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Legal Updates for Florida Coverage and Property Litigation

Appellate Court Reverses Fee Award, Clarifies ‘Judgment Obtained’ Under Florida’s Offer of Judgment Statute

SFR Services, LLC a/a/o John & Rose Zapisek v. Florida Department of Financial Services o/b/o Avatar Property and Casualty Insurance Company, Fla. 6th DCA, No. 6D2023-1050, L.T. Case No. 19-CA-001630, May 16, 2025

June 1, 2025

This case arises from a dispute regarding a Hurricane Irma homeowners’ insurance claim. SFR Services, LLC, a Florida restoration company, performed repairs for the homeowners, and in exchange the homeowners executed an agreement assigning their insurance benefits to SFR Services. Ultimately, SFR Services filed suit against the insurance company, seeking payment of its invoices in addition to recovering “damages, together with interest, costs and attorneys’ fees” under section 627.428, Florida Statutes.

During the underlying litigation, Avatar Property and Casualty Insurance Company, the homeowners’ insurance company, served a proposal for settlement (PFS) to SFR Services for $15,000, which included the language that the settlement amount was “exclusive of all taxable costs and attorneys’ fees.” SFR Services did not accept the PFS, and the matter proceeded to trial. 

At trial, the jury found in favor of SFR Services and concluded that the insurance company owed $20,000 in damages to SFR Services. The trial court subsequently reduced the damages amount to $9,000 to account for both the insurance policy’s applicable $6,000 hurricane deductible and to account for a prior directed verdict motion judgment for $5,000 regarding the interior damages. 

Afterwards, both the insurance company and SFR Services filed competing motions for attorneys’ fees and costs. The insurance company sought fees and costs under F.S. § 768.79(1), based on SFR Services’ rejection of the $15,000 PFS. Under Florida law, when a defendant serves a PFS that “is not accepted by the plaintiff, and if the judgment obtained by the plaintiff is at least 25 percent less than the amount of the offer, the defendant” is entitled to reasonable attorneys’ fees and costs “incurred from the date the offer was served.” F.S. § 768.79(7)(a). Regarding offers made by defendants to plaintiffs, “the term ‘judgment obtained’ means the amount of the net judgment entered, plus any post-offer collateral source payments received or due as of the date of the judgment, plus any post-offer settlement amounts by which the verdict was reduced.” F.S. § 768.79(7).

Thus, the insurance company argued that the final damages amount ($9,000) plus SFR Service’s pre-offer interest ($1,364.93) was 25% less than the $15,000 PFS, triggering fee shifting under the statute. In response, SFR Services argued that its pre-offer attorneys’ fees and costs also had to be factored in, in order to calculate the correct “judgment obtained.” By doing so, SFR Services argued that this would place the “judgment obtained” above the $11,250 threshold, thereby eliminating the fee triggering. 

After a hearing, the trial court sided with the insurance company and concluded that the “judgment obtained” by SFR Services, exclusive of taxable costs and attorneys’ fees, was $9,000. Because this $9,000 amount was less than the $11,250 threshold (at least 25% less than the $15,000 PFS), the trial court determined that the insurance company was entitled to recover its attorneys’ fees and costs incurred from the date the PFS was served. SFR Services subsequently appealed. 

Upon appeal, the Sixth District Court of Appeals agreed with SFR Services and determined that the trial court erred by not applying the Florida Supreme Court’s decision in White v. Steak & Ale of Fla., Inc. when calculating the “judgment obtained.”

In the White decision, the Florida Supreme Court held “that the ‘judgment obtained’ . . . includes the net judgment for damages and any attorneys’ fees and taxable costs that could have been included in a final judgment if such final judgment was entered on the date of the offer.” Id., 816 So. 2d at 551. This judgment calculation (which includes pre-offer attorneys’ fees and costs as of the date of the PFS offer) has become known as the White formula. Application of the White formula does not turn on whether the PFS includes attorneys’ fees or costs. Id. at 552.

Thus, the appellate court concluded that the trial court erred in failing to apply the White formula in calculating the “judgment obtained” because they failed to include the pre-offer attorneys’ fees or costs amount incurred by SFR Services. As of the date of the offer, SFR Services had incurred $2,384.90 in costs. Following the White formula and factoring this amount into the $9,000 damages amount, “the judgment obtained” was not “at least 25 percent less than the amount of the [$15,000.00] offer.” F.S. § 768.79(7)(a). Thus, the District Court determined that the insurance company was not entitled to attorneys’ fees and costs under the offer of judgment statute.

The final judgment in favor of the insurance company was reversed, and the case was remanded to the trial court for proceedings consistent with this opinion. 

 

Legal Update for Florida Coverage & Property Litigation – June 2025 is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We would be pleased to provide such legal assistance as you require on these and other subjects when called upon. ATTORNEY ADVERTISING pursuant to New York RPC 7.1 Copyright © 2025 Marshall Dennehey, all rights reserved. No part of this publication may be reprinted without the express written permission of our firm. For reprints or inquiries, or if you wish to be removed from this mailing list, contact tamontemuro@mdwcg.com.

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Employer/Carriers Must Explicitly Invoke Right to Deny Claim Under “Pay and Investigate” Statutory Provision; Employes Must Always Prove Medical Necessity of Treatment

Koren v. City of Kissimmee/PGCS, ___So.3d___(Fla 1st DCA 6/10/26) The majority opinion in Koren holds that the Judge of Compensation Claims (JCC) properly denied psychiatric treatment because the claimant did not challenge on appeal the JCC’s finding that the requested treatment was not medically necessary. However, Judge K. Thomas authored a detailed concurrence agreeing with the result on the ground that the claimant failed to meet his burden of proving medical necessity. In doing so, Judge K. Thomas also emphasized an important principle: employer/carriers must expressly invoke the 120-day pay-and-investigate provision under Florida’s Workers’ Compensation Act if they intend to preserve their right to deny compensability. Merely authorizing evaluations, without explicitly invoking the 120-day rule, may be insufficient to preserve the right to deny compensability of specific injuries. In Koren, the claimant sustained injuries to his upper lip, tooth, right knee, and right foot when a board gave way on a deck he was repairing for the employer/carrier. The accident was accepted as compensable, and multiple specialists were authorized to treat his physical injuries, including an ear, nose, and throat physician, dentist, orthopedist, and plastic surgeon. The claimant later sought psychiatric treatment and attended an independent medical examination (IME) with a psychiatrist. The IME diagnosed adjustment disorder with mixed anxiety and depressed mood, opining that the condition was caused by “the actual appearance of the scar” resulting from the industrial accident. The IME recommended continued medication, including an antidepressant, as well as follow-up care with a psychiatrist and psychologist. Critically, however, the IME did not offer an opinion regarding the medical necessity of this treatment. The claimant then filed a petition for benefits attaching the IME report and requesting authorization of psychiatric care. The employer/carrier responded by authorizing a psychiatrist, whom the claimant did, in fact, see. However, the employer/carrier neither denied the claim nor issued written notice invoking the 120-day pay-and-investigate provision. The authorized psychiatrist subsequently opined that the claimant’s psychiatric condition was unrelated to the industrial accident and instead attributable to prior employment as a law enforcement officer and volunteer firefighter. The psychiatrist further concluded that the work accident was not the major contributing cause of the condition. Although the employer/carrier stipulated to the authorization of the psychiatrist, it ultimately denied the claimant’s entitlement to psychiatric treatment. The JCC denied the requested benefit. The majority opinion affirmed on the narrow ground that medical necessity had not been established. Judge K. Thomas’s concurrence, however, expands on the legal framework. Under Florida law, an employer/carrier presented with a claim must “pay, pay and investigate, or deny.” To avail itself of the 120-day pay-and-investigate protection, the employer/carrier must affirmatively and explicitly invoke that option, typically through a written 120-day letter. The statutory investigative period does not arise automatically upon the provision of care. Furthermore, an attempt to characterize authorization as a “one-time evaluation” does not avoid waiver, as even a single evaluation may constitute the provision of a compensable benefit. By authorizing psychiatric care without invoking the 120-day provision, the employer/carrier in Koren effectively accepted compensability of the claimant’s PTSD condition. Nonetheless, it retained the ability to contest entitlement to ongoing treatment. While the employer/carrier failed to demonstrate a break in the causal chain, the claimant still bore the burden of proving that the requested treatment was medically necessary. Because the JCC found that the claimant failed to meet this burden, and the claimant did not challenge that finding either below or on appeal, the denial of psychiatric benefits was ultimately affirmed.

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