|Date:||November 14, 2017|
Attorneys fees would be more difficult for “bad actor” water restoration companies and their attorneys to collect from insurance companies under a bill advanced Tuesday by the state House Judiciary Committee.
The committee voted 13-5 to advance the bill to the full House despite concerns by some members that it would tilt the playing field too far in favor of insurance companies in disputes over how much should be paid to repair damaged properties.
Similar to a bill that passed the full House last spring but wasn’t considered in the Senate, the new bill aims to remove incentives for water restoration companies and their attorneys to sue insurers.
Florida law has long enabled insurance policyholders to dispute insurers’ settlement offers in court without the risk they’d be forced to pay insurers’ legal fees if they lose.
But insurers contend the so-called one-way attorney fee provision is abused by a group of restoration companies and their attorneys — mostly in Broward and Palm Beach counties — who convince homeowners to sign over benefits of their claims, then file lawsuits by the hundreds to coerce insurers to settle for any amount over their original offers. Those settlements entitle the restoration companies’ attorneys to claim thousands of dollars in legal fees.
Policyholders statewide pay for the abuses through annual rate increases that won’t stop unless the Legislature shuts down easy access to one-way attorneys fees, insurers contend.
The new bill, sponsored by Rep. Jay Trumbull, R-Panama City, would establish a complicated formula to dictate whether plaintiffs working under assignments could collect attorneys fees if they sue insurers.
Legal fees could only be collected if a final judgment, including an out-of-court settlement, exceeded 50 percent of the difference between insurers’ initial offers and contractors’ initial invoices.
If a contractor sues and wins less than 25 percent of that disputed amount — even though it would still exceed an insurer’s initial offer — the contractor would pay the insurers’ legal fee.
Representatives of restoration companies and attorneys spoke out against the formula, saying it would embolden insurers to underpay claims and prevent homeowners from getting quality repairs.
Jason Lamoureaux, representing the Florida Justice Association, a lobbying organization for trial attorneys, said, “You could potentially recover $5,000 on a $10,000 disputed bill and still have to pay your own attorney to recover that.”
But supporters of the bill said changes are needed to quell abuses that have driven the number of lawsuits tied to “assignments of benefits” from 1,406 in 2011 to 28,183 in 2016, according to the state Office of Insurance Regulation.
State-run Citizens Property Insurance Co., a frequent target of AOB lawsuits, reported in 2015 that its average cost for litigated water claims was $33,918 while costs for non-litigated water claims averaged $5,857.
The bill is supported by Citizens, Insurance Commissioner David Altmaier, Insurance Consumer Advocate Sha’Ron James, the Florida Chamber of Commerce and other pro-insurance industry organizations.
Other provisions of the bill include requirements for:
Rep. Shawn Harrison, R-Tampa, vice chair of the committee, said it’s time for reform. “Everyone know’s there’s a problem here. We can’t just stick our heads in the sand and hope it goes away.”
Because the new bill is a revision of a bill approved by the full House last spring, it can advance to the full House when the 2018 session begins in January without further debate by any other House committee.
What remains to be seen is what a Senate version will look like. In the Senate Committee on Banking and Insurance, Sen. Anitere Flores, a Miami Republican, has been holding workshops aimed at brokering a compromise bill between insurers and trial attorneys.
Flores has said that because insurers have been blaming claims abuses and attorneys fees for rate increases, any reform bill should include guarantees that rates will be decreased.