Florida’s Senate Bill 76, signed into law last June, was supposed to help reduce insurance claims litigation by making policyholders give 10-day notice before they file suit. The idea was to give insurers a little more time to settle, re-inspect or address concerns.
In the case of Citizens Property Insurance Corp., the law may be having an unexpected effect.
A proposed class-action lawsuit filed in Fort Lauderdale charges that Citizens has failed to pay some attorneys’ fees in thousands of claims in which pre-suit notices were filed in the eight months since the law took effect.
“While all insurers in the state, as well as every lawyer representing insureds, have interpreted that statute to entitle attorneys representing insureds to be paid reasonable attorneys’ fees for engaging in the pre-suit process … Citizens has taken it to mean the opposite,” reads the complaint.
The suit was filed on behalf of Shanique Baker, a Citizens’ insured whose home sustained damage in May 2021, and for all other Citizens policyholders who may have been similarly denied attorney fee compensation.
“Plaintiffs believe that there are thousands of people affected, since Citizens is the largest insurer in the State of Florida,” reads the complaint, filed by the Hernandez, Levy & Citron law firm in Hollywood, Florida.
Citizens has asked the Broward County Circuit Court to dismiss the suit. The insurer’s attorney, Jason Gonzalez, of Shutts & Bowen, argued that the SB 76 law does not require insurers to cover those attorney fees incurred only for a pre-suit notification, but requires the filing of an actual lawsuit. The statute also establishes a schedule for legal fees, predicated on the difference between the amount “obtained by the claimant” and the pre-suit settlement offer.
“The proposed class representative had not filed suit when Citizens offered a settlement to her,” Citizens’ motion to dismiss said. “Citizens offered a settlement, not only outside of a court of law, but entirely outside of litigation ever being commenced.”
Other Florida statutes also make it clear that attorney fees should be paid by the insurer only upon a court judgment or decree, Citizens said. “Simply stated, a plaintiff cannot obtain a judgment without first filing (and prevailing in) a lawsuit,” the motion to dismiss states.
The plaintiffs’ lawyers acknowledged that the suit raises questions about whether the law entitles insureds to reasonable attorney fees during the pre-suit process. The statute notes that the pre-suit notice should include a settlement demand with itemized costs and attorney fees, but it does not appear to specify that insurers must pay the fees if claims disputes don’t go to litigation.
The suit did not specify damages sought.
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