Nearly 5 years after Florida lawmakers clamped restrictions on assignment-of-benefits agreements and two years after they successfully outlawed AOBs altogether, state appeals courts could have lastly put an finish to 1 inventive means that been utilized in makes an attempt to get across the legislation.
Florida insurance coverage business advocates mentioned some gamers, although, will doubtless proceed to hunt new mechanisms to skirt the legal guidelines that took away what was as soon as a extremely profitable enterprise mannequin for various contractors and policyholder attorneys.
“I’m positive they’ll nonetheless give you a method to attempt to get across the statutes,” mentioned Tiffany Roddenberry, an lawyer with the Holland & Knight legislation agency who was concerned in two current AOB appeals. “However at the very least on this, the appeals courts have come out in opposition to it and are in settlement.”
In the latest resolution, Florida’s 5th District Courtroom of Appeals late final week upheld a Marion County choose’s ruling that discovered that a corporation often known as Holding Insurance coverage Firms Accountable LLC had no standing to sue Tampa-based American Integrity Insurance coverage Co. The case was certainly one of a number of that the plaintiff, abbreviated as HICA, had pursued for years in opposition to American Integrity and in opposition to Safety First Insurance coverage, two of the most important insurers within the state.
All of it started in 2019, because the insurance coverage litigation disaster within the state worsened. The Florida Legislature that spring authorized Home Invoice 7065, which turned the landmark statute 627.7152 and put new limits on AOBs in an try to cut back lawsuits.
HICA argued within the attraction that it was not a contractor, solely a service that advocated on behalf of house owners. The AOB legislation, together with its guidelines requiring an itemized itemizing of harm to the property, signed agreements, notices of intent to file go well with, provisions to permit insureds to rescind the agreements, limits on lawyer charges, and different provisions, didn’t apply, the group mentioned.
Leonard Caruso, a home-owner in The Villages who had sustained some wind injury to his roof, had filed a declare and employed Noland’s Roofing Inc. to make the repairs. Caruso signed a directive to pay, primarily instructing his insurer, American Integrity, to pay the roofer. He additionally signed an AOB contract with HICA, which calls itself a enterprise that helps implement householders’ rights beneath their insurance coverage insurance policies, the appellate courtroom defined.
However the courts held that HICA principals had pledged to provide restoration from the lawsuits to Noland’s Roofing, its chosen contractor. That’s the similar as an AOB, the trial and appellate courtroom judges famous.
“Because the trial courtroom discovered, this obligatory pass-through of advantages from HICA to Noland’s Roofing locations the project throughout the broad attain of part 627.7152,” Choose Harvey Jay wrote within the 5th DCA’s Jan. 3 opinion. “Although HICA won’t personally scale Caruso’s home to restore his roof, it’s looking for funds to facilitate these repairs.”
The Florida Legislature in 2019 had mandated that AOBs adjust to all provisions of the assignments legislation. And since the HICA project settlement didn’t try this, it’s invalid and unenforceable, the courtroom famous.
The ruling adopted related current choices: one by the 5th DCA in December in one other HICA go well with filed in opposition to American Integrity; one in Might involving American Integrity; and one other in February 2024, by the twond DCA, involving Safety First. The twond District Courtroom additionally in 2022 ruled against one other contractor, Richie Kidwell’s Air High quality Assessors, in yet one more American Integrity case. The courtroom discovered that Air High quality’s settlement with a home-owner was, actually, an AOB and didn’t adjust to the 2019 legislation, regardless of Kidwell’s arguments that it was an evaluation of harm, not an project of advantages.
Maybe seeing the futility of pursuing additional appeals, HICA in December tried to drop its attraction of the Caruso go well with. However the 5th DCA refused to simply accept the dismissal “as a result of the difficulty offered is certainly one of significance and for which a broadcast resolution can be useful,” the judges famous, citing the precedent of a 2016 courtroom ruling.
The current appellate choices are thought of important victories for insurance coverage corporations which have battled AOB fits for years, mentioned William Massive, president of the Florida Justice Reform Institute. Massive and Roddenberry penned amicus curiae briefs in two of the 2024 appeals, on behalf of the insurance coverage business.
“This attraction presents a difficulty of paramount significance to Florida’s property insurance coverage business: making certain the applying of legislative reforms designed to forestall abuse of assignments of advantages,” reads the amicus brief within the December 5th DCA HICA attraction, determined Dec. 23, 2024.
AOBs could have began as a method to make it simpler for storm-stricken householders to go away the hurricane restoration and insurance coverage restoration work to others. However by the mid-2010s, a number of contractors and their attorneys had discovered to sport the system and reap the benefits of one-way lawyer charges, producing 1000’s of pointless lawsuits in opposition to insurers and abusing the authorized system, Massive and others have argued.
“Research have confirmed these abuses, and underlined additional that AOBs have been one of many driving forces of insurance-related litigation in Florida since 2000,” the Justice Reform Institute’s transient famous. The Institute’s personal 2019 research, authored by business consultants and lobbyists Mark Delegal and Ashley Kalifeh, mentioned the variety of lawsuits introduced by AOB holders had elevated by 16,000% within the twenty years since 2020.
The current appeals have been anticipated after the 2019 AOB legislation was adopted, and it has taken 5 years for courts to nail down the complete attain of the statute, Massive famous. This implies insurers can now know the extent of the legislation for actuarial functions. It’s unlikely the HICA fits shall be appealed to the state Supreme Courtroom.
And though Florida lawmakers in 2022 in a particular legislative session particularly put an end to assignments of benefits, the a number of lawsuits by Holding Insurance coverage Firms Accountable exhibits the lengths that some contractors will go to attempt to get across the statutes, insurance coverage attorneys mentioned.
“It all the time surprises me the creativeness that a few of these folks have,” Massive mentioned.
And in as an alternative of AOBs, some restoration corporations proceed to pursue related agreements beneath the title of “directives to pay.” The 5th DCA addressed that situation solely in passing within the Jan. 3 opinion.
“I don’t suppose this resolution was a lot a commentary on ‘instructions to pay’ as it’s on what qualifies as an project of advantages beneath FS 627.7152,” mentioned south Florida lawyer Michael Packer, of the Marshall Dennehey legislation agency. “I feel the 5th DCA, following the lead of the second DCA, is sending a message that they don’t seem to be going to look favorably on these makes an attempt to bypass the necessities” of the 2019 AOB statute.
Picture: In January 2018, greater than 125 insurance coverage brokers from throughout Florida, together with members of the Shopper Safety Coalition, marched to the Florida Capitol to focus on the necessity for AOB reform. (Colin Hackley photograph)
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