Those looking to understand the politics of AOB need look no further than the next two words: ATTORNEY FEES!

At its core, Assignment of Benefits is a scheme birthed by one law firm and materially employed by roughly two dozen others—solely to stuff their pockets via a perversion of Florida’s well intended “one-way” attorney fee statute fs. 627.428. (fs. 626.9373 for the non-admitted market).

The statutes’ origins were benevolent–a means to protect policyholders from large insurance companies with superior financial resources that could be deployed to intimidate when/if their claim was underpaid or inappropriately denied. Specifically it provides that in any action taken by a policyholder against an insurer, the policyholder (property, auto, health) will not have to pay the insurers attorney fees—even if the carrier successfully defends what might have been a meritless suit. (See NOTE #1 below)

By not relying on the prevailing fees approach an important  disincentive for the policyholder to file suit is, therefore, removedThis has been acceptable over the years because a policyholder usually seeks only to be made whole for their loss–whether getting their home or windshield repaired, or necessary medical treatment.

With property insurance, abuse arises when the homeowner mistakenly (unknowingly) assigns their entire claim and all attendant policy rights, including the right to sue, to a disinterested 3rd party vendor—a for profit entity the “one way” statute was never intended to help. (See NOTE #2 below)

This results in thousands of disputes manufactured by law firms and their fronting organizations that represent contractors in the legislature and conduct workshops and training programs on how to use AOB contracts to generate disputes attorneys can profit from. These suits  usually yield fees ranging from $450 to $600 an hour—almost double the overall average for a Miami attorney. (See NOTE #3 below).

In a nutshell, solve the attorney fee side of the equation and solve AOB abuse.

Now for some AOB politics!

After yet another defeat for AOB reformers in 2016, the Florida Property & Casualty Association (FPCA) blamed a trial attorney, Sen. Miguel Diaz de la Portilla, (R-Miami), chairman of the Senate Judiciary Committee (the last stop), for failing to move forward a bill that… “prevented a handful of vendors and their lawyers from stealing homeowners’ insurance policy rights and using them to pad their own pockets…”. See FPCA’s full op-ed.

The following year, and again in 2018, the Florida House of Representatives adopted meaningful AOB reforms that included compromise language on the one-way attorney fee statute. Note, the bill didn’t entirely repeal the statute.  It still protected policyholders but, awarded fees based on the amount of the judgement when the claim was assigned to a third party.  It was a clever compromise and in 2018 HB-7015 passed the house by a substantial 82 to 20 margin.

So… to clearly understand the politics of AOB one need only look at who voted “no” on HB-7015. They were all Democrats.  Sixteen (16) were from Dade, Broward and Palm Beach Counties and over half were…trial lawyers.

Of the four that were not from the tri-county area, the most vocal opponent was Representative Sean Shaw (D-61), a trial lawyer who, during committee debates, mischaracterized the abuse as mere disagreements over invoices. Shaw works for Chip Merlin. Merlin heads a Tampa based lawsuit mill (See post publication clarification below) that’s been sanctioned numerous times (See Lawyers Lie to Court) leading one judge to opine “I am convinced only the harshest of sanctions may cause…the Merlin firm to reexamine their approach to litigation.”   Frankly, had Sean Shaw’s quest to become Florida’s Attorney General succeeded it would’ve been the epitome of the fox (maybe two foxes) guarding the hen house.

There’s more.

In 2017 trial lawyers handed the Senate’s obstruction torch to Senator Anitere Flores (R-Miami) who, along with Senator Gary Farmer (D-Fort Lauderdale) deployed various parliamentary maneuvers to keep the House compromise from even being heard.  Both are lawyers, of course. Senator Farmer is a former president of the trial lawyers lobbying group (Florida Justice Association) and, according to journalist Peter Schorsch, spends at least some of his Senate time continuing to do their bidding. See “Texts reveal Gary Farmer still lobbying for trial bar.”

Ditto 2018.  With an assist from another trial lawyer, then Senate President Joe Negron (R-Stuart), Senator Flores and yet another trial lawyer, then Senator Greg Steube (R-Sarasota), bottled up debate in both of their committee’s by offering various “unpassable” approaches–any approach, that didn’t mess with the trial bars sacred cow.  (See NOTE #4 below)  

That’s the politics of AOB through 2018: “…a small group of greedy vendors and their lawyers.”

But politics never stay the same!

Newly elected Senate President, Bill Galvano (R-Sarasota) has appointed a new chairman of the Banking and Insurance Committee. Instead of Senator Flores, it will now be Senator Doug Broxson (R-Pensacola) who is neither a trial lawyer nor from South Florida.  He’s an insurance agent from Pensacola.

Almost immediately Senator Broxson dropped SB-122 in the hopper which, unlike previous versions in the house, doesn’t compromise on the attorney fee issue.  In fact, it directly prohibits the “one way” concept from applying anytime there is an assignment of benefits, as follows:

“The right to attorney fees under this section may not be assigned or extended by contract or other agreement to any person other than another named insured…” 

Senator Broxsons’ bill was immediately blasted by trial lawyers via the Restoration Association of Florida (RAF).  The group claims to represent “restoration contractors” but, in fact, it has only 28 members total, 25% (7) of which are trial law firms, (See NOTE #5 below). The only other so-called group of restoration contractors sure to disagree with Senator Broxson is FLARS (The Florida Association of Restoration Specialists). It’s closely aligned with the Cohen Law Firm, where the AOB property scheme is alleged to have originated.

On that note, I’ll close as I opened…

        “Those looking to understand the politics of AOB need look no further than the next two words: ATTORNEY FEES!”


NOTE #1: Conversely, if a policyholder wins just a penny more than the insurer’s offer, all their attorney’s fees are paid by the insurer, sometimes tens of thousands more than the claim itself—and, thus the term “one way”.

See “Restoring Balance in Insurance Litigation—Curbing Abuses of Assignment of Benefits and Reaffirming Insureds’ Unique Right to Unilateral Attorney’s Fees”; page 1:

“What makes this arrangement particularly lucrative for attorneys  are the ‘one-way’; attorney’s fees awarded to the attorney’s that represent prevailing service providers. Under Section 627.428, Florida Statutes, a prevailing party in a dispute with an insurer is entitled to his attorney’s fees and costs.  The fees are ‘one way’ because insurers that prevail are not entitled to fees under the statute”

Out of court settlements in the carriers favor are rare, and in many cases settled for just $1 more than the insurers original offer–merely so the trial lawyer will agree to settle.  In one notable instance, even though fraud was proven, the insurance company still had to pay the plaintiff’s fees. In the case (Bascuas vs Citizens) Citizens initially paid its policyholder $28,000 for a water claim.   Weeks later the policyholder brought suit claiming the damages were $330,000.  Citizens defended claiming the loss was staged and the result of fraud. The jury agreed! But, the court not only denied Citizens’ request for a return of the $28,000 it had already paid, it denied a refund of the attorney fees as well. The court’s rationale was that, despite the fraud, the policyholder did prevail in defeating Citizens’ counter-claim for the return of the $28,000.  The court found that the “one way” attorney fee statute has no exception for fraud and that it is the legislature’s responsibility to enact such an exception.  See Insurer Owes Fees Despite Fraud Finding and the rendering by the 3rd DCA.

NOTE #2: Vendors are now in cahoots with AOB law firms (and/or public adjusters) who train them on how to present carriers with invoices designed to create a legal dispute and to make it difficult for the carrier to properly adjust the claim. Because the claim has been transferred away from the homeowner to a disinterested profit-making entity, the one-way statute’s benevolent intent is warped to unjustly enrich lawyers and remediation contractors. The “one way” approach also incentivizes the plaintiffs’ attorney to avoid settling (even the most meritless case) for anything equal to or less than the carriers original offer.

NOTE #3: The 2017 Legal Trends Report by software firm Clio states the average hourly rate for Miami attorneys is $310, behind counter parts in New York ($344) and Los Angeles ($323), but ahead of D.C. lawyers ($304).  The data was provided by 60,000 Clio software users from various sized law firms, together with surveys from 3,000 legal professionals and 2,000 consumers.  Both the 2017 and 2018 reports can be downloaded here.

NOTE #4: The “unpassable approaches” did not acknowledge the one-way fee statute as the source of the problem and thus they were opposed by Insurance Commissioner, David Altmaier; Insurance Consumer Advocate, Sharon James; Citizens Property Insurance Company; the Department of Financial Services; the Florida Chamber of Commerce; and, virtually every non-insurance group that comes to mind other than trial lawyers and restoration vendors.  Opposition by insurance groups appeared unanimous as well.

NOTE #5: You can learn more about RAF which claims to be a non-profit organization from its’ Facebook page and website. Among other notables you’ll find pictures and connections to Senator Gary Farmer and Harvey Cohen. Dues range from $25 per month to $1,000 per month.  Based on the response to my request for information RAF differs from FLARS by primarily focusing on defending AOB.

Post publication clarification: this statement was not intended to imply, nor does it state, that the Merlin firm is active in filing AOB lawsuits.  See Merlin Blog, here.


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