Assignment of Benefits—David & Goliath!

A handful of trial lawyers serving in Florida’s Senate blocked any reform of Assignment of Benefits (AOB) this year.  In fact,  fearing it would pass, they didn’t even allow debate on a compromise House version overwhelmingly adopted each of the last two years—this year 82-20.

On the heels of this disappointment, The Pensacola News Journal published an opinion by the CEO of the Florida Chamber of Commerce, Mark Wilson, lamenting the continuing abuse by “unscrupulous” vendors and their lawyers and expressing hope that next year new leadership might put an end to the blockade. (See Note #1 below)

In a response titled “Insurance industry spreading falsehoods”, Dave DeBlander, owner of Pro Restoration and Cleaning in Pensacola, took umbrage.  He blamed insurance companies, said the Chamber is their “lapdog” and painted himself as the “David” in a “David and Goliath battle.”

It was a page torn directly from the trial bars hymnal—saying things that aren’t true,  hoping they’ll stick.  The most outrageous example is when DeBlander states AOB doesn’t take away “rights of the policyholder”.  Really?

Let’s read one of “David’s” AOB contracts and see.  Among other gems it includes the following:

“I hereby assign any and all my insurance rights, benefits, and proceeds under any applicable insurance policies to Pro Clean Restoration and Cleaning”

“…I waive my privacy rights.”

“I hereby appoint Pro Clean Restoration and Cleaning as attorney in-fact, authorizing…[it] to endorse my name, and to deposit insurance checks…”

“I agree to release and hold Pro-Clean Restoration harmless, and indemnify [it] against all claims or actions that may result from such… [if Pro-Clean cannot finish or if drying equipment is removed prematurely]…” [Clarification added]

A real “David” wouldn’t need falsehoods to defeat “Goliath”.  Obviously AOB restricts  rights. That’s why trial lawyers provide AOB language to restoration vendors like DeBlander and to members of the Florida Association of Restoration Specialists (FLARS).  AOB protects their vendor clients by restricting the consumers’ rights, including the right to sue under certain circumstances.

And, AOB restricts the consumers’ right to deal directly with their insurance company.  At  least according to one AOB victim, Charles Snellgrove. He  disagreed with DeBlander’s mischaracterizations and in his letter to the News Journal he specifically mentions losing his right to speak to his insurer. [Emphasis added below].

Dear Editor,

I take great offense to Dave DeBlander’s column defending restoration contractors’ use of Assignment of Benefits, or AOB. My wife and I signed an AOB to repair a “leak” under our kitchen sink. Signing an AOB was no benefit to us at all, as Mr. DeBlander states. In fact, it was just the opposite. The AOB took away our ability to speak with our insurance company.

Within hours of signing the AOB, the cabinets and countertops by our sink were ripped out and hauled off before our insurance adjuster could inspect them. We asked about calling our insurance company first, but the contractor insisted he would simplify the process by photographing and documenting each step. It turned out the leak didn’t warrant gutting most of our kitchen, plus they found no mold!  

The contractor billed our insurance company $26,000 for substantially more work than necessary. Mr. DeBlander says AOBs allow contractors to work directly with insurers to go over details of the bill because “the homeowner is not capable of discussing such things.’’ That’s an insult to our intelligence and simply ridiculous. Legislation is needed to stop these abusive AOB practices.

Charles Snellgrove, Clearwater

And there’s this.  During his Senate testimony DeBlander implied he has to sue carriers to get paid–and he always wins–meaning, I guess, that the insurance company opts to settle, which is due in part to Florida’s one-way attorney fee statute.

Isn’t it possible the carriers are questioning inflated bills? Isn’t that what the AOB vendor did to Charles Snellgrove to the tune of $26,000?  I wonder if Mr. DeBlander would also consider him a “lapdog” of insurance companies?  And, how about all the other consumers on video explaining how they were mistreated by AOB vendors.  More lapdogs?

I’d like to ask Mr. DeBlander this question: why is it that so many of your competitors don’t have to sue to get paid?

Heck, I know one water remediation company that has operated in Florida for nearly two decades. It guarantee’s its’ work and response time.  It is very profitable. And…it has never, (that’s never), had to sue an insurance company to get paid. Nor does it require consumers to pay up-front.

Again; why does Mr. DeBlander (and AOB vendors) have to sue when many others do not?

When I spoke to the attorney for FLARS he told me that some of its’ members don’t use AOB.  How can they survive and compete without AOB when Mr. DeBlander says he can’t?

Even the former spokesman for FLARS has repudiated the use of AOB, saying “…we certainly don’t want to be associated with the abusers.”  How can he operate without AOB, if Mr. DeBlander cannot? (See Note #2 below).

Vendors that don’t use AOB, have contract language that’s been around for decades.  It’s called “Direction to Pay” and it isn’t designed to create disputes like AOB. It’s designed to avoid them.  (See Note# 3 below)

Anyway, I promise to print any response Mr. DeBlander sends me, without any edits whatsoever. In the meantime I will continue to advise consumers to never (that’s never) sign an AOB contract.    There are always other options available.  (See Note #5 below)

I will also continue to advise insurance agents as the Florida Association of Insurance Agents (FAIA) has done—don’t refer clients to vendors that use AOB language.  While it doesn’t automatically mean there will be abuse (like Charles Snellgrove and many other consumers describe), it is, none the less, a red flag.

Agents–refer your clients to vendors recommended by your carriers.  For water losses, when in doubt, recommend FAIA’s preferred vendor, Rytech –a firm specifically vetted to help agents and consumers avoid the pitfalls of AOB.

And, to Mr. DeBlander I say this:  take some time to see how the other guys do it.  Maybe you, too, can be profitable without AOB and without having to sue to get paid.

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NOTE #1:  The Consumer Protection Coalition (CPC) references trial lawyers that team with vendors as “Shady”–specifically:  “Florida homeowners are being targeted by dishonest home repair vendors, roofers and water mitigation companies who team up with shady trial lawyers to take advantage of them.”  The CPC has been circulating a petition via its’ website.  Go to this website and sign the petition.  While you’re there, watch the videos of just a few of the consumers harmed by AOB.

NOTE #2: In a blog I wrote in 2015 following a legislative panel on which I participated, I describe how the spokesman for FLARS repudiated the use of AOB.  The blog is titled “AOB…the ‘Tipping Point; is here!”

NOTE #3: Most vendors who don’t need to sue to get paid use “Direction to Pay” language in their contracts.  Its’ purpose is simple: to cause the insurer to send payment for services directly to the vendor so the homeowner doesn’t have to pay out of pocket.  Are there problems and/or disputes? Of course.  But, they get resolved because neither party is trying to gouge the other and because attorneys aren’t involved, because there’s no AOB.  To see a typical “Direction to Pay” contract look at the one used by Rytech here.  To see the typical AOB contract as prescribed by the Cohen Law Firm look at Mr. DeBlander’s contract.

NOTE #4: beginning at the 2:14:51 during the Senate Banking & Insurance Committee watch as Mr. DeBlander responds to a question stating that the advent of AOB came about because “bad” carriers weren’t paying as they should.  Insurance Commissioner David Altmaier puts that theory to rest stating he has seen no such “data point” in his examinations.  “Nothing has changed in the marketplace” to justify the use of AOB.  See Altmaier’s comments at the hearing starting at 2:19:49 here.

NOTE #5:  a world of hypocrites– “Some” vendors (public adjusters, trial lawyers, etc.) point fingers at insurers using preferred & managed repair affiliates.  But, DeBlander (and those using similar AOB language) does the EXACT same thing– tying the hands of customers to his affiliated construction company and restricting their options with a cancellation fee that’s 10% of his ESTIMATE.

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