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FLORIDA RECORD

Thursday, March 28, 2024

Florida Justice Reform Institute advocates for Assignment of Benefits reform to improve state’s lawsuit climate

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TALLAHASSEE – In its ongoing efforts to improve the state's poor lawsuit climate, the Florida Justice Reform Institute is calling for changes to the Assignment of Benefits law, which allows a third party to collect insurance proceeds owed to a policyholder directly from an insurance company.

Under the current law, the policyholder loses control of the litigation process once an assignment of benefits clause kicks in. 


“So just to keep it simple, if I had an insurance policy with XYZ insurance company and there was property damage..., I might file a claim against my insurance company.” William Large, president of Florida Justice Reform Institute, told the Florida Record recently. “In Florida, to protect the rights of the insured, we have something called the one-way attorney’s fee. If the insured wins (a lawsuit against the insurance company), not only do they recover their damages, but they recover their attorney’s fees, and that makes all the sense in the world.”

That benefit is given to the policyholder unless the policyholder signs a contract with a vendor hired to repair the damage and the contract includes an assignment of benefits clause. In that case, the vendor can not only get its attorney fees paid by the insurer but also bill the insurance company for the repair.

“What is occurring in Florida is vendors are asking to have the rights of that insurance company assigned to them, and those vendors are themselves corporations and they are working with attorneys and they are charging sometimes three-fold, four-fold, five-fold greater for market prices to do a repair, and they are doing it not by charging the insured but by only asking for an assignment of the contract,” Large said. “The reason they are doing it is not just to get the three-fold, four-fold, five-fold more on whatever the repair is but because with that assignment comes the one-way attorney’s fees.”

The attorneys then litigate whether or not that repair was the market price, but do so knowing they are the beneficiary of the one-way attorney’s fee that has now been assigned to the third-party vendor, Large said.

Recent bills introduced to Florida’s House and Senate have attempted to reform the Assignment of Benefits law. 

House Bill 1097 was filed in January. The bill prohibits an assignment, except for emergency repairs, until the policyholder has notified the insurer of any loss or damage, and gives the policyholder the right to cancel the agreement assigning benefits to vendors. It also “requires notice to the insured of the right to cancel; requires the assignee to accept duties of the policy relevant to the claim; and prohibits an assignee from attempting to recover payment from an insured for work that is covered by the insurance policy.”

In addition, the bill would give insurers authority to require notice of loss to be reported as soon as practicable after the loss, and to “limit the scope of repairs that may be undertaken before the insurer inspects the property.”

The bill was halted in the House Regulatory Affairs Committee on March 11.

A similar bill, Senate Bill 0596, was introduced into the Senate by Sen. Dorothy Hukill last October, but suffered a similar fate to HB 1097 and died in the judiciary committee.

Since the state’s legislative session ended earlier this month without much action on legal reform, any hope of reform will have to wait until next year.

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