R Street Praises Florida House Passage of Assignment-of-Benefits Reform
(April 11, 2019) – The R Street Institute commends the Florida House of
Representatives for passage of H.B. 7065, legislation intended to address the
state’s epidemic of lawsuits stemming from assignments of benefits.
With similar legislation, S.B.
122, currently in the Senate Rules Committee, having previously cleared the
Judiciary and Banking and Insurance committees, House passage of H.B. 7065
raises hopes that assignment-of-benefits reform may finally be enacted into law
this year. Abusive and even fraudulent AOB-related lawsuits have exploded in
Florida in recent years, contributing to rising homeowners’ insurance premiums
even during a decade-long hurricane drought. The Legislature has previously
tried and failed to pass AOB reform legislation in every regular session since
“We salute the Florida House for once again taking this
crisis seriously and passing a commonsense, bipartisan bill that protects consumers,”
said R Street Associate Fellow Christian Cámara, author of a November
2018 paper calling for AOB reform. “We encourage the Senate to take up this
good bill and quickly send it to the governor so Floridians can benefit from
much-needed rate relief.”
Under an assignment of benefits, the beneficiary of an
insurance contract may transfer the right to collect benefits to a third party.
While transfers are standard in insurance, quirks in Florida law have made it a
locus of AOB-related litigation. According to Florida Department of Financial
Services’ legal-service-of-process data, the number of AOB lawsuits filed in
the state grew from just 405 in 2006 to more than 28,000 in 2016.
Of particular concern is the state’s “one-way attorneys’
fee” law, which allows plaintiffs’ attorneys to bill hours directly to a losing
insurer if the final settlement is even $1 more than the initial offer. H.B.
7065 lays out a formula under which the assignee, the insurer, or neither
party, may be entitled to attorney fees, depending on the difference between
the judgment obtained by the assignee and the pre-suit settlement offer.