TALLAHASSEE — State law intended to maintain a level playing
field between consumers and insurance companies in claims-handling
continues to generate a windfall for some trial lawyers, contractors
and other vendors, according to an updated report by the Florida
Justice Reform Institute.
The report, Restoring
Balance in Insurance Litigation, focuses on the Florida
Department of Financial Services’ service of process database to
illustrate growth and abuse of one-way attorney fees and Assignment
of Benefits, also known as AOBs.
According to the report,
AOB litigation is lucrative because of the one-way attorney’s fees,
which are available for attorneys that represent prevailing service
providers. Yet, the one-way attorney fees were initially designed to
give individual policyholders equal footing in disputes with
insurances who have additional resources. This was recently
reiterated by the Florida Supreme Court, which stated that “the
average policyholder has neither the finances nor the expertise to
single-handedly take on an insurance carrier.”
The report stated that this is best served when the statute is
used to “award fees to the policyholder, or any beneficiaries
specifically designated by the policyholder at the time of contract
formation,” and not for service providers and their attorneys.
With the statute, policyholders can collect legal fees from their
insurers if they prevail in a claims dispute, but they don’t have
to pay the insurers’ legal fees if the court subsequently rules in
favor of the insurer.
However, it appears that some third parties are using AOBs to
seize control of the policyholder’s special rights and the
negotiating power required to inflate claims and file lawsuits. The
report stated that this can happen even without the knowledge or
consent of the policyholder.
Reportedly, the courts are being clogged by meritless lawsuits as
litigation-for-profit schemes become an incentive for trial lawyers
and their vendor clients to take advantage of the system.
“This report details how the growing use of AOBs and the one-way
attorney fee is increasing costs and litigation,” William Large,
president of the Florida Justice Reform Institute, said in a news
release from the organization. “Insurance Commissioner David
Altmaier had it right last week when he told the governor and cabinet
that there’s no other explanation other than the one-way attorney
The report highlighted some interesting facts, according to the
Florida’s population increased 26 percent from 2000 to 2016
while total litigation filed against insurance companies increased
around 280 percent.
From 2010 to 2011, AOB litigation rose by more than 66 percent;
however, while it fell slightly after the 2012 auto-insurance
legislative reforms (PIP), it began rising again, going from 10.7
percent during 2014 and 2015 and 21 percent from 2015 to 2016.
Auto-glass claims experienced a significant increase — more than
3,000 percent in five years, from 591 claims in 2011 to 19,558 claims
Around 25 percent of all AOB cases were filed in Florida between
2013 and 2016 by 11 attorneys.