Insurer Faces Paying Attorney Fees

By Jim Saunders, The News Service of Florida

TALLAHASSEE — When Florida lawmakers in December 2022 overhauled property-insurance laws, they shielded insurers from having to pay policyholders’ attorney fees after claims disputes — a top priority of the industry.

But a state appeals court Thursday said the change only went so far.

A three-judge panel of the 5th District Court of Appeal sided with a homeowner who argued that an insurer, Security First Insurance Co., should be required to pay her attorney fees because her home was damaged before the 2022 law took effect.

While the homeowner, Denise Blumberg, did not file a claim until January 2023 — and a lawsuit until July 2023 — the appeals court said her policy was in effect at the time the law passed and that the law doesn’t apply retroactively.

“Because attorney’s fees are a substantive right, an amendment limiting that right is presumed to apply prospectively,” Judge Jordan Pratt wrote in an eight-page opinion joined by Judges F. Rand Wallis and John Harris.

The opinion, which overturned a ruling by a Volusia County judge, sent the case back to the lower court to determine the amount of fees that should be paid.

The insurance industry and plaintiffs’ attorneys long battled in the Legislature about what are known as “one-way” attorney fees. In the past, policyholders who recovered money in claims disputes with insurers were entitled to have the carriers pay their attorney fees. That included recoveries through settlements — as was the situation in Blumberg’s case, according to Thursday’s ruling.

Amid major problems in the property-insurance industry, including soaring premiums and customers losing policies, lawmakers and Gov. Ron DeSantis in December 2022 approved a bill (SB 2-A) that eliminated one-way attorney fees in property insurance disputes.

The industry has hailed the change, saying it reduced costs and litigation and improved the market. Critics, however, have argued it tilted the system too far toward insurers, as policyholders can’t afford to wage legal fights.

A brief filed by Security First attorneys at the Daytona Beach-based appeals court said Blumberg alleged in her claim that the home suffered hail and wind damage in 2022. Thursday’s opinion did not detail terms of the settlement or how much Blumberg has sought in attorney fees.

In the brief, Security First contended that the elimination of the requirement to pay attorney fees should apply to Blumberg because the claim and lawsuit were not filed until 2023 — after the law took effect.

“The date of any initial alleged breach was at the time she reported her claim to Security First (and was denied),” the Security First brief said. “That date was after SB 2-A eliminated any right to … attorney fees. Again, there is no retroactivity issue here.”

But Thursday’s opinion said the right to attorney fees was “incorporated into a contract (the insurance policy) that issued before the statutory amendments.”

“Senate Bill 2-A includes no language near the amendments that implies retroactivity or prospectivity, and it sets no specific effective date for those sections,” the opinion said.