Summary: In the six months since legislative reform, insurance companies report the number of Assignment of Benefit (AOB) claims in Florida are way down as are related lawsuits. But they’re also seeing new strategies by contractors and their attorneys to work around the reforms. On the other side, contractors complain that without the “old AOB,” they’re getting shortchanged by insurance companies and homeowners for work they’ve already performed. Host Lisa Miller, a former deputy insurance commissioner, talks with Tanaz Salehi, an insurance defense attorney, and Mohammad Sherif, a plaintiff attorney, on the reform’s impact, its unintended consequences, and the potential solutions to ongoing claims problems. Show Notes An Assignment of Benefits (AOB) contract is a legal agreement between the contractor and homeowner, which allows the contractor to receive payments directly from insurance companies for work they perform at a policyholder’s home, without the homeowner having to pay money upfront. In past years, unscrupulous vendors and their lawyers have taken advantage of the AOB to take control of a homeowner’s policy, then inflate the scope and cost of claims and sue the insurance company if it refuses to pay the inflated bills. The Florida Legislature passed AOB reform in 2019 establishing tighter rules to stem the abuse and fraud, while putting more responsibilities on insurance companies, too. The reform, in part, revised Florida’s one-way attorney fee system, to make fee awards fairer. “Insurance carriers have been filing motions to strike plaintiff attorney fees under the new law and have been prevailing in different counties across Florida,” said Salehi, managing shareholder with the Salehi Boyer Lavigne Lombana law firm in Miami. She represents insurance companies. Both Salehi and Sherif agree that while the reform is working, as evidenced by the reduction in lawsuits, there are now issues with loopholes being exploited and unintended consequences for both sides. Host Miller noted reports of various workarounds to the reform law. These include plaintiff attorneys making bulk deals with contractors to recommend the homeowner hire the attorney upfront to represent them at First Notice of Loss, to avoid using an AOB. Also, there are reports of some restoration contractors splitting out “Emergency Services” they provide over several days, in order to get around the $3, 000 statutory limitation. “That ($3,000 cap) applies to emergency mitigation services,” said Salehi. “That leaves a huge void for the roofing contractors that are now charging maybe ten to twenty times what it actually costs to replace the roof and submitting permits to the county for repairs for a fraction of what they’re charging the insurance companies.” Sherif said there are bad actors on both sides and lots of misinformation and confusion in the industry about what the reform did and the expectations going forward. “There are front end desk adjusters at insurance companies who may be overzealous in applying the new law to hold vendors accountable,” said Sherif, a partner with Mubarak & Sherif, a Tampa law firm that focuses predominantly on helping homeowners in the Florida Panhandle with Hurricane Michael claims. Both Sherif and Salehi agree the reform has had unintended consequences, too, especially for contractors who want to work but want to be guaranteed payment. “What I’m seeing is a lot of vendors who don’t want to use assignments anymore but who are having difficulty getting paid. And the expectation has always been that ‘if I can’t go against the insurance company directly, what recourse am I left with as a contractor?’” said Sherif. Salehi, who also advises contractors, said there are some cases where (continued)
