an application and expressly state that the
applicant’s fingerprints will be submitted to the FBI or submitted for a national criminal records
background check.
Effect of the Bill
The bill makes technical amendments to licensing laws to ensure compliance with federal law and
continuation of FBI background checks for agents and agencies seeking licensure in Florida.
68
S. 626.015(20), F.S.
69
S. 626.112, F.S.
70
S. 626.311(6), F.S.
71
S. 626.201, F.S.
72
S. 624.34, F.S.
STORAGE NAME: h0959z1.DOCX PAGE: 16
DATE: 5/26/2022
Seven of the laws being amended set forth the application requirements for persons seeking licensure:
As an insurance agent, customer representative, adjuster, service representative, or reinsurance
intermediary;
73
For an insurance agency;
74
As a limited lines licensee to transact motor vehicle physical damage and mechanical breakdown
insurance; industrial fire or burglary insurance; travel insurance; motor vehicle rental insurance;
credit insurance; crop hail and multiple-peril crop insurance; in-transit and storage personal property
insurance; and portable electronics insurance;
75
As a nonresident all-lines adjustor;
76
As an insurance navigator;
77
As a bail bond agent;
78
or
For temporary licensure (pending examination) as a limited surety agent or professional bail bond
agent.
79
Four of the laws being amended:
Provide authority to investigate the character, experience, background, and fitness of licensees and
applicants seeking licensure, and to require the submission of fingerprints as part of such
investigation;
80
Require the submission of fingerprints if DFS has reason to believe a licensee has been convicted
of a crime; is the subject of an acquisition; or employs or appoints a new partner, officer, or
director;
81
Authorize investigations of allegations of improper conduct by licensed persons and entities
(adjustors, agents, agencies, insurers) and related professionals (mediators and continuing
education providers);
82
and
Identify portions of the Insurance Code that are applicable to title agents and agencies.
83
Authority to Investigate Licensees
Applicants seeking licensure by DFS as an insurance agent, insurance agency, or bail bond agent are
subject to a background investigation to determine the applicant’s character, experience, background,
and fitness for the desired license.
84
The application process includes the submission of fingerprints for a national criminal background
check and a review of any prior violations of the Insurance Code. DFS may inquire about any matter
that is reasonably related to the character and fitness of a licensee upon application for a license,
renewal of a license, or reinstatement of a license.
85
DFS has the power and authority expressly conferred upon it and reasonably implied from the
provisions of the Insurance Code.
86
For investigations, the law provides the following express authority:
73
S. 626.171, F.S.
74
S. 626.172, F.S.
75
S. 626.321, F.S.
76
S. 626.8734, F.S.
77
S. 626.9953, F.S
78
S. 648.34, F.S.
79
S. 648.355, F.S.
80
S. 626.201, F.S.
81
S. 626.202, F.S.
82
S. 626.601, F.S.
83
S. 626.8411, F.S.
84
Ss. 626.201 and 648.27 F.S.
85
Ss. 626.201, 648.27, 648.34 and 648.355 F.S.
86
S. 624.307(2), F.S.
STORAGE NAME: h0959z1.DOCX PAGE: 17
DATE: 5/26/2022
DFS may investigate any matter to determine whether a violation of the Insurance Code has
occurred, or to secure information that may be useful in the lawful administration of the Insurance
Code.
87
This includes the authority to investigate the accounts, records, documents, and
transactions of licensees.
88
DFS may investigate the conduct of any licensee, upon its own motion or upon receiving a written
complaint signed by an interested person, so long as there is reasonable cause to believe that a
licensee has violated a provision of the Insurance Code.
89
A licensee that fails to respond to a
written request for documents or other information within 20 days of receipt of such request may be
subject to administrative penalties of up to $2,500.
90
Enforcement powers granted to DFS – including authority to issue orders to cease and desist,
administrative complaints to suspend or revoke a license and/or remove affiliated parties – apply to
licensees and their affiliated parties, and to unlicensed persons who engage in activities for which
licensure is required.
91
Effect of the Bill
The bill provides explicit authority to investigate licensees for violations of the Insurance Code even if a
license expires, is not renewed, or is surrendered. The bill also states that the withdrawal of a complaint
does not affect DFS’s authority to investigate or take administrative action against a licensee or former
licensee. An alleged violation must have occurred while the licensee held an active license.
Express authority is added to s. 626.201, F.S., which permits DFS to investigate applicants seeking
licensure or appointment in Florida. Identical express authority is added to s. 648.46, F.S., which
permits DFS to take disciplinary actions against licensed bail bond agents.
87
S. 624.307(3), F.S.
88
S. 624.317, F.S.
89
S. 626.601, F.S.
90
S. 624.307 (10)(b), F.S.
91
Ss. 624.310(2), 624.319(3)-(4) and (8), and 626.016, F.S.
STORAGE NAME: h0959z1.DOCX PAGE: 18
DATE: 5/26/2022
Closure of an Insurance Agency
Current law does not address the closure of an insurance agency. Some insurance agencies have
abandoned their offices and records, forcing DFS to work with landlords, retrieve records, and complete
unfinished work, like remitting checks to insurers and managing applications that were not filed.
Effect of the Bill
The bill provides directions for closure in the event that an insurance agency stops doing business for
more than 30 days. Within 35 days of the date the insurance agency stops doing business, the
insurance agency must:
Notify DFS of its closure and cancel its agency license;
Notify insurers, policyholders, and premium finance companies of the closure and provide
information about the agency or agent who has taken over the book of business; and
Ensure that all funds held in a fiduciary capacity are properly distributed to the rightful owner(s).
Failure to provide the required notifications could result in an administrative fine up to $10,000 per
violation and suspension or revocation of the agency license.
All-Lines Adjusters
An all-lines adjuster is a person who determines the value of a claim, loss, or damage payable under a
property or casualty insurance contract and tries to negotiate a settlement of such claim, loss, or
damage.
92
Such persons must pass a written exam recognized by DFS to be licensed unless they qualify for an
exemption.
93
Examination is not required for persons who earn an appropriate designation from a
regionally accredited postsecondary institution in Florida; or certification from a recognized professional
association whose curriculum has been approved by DFS, like the Insurance Institute of America or the
Claims and Litigation Management Alliance.
94
Effect of the Bill
The bill adds the Certified All Lines Adjuster certificate from Kaplan Financial Education to a list of
recognized programs that exempt an applicant from the examination requirement.
Title Agents and Agencies
Title insurance insures property owners against claims related to the ownership of an insured property,
liability for back taxes, and liens or other encumbrances.
95
Effect of the Bill
The bill includes clarifying amendments in six sections related to the sale of title insurance:
A title insurer may not sell policies unless both the agent and the agency are appointed by the
insurer;
96
Pre-licensing classes for title insurance agents may be taught online as well as in a classroom;
97
92
S. 626.8548, F.S.
93
Ss. 626.211 and 626.292, F.S.
94
S. 626.221(2)(j), F.S.
95
Ch. 626, part V, F.S.
96
S. 626.8412, F.S.
97
S. 626.8417, F.S.
STORAGE NAME: h0959z1.DOCX PAGE: 19
DATE: 5/26/2022
Both title agents and title agencies are required to have a separate appointment for each insurer
that has appointed the agent or agency;
98
Appointments for title agents and title agencies are renewable every two years;
99
Notice requirements related to the termination of an appointment apply to both title agents and title
agencies;
100
Sanctions related to the suspension or revocation of a license apply to both title agents and title
agencies.
101
Public Adjusters
Public adjusters file and negotiate insurance claims on behalf of a policyholder, for a fee. Florida law
limits reimbursement to a public adjuster to no more than 20 percent of a claim payment, or no more
than 10 percent of a payment for a claim that arose from an event that was declared a state of
emergency. The law additionally prohibits a public adjuster from offering any gratuity worth more than
$25, or any loan or advance to a client in return for representation in an insurance claim. Further, public
adjusters may not offer residential property owners any type of gratuity or rebate in return for permitting
a roof inspection, or making an insurance claim for roof damage.
102
Persons seeking licensure as a public adjuster must have been licensed and appointed as a public
adjuster apprentice, independent adjuster, or company employee adjuster for at least six months prior
to application.
103
Persons seeking licensure as a public adjuster apprentice must be licensed as an all-lines adjuster and
must post a $50,000 bond during his or her appointment to a public adjusting firm and for a year
following termination of such appointment.
104
Nonresident public adjusters may be licensed to do business in Florida if they satisfy the application
requirements, including passing a written exam, and demonstrating that they have been licensed and
employed as a public adjuster or insurance company adjuster or independent adjuster in a state other
than Florida during the six months prior to application. Additionally, the applicant must post a $50,000
bond that may not be terminated without 30 days written notice to DFS.
105
Effect of the Bill
The bill establishes requirements for public adjusting firms and their apprentices, and makes technical
changes to related laws:
Most homeowners, condo, and renter insurance include coverage for additional living expenses a
policyholder incurs if the policyholder cannot live in his or her home due to a covered loss. The bill
prohibits compensation to a public adjuster based on amounts attributable to additional living
expenses unless the public adjuster and the policyholder agree to such compensation in a separate
agreement that includes the following disclosure: "I agree to retain and compensate the public
adjuster for adjusting my additional living expenses and securing payment from my insurer for
amounts attributable to additional living expenses payable under the policy issued on my
(home/mobile home/condominium unit).”
98
S. 626.8421, F.S.
99
S. 626.843, F.S.
100
S. 626.8433, F.S.
101
S. 626.8447, F.S.
102
S. 626.854, F.S.
103
S. 626.865(1)(e), F.S.
104
S. 626.8651(1), F.S.
105
S. 626.8732, F.S.
STORAGE NAME: h0959z1.DOCX PAGE: 20
DATE: 5/26/2022
Creates a new provision which states that the rate of compensation paid to a public adjuster may
not be increased based solely on the fact that the claim is litigated, and amends existing law related
to public adjuster compensation to exclude attorney fees and costs;
Requires that adjusting firms seeking licensure include the name and license number of the
designated primary adjuster who is responsible for adjusters at each business location, and
requires fingerprints for background checks of the owner(s) as well as corporate officers and
directors;
Requires that an applicant for licensure as a public adjuster must have been licensed and
appointed in Florida as a non-resident public adjuster, or as an all-lines adjuster, on a continual
basis, during the six months prior to application;
Amends the definition of “public adjuster apprentice” to state that such apprentice must be
employed by a public adjusting firm, rather than employed by a public adjuster;
Requires that a $50,000 bond posted by each public adjuster apprentice remain in effect for one
year after termination of the public adjuster apprentice license, and requires that the public
adjusting firm provide DFS with notice of the primary adjuster who responsible for the supervision of
all adjusters at the firm’s location;
Requires that the $50,000 bond posted by each nonresident public adjuster must remain in effect
for one year following the expiration or termination of the public adjuster license, and also makes
changes to comply with federal law related to the use of fingerprints in national background checks,
discussed above.
The Florida Patient’s Compensation Fund
Florida experienced a medical malpractice insurance crisis in the mid-1970s when 20 professional
liability insurers responded to rising medical malpractice awards and settlements by cancelling
coverage of Florida physicians and withdrawing from the market. Companies remaining in the market
increased rates dramatically, with the leading insurer at the time requesting and receiving approval for a
100 percent increase in premium rates paid by doctors.
106
The Legislature responded by enacting The Medical Malpractice Reform Act of 1975, which, among
other things, created the Florida Patient’s Compensation Fund (Fund) to limit the risk exposure of
participating health care providers. Participants had to show proof of $100,000 coverage from an
insurer or self-insurance plan and deposit an annual fee into the Fund. The Fund paid the excess over
$100,000 for any judgment or settlement against a member. The Fund was capped at $25 million and
could not pay more than $1 million on a given claim in any single year.
107
The Fund attracted providers and ran smoothly for a few years but was not actuarially sound, so
substantial losses began to accumulate.
108
In 1982, the Fund assessed its members to cover deficits,
hospitals dropped out because most of the claims were against physicians, and the Fund was unable to
continue operating.
109
During its short tenure, the Fund received $72 million in membership fees and
$280 million in assessments; closed 4,595 claims and paid more than $311 million to victims of medical
malpractice.
110
106
U.S. General Accounting Office, Medical Malpractice Case Study on Florida, Report to Congressional Requestors,
December 1986, at 8, www.gao.gov/assets/hrd-87-21s-3.pdf, (last visited Feb. 14, 2022); and Florida House of
Representatives Committee on Insurance, The Florida Patient’s Compensation Fund: Status Report on Terminating
Activities of the Fund, December 10, 1994, at 1-7.
107
S. 765,105, F.S.
108
The Florida Patient’s Compensation Fund: Status Report on Terminating Activities of the Fund, supra note 106, at 7.
Section 766.105(3)(h), F.S., provides that the Fund must determine whether it has minimum membership levels to offer
coverage one week prior to the beginning of each fiscal year. The minimum membership thresholds of $5 million for non-
hospital providers and $12.5 million for hospitals could not be met when hospitals stopped participating.
109
Medical Malpractice Case Study on Florida, Report to Congressional Requestors, supra note 106, at 10.
110
The Florida Patient’s Compensation Fund: Status Report on Terminating Activities of the Fund, supra note 106, at 17-
18.
STORAGE NAME: h0959z1.DOCX PAGE: 21
DATE: 5/26/2022
Initially, the Fund was scheduled for sunset in 1991 and repeal in 1995; however, during a special
session in 1991 the Legislature revived and readopted all statutes that had been subject to future
repeal, including s. 766.105, F.S.
111
As a result, the law has not been subject to sunset review even
though the Fund has not accepted new members since June 30, 1983.
112
All private hospitals were required to join the Fund or demonstrate financial responsibility of at least
$10,000 per bed through self-insurance, by posting a bond or establishing an escrow account, or by
purchasing professional liability insurance. Compliance was delegated to the Agency for Health Care
Administration (AHCA), which required proof of membership or exemption for licensing and license
renewal. The requirement that AHCA determine compliance with s. 766.105(2)(d)2, F.S., remains, so
hospitals must demonstrate that they are exempt from participation in the Fund by providing proof of
financial responsibility through one of the following:
A bond posted in the amount equivalent to $10,000 per claim for each hospital bed, not to exceed a
$2,500,000 annual aggregate.
An escrow account in an amount equivalent to $10,000 per claim for each hospital bed, not to
exceed a $2,500,000 annual aggregate to the satisfaction of AHCA.
Professional liability coverage in an amount equivalent to $10,000 or more per claim for each
hospital bed, from a private insurer, the Joint Underwriting Association; or through a plan of self-
insurance as provided in s. 627.357, F.S., not to exceed a $2,500,000 annual aggregate. Include
proof of funding any self-insurance retention.
Sovereign immunity. State Agencies, subdivisions or instrumentalities of the state. No additional
documentation necessary if previously documented.
113
The Fund is an independent, tax-exempt entity created by the state, but OIR has supervisory authority
over the Fund’s Plan of Operation and any changes to the Plan of Operation, including repeal.
114
The law requires that OIR review any request for assessments of plan participants or refunds of plan
participants, and further states that the Fund is required to furnish audited financial reports annually,
upon request, to any fund participant and to OIR and the Joint Legislative Auditing Committee.
115
The following provides a short history of interactions between the Fund and OIR:
OIR Approved the Fund’s Plan of Operations in 1979;
116
OIR approved member fees in 1981, 1985, 1986 and 1989;
117
OIR ordered 12 assessments of Fund members and approved 11 refunds between 1982 and
2004;
118
In 1994, the Fund’s general manager advised the House of Representatives that it would take
about six or seven years to wind down the Fund’s operations, which, at that time, included 69
open claims that were the subject of litigation;
119
111
Id., at 1.
112
Office of Insurance Regulation, Target Market Conduct Final Examination Report of the Florida Patient’s
Compensation Fund, April 25, 2014, at 4, lamainrouge.net/siteDocuments/FLPatientsCompensationFund 04252014.pdf
(last visited Feb. 14, 2022).
113
Agency for Health Care Administration, Health Quality Assurance Licensure Form3130-8001s, Hospital, at 11,
https://Ahca.myflorida.com/MCHQ/HQALicensureForms (last visited Feb. 14, 2022)
114
S. 766.105(3)(c), F.S.
115
S. 766.105(3)(e)4, F.S
116
Email from Grant Phillips, Director of Legislative Affairs for the Office of Insurance Regulation, FPCF Order Timeline, at
26 (Nov. 16, 2021).
117
Id.
118
Target Market Conduct Final Examination Report of the Florida Patient’s Compensation Fund, supra note 112, at 7.
119
Id., at 20-21.
STORAGE NAME: h0959z1.DOCX PAGE: 22
DATE: 5/26/2022
The Fund rejected a proposal to merge with the Florida Medical Malpractice Joint Underwriting
Association in 2008, but promised to reduce its budget by 20 percent in 2009 and an additional
10 percent in 2010.
120
o In response, OIR noted that operating expenses of $325,950 (including $111,000 salary to
the general manager, at that time the Fund’s only employee) were not prudent because the
Fund had not written any new policies in 20 years. OIR suggested that the Fund meet once
per year, via conference call, and outsource the duties of the general manager.
121
o In reply, the Fund provided a legal opinion stating that its Articles of Association require a
general manager and that the Fund benefited from the general manager’s knowledge of the
Fund’s history and activities.
122
A 2014 market conduct exam conducted by OIR noted that the Fund’s operating expenses were
$330,950 in 2010, $338,700 in 2011, and $359,700 in 2012.
o The increase in operating costs was attributed to a “catastrophic computer failure” that
caused the Fund to lose all digital records related to refunds. A vendor used microfilm
records to restore the Fund’s digital system and the Fund installed automated backup
programs on its one desktop and two laptop computers.
123
By spring 2016, the Fund had negotiated a $3,334,000 deal with Berkshire Hathaway, which
was willing to accept liability for 10 annuities that were owned by the Fund and did not have a
unified qualified assignment that would have released the Fund from liability in the event an
insurer paying annuitants through a structured settlement became insolvent. A transfer to
Berkshire Hathaway would have allowed the Fund to issue refunds to former members and wind
down its activities. The Fund rejected the deal when final contract language gave OIR
contractual control over most of the Fund’s activities.
124
In the fall of 2016, the Fund submitted a request to OIR to issue refunds and wind the Fund
down, but was unable to persuade OIR that it did not have any contingent liability for some of
the annuities that were issued by insurance companies, and continue to be serviced by those
insurance companies, as part of structured settlements negotiated by the Fund decades
earlier.
125
In 2019, the Fund obtained releases of contingent liability from five annuitants whose remaining
payments exceed the $300,000 limit of the Florida Life and Health Insurance Guaranty
Association (FLAHIGA), which would be responsible for claims in the event an insurer servicing
the annuities became insolvent.
126
In 2021, an actuarial report conducted for the Fund found the Fund retains an ownership
interest in 15 annuities that have an aggregate future value of $12,680,687. In the event of an
insurer insolvency, many of the annuities would be covered by FLAHIGA, therefore the actuary
concluded that the Fund’s exposure to contingent liability is $2,403,590. About half of the
120
Correspondence from Stanley Marguilies, M.D., chairman of the Board of Governors of the Florida Patient’s
Compensation Fund to Insurance Commissioner Kevin McCarty, June 13, 2008.
121
Correspondence from Insurance Commissioner Kevin McCarty to Stanley Marguilies, M.D., chairman of the Board of
Governors of the Florida Patient’s Compensation Fund, Aug. 14, 2008.
122
Legal opinion of Zollie M. Maynard, Esq., general counsel for Florida Patient’s Compensation Fund, Sept. 18, 2008.
123
Target Market Conduct Final Examination Report of the Florida Patient’s Compensation Fund, supra note 112, at 6-8.
124
Correspondence from OIR Assistant General Counsel Alyssa S. Lathrop to General Manager of the Florida Patient’s
Compensation Fund Charles J. Portrero, Nov. 17, 2016; and Minutes of the May 18, 2017, meeting of the Florida Patient’s
Compensation Fund Operations Committee.
125
Correspondence from OIR Assistant General Counsel Alyssa S. Lathrop to General Manager of the Florida Patient’s
Compensation Fund Charles J. Portrero, Nov. 17, 2016; and Correspondence from David Yon, Esq., on behalf of the
Florida Patient’s Compensation Fund, to Susan Herendeen, Esq., of the Insurance and Banking Subcommittee of the
Florida House of Representatives, Dec. 22. 2021.
126
Correspondence from David Yon, Esq., on behalf of the Florida Patient’s Compensation Fund, to Jane Nelson of the
Office of Insurance Regulation, Aug. 4, 2021.
STORAGE NAME: h0959z1.DOCX PAGE: 23
DATE: 5/26/2022
remaining annuitants were children when their parents entered into structured settlements with
the Fund; therefore, some of the remaining annuities may continue for another 40 years.
127
Audited financial reports state that the Fund had total assets of $15,135,541 at the close of 2020; this
includes $14,888,634 held in investment accounts.
128
Thus, it appears that the Fund has enough assets
to cover its liabilities.
Operating costs have increased in recent years, because the Board of Governors approved the general
manager’s request for an assistant in 2015 and approved 4 percent annual salary increases for the two
Fund employees for 2017, 2018, 2019 and 2020.
129
The Fund contributes to an employee pension plan
and pays for legal counsel, accounting and auditing, rent and utilities, travel, and insurance.
130
The following comes from financial statements the Fund shared with its governing board and OIR:
2016 2017 2018 2019 2020
Salaries $181,754.00 $213,668.00 $221,600.00 $229,764.00 $240,417.00
Pension Plan $59,684.00 $52,303.00 $55,677.00 $54,424.00 $45,891.00
Rent, Utilities, and Janitorial $20,336.00 $16,704.00 $16,158.00 $16,758.00 $12,841.00
General Counsel $3,500.00 $42,195.00 $36,992.00 $35,339.00 $37,065.00
Accounting and Audit $73,513.00 $58,294.00 $52,578.00 $52,821.00 $39,126.00
Travel & Expenses (staff) $1,463.00 $4,087.00 $3,841.00 $1,962.00 $4,404.00
Travel & Expenses (board) $7,124.00 $20,327.00 $17,627.00 $21,905.00 $22,751.00
Effect of the Bill
The bill provides for a two-year wind down of the Fund that will be supervised by the Chief Financial
Officer through the DFS Division of Rehabilitation and Liquidation. DFS must dissolve the Fund on or
before December 31, 2023; ensure that the Fund has met its obligations to former members and
creditors; and make a final accounting for the finances of the Fund. DFS must attempt to return any
property held by the Fund to its owners; property that cannot be returned to the owner will be
transferred to DFS’s Division of Unclaimed Property. Any remaining money or assets of the Fund will
be transferred to the General Revenue Fund.
The bill also moves financial responsibility requirements for hospitals, which are part of s. 766.105,
F.S., to a new section within ch. 395, F.S., and makes conforming changes to retain the definition of
“health care provider” in laws that are cross referenced with s. 766.105, F.S.
The law
131
that created the Fund will be repealed on January 1, 2024.
Effective Date
The bill shall be effective upon becoming a law, except as otherwise provided. The effective date for the
educational tutorial that will be part of the workers’ compensation exemption application process is
127
Jack Swisher, ACAS, MAAA, Florida Patient’s Compensation Fund Annuity Insolvency Analysis, June 28, 2021, at 4-5;
and Correspondence from David Yon, Esq., on behalf of the Florida Patient’s Compensation Fund, to Jane Nelson of the
Office of Insurance Regulation, Aug. 4, 2021.
128
Carr Riggs & Ingram CPAs and Advisors, Florida Patient’s Compensation Fund Financial Statements, Dec. 31, 2020,
at 4.
129
Memo to the Florida Patient’s Compensation Fund Operating Committee from General Manager Charles Portrero, Nov.
19, 2018.
130
OIR monitors meetings of the Florida Patient’s Compensation Fund by telephone and receives copies of meeting
materials the Fund provides to its Board of Governors. OIR provided copies of meeting materials from 2011-2020 to the
Insurance and Banking Subcommittee.
131
S. 766.105, F.S.
STORAGE NAME: h0959z1.DOCX PAGE: 24
DATE: 5/26/2022
January 1, 2023. The effective date changes to reduce financial penalties for non-compliance with
workers’ compensation law is October 1, 2022.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
There is an indeterminate, but likely insignificant, fiscal impact on state revenues. DWC anticipates
a minimal impact from changes to the workers’ compensation fines and penalties assessed,
because the collection rate may increase as the cost of assessed penalties decreases.
132
The bill
also deletes a $50 exam fee for boiler inspectors, but no loss of revenue is expected, as the exam
is not conducted by the State Fire Marshal.
133
2. Expenditures:
The bill will have an indeterminate, but likely insignificant, negative fiscal impact on state
expenditures. See Fiscal Comments.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
Reducing the penalty calculation period and increasing credits for businesses that fail to comply with
the workers’ compensation law, so long as the business has not previously failed to provide workers’
compensation coverage for its employees, should reduce the cost of non-compliance for small
businesses, particularly those in the construction industry.
Permitting payroll audits by mail, rather than in person, for employers in the construction industry that
have an estimated annual workers’ compensation premium of less than $10,000 could result in modest
cost savings for insurance carriers.
Permitting unaffiliated insurance agents to adjust claims, so long as the agent is also a licensed
adjuster, could create employment opportunities for persons who hold both licenses and increase the
pool of adjusters who can respond in the aftermath of a large storm or catastrophic event.
Terminating the Florida Patient’s Compensation Fund could result in refunds to doctors and hospitals
that were members of the Fund in the late 1970s and early 1980s.
D. FISCAL COMMENTS:
132
Email from Austin Stowers, Director of Legislative Affairs, Department of Financial Services, RE: CS/CS/HB 959
Information Requested (Feb. 8, 2022).
133
Id. The exam is conducted by the National Board of Boiler and Pressure Vessel Inspectors.
STORAGE NAME: h0959z1.DOCX PAGE: 25
DATE: 5/26/2022
The cost of adding employees of the Division of Rehabilitation and Liquidation to the State Group
Insurance Program is indeterminate. Premiums to be paid by the Division of Rehabilitation and
Liquidation are the same as early retirees.
Before the dissolution of the Florida Patient’s Compensation Fund, DFS must attempt to return property
held by the Fund to its owners. Any property that cannot be returned to the owner will be transferred to
DFS’s Division of Unclaimed Property. Any remaining money or assets after the termination of the Fund
will be deposited by DFS in the General Revenue Fund. The Fund currently has a balance of $14.9
million and has not paid a claim since the 1980s.
134
134
Id.