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Insurance Journal: Some insurers eye repayment of legal fees in past property litigation cases

Buildings on Sanibel didn't fare well in the storm surge of Hurricane Ian.
Thomas James for WGCU/NPR
Buildings on Sanibel didn't fare well in the storm surge of Hurricane Ian.

A recent report in the Insurance Journalsaid that a number of insurance carriers and defense firms are insisting that the Florida SB 2A statute should be applied retroactively, blocking insurers’ payment of most attorney fees in cases that began long before the legislation was signed into law.

In the early March story, the property and casualty insurance industry publication reported that the interpretation by carriers is drawing ire from lawyers for policyholders.

“This is an improper interpretation of the law,” West Palm Beach attorney Gina Clausen Lozier, who represents policyholders in insurance cases, told the publication.

According to the Insurance Journal story, Florida court rulings say the statute in effect at the time an insurance contract is signed governs issues like this, Lozier said. In other words, if a policy was written before the attorney-fee limitation bill became law in late 2022, one-way attorney fees can still be allowed when an insured prevails over a carrier, she said.

“All of our research shows that the law is not retroactive,” said Chip Merlin, a claimants’ attorney in Tampa. “Members of the Legislature, in fact, have said it was not retroactive.”

The Insurance Journal story said that at least two insurers in recent months — one in Lee County and another in Charlotte County — have begged to differ.

The story described Lee County as ground zero for Hurricane Ian claims and said that American Integrity Insurance Co. in mid-February asked a circuit judge to strike the homeowners’ request that the insurer pay their legal fees.

“Based on recent legislation aimed at addressing excessive litigation by eliminating one-way attorney fees for property insurance, and limiting the ability to acquire fees to an offer of judgment pursuant to Fla. Stat. § 768.79 or § 57.105, plaintiffs’ claim for attorney fees … is improper, immaterial and must be stricken by this court,” American Integrity attorney Amanda Droleski wrote in her motion.

Those one-way fees in Florida have been allowed by statute and court rulings for more than a decade and were cited as the number one reason that insurance claims litigation exploded in the last five years.

The Insurance Journal story practice was seen as a strong incentive for some claimants’ attorneys to file thousands of unnecessary, premature or even duplicative suits on homeowner claims, costing insurers millions, driving up premiums and sending 10 property insurers into the realm of insolvency in the last three years, insurers and defense lawyers have said.

SB 2A, much heralded by the insurance industry when it passed, “makes it perfectly clear that there is no right to attorney fees…,” Droleski’s motion reads. Because the homeowners filed their lawsuit in January, after the bill became law, their lawyer is not entitled to fees paid by the insurer.

In another suit, from Charlotte County, Spinnaker Insurance Co. made a similar assertion in an appeal to Florida’s 6th District Court of Appeals. The court has asked both sides to submit briefs about the issue.

Both cases are still pending.

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