The Florida House Judiciary Committee officially re-started the Assignment of Benefits (AOB) debate on Tuesday by passing legislation to address the issue. The insurance industry-backed measure would curb the well-established homeowners’ right to assign insurance benefits to home repair contractors, who then pursue payment for their repair work from insurance companies.
The legislation – similar to a bill passed by the House at the end of the 2017 Session – requires contractors notify insurers when assignment of benefits agreements are executed. Under the proposal, contractors also would have to include written estimates of the work with itemized costs. It also provides policyholders seven days to opt out of assignment of benefits agreements. Contractors would have to warn insurers of their intent to file lawsuits.
Sliding-Scale Attorneys’ Fees Could Benefit Losing Insurers
The bill also would create a controversial and complex sliding scale to address the issue of attorneys’ fees in assignment of benefits cases. Attorney Jason Lamoureux, who testified on behalf of FJA, said under current law, insurance companies only have to pay plaintiff’s attorneys’ fees if they are found to have wrongly denied a legitimate claim.
“The purpose of one-way attorneys’ fees is to discourage insurance companies from denying and withholding benefits on valid claims. If they do that and the insured brings a valid insurance lawsuit against the insurance company, and the insurance company gets a judgment against them then the insurance company has to pay those attorneys’ fees,” explained Lamoureux. “So, if there’s no judgment, there are no attorneys’ fees.”
FJA member Chris Ligori, of Tampa, shared how current law also handles the fee question.
“This is not a bill that levels the playing field. This slopes it tremendously toward the insurance companies and away from consumers. There is a way for the insurance company to shift fees so if the plaintiff loses – the insureds lose – that the insureds would then have to pay their fees, as the law sits right now. It’s called filing a proposal for settlement,” said Ligori. “This whole formula is completely unnecessary under Florida law as it sits now.”
Proposal Hurts Small Businesses to Benefit Insurers?
The bill is the latest play from Florida’s big insurers to curb a homeowner’s right to hire their chosen contractor when they need emergency repairs without having to pay for it up front. Some worry the insurers want to restrict AOBs in favor of “preferred vendors and providers” they can control – in direct opposition to bedrock conservative free-market principles.
Led by the Florida Association of Restoration Specialists, small business contractors who help homeowners address emergency repairs traveled to Tallahassee to let lawmakers know how the legislation would hurt their businesses. They told lawmakers that insurance companies’ bad business practices of denying legitimate claims are to blame for driving the so-called AOB-related litigation “crisis.”
“As contractors, our sole desire is not to sue an insurance company. Our sole desires are to get paid for our services and restore homes,” said Palm Beach County-based water restoration contractor Dallas Trahern, representing the Florida Association of Restoration Specialists.
FJA’s Lamoureux amplified the contractors’ point.
“I don’t think the premiums going up is a result of the litigation or attorneys’ fees. The premiums are going up as a result of the denial of claims and not properly adjusting claims, which is forcing a lot of the litigation,” said Lamoureux. “The way that it’s (the bill) written will allow insurance companies to continue to deny valid claims, underpay benefits, and even when they’re forced to pay those benefits, they still don’t have to pay the attorney fees in most of those cases.”
Ryan Banfill is communications director for the Florida Justice Association. E-mail him at rbanfill@FloridaJusticeAssociation.org or follow him on Twitter @RyBan1001.