A new law represents a major step forward to remedy Florida’s assignment of benefits (“AOB”) crisis, which Florida Governor Ron DeSantis has described as a “racket” in recent years. On Thursday May 23, 2019, Governor DeSantis signed House Bill 7065, which addresses the abuse of post-loss AOBs for residential and commercial property insurance claims, by (among other things):
A key provision of House Bill 7065 requires an assignee to give ten business days’ written notice prior to filing suit. This notice must specify the damages in dispute, the amount claimed, and the pre-suit settlement demand, and must include an itemized, detailed written invoice or estimate of the work performed or to be performed. Requiring the repair or remediation company to provide supporting documentation prior to filing suit may put the insurer in a better position to evaluate the claim.
In addition, if the parties fail to settle and subsequent litigation results in a judgment, the Bill provides a means of recovering attorneys’ fees. Insurers in Florida now have the opportunity to recover their attorneys’ fees in certain situations. Specifically, the Bill allows an award of fees based on the difference between the judgment and the amount offered during settlement negotiations. To accomplish this, the Bill defines the difference between the insurer’s pre-suit offer and the assignee’s pre-suit demand as the “disputed amount.”
This provision especially benefits the insurer in cases where the difference between the judgment and the settlement offer is less than 25% of the disputed amount. In that case, the insurer is entitled to 100% of its attorneys’ fees. In cases where the difference between the judgment and the settlement offer is at least 25% but less than 50% of the disputed amount, neither party is entitled to fees.
Another key provision of the Bill creates Florida Statute Section 627.7153, which allows the insurer to issue a policy prohibiting AOBs if:
House Bill 7065 becomes effective on July 1, 2019, and with its passage, there is some hope that abuse surrounding AOB claims will be curtailed. Nevertheless, there have been claims that the reforms treat contractors unfairly. We can certainly anticipate litigation by contractors taking issue with the meaning, scope and equities of the new law. We will monitor and weigh in on these challenges in the months ahead.