Florida Legislature Finally Passes Substantial Assignment-of-Benefits Reform
(April 24, 2019) – The seventh time was the charm for the Florida
Legislature, as the state Senate today passed House-passed reforms to stem the
flood of abusive assignment-of-benefits litigation.
With the Senate’s passage, the bill, H.B. 7065, now moves
to Gov. Ron DeSantis. The R Street Institute urges that he sign this important
legislation. The Legislature had previously tried and failed to pass AOB reform
legislation in every regular session since 2013.
Under an assignment of benefits, the beneficiary of an
insurance contract may transfer the right to collect benefits to a third party,
such as a contractor. While they are common in every state, Florida has seen an
explosion in AOB-related litigation, growing from just 1,300 AOB lawsuits in
2000 to 135,000 in 2018.
H.B. 7065 makes several substantial changes to address
concerns that bad actors are exploiting the law to file fraudulent claims and
abusive lawsuits. Most notably, it will replace Florida’s “one-way attorneys’
fee” law with a formula to determine which party, if any, receives attorney
fees should an AOB lawsuit result in a judgment. It also would allow insurers
to make some policies available that restrict or prohibit assignments.
“Floridians have been slammed with higher property
insurance rates for more than a decade not because of natural disasters, but
because of insurance fraud, abuse and excessive litigation,” said R Street
Associate Fellow Christian Cámara. “We commend the Florida Legislature for
tackling this man-made disaster by finally passing commonsense AOB reform and
strongly urge Gov. DeSantis to quickly sign this bill into law.”