If you are a regular reader of this blog, then you know that the Florida Legislature passed no meaningful laws regarding assignment of benefits (AOBs) during this past Session. Although AOBs were a hot topic in Tallahassee, insurers could not agree on how to deal with this issue.
As outlined in Court Upholds Assignments of Benefits, But Legislative Door Still Open, recent appellate court decisions upholding AOBs coupled with the Office of Insurance Regulation disallowing policy changes that would prohibit AOBs means that insurers will be chomping at the bit to address this issue next session. The article referenced above offered a great summary of the recent ruling in One Call Property Services v. Security First Insurance Company:1
Of the three decisions, the One Call case addresses the issues in the most plenary manner. In One Call, a contractor that provided emergency water removal services to an insured pursuant to an assignment of benefits filed suit against Security First alleging that the insurer did not adequately pay the contractor for the services that the contractor rendered.
The insurer moved to dismiss the lawsuit arguing that the contractor lacked standing to sue under the insurance policy and that the assignment was invalid. Agreeing with the insurer, the trial court dismissed the contractor's complaint with prejudice and found that the policy precluded the contractor, as assignee, from bringing suit to determine what was due under the policy.
On appeal, the Fourth DCA reversed the lower court dismissal of the case and found that an assignment of insurance benefits is valid under Florida law, even when an insurance policy contains a provision barring assignment of the policy.
In doing so, the court rebuffed several insurer arguments that have been advanced by various insurers in the trial courts. The court found that payment does not have to be due under the loss payment provision of a policy for an assignment to be valid.
The court also held that an assignment cannot be invalidated on the theory that it attempts to assign a contractual "duty to adjust" from the insured to a third party, namely the contractor.
Additionally, the court rejected the insurer's argument that a payment must be due under the policy before the right to the payment may be assigned and found that an assignable right to benefits under a policy accrues at the date of loss even though payment is not due at that time.
The court concluded, "As long as the insured complies with all policy conditions, a third-party assignee may recover benefits on a covered loss.
The Fourth DCA also issued opinions in ASAP Restoration and Emergency Services 24. These opinions remanded cases to the trial court finding that post-loss assignments are not barred for the reasons outlined in the One Call case.
In One Call, the Court also declined to address the public policy arguments against AOBs made by Security First and deferred to the Legislature for that determination. All of these factors mean one thing – no matter how you feel about AOBs, get ready for next year’s Session. One way or the other, I believe that the legislature will do something in this area soon. Let’s hope their “solution” is something fair to all sides.