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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

Supreme Court of Pennsylvania Holds That Public Policy Does Not Prevent Insurance Coverage for Sex Trafficking Claims

On July 21, 2026, the Supreme Court of Pennsylvania issued an opinion emphasizing the limited circumstances in which courts may invoke public policy to bar insurance coverage, holding in Samsung Fire & Marine Insurance Co., Ltd. (U.S. Branch) v. RI Settlement Trust that Pennsylvania public policy does not preclude coverage for claims alleging that insureds enabled or profited from human sex trafficking. The decision rejects a line of federal district court decisions predicting otherwise and reinforces that Pennsylvania courts will invoke the public policy doctrine only in the clearest of circumstances. RI Settlement is particularly significant because it arose on certified questions from the United States Court of Appeals for the Third Circuit, giving the Supreme Court the opportunity to resolve an issue on which federal courts had predicted Pennsylvania law differently. RI Settlement arose out of four separate civil complaints in which the underlying plaintiffs alleged that, as minors, they were the victims of human sex trafficking at various hotels in Philadelphia. The plaintiffs claimed that the hotel owners were negligent in failing to stop the sex trafficking from happening at their hotels. After the filing of the lawsuits, the hotel owners sought coverage under their Commercial General Liability policies. The insurers initially defended the hotels under Reservation of Rights letters, though the carriers later filed Declaratory Judgment actions seeking declarations that they did not owe a duty to defend or indemnify. In short, the insurers argued in the alternative that they did not owe any obligation to provide coverage based upon Pennsylvania public policy (because the claims violated the Human Trafficking Law – 18 Pa.C.S. § 3011) and the terms and conditions of the policy. On motions for judgment on the pleadings, the District Court found for the insurers on the basis of public policy: There is no duty to defend or indemnify against actions arising out of an insured's criminal conduct related to the sex trafficking of minors. The Court appreciates that it may make public policy the basis of a judicial decision only in “the clearest of cases.” See Minnesota Fire & Cas. Co. v. Greenfield, 589 A.2d 854, 868 (Pa. 2004) (quoting Hall v. Amica Mut. Ins. Co., 648 A.2d 755, 760 (Pa. 1994)). Yet, the Court strains to imagine a clearer case than the one presented here in which the facts alleged indicate that Policyholders engaged in criminal conduct in violation of Pennsylvania's Human Trafficking Law. The hotel owners appealed the matter to the Third Circuit, which petitioned the Supreme Court of Pennsylvania to grant review of two certified questions of law: (1) whether Pennsylvania law had an “overriding public policy” against sex trafficking, such that an insurer’s duty to defend and/or indemnify is abrogated when an insured is alleged to have enabled or profited from such trafficking; and (2) if yes, is that duty abrogated whenever the insured’s alleged conduct would constitute a violation of the Pennsylvania Human Trafficking statute. Importantly, the certified questions did not ask the Supreme Court to determine whether the policies afforded coverage under their terms. Rather, the court was asked only whether Pennsylvania public policy independently barred coverage. As a result, the court assumed for purposes of answering the certified questions that the insurers otherwise owed a duty to defend and addressed only the public policy issue, leaving all policy-based coverage defenses for further proceedings. Because the court concluded that the answer to the first certified question was “no”, it did not reach the second issue. In reaching its determination that Pennsylvania public policy does not prohibit insurance coverage for sex trafficking claims, the court limited the impact of its decision in Minnesota Fire & Cas. Co. v. Greenfield, 855 A. 2d 854, 855 (Pa. 2004), which the RI Settlement opinion emphasized as having been an “Opinion Announcing Judgment of the Court” – or a plurality opinion. In Greenfield, the insured homeowner was sued by the estate of his houseguest who overdosed from heroin that he sold to her. The matter wound its way to the Supreme Court, which determined that the insurer did not owe a duty to defend or indemnify based upon Pennsylvania public policy, which criminalized the sale and use of heroin as a Schedule I narcotic. In RI Settlement, the court “decline[d] the invitation” to extend the rationale of the three-justice plurality in Greenfield beyond cases involving Schedule I controlled substances. In so holding, the justices in RI Settlement refused to “divine an overriding public policy pronouncement by the General Assembly by virtue of its enactment of the Human Trafficking Law.” The opinion further states that it is not “within the purview of this Court to rank the magnitude of the public policy underlying the various crimes defined in the Crimes Code. It is sufficient for the work of the courts to know that the General Assembly has identified conduct it deems harmful and dangerous to the maintenance of an orderly society and criminalized it.” While the court declined to declare that Pennsylvania public policy prohibits coverage for sex trafficking claims, the opinion in RI Settlement expressly states that insurers are free to include appropriate exclusionary language for such causes of actions in their policies if they desire to do so. It will certainly be interesting to see whether the insurance industry accepts the court’s invitation, or perhaps whether the Pennsylvania legislature steps in to clarify that sex trafficking claims are indeed of the type or magnitude that they should not be covered by insurance. In any event, we will, of course, continue to monitor this and other insurance coverage issues that arise before courts in Pennsylvania, New Jersey and throughout our firm’s geographic footprint and around the country.

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

New Jersey Appellate Division Affirms Exclusion of Legal Malpractice Expert as Impermissible Net Opinion

Jack Slimm and Jeremy Zacharias obtained a favorable decision on behalf of their client in a case centering on the admissibility of expert testimony in legal malpractice actions. In Martin v. Loury, the New Jersey Appellate Division affirmed the exclusion of a plaintiff's legal malpractice expert, holding that the expert's opinions on causation and damages were too speculative to support the malpractice claim. The legal malpractice action arose from an underlying employment dispute involving claims for damages stemming from the breach of an employment agreement. The plaintiff alleged that defense counsel committed malpractice during a second trial by failing to recall the plaintiff as a rebuttal witness after the employer's CEO testified. According to the plaintiff's expert, additional rebuttal testimony would have bolstered the plaintiff's damages claims and led to a more favorable result. Both the trial court and the Appellate Division rejected that theory. The courts found that the expert could not explain how the proposed rebuttal testimony would have altered the outcome of the underlying case or resulted in any additional recoverable damages. Notably, the trial judge in the underlying employment matter had already rejected the CEO's testimony as not credible and had accepted the damages analysis advanced by the plaintiff. The court had also determined that the amount of damages was not genuinely disputed. As a result, the expert's opinion that additional rebuttal testimony would have produced a better outcome was unsupported by the record and based on speculation rather than evidence. The Appellate Division agreed that neither the plaintiff nor the expert could identify any actual damages attributable to the alleged malpractice or demonstrate the required element of proximate causation. The court further upheld the trial court's application of New Jersey's net opinion doctrine, finding that the expert failed to provide the necessary "why and wherefore" supporting his conclusion that the attorney's conduct caused a compensable loss. Because the opinions rested on unquantified possibilities rather than demonstrable facts, they were inadmissible. Key Takeaway for Legal Malpractice Defendants For attorneys and firms defending legal malpractice claims, Martin v. Loury underscores the importance of closely scrutinizing an opponent's expert report on the critical elements of proximate causation and damages. The decision demonstrates that a malpractice claim cannot survive where an expert merely speculates that different litigation tactics might have produced a better result. Instead, the plaintiff must present admissible expert testimony grounded in the record that explains how the alleged attorney error probably changed the outcome of the underlying matter and resulted in measurable damages.

Thought Leadership

Court Allows Recklessness and Punitive Damages Claims to Proceed After Work‑Zone Crash

In a case where a defendant filed preliminary objections against allegations of recklessness and punitive damages, the Susquehanna County Court of Common Pleas denied these preliminary objections. This case stems from a motor vehicle accident, where the defendants car struck the plaintiffs car after the defendant allegedly fell asleep at the wheel, going at a high rate of speed, through a construction work zone. Defendant first objected to the general allegations throughout the plaintiff’s complaint pertaining to “reckless” conduct contending that there were insufficient factual allegations to support the claim of reckless conduct. Defendant next objected to the plaintiffs claim for punitive damages, as punitive damages may only be assessed against a motorist for falling asleep while driving if there is further evidence to prove driver was aware of their drowsiness and risk of falling asleep. Lastly, defendant objected to plaintiffs complaint, claiming it lacked specificity. The court here found that the plaintiff had included in the complaint specific allegations related to the defendant’s alleged recklessness, including allegations regarding speeding in a work zone, almost striking the flagger, falling asleep at the wheel, and striking the plaintiffs vehicle which was stopped. Additionally, the court noted that falling asleep does not come without warning. The court found that these allegations were sufficient to support an allegation of recklessness at the pleadings stage.