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Defense Digest

Decision Requiring Strict Compliance with §627.7152 Provides Insurance Carriers With Another Tool to Combat Litigation of Assignment of Benefit Claims

Defense Digest, Vol. 28, No. 12, December 2022

December 1, 2022

by Danielle N. Robinson

Key Points:

  • As of July 1, 2019, pursuant to Florida Statute §627.7152, there are specific guidelines that an assignment of benefits (AOB) must adhere to.
  • Statute requires that an AOB must be in writing and executed, contain a provision that allows for rescission without a penalty, and include a written itemized, per-unit cost estimate of the services to be performed by the service provider.
  • Statute also specifies that an AOB may not have penalties or fees for cancellation, processing or administration.

In The Kidwell Group, LLC, d/b/a Air Quality Assessors of Florida v. United Property & Casualty Insurance Company, the Fourth District Court of Appeal upheld a dismissal of a breach of control suit brought by an assignee. The court found that an estimate attached to the complaint from five days after the date the AOB was executed did not satisfy the requirement that the Assignment contain a written itemized, per-unit cost estimate of the services to be performed.

On June 15, 2022, the Fourth District Court of Appel upheld a lower court’s dismissal of a breach-of-contract suit brought by an Assignment of Benefit (AOB) holder (assignee) because the AOB was invalid and unenforceable. Under Florida law, a valid AOB allows an assignee (such as water remediation companies, roofers and contractors) to receive benefits under a policyholder’s insurance policy in exchange for providing services or repairs relating to the policyholder’s property damage claim. Due to the increase in the number of entities seeking to provide services pursuant to an AOB, many Florida homeowners unwittingly engaged repair providers and executed AOBs in exchange for their services. Many times, after an AOB had been obtained from the policyholders, assignees subsequently, and often unilaterally, expanded the scope of the services to be provided or changed the prices for their services. Additionally, many companies began to take advantage of homeowners by offering a multitude of tests, assessments and evaluations, ostensibly related to their property damage claims, in an effort to obtain an AOB and bill their insurance carriers for the costs. As a result, Florida insurance carriers began seeing an ever-increasing tidal wave of assignee-related claims for questionable services and excessive amounts. This influx in claims ultimately translated into an influx of litigation between assignees and insurance carriers.

In an effort to curb this rampant litigation, the Florida Legislature passed §627.7152, detailing the specific guidelines an AOB must adhere to in order to be valid and enforceable. The law went into effect on July 1, 2019. The Statute requires that an AOB:

(1) be in writing and executed by and between the policyholder and the service provider;

(2) contain a provision that allows the policyholder to rescind the AOB without a penalty within a certain time;

(3) contain a provision requiring the service provider to provide a copy of the AOB to the policyholder’s insurance carrier;

(4) contain a written, itemized, per-unit cost estimate of the services to be performed by the service provider;

(5) relate only to specific types of repairs and services at the property;

(6) specifically notify the policyholder that they are giving up rights under their insurance policy which may result in litigation; and

(7) contain a provision requiring the service provider to protect the policyholder from any resulting liabilities, costs or losses.

In addition to indicating what an AOB must have, the Florida Legislature also specified what an AOB may not have, including penalties or fees for cancellation, processing or administration. Under the statute, an AOB that does not comply with these requirements is deemed to be invalid and unenforceable. Section 627.7152 also requires an assignee to provide the policyholder and the insurance carrier with a written notice of its intent to initiate litigation at least 10 business days before filing a lawsuit. The statute holds assignees’ feet to the fire by requiring that an AOB conform to specific, concrete, and uniform requirements or be deemed unenforceable.

The Fourth District Court of Appeal’s recent decision in Kidwell demonstrates just how strictly assignees will have to comply with §627.7152. In Kidwell, the AOB was deemed invalid and unenforceable because it was not in strict compliance with the requirements laid out in 627.7152. The court held that the AOB did not contain an itemized, per-unit cost estimate of the services to be performed, as required by law. In Kidwell, the plaintiff argued that it satisfied the requirements of § 627.7152 by providing the policyholder with an invoice dated five days after the AOB was signed. However, the court determined that a post-dated, unsigned invoice did not comply with the requirement that the AOB contain a per-unit cost estimate of the services to be performed and was, therefore, invalid.

In one of the first appellate rulings on this aspect, the Fourth District Court of Appeal’s decision in Kidwell has paved the way for other jurisdictions to reach the same decisive conclusion. It is the intent of the legislature that Statute 627.7152 will prevent assignees from potentially deceiving policyholders and insurance carriers by seeking reimbursement for inflated estimates and unnecessary repairs. The Kidwell decision’s strict enforcement of the statue will hold entities to account for their duplicitous tactics.

In an effort to get around the statute, Kidwell and other entities have argued that 627.7152 should not be applied retroactively to any claims on insurance policies issued prior to July 1, 2019, the effective date of the statute. However, the Second District Court of Appeal recently rejected that argument when it issued its opinion in The Kidwell Group, LLC d/b/a Air Quality Assessors of Florida a/a/o Robert and Maureen Mucciaccio v. American Integrity Insurance Company of Florida, 347 So.3d 501 (Fla. 2d DCA Sept. 16, 2022). There, the court found that the assignee has no rights to an insured claim until it executes a valid AOB with the policyholder. Therefore, the law in effect on the date the parties executed the AOB controls, not the law in effect when the insurance policy was issued. As a result, the court held that Florida Statute 627.7152 applied to Kidwell’s AOB as it was executed after the statute’s July 1, 2019, effective date.

As is clear from both of the recent Kidwell cases, the trend is to hold the assignee accountable and ensure they are providing reasonable services at reasonable costs. Strict compliance with Florida Statute §627.7152 for any AOB executed after July 1, 2019, will be required.

Firm Highlights

Thought Leadership

PA Middle District Dismisses Claims Against School District and its Superintendent, Principal, Special Education Director, and Classroom Teacher

A five-year-old special education student was enrolled in the Wyoming Valley West School District and attended the State Street Elementary School during the 2024-2025 school year. The student refused to clean up classroom toys at dismissal. When his teacher allegedly grabbed him by the wrist to walk him back to his seat, the student dropped to the floor and began crying. The teacher then allegedly grabbed the student by the ankle and dragged him across the floor. Following an investigation, criminal charges were not advanced by the county DA, and the school permitted the teacher to return to the classroom. The student’s parents sued, lodging thirteen legal counts under both state and federal law, which sought monetary damages from the teacher, the school district, the superintendent, the principal, and the director of special education. The plaintiff’s 42 USC 1983 claims were dismissed as to the school district for failure to allege a policy or custom violation, and the failure to alleged deliberate indifference in the failure-to-train context. As to the superintendent, building principal, and special education director, the Section 1983 claims were also dismissed for failure to allege personal involvement on the part of the individuals. Regarding an equal protection claim asserted against all defendants, the motion to dismiss was also granted for a failure to advance a plausible equal protection claim, holding that “plaintiffs' single-act allegations do not include a factual basis to even infer that the act was motivated by discriminatory animus rather than some other non-discriminatory impulse.” The court further dismissed the plaintiff’s negligence-based claims including negligence against the teacher and district administrators, NIED, and vicarious liability under the Political Subdivision Tort Claims Act (PSTCA). The federal claims under the IDEA, Section 504, and the ADA were also dismissed in various respects. The IDEA claim was dismissed against all defendants with prejudice for failure to exhaust administrative remedies. The Section 504 claims against the individual defendants were also dismissed with prejudice, as districts, not individuals, are the recipients of federal funds under Section 504. However, the Section 504 and ADA claims were dismissed without prejudice as to defendant Wyoming Valley West, and the plaintiff was permitted leave to amend.

Result

No-Cause Jury Verdict Secured in Wrongful Death Trial

We successfully obtained a no-cause jury verdict in a 13-day wrongful death trial. The decedent, a 59-year-old man, was admitted to the emergency room on February 15, 2019, with complaints of abdominal pain, decreased appetite, and constipation, despite the use of laxatives. The patient did not complain of any nausea, vomiting, or diarrhea. He had a significant medical history including diabetes, hypertension, prior coronary artery stenting, morbid obesity (with past gastric bypass surgery), longstanding ventral hernia, and back pain. A CT scan revealed multiple hernias and a potential closed-loop bowel obstruction, leading to a surgery consultation. Our client, an emergency general surgeon, interpreted that the patient did not have a closed loop or any significant obstruction and recommended non-surgical management. The patient was approved to have clear liquids, and had a vomiting incident shortly after, but our client was not notified. The patient was returned to NPO status, and after improving overnight, he was returned to “clears” and additional medical and renal consults were ordered. Our client did not receive any communications from the residents/nurses of any changes in the patient’s condition. On February 18, 2019, two rapid responses were called due to increased heart rate and vomiting. It is believed that the vomiting resulted in aspiration, causing sepsis, ultimately leading to the patient’s death. During the trial, the plaintiff’s sole medical expert highlighted imaging on the wrong hernia, which called into question all of his opinions in the case. We made key objections related to the expert testimony, limiting what the allegations were, and preventing new allegations from being made. After approximately two and a half hours of deliberating, the jury returned a no-cause verdict. 

Thought Leadership

U.S. Supreme Court Decides Key Issue Regarding Interstate Freight Broker Liability

Freight brokers are intermediaries.  They connect shippers of goods with trucking companies that transport those goods.  Freight brokers match a load of freight with a trucking company and oversee the logistics of the transportation. For a number of years there has been a division among the Federal Circuits regarding the potential liability of freight brokers when the trucking companies that they retain for interstate loads are involved in accidents.  At the center of this division was the Federal Aviation Administration Authorization Act of 1994 (FAAAA).  Some Federal Circuit Courts have held that state law negligent hiring claims against freight brokers were preempted by the FAAAA .  Other Federal Circuits Courts have held that even if preemption applied, the “safety exception” in the FAAAA saved state law negligent hiring claims from federal preemption.  On May 14, 2026, the U.S. Supreme Court addressed the conflict in Montgomery v. Caribe Transport II, LLC, et al, No24-1238. In that case freight broker C.H. Robinson selected Caribe Transport to haul an interstate load. The commercial truck driver employed by Caribe Transport allegedly caused an accident and the plaintiff, Montgomery, was seriously injured. Montgomery brought an action against the driver, Caribe Transport and C.H. Robinson. The allegation against C.H. Robinson was that it negligently retained Caribe Transport when it knew, or should have known, that it was an unsafe company. The Seventh Circuit Court of Appeals held that Montgomery’s claims against C.H. Robinson were preempted by the FAAAA. The plaintiff appealed to the U.S. Supreme Court.  The U.S. Supreme Court’s decision focused primarily on the safety exception in the FAAAA.  That provision provides that the FAAAA preemption “…shall not restrict the safety regulatory authority of a State with respect to motor vehicles.” C.H. Robinson argued, as freight brokers historically have, that their function was not “with respect to motor vehicles” because they do not own trucks or employ drivers. They are merely intermediaries, connecting entities who need freight moved with entities who can do that job. Therefore, C.H. Robinson argued that preemption applied, not the safety exception. The U.S. Supreme Court did not accept that argument. The Court focused on the meaning of the phrase “with respect to” in the safety exception. The Court held that it means “referring to”, “concerning” or “regarding”. Therefore, writing for a unanimous Court, Justice Barrett concluded that “[r]equiring C.H. Robinson to exercise ordinary care in selecting a carrier therefore “concerns” motor vehicles—most obviously, the trucks that will transport the goods. So, Montgomery’s negligent-hiring claim falls within the FAAAA’s safety exception, which saves it from preemption.” Justice Kavanaugh, in his concurring opinion, noted the effect this ruling may have on freight brokers and their insurers throughout the country: Importantly, the Court's decision today should not be read to mean that brokers will routinely be subject to state tort liability in the wake of truck accidents. As even plaintiff's counsel stressed, brokers should be able to successfully defend against state tort suits if the brokers have acted reasonably and arranged transportation with reputable trucking companies. Tr. of Oral Arg. 27-29. In plaintiff's counsel's words, the brokers "just have to hire carriers that actually have a reasonable policy," and "the broker is not going to have a problem if it's asking the hard questions of the carrier." Id., at 42, 45. In addition, the proximate-cause requirement in typical state tort law should help protect brokers from excessive liability. Id., at 25. That said, the brokers rightly caution against naivete. In the real world, as the brokers forcefully respond, state tort law can be unpredictable, and the costs to brokers of litigation and insurance may be significant even when brokers prevail in lawsuits. Moreover, the costs of litigation and insurance, as well as the costs of brokers' conducting more substantial inquiries into trucking companies, will cascade through the economy and be paid in part by American consumers in the form of higher prices. The concerns expressed by the brokers are legitimate and weighty. The key point here is that freight brokers can no longer claim they are protected from negligent retention claims by the FAAAA (in cases involving interstate transportation). The challenge will be to determine what is considered ”reasonable efforts” used by brokers when retaining transportation companies.