AOB Law in Effect Should Lower Insurance Premiums in Sunshine State, Reformer Predicts
Florida Record, By John Suayan, July 20, 2019
TALLAHASSEE — Consumers statewide should finally see an end to rising insurance premiums because of a new law that took effect July 1.
House Bill 7065 reforms assignment of benefits (AOB) law, which critics argued got out of control with lawyers teaming up with contractors to get homeowners to sign away their insurance rights. In exchange for the assignment, lawyers who took advantage of the law would promise to handle repairs to the homeowners’ property and often file inflated claims with an end game of getting insurers to pay legal fees.
William Large, president of the Florida Justice Reform Institute, praised Gov. Ron DeSantis for prioritizing passage of AOB reform, House Bill 7065.
“Gov. DeSantis really rolled his sleeves up to get this done. He showed incredible leadership during the legislative session,” Large said. “It is obvious the governor is first and foremost concerned about Florida’s consumers.”
What was arguably the official end to a decade-long fight for reform took place in late May when DeSantis signed the measure..
Click here to read the entire article in the Florida Record.
Florida Must Restrain Insurance Abuse
Originally Published in The Daytona Beach News-Journal, April 6, 2017
The state needs to get this right.
Until Hurricane Matthew raked the Atlantic coast last October, Florida had been spared major storm damage since the 2004 and 2005 hurricane seasons devastated homes and businesses — and the state’s property insurance industry. That historically long respite was supposed to give insurers opportunity to regain solid financial footing, which should result in lower premiums for consumers.
Unfortunately, those potential savings have been eroded by an increase in what is known as “assignment of benefit” abuse. “Assignment of benefits” agreements or “AOBs,” is the practice in which property owners sign away the task of negotiating with insurance adjusters and collecting payment to the contractors who are doing the repairs. In theory, it appeals to homeowners who can get work done immediately to fix roofs or water damage without having to go through the often lengthy insurance claims process. But in practice it has led to some unscrupulous contractors and attorneys to inflate claims and perform unauthorized upgrades, which they then sue the insurance companies for payment. Insurers often settle these bogus claims to avoid costly court battles, and the price can include paying attorney fees as well.
According to William Large of the Florida Justice Reform Institute, a subsidiary of the Florida Chamber of Commerce, from 2014 to 2015 AOB litigation increased 10.7 percent, and then 21 percent from 2015 to 2016. Last year, Ormond Beach-based Security First, one of the largest property insurance companies in the state, looked at water-damage claims it handled in 2015. While only 15 percent had AOBs, those claims cost an average of twice as much as normal water-damage claims.
Read the complete article in the Daytona Beach News-Journal.
Fixing Florida’s Broken Legal System
> DOWNLOAD Our Legal Reform One Pager
The sunny climate may be one of Florida’s most enduring assets, but unfair laws and courts are storm clouds on Florida’s horizon.
This is a reasonable conclusion from the findings of the U.S. Chamber Institute for Legal Reform’s (ILR) newly released 2015 Lawsuit Climate Survey ranking the fifty states on their lawsuit systems. For the fourth consecutive time, the Sunshine State sits in the bottom ten, 44th out of 50. This is a three-spot drop from the last survey three years ago.
While Florida has much to be proud of – the state’s education system has gone from the bottom ten to the top ten, and the Governor has eliminated over 3,000 regulations and cut taxes more than 40 times – the jobs picture is mixed.
Even with one of the fastest job creating records in the country, Florida must still create more than two million jobs over the next 15 years, and a broken lawsuit system threatens this.
The Florida Chamber and our partners at the Florida Justice Reform Institute and the U.S. Chamber’s Institute for Legal Reform will continue to push for common sense reforms that fix Florida’s broken legal system.
Lawyer billboards throughout Florida attest that suing is big business here. But most Floridians aren’t fooled by ads proclaiming to be “for people” when in truth they usually mean “for the plaintiffs’ lawyers.” Until Florida’s courts are seen as fairer for all the people, the forecast for broader economic growth will be cloudy.
Join us in reforming Florida’s unfair lawsuit climate by contacting us at firstname.lastname@example.org.
Florida Chamber and Florida Justice Reform Institute File Amicus Brief in Important Workers’ Compensation Case
On January 8, 2016, the Florida Chamber of Commerce and Florida Justice Reform Institute filed an amicus curiae brief, or friend of the court brief, in support of Hialeah Hospital in Stahl v. Hialeah Hospital — a workers’ compensation case that seeks to make the workers’ comp system, in its entirety, unconstitutional.
Workers’ comp is essential for Florida employers, employees and families because it provides the health care necessary to help an injured employee return to work while also protecting job creators from costly litigation.
The jointly filed amicus brief maintains:
- Stahl does not have standing, or has not proven that changes to the workers’ comp statute have adversely affected him, and
- The case did not follow the proper judicial procedure for the Florida Supreme Court to determine if the statute is unconstitutional.
“As the leading advocate fighting to keep Florida’s workers’ comp system functioning, fair and affordable, we are concerned that the potential impact of this case could threaten Florida’s improving business climate,” said David Hart, Executive Vice President of the Florida Chamber of Commerce. “This is another example of Florida’s billboard trial lawyers trying to dismantle a working system by doing what they do best – suing someone.”
Plaintiff attorney maneuvers like we’re seeing with workers’ comp are reflective of a larger legal abuse problem in Florida. In fact, a national survey shows Florida’s lawsuit climate worsening – ranking at an all-time low 44 out of 50 states, the bottom 10. That’s important because 75 percent of companies surveyed say a state’s lawsuit environment is likely to impact important business decisions at their company, such as where to locate or expand.
The Florida Chamber remains laser focused on ensuring workers’ comp rates are fair, and remain committed to ensuring the voices of job creators throughout Florida are heard before lawmakers in the halls of justice. Ensuring injured workers receive quality care and due process is also a priority.
“To secure Florida’s future, we must keep Florida’s workers’ comp system working,” Hart added.
For more than 10 years, the Florida Chamber has led efforts to help lowers workers’ comp rates by almost 60 percent.
If you would like more information, contact email@example.com.
Insurance Litigation, Assignment of Benefits Reform a Key Focus of Florida Chamber of Commerce’s Insurance Summit Oct. 26-28
Florida insurance officials and industry leaders will meet to discuss the state’s top insurance issues for the upcoming year
TALLAHASSEE (October 21, 2015) – State law that was intended to ensure a level playing field between consumers and their insurance companies in the handling of claims has instead evolved into a windfall for some trial lawyers, contractors and other vendors, according to a new report by the Florida Justice Reform Institute.
The report, Restoring Balance in Insurance Litigation, calls on state lawmakers to amend Florida law to curb abuse of one-way attorney fees and Assignment of Benefits, or AOBs. The one-way attorney fee statute allows trial lawyers to collect legal fees from insurance companies if they prevail in a claims dispute, but prevents insurers from recouping their legal costs if the court instead rules in their favor. Emboldened by the statute, plaintiffs gain negotiating power to inflate bills and gain attorney fees that are potentially unwarranted or disproportionate to any amount recovered.
Over time, the one-way attorney fee statute has become an incentive for trial lawyers, contractors and other vendors – often water damage remediation firms, roofers, or auto glass shops with aggressive marketing schemes – to file meritless lawsuits using Assignment of Benefits. AOBs are intended to allow contractors to work directly with insurers in getting paid for work performed, without having the policyholder put up repair money. However, some third parties are soliciting AOBs as a means of taking control of the policyholder’s benefits and then using that authority to inflate claims and file lawsuits, sometimes without the knowledge or consent of the policyholder.
The Institute’s report, authored by Mark Delegal of Holland & Knight and Ashley Kalifeh of Capital City Consulting – two Tallahassee-based attorneys with extensive insurance experience – will be presented during the Florida Chamber of Commerce’s annual Insurance Summit Oct. 26-28 at the Grand Floridian Resort in Orlando. The event attracts Florida’s elected officials, insurance regulators and private industry leaders to discuss the major trends and issues impacting Florida insurance consumers.
“Maintaining a healthy and competitive private insurance market is essential to ensuring Florida is an attractive destination for new businesses, capital investment and job growth, while also benefiting consumers with more choices in the marketplace,” said Mark Wilson, President and CEO of the Florida Chamber of Commerce. “Already, Florida’s lawsuit abuse climate is known as one of the worst in the country. Unfortunately, rampant Assignment of Benefits abuse is threatening to worsen our state’s legal climate and cost families more.”
The conference will include speaker presentations and panelist discussions on various insurance issues, including the property and casualty market, pricing and cost drivers, regulations, cyber security, medical malpractice and workers’ compensation. A key focus will be one-way attorney fees and AOB, as outlined in the Florida Justice Reform Institute report.
“This report is the first, hard look at how the growing use of AOBs is increasing costs and litigation,” said William Large, president of the Florida Justice Reform Institute. “Policyholders just want to be made whole for their losses, but with an AOB, vendors and their lawyers are incentivized to increase the claim’s scope of work and maximize profit and litigation fees.”
Assignment of Benefits abuse has become widespread in South Florida and is quickly spreading throughout Florida. State-run Citizens Property Insurance Corp. says lawsuits over water damage claims are the main reason why it is raising 2016 premiums in the tri-county region of Broward, Miami-Dade and Palm Beach counties. Without AOB abuse, the rates for Citizens policyholders would have gone down. In addition, data mined from the Florida Department of Financial Services’ Service of Process Unit shows that AOB lawsuits have grown by 16,000 percent since 2000, and currently represent about one-third of all insurance litigation.
“As these water damage claims are absorbed by the insurance companies, it’s going to result in an increase in everyone’s homeowner premiums,” said Bob Rollins, an independent insurance agent for the Beacon Group in Boca Raton. “The best answer is a legislative approach. We need a law that has some teeth in it.”
Bills to address AOB abuse were introduced during the last three legislative sessions but failed amid intense lobbying pressure from trial attorneys, contractors and vendors who use this scheme. Similar legislation is expected to be filed for the 2016 session.
“The one-way attorney’s fee was meant to benefit the insured. It was not meant to benefit third party corporate vendors,” Large said. “Until legislators clarify this principle, the problem will only get worse.”
During the conference, Chamber organizers plan to unveil an educational video about the risks of blindly assigning insurance benefits to a contractor or other third party. John Rollins, Citizens’ chief risk officer, and Angel Conlin, general counsel for the American Strategic Insurance Co., will also discuss AOB abuse and its impact on insurers and homeowners.
NOTE: Media are encouraged to attend. RSVP to Edie Ousley at firstname.lastname@example.org.
The Florida Chamber of Commerce is the voice of business and the state’s largest federation of employers, chambers of commerce and associations, aggressively representing small and large businesses from every industry and every region. The Florida Chamber works within all branches of government to affect those changes set forth in the annual Florida Business Agenda, and which are seen as critical to secure Florida’s future. The Florida Chamber works closely with its Political Operations and the Florida Chamber Foundation. Visit www.FloridaChamber.com for more information.
Florida Supreme Court Workers’ Comp Decision Favorable for Business
Florida Chamber Reports Win for Businesses in Worker’s Comp Case
In a unanimous decision, the Florida Supreme Court this morning issued an opinion in the Morales v. Zenith Insurance Company case that upheld the workers’ compensation system as the exclusive remedy for injured parties. A separate tort case had been filed by the claimant’s estate seeking additional damages, which the Court rejected.
What does this mean for Florida’s businesses? The Florida workers’ compensation system remains intact and is the only means for injured employees to collect damages from an employment related injury.
Because workers’ compensation is the exclusive remedy, the Supreme Court ruled that the workers’ compensation exclusion bars coverage of the estate’s tort judgment under the employer liability policy and the claimant could not collect the tort judgment from the workers’ compensation insurer.
This decision is the first of three cases before the Florida Supreme Court, which include Castellanos v. Next Door Company, and Westphal v. St. Petersburg. The Florida Chamber of Commerce filed amicus curiae briefs along with the Florida Justice Reform Institute on these cases to advocate on behalf of the business community and decisions that won’t cause rates to be inflated by extraneous lawsuits. We will keep you up to date on the progress of these cases.
Florida Chamber Fights for Workers’ Comp Attorney Fee Caps in Supreme Court
When the Florida Supreme Court heard oral arguments today in a high profile workers’ comp case (Castellanos v. Next Door Company,) a Florida Chamber of Commerce and Florida Justice Reform Institute joint amicus brief served as a defense tool in a battle to maintain caps on attorneys’ fees in workers’ comp cases.
Former Justice Raoul Cantero, arguing on behalf of employer Next Door Company, cited the Florida Chamber/Justice Reform Institute joint amicus brief to refute arguments the petitioners made regarding the reasonability of attorneys’ fee caps.
Florida Chamber Executive Vice President David Hart, and I attended the proceedings on behalf of Florida’s employers.
This is the third workers’ comp case currently before the Florida Supreme Court challenging the constitutionality of the workers’ comp system. Another case is pending before the Third District Court of Appeal.
The Florida Chamber and our partners at the Florida Justice Reform Institute have filed an amicus curiae brief on each of these cases. These cases challenge the gap between temporary and total permanent disability, whether bad faith applies in workers’ comp and whether workers’ comp should serve as an exclusive remedy.
A decision against the business community in any one of these cases could have a significant impact on workers’ comp rates.
Oral arguments have been completed on each of the three cases before the Florida Supreme Court, and it is not clear on when the Supreme Court will make a decision. The Florida Chamber is committed to fighting on behalf of Florida employers. We are actively involved and monitoring these cases closely and are ready to take action when a decision is made.
Are Workers’ Comp Issues Impacting Your Business?
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