An assignment-of-benefits claim filed over hurricane damage to condo properties in Broward County may become the launch pad for an effort to overturn an AOB property insurance reform bill signed into law last year.
Attorneys Michael Citron and Igor Hernandez of MAC Legal P.A. are representing KDH Architecture Inc., which claims that the United Property & Casualty Insurance Co. failed to cover more than $900,000 in repairs to fix damage sustained during Hurricane Irma. Citron earlier this month filed a notice that he is now seeking to challenge the legality of the AOB reform law based on constitutional issues.
And last week, Judge Keathan Frink rejected the defense’s call to dismiss the case. In this situation, the AOB reform law doesn’t apply because the assignment was signed prior to the law taking effect, Frink said.
Attorney Michael Citron
The constitutionality argument appears to still be in play, however, as plaintiff’s attorneys await a June 3 deadline for the defendant to respond to the complaint.
“The court ruled the statute doesn’t apply in our case, which is one of the other positions that we took,” Citron told the Florida Record, “meaning that the insurance company took the position that it does apply and the court found that it does not apply at all based on how it’s written.”
If the case does not end up resulting in a constitutional challenge to the reform law, House Bill 7065, the firm has other cases to set up such a challenge, he said.
“It's an unavoidable path, I think, for the (Florida) Supreme Court to have to take it up at some point to analyze the situation,” Citron said, “because it infringes upon the equal protection rights of a particular aggrieved party and their a) access to the courts and b) usage of the rules of civil procedure and the like.”
His notice of a constitutional challenge argues that the reform law denies a specific class of litigants the right to seek attorney fees using procedures that are available to other civil litigants.
The attorney representing the insurer, Otto Espino of Kelley Kronenberg in Miami, did not immediately respond to a Record request for comment. But in a lengthy motion to dismiss, Espino said the plaintiff failed to carry out duties specified in the insurance policy about the property damage prior to filing the lawsuit.
The insurer has also argued that the AOB reform law does apply in this case and blocks the plaintiff from seeking payment of attorney fees.
Supporters of the reform law argue that it is designed to put a stop to abusive litigation that causes inflated property insurance premium rates. They also say it provides a more straightforward process for property repairs. Opponents, however, see the statute as tipping the scale in favor of insurance companies and against policyholders.
The law limits when an assignee can claim attorney’s fees in civil court proceedings and allows insurers to prohibit a property owner from assigning policy benefits to a third party in some situations.
Jeff Grady, the president and CEO of the Florida Association of Insurance Agents, expressed doubt that the AOB reform law is in any danger of being upended.
“The fact is that the state Supreme Court has shifted, and there are more conservatives on the court,” Grady told the Record. “If you want to overturn that AOB law, you have a pretty steep climb.”
The AOB law should pass muster because state lawmakers went through the bill thoroughly to ensure its provisions are on solid legal ground, he said.
“I don’t hear anyone in the insurance industry panicking because they don’t think this law won’t hold up in court,” Grady said. “I think it will.”
A bigger concern right now among insurers is convincing state lawmakers to pass contingency fee multiplier reform, he said. Such a reform would alter how lawyers’ fees in property insurance claims are calculated by using a federal standard to limit such multipliers to unusual circumstances, according to Grady.
“That’s where our attention is – trying to get some litigation reform like that,” he said.
Lawsuits have driven up property insurance costs in Florida, putting several insurers on the financial ropes as they attempt to deal with legal abuses and “toxic” policies, according to Grady.
“The reinsurance market is penalizing these companies now for Florida’s bad litigation environment,” he said.