Karlinsky: Assignment of benefits bills not approved in session, still a 'major issue'

By Carrie Salls | Jul 18, 2016

ORLANDO – Fred Karlinsky, co-chair of the insurance regulatory and transactions practice at Greenberg Traurig, discussed noteworthy insurance-related measures before the legislature as part of his presentation at the recent Florida Hurricane Catastrophe Fund’s (FHCF) annual Participating Insurers Workshop.

“Assignment of benefits (AOB) remains a major issue, and we will see it addressed again next year,” Karlinsky told the Florida Record. This issue was also paramount in his presentation at the workshop.

Specifically, Karlinksy discussed the adoption of the Own Risk and Solvency Assessment (ORSA) and Corporate Governance Annual Disclosure (CGAD) requirements, changes to the Citizens Property Insurance Corp. takeout process, AOB and other measures. He also discussed the current state of some potential AOB remedies, since some bills addressing the issue did not make it out of the 2016 legislative session.

“An industry-backed measure that sought to address the increased claims and lawsuits involving assigned benefits was not approved this session amidst strong opposition by water remediators and trial attorneys,” Karlinsky said.

Karlinsky told workshop participants that the Senate’s version of the bill would voided any agreement that assigns or transfers the right to enforce post-loss benefits under a property insurance policy, while the House bill would have included fewer restrictions on assignments.

The event marked the fund’s 16th annual Participating Insurers’ Workshop. 

“The purpose (of the workshop) is to educate our participating insurers on their responsibilities to meet the FHCF reporting requirements and provide relevant insurance-related information to all participants,” FHCF chief operating officer Anne Bert told the Florida Record

In addition to the AOB bills, Karlinsky said other proposed legislation that was not approved in the 2016 session included bills related to prohibited insurance practices, drone liability, property insurance appraisal umpires and bill addressing the filing of bad-faith actions. Karlinsky said the drone liability legislation will also return in the 2017 session, and the appraisal umpires may be addressed again.

In addition, Karlinsky covered the workers' compensation cases before the Florida Supreme Court, including the decision in Castellanos v. Next Door Co. and its ramifications and the issues raised in Westphal v. city of St. Petersberg.

“In a long-awaited decision on April 28, 2016, the Florida Supreme Court issued a decision that held the statutory fee schedule for workers’ compensation was unconstitutional in Castellanos,” Karlinsky said. “The court said the issue for them was really the ‘irrebuttable presumption’ of the statutory fee schedule. It allowed for no deviations so claimants had no ability to challenge the reasonableness (of a fee award) in a particular case or circumstance."

In light of this ruling, Karlinsky said lawmakers will have to fix the constitutional issues. Until they do so, Karlinsky said the awarding of attorney fees will be based on the 2003 version of the related statute. He said the issue will be addressed in the 2017 legislative session. 

On May 3, the JCC awarded $42,000 in fees to an attorney who spent 120 hours securing nearly $9,000 in benefits in Diaz v. Palmetto General Hospital. Karlinsky said the court cited the Castellanos case in its ruling in Diaz.

“We were quite pleased with the attendance of nearly 200 participants,” Bert said. “This is an annual event, and we will be developing next year’s agenda with timely topics.”

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