Insurance bills differ on lawyer fees

A new House bill aims to reduce costly litigation against insurers by forcing benefits assignees to risk paying insurers’ attorneys fees if they lose.

The bill differs from a recently filed Senate bill because it does not explicitly bar attorneys from collecting so-called one-way attorney fees when representing a third party, such as a repair contractor, assigned by a homeowner to collect benefits of a property insurance policy.

Instead, the bill allows assignees to collect legal fees if they win an amount equal to or greater than what they request in a prejudgment settlement proposal, and it lets insurers collect legal fees if the amount awarded is equal to or less than the settlement offered by the insurer.

Attorney fees may not be awarded to either party if the amount awarded is less than a plaintiff initially requests and more than initially offered by an insurer, the bill says.

The bill, filed by Reps. James Grant, R-Tampa, and Rene Plasencia, R-Titusville, was anticipated as a companion to a Senate bill filed on Feb. 17 by Dorothy Hukill that hewed closely to a legislative wish list promoted by state-run Citizens Property Insurance Corp.

Citizens officials, who helped craft the Senate bill, were reviewing the House bill Wednesday, a spokesman said.

“It may be a couple days before we are in a position to comment on it as they are looking at the details and mechanics of Rep. Grant’s proposal,” Citizens spokesman Michael Peltier said.

Barring attorneys from collecting one-way attorneys fees when representing third-party assignees is a key provision of the Senate bill. The insurance industry hopes it will curtail what they consider abuses that enable customers to challenge claims denials without fear of being forced to pay insurers’ attorneys fees.

Over the past decade, attorneys and contractors have been filing thousands of lawsuits with little fear of being forced to pay insurers’ legal fees, insurers contend. As the suits inflate costs of claims, insurers raise rates to transfer those costs to policyholders.

After the Senate bill was filed, several plaintiffs attorneys said the one-way fee restriction would dissuade policyholders from assigning post-loss benefits, a right that courts have repeatedly reinforced, and predicted it would be challenged in court.