Attorneys fees protected in rival insurance
claims reform bill
Article Courtesy of The Sun Sentinel
March 11, 2017
Now it’s the attorneys’ turn to pitch their version
of insurance claims reform.
Freshman state Sen. Gary Farmer, a Fort Lauderdale-based attorney and
former president of the trial attorneys’ trade organization Florida
Justice Association, is offering an alternative to a bill supported by
the insurance industry that would bar trial attorneys from collecting
fees in thousands of lawsuits against insurers.
filed last week, would not prohibit attorneys from
collecting legal fees if they represent repair
contractors working under an assignment of benefits.
But it would give insurers some of what they want:
.Notification of assignments [although within seven days
and not three]
At least a
10-day notification to insurers of any pending
lawsuit by contractors
The right by
policyholders to rescind assignments
A statement of
the scope of work to be performed included with
fifth-straight year, Florida’s property insurance
industry is asking the Legislature to help it cut claims
Led by state-run
Citizens Property Insurance Corp., insurers say water
damage claims are forcing rate increases that could soon
make insurance unaffordable for homeowners.
A Fort Lauderdale-based state senator has filed
an insurance claims reform bill that would not bar attorneys
from collecting fees if representing a water damage repair
company working under a post-loss benefit assignment.
They blame about a dozen South Florida law firms who they say are in
league with “bad actors” in the water damage restoration business.
Insurers say repair companies coerce policyholders into signing over
benefits of their policies, send inflated bills to insurers while
“standing in the shoes” of homeowners, then sue if insurers deny or try
to underpay claims.
If a settlement exceeds an insurer’s original offer, the insurer must
pay legal fees under a “one-way attorney fee” law that was originally
intended to give policyholders a fair shake in disputes with
deep-pocketed insurance companies.
Increasingly, insurers don’t learn about claims until served with
lawsuits, they say.
Insurers have tried to choke off the cash flow by seeking to control
homeowners’ ability to assign benefits. But Florida courts have
repeatedly affirmed policyholders’ assignment rights, and plaintiffs’
attorneys last week predicted courts would also strike down the
insurers’ latest proposal to restrict one-way attorneys fees.
Farmer said his bill strikes a balance by requiring notice of claims to
insurers before suits can be filed, while protecting policyholders’
rights to choose a repair company and sue if insurers fail to pay up. “I
just don’t believe eliminating assignments or changing the attorney fee
statute is the right way to do it,” he said.
If insurers had their way, they would require policyholders to accept
work by repair companies only they select, Farmer asserted. “And that’s
not fair. We all know what happens. Preferred vendors tend to side with
insurance companies’ [cost estimates] or give low-ball estimates so they
can get more work with the companies.”
Beyond excluding the one-way attorney fee restrictions, Farmer’s bill
differs from the insurers’ bill in several other ways:
The bill does not dictate what contractors should
include in their scope-of-work submissions. The insurers’ bill
requires “written, itemized, per-unit cost estimate” of the work to
be performed. Farmer said those requirements enable an insurer to
play “gotcha” and deny any expense not included in an estimate.
The insurers’ bill prohibits any assignment from
imposing penalties or fees against homeowners, including an
assignment rescission penalty or a mortgage or check processing fee.
Farmer’s bill does not.
The insurers’ bill requires notification of
assignments to insurers within three business days. Farmer’s bill
Unlike the insurers’ bill, Farmer’s bill would
not require assignees to comply with responsibilities required of
homeowners, including submitting to “examinations under oath and
recorded statements conducted by the insurer.”
Farmer’s bill would also require state licensing
of water restoration contractors and require all work performed to
current and accepted industry standards. The insurers’ bill does
Asked to comment on Farmer’s bill, Citizens spokesman
Michael Peltier said company officials are reviewing it.
But in a statement, Carolyn Johnson, spokeswoman for the Florida Chamber
of Commerce, said the bill “appears designed to protect the water
restoration industry at consumers’ expense and doesn’t get to the heart
of the issue … which is the explosion of Assignment of Benefits lawsuits
that is driving up insurance premiums and threatening the affordability
of homeownership in Florida.”
Johnson said the chamber’s Consumer Protection Coalition opposes any
bill that would impose penalties for rescission of assignments, and
believes “any effort to reform AOB abuse should eliminate one-way
attorney fees which are the fuel that allows profiteering attorneys to
file thousands of lawsuits against insurance companies without financial
But Florida Justice Association spokesman Ryan Banfill called Farmer’s
bill “a step in the right direction,” adding it “protects consumers and
their rights” while it “gets at the heart of the concern expressed over
the four-plus years that we’ve seen issues with those taking advantage
of the system.”