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CQ Roll Call

Florida Senate committee approves changes for assignment of benefits suits

(April 18, 2019) - Changes to attorney fee awards from assignment of benefit lawsuits are one step closer to passing the Florida state Senate after the Rules Committee approved the proposal (SB 122) by an 11-16 vote on Wednesday.

Insurance Commissioner David Altmaier praised the committee's action in an April 17 statement April 17, describing it as "a significant step towards protecting Floridians from future AOB abuse."

The Rules Committee adopted a provision from a House bill (HB 7065) that proposes rules for awarding attorneys' fees "in a suit related to an assignment agreement for post-loss claims arising under a residential or commercial property insurance policy" — depending on "the difference between the judgment obtained by the assignee and the pre-suit settlement offer."

If that difference is less than a quarter of the disputed amount, the insurer can be awarded "reasonable" attorneys' fees. If that difference is at least a quarter but less than half of the disputed amount, neither party can receive attorneys' fees. If that difference is at least half of the disputed amount, the assignee can receive "reasonable" attorneys' fees.

The House passed its bill on April 11 by a 96-20 vote.

Previously the Senate considered a different approach: The "prevailing party" in a case could receive attorneys' fees and that party would be determined by the court — depending on the issues, the number of claims compared with the amount recovered, "the existence of setoffs and counterclaims, if any" and "the amounts offered by either party to resolve the issues prior to or during litigation," according to the bill. A court also "may determine" a case doesn't have a prevailing party.

The Senate Judiciary Committee amended the bill to require AOB and other post-loss agreements be made in writing with specific details. The amended bill passed the committee on a 5-1 vote, after having cleared the Banking and Insurance Committee by a 5-3 vote earlier.

Florida Justice Reform Institute President William Large praised House passage of the bill and told CQ April 11 it "will help stabilize runaway assignment of benefits litigation and give policyholders the tools they need to better protect themselves against predatory lawyers and vendors." He added the Institute urged the Senate to take up the House bill and pass it.

"Florida also has a unique attorney fee structure as it relates to AOB agreements as the current one-way attorney fee structure incentivizes abusive litigation in our insurance market," Altmaier said in an April 11 statement after the House passage. "As a result, Florida remains unique as we are one of the only states currently battling a cottage industry that profits off the systemic abuse of AOBs. However, the impacts of this abuse are not so unique as every policyholder across our state is facing an insurance product affordability and availability crisis."

Half of the assignment of benefits lawsuits related to auto glass claims in 2018 were filed by just four firms, and among the firms by just six attorneys, according a report published March 27 by the Florida Justice Reform Institute. And about 85 percent of auto glass cases were filed by nine firms, which represented 12 attorneys. These firms include Morgan & Morgan, Amorginos & Barrows, Malik Law, Emilio Stillo PA, Reeder & Nussbaum, Chris Ligori & Associates, and Hale Hale Jacobson.

Insurers have an incentive to pay "slightly inflated" claims because of the "one-way attorney's fees" policy, the Insurance Information Institute explained in a study about assignment of benefits agreements, released Dec. 11.

Nearly 135,000 lawsuits over assignment of benefits agreements were filed in Florida in 2018 through Nov. 9, an increase of 70 percent over the last five years, according to the Institute's report.

By Zoe Sagalow, CQ Roll Call

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