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New Law Limiting Attorney Fees Tested in Court

Citizens Ins. – the Fla. “insurer of last resort” – is helping defend a new Fla. law that limits attorney fees for “assignment of benefits” (AOB) damage claims.

TALLAHASSEE, Fla. – The state-backed Citizens Property Insurance Corp. is seeking to help defend part of a new property-insurance law aimed at curbing litigation costs. Citizens filed a motion Friday to intervene in a lawsuit challenging the constitutionality of a law the Legislature passed during a May special session.

The Restoration Association of Florida and Air Quality Assessors, LLC, an Orlando firm that does work such as mold testing and leak detection, filed the lawsuit May 31 in Leon County circuit court. The challenge focuses on part of the law dealing with what is known as “assignment of benefits,” or AOB.

In assignment of benefits, homeowners sign over their insurance claims to contractors, who then seek payment from insurance companies. But that often spurs lawsuits about claims when the insurers and contractors disagree.

Before the new law went into effect, contractors could recover their attorney fees from insurers if they were successful in the lawsuits, a concept known as “prevailing party fees.” But the new law stripped contractors of the ability to recover prevailing-party fees when they’re assigned benefits.

Homeowners can still recover prevailing-party fees if they file lawsuits directly against insurers but contractors cannot.

The lawsuit alleges that the change violates equal-protection and due-process rights, and denies contractors access to courts.

In the motion to intervene in the case, Citizens said invalidation “of the provision would have a significant impact on Citizens.” The motion said it could affect premiums paid by Citizens customers and could affect other policyholders across the state, who face the possibility of paying surcharges to help cover potential Citizens deficits.

The lawsuit named as defendants Melanie Griffin, secretary of the state Department of Business and Professional Regulation, and Donald Shaw, executive director of the state Construction Industry Licensing Board.

Source: The News Service of Florida