Courtesy of The Sun Sentinel
Published March 7, 2016
A half-a-loaf package of property insurance reforms aimed
at reducing fraud and overbilling cleared the state Senate Appropriations
Committee on Tuesday over the opposition of construction contractors and to
the chagrin of the sponsor of a tougher bill that failed to advance.
The new bill next heads to the full Senate floor. Its counterpart advanced
to the full House last week.
Sen. Dorothy Hukill, R-Port Orange, said the bill passed Tuesday amounts to
"nibbling around the edges and not actually fixing" the
assignment-of-benefits problem spreading across the state. "I don't want to
wait until it becomes an absolute crisis," she said.
The bill approved Tuesday does not impose a $2,500 limit on emergency
repairs made prior to inspection by insurance companies. It does not require
notification to insurance companies any time a policyholder signs over
benefits of a policy to a repair company. And it does not require advance
approval by insurance companies of any invoice exceeding a contractor's
original written estimate. Those were key elements of the bill sponsored by
Hukill and promoted by insurance industry lobbyists and their allies in the
run-up to the legislative session.
Hukill's bill died in committee, along with its House counterpart.
The sponsor of the alternative bill, Sen. Miguel Diaz de la Portilla,
R-Miami, said it's as "far as we've been able to bring it" following
meetings he compared to "herding cats" to build consensus among attorneys,
homeowners groups, insurance industry representatives, water damage repair
contractors and even roofers.
Opposition to Diaz de la Portilla's bill was voiced by representatives of
several contractors, including American Construction and Plumbing,
Restorative Pros Inc., Restoration One and Air Quality Assessors. While they
did not speak, they likely opposed the new bill because it would impose a
$25 cap on referral fees for any repair or restoration work payable by
insurance proceeds, said Paul Handerhan, a spokesman for the Fort
Lauderdale-based Florida Association for Insurance Reform.
Reached by email, Edie Ousley, spokeswoman for the Consumer Protection
Coalition, an organization formed by the Florida Chamber of Commerce in
support of Hukill's bill, said she hopes Hukill and Diaz de la Portilla can
strengthen the bill into one "that better protects Florida families against
the insurance scams that lead to fraud and abuse."
Logan McFaddin, a spokesman for the Property Casualty Insurers Association
of America, called the new bill a start but said "more reforms are needed
for there to be real and lasting impacts."
Diaz de la Portilla said he would review additional suggestions received
Tuesday morning. "This is not entirely the finished product, but I think
it's a good start."
This is the fourth straight year that reform proponents have tried to enact
proposals restricting homeowners' ability to assign benefits of their
insurance policies to damage repair contractors. Reforms are necessary,
insurers maintain, because contractors refuse to make repairs after plumbing
emergencies unless homeowners sign over benefits of their policies, then use
the assignments to overbill insurers and file costly lawsuits if insurers
refuse to pay.
Data released by the state Office of Insurance Regulation last month show
that while the practice occurs most commonly in South Florida, all regions
of the state are experiencing increases. State-run Citizens Property
Insurance Corp. blamed it for increased insurance rates in Miami-Dade,
Broward and Palm Beach counties this year.
Previous legislative efforts to restrict policyholders from assigning
benefits met with sharp opposition from contractors, trial attorneys and
public adjusters who argued that the right has been upheld by Florida's
courts for more than a century and is a critical tool for obtaining car
repairs and emergency medical care.
The right was upheld again Feb. 5 by Florida's 2nd District Court of Appeal,
which ruled that a homeowner may assign policy benefits to an emergency
water mitigation company despite a policy provision requiring the insurer's
Hukill's bill and its House counterpart would have voided policy assignments
not presented to insurance companies within three days after they are
signed, or when invoices exceeded cost estimates without insurers' approval.
The bills also originally capped reimbursement of emergency repairs under an
assignment at $2,500.
Handerhan, senior vice president of FAIR, said in mid-February that
restrictions in the bill may have been "a little too aggressive." He said
FAIR prefers Diaz de la Portilla's bill, which in addition to barring
kickbacks exceeding $25 for recommending repair companies to homeowners,
would prohibit anyone not licensed as a public adjuster from interpreting
insurance coverages for policyholders, and require itemized estimates for
The Department of Financial Services would be authorized to issue
cease-and-desist orders to violators and impose fines up to $10,000.
Amendments approved Tuesday also would bar contractors from billing or suing
a policyholder for payment owed by an insurance company, limit the law's
effects to residential policyholders, allow policyholders to assign benefits
of other claims and state that contractors won't be in violation for
presenting supplements to their original work estimates.