High hopes by plaintiff’s attorney
Certainly one of the factors in Florida’s rising property insurance rates has been the abusive use of Assignment of Benefits (AOB) contracts. The Florida Legislature passed reforms in 2019 that have begun to make a difference and current and future data calls over the next 18 months by insurance regulators will help define the degree of progress. But that’s not stopping the trial bar from pressing the envelope.
The reforms seek to reduce the incentives fueling litigation and the “racket” as Governor DeSantis described it, that AOBs have become among contractors and trial lawyers. The new law is being played out in courtrooms across Florida, as judges decide applicability to the cases before them. One such case in Broward County has caught our eye.
An architectural firm signed an AOB with a condominium association over apparent damage related to Hurricane Irma. The firm ended up suing the condos’ insurance company, United Property & Casualty Insurance, for what it said were wrongly denied prospective claims totaling $916,000. While the suit was filed last November, the new AOB reforms became law last July 1. The insurance company’s attorney sought to have the case dismissed and to deny claims for attorney fees. The judge denied the motion and the case will continue for now.
What we find interesting is that the plaintiff’s attorney sought to have the Broward Circuit Court Judge rule on the constitutionality of the new AOB law. The judge declined to do so, finding the new law doesn’t apply as it was enacted after the AOB in this case was signed. The plaintiff’s attorney, Igor Hernandez, told the Daily Business Review that the new law violates the state constitution’s equal protection clauses by providing different rights to the policyholder and the assignee, even though they are part of the same contract and the assignee stands in the shoes of the insured. He said he plans to seek certification of the issue as a question of great public importance before the Florida Supreme Court.
LMA Newsletter of 5-26-20