Florida’s state-backed insurer Citizens Property Insurance Corp. secured a win at the Fourth District Court on Wednesday, when it upheld a Palm Beach Circuit ruling against a third-party contractor who sought insurance benefits after conducting repairs for a homeowner.
It’s a case that involves assignment of benefits, which transfers the insurance claims rights or benefits of an insurance policy to a third party. The issue here was that the lawsuit was filed in 2020, after Florida’s assignment of benefits statute was changed in 2019 to make it harder for third parties to secure attorney fees in an effort to curb alleged fraud.
The Fourth DCA affirmed that there wasn’t a retroactive application of an assignment of benefits statute because the third party didn’t have rights prior to an assignment.
Erik Diener of The Diener Firm in Plantation represents the appellant, Pride Clean Restoration, and said he doesn’t see any precedential value stemming from the ruling.
“The DCA is looking at whether the contract is being retroactively applied. They look at the interest of the parties involved in the dispute, which is the assignee and the insurance company, and they really don’t look at or consider the rights of the insured. He [the third-party contractor] is losing something by the change in assignment of benefits statute,” said Diener.
New Statute a ‘Riskier Proposition’
The dispute began in 2017, when a homeowner insured with Citizens suffered a covered loss to their home. That homeowner then contracted a third-party water damage restoration company, Pride Clean Restoration Inc. in Davie, to take care of the problem.
Pride Clean Restoration then sued Citizens in 2020 after it refused to cover the loss. The lawsuit claimed insurance benefits for the assignment and sought an award for attorneys fees and costs for obtaining a judgment.
“At the time the loss occurred, the policyholder had the right to sign away his or her rights to recover benefits under her policy and to also recover one-way attorneys fees. That’s a valuable right that the homeowner could use and assign away in exchange for goods and services,” said Diener. “Once the assignment of benefits statute was amended, the homeowner no longer has the right to assign away attorneys fees. Now they can only assign away the right to recover attorneys fees under the new statute, which is not a sure thing. It’s a riskier proposition for the person accepting the assignment.”
Citizens argued that the insurer couldn’t retroactively apply the assignment to Pride Clean Restoration because the policy was issued before the new statute was in place in 2019.
The trial court agreed with Citizens and ruled in the insurance company’s favor. Although the Fourth DCA affirmed the trial courts decision, Judges Edward Artau, Alan Forst and Martha Warner did not provide any explanation for their ruling.
“I don’t think the Fourth DCA looked at in either of its opinions or analyzed the retroactive effect of this statute on the homeowner, the assignor,” said Diener. “They’ve solely focused on the effect on the insurance company and the assignee and they held that there was not retractive as it pertains to the assignee because the assignee didn’t have any rights prior to the assignment.”
Abbi Carr and Veresa Jones Adams of ROIG Lawyers in Deerfield Beach, and Jeffrey Geldens of ROIG Lawyers in Miami represent Citizens. They did not respond to a request for comment by deadline.
‘You’re Probably Going to Lose’
Diener said the appeals court could have looked at the issue a different way.
“What rights are being assigned to the assignee? The assignee is stepping into the shoes of the assignor,” said Diener. “I don’t know what the court thinks about the issue because they didn’t discuss it. They never addressed it.”
For attorneys who may have similar cases in the future, Diener said it’s important to think ahead to appeals while in the trial court, by preserving the issue of whether the insurance company has standing to challenge an assignment between a policyholder and assignee in the first place.
“Even though you’re probably going to lose the retroactive application argument, based on what the Fourth DCA affirmed in my case, I would still preserve them for appeal,” said Diener.
The change in the statute has had its intended effect, the way Diener sees it, as he said fewer companies now accept the assignment of benefits than before the statute was changed.
“It’s not a popular time to be suing insurance companies on property claims in Florida because everybody is doing it now,” said Diener. “Premiums are sky-high, judges and juries are taking notice and they’re seeing things more on the property insurance side now more than ever before. You have to be aware of that if you’re practicing in this area of law.”