Source: http://firstpartyproperty.com/blog/tag/st-petersburg-claim-denial/
Timestamp: 2019-04-23 11:57:20+00:00

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Posted on December 1, 2014 by Todd Legal, P.A.
In Mejia v. Citizens, Florida’s Second DCA held that Citizens had the burden of proof to show that sinkhole activity was not the cause of the plaintiff’s property damage. Once Mejia proved the property suffered a loss during the policy period, Citizens was required to show that the loss was excluded under this policy. In addition, the Court ruled that the amount of money Citizens paid to its engineer during the previous three years ($9.5M) was admissible.
For a copy of the Mejia opinion, scroll to the bottom of this article.
How does CaseGlide Solve This Problem?
To learn more about how our proprietary claims litigation software CaseGlide solves this problem, check out our First Party Property Insurance Blog article on CaseGlide here.
Posted on October 30, 2014 by Todd Legal, P.A.
Florida’s Second DCA recently answered an important question in Florida sinkhole homeowners insurance litigation: if (1) a homeowner has a competing engineering report it obtains after an insurer denies a sinkhole claim and (2) the insurer does not request the report, the homeowner is not required to produce the report before filing a lawsuit.
In a concise opinion embedded at the end of this post, Florida’s Second DCA in Herrera v. Tower Hill determined that the insureds were not required to produce their competing engineering report prior to filing their lawsuit against Tower Hill. In summary, Tower Hill argued that the insureds’ failure to produce the report constituted a breach of the “concealment or fraud” and the “duties after loss” provisions.
Tower Hill argued that the insureds, before filing the lawsuit, should be required to to produce the report to Tower Hill. If the insureds would have produced the report, Tower Hill could have evaluated the report and the parties could have avoided the litigation altogether. The trial court granted Tower Hill’s motion for summary judgment on these arguments.
This is a very popular argument for insurers; however, the Second DCA did not agree that it applied to this specific set of facts. Interestingly, the Second DCA may have “left the door open” to this argument: if Tower Hill would have requested the report at some point after it was created, the policy may have required the insureds to produce the report before the lawsuit. That’s not exactly what the opinion states; however, you have to assume the Second DCA mentioned that fact for a reason.
In addition, Tower Hill’s arguement may still provide it with a defense to the insureds’ attorney’s fees as discussed here in our analysis of Omega v. Johnson.
As a reminder, we have the complete Herrera v. Tower Hill order embedded at the end of this post.
Let me know your thoughts on this opinion and feel free to send me a message.
Posted on September 9, 2014 by Todd Legal, P.A.
According to Florida’s Fifth DCA, a homeowners insurer can reverse its position in a sinkhole case and still not be required to pay attorneys’ fees. Read more about Omega Insurance Company v. Johnson to find out how Omega perfectly handled a disputed sinkhole claim.
In Johnson v. Omega Insurance Company, Florida’s Fifth DCA held that it is possible for a homeowners insurer to make a mistake in a sinkhole case and still not have to pay hundreds of thousands of dollars in attorneys’ fees. I include a full copy of the opinion at the end of this post.
Omega, a Tower Hill company, followed the statutes from the beginning to end. Relying on a report from a professional engineering and geology firm, Omega initially denied the sinkhole claim. The homeowner hired an attorney, and that attorney hired an engineer to contradict Omega’s decision. According to the homeowner’s engineer, Omega’s engineer may have been wrong – there may have been sinkhole activity causing damage.
Instead of providing this report to Omega and allowing Omega to make a decision based on the new information, the homeowner’s attorney sued Omega, and then provided the report to Omega in discovery. As discussed below, Omega was entitled to rely on its engineering and geology firm’s report.
In response to the homeowner’s lawsuit, Omega submitted the case to neutral evaluation (which we know is mandatory), and the neutral evaluator sided with the homeowner – sinkhole activity may be the cause of the damage. In response to the neutral evaluator’s opinion, Omega agreed to comply with the neutral evaluator, accepted coverage, and tendered the policy benefits to the homeowner.
Now that there was no dispute, the homeowner made her next move: a motion for confession of judgment and attorneys’ fees.
The Fifth DCA determined Omega did everything right. By complying with every Florida statute for sinkhole claims, Omega did not do anything that wrongfully led the homeowner to resort to litigation. Accordingly, Omega did not have to pay the homeowner’s attorneys’ fees.
As you know, the homeowners insurers that are still litigating sinkhole cases rely very heavily on these arguments. In short, the argument is that the insurer is entitled to rely on its expert absent any competing reports. When you combine that presumption with the confession of judgment doctrine, insurers believe that they should never have to pay attorneys’ fees when a homeowner’s attorney hides a report that could have led to no lawsuit in the first place.
You can bet these insurers are relieved that their hard work paid off in this case. With hundreds of thousands of dollars per case looming over every adjuster’s head on every case, a decision the other way would have been tough for these insurers to endure.
Of course, this outcome could have been different for a number of reasons- what if the homeowner did not have the report before filing the lawsuit? Most homeowners’ attorneys would not make this same mistake today.
For those remaining sinkhole cases (many have settled), homeowners insurers’ attorneys will have another tool in their arsenal.
With sinkhole claims dwindling, the big takeaway here is that this logic can be applied to other types of insurance claims. Johnson stands for the longstanding Florida proposition that homeowners need to give insurers a chance to fully evaluate the claim instead of “hiding the ball.” The sinkhole statutes may provide an added level of protection – the presumption of correctness – but the arguments in this case are undoubtedly applicable to any other case where the homeowner withholds information in her possession before she files the lawsuit.
Posted on August 26, 2014 by Todd Legal, P.A.
Another hundred million dollar sinkhole insurance question has finally been answered: to deny a sinkhole claim, homeowners insurers can apply the 2011 statutory definition of “structural damage” to a policy issued after May 17, 2011 even if the insurance policy did not include the statutory definition.
In Shelton v. Liberty Mutual, the Eleventh Circuit issued a ruling that is extremely important for sinkhole claims reported for insurance policies that were issued after May 17, 2011, the effective date of Senate Bill 408. Although Liberty Mutual’s policy did not have the statutory definition for “structural damage” written in the policy, the Eleventh Circuit held that Liberty Mutual properly denied a sinkhole claim by relying on the “structural damage” definition in the statute – Fla. Stat. 627.706(2)(k).
because Liberty Mutual’s policy did not include the statutory definition, Liberty Mutual could not rely on the statutory definition and, therefore, had to cover sinkhole claims if there was any damage to the structure.
this change in the “structural definition” was a change that required heightened notice to the policyholder.
The Eleventh Circuit rejected both arguments.
The court held that the statute is a part of the insurance policy and Liberty Mutual’s policy and should be read as if it were part of it. Unfortunately for the homeowner, the court does not go into great detail regarding why this can’t be considered a situation where the insurer offers more coverage than the statute allows. This argument – that the statute provides a baseline for the coverage required but not necessarily all of it – is usually homeowners’ attorneys’ favorite argument in situations like these. Interestingly, although the Court rejected the argument, the court did not go into great detail regarding why this did not apply here.
Second, there is an entire body of case law that can make insurers’ new policy provisions invalid if they failed to provide proper notice of material changes to the policy. In other words, if an insurer drastically changes an insurance policy, it can’t call it a renewal because the homeowner might not ever notice the change. Usually, if that happens, the insurer will be forced to apply the old parts of the policy if it failed to provide notice of the new terms.
Here, in Shelton, we had what most could consider to be a material change – a change in coverage from all sinkhole damage to only the worst forms of sinkhole damage.
However, the court used Fla. Stat. 627.43121 to state that this was a change in policy terms that was mandated by the legislature; therefore, it was not a “change in policy terms” as defined by the law, and it did not require heightened notice procedures.
Frankly, this body of law is very complex and outside the scope of this discussion; however, I wanted to give you a summary of this part of the ruling. If you want to see the statutes, check out First Party Property Insurance Blog’s Homeowners Insurance Statutes Page.
So … all of those sinkhole claims may not be covered … and we are just finding this out now?
Of course, the Eleventh Circuit does not bind Florida state courts, and Florida’s appellate courts could take a completely different position. However, like yesterday’s post about the contract for repairs ruling, we are finding out this information a little late.
Unlike with the contract for repairs decision we discussed yesterday, this delay was outside of everyone’s control. The statutory definition came into effect in 2011, yet the contract for repairs requirement arose years and years before that. For homeowners insurers to get a ruling on the statutory definition issue, they had to wait this long for it to go up the ladder to the Eleventh Circuit.
The vast majority of these claims – hundreds of millions of dollars worth of claims – are resolved. Thus, the impact is very limited.
Nevertheless, thousands of claims and lawsuits remain pending, and this case should give homeowners insurers and their attorneys a big boost in their arguments to resolve these cases.
Like the opinion in yesterday’s post, homeowners insurers would have been much better served if they had this opinion a couple of years ago. Unfortunately, homeowners insurers and attorneys had no choice but to let this issue linger in the federal system until now.
It will be interesting to see if Florida courts side with the Eleventh Circuit, or if they focus more on the argument that insurers are free to provide more coverage than the statutes. For the good of the industry, hopefully that Florida appellate opinion comes out soon.
Posted on July 28, 2014 by Todd Legal, P.A.
As we have said several times in the past here at First Party Property Insurance Blog, water damage claims are the most common type of Florida homeowners insurance claim.
To summarize, Johnson delivers some terrific insight on how seemingly slight “tweaks” to an average water damage insurance claim payout can lead to hundreds of millions of additional homeowners insurer liability. In this article, Johnson also focused on how prevalent these “tweaks” are when the water damage claim involves a restoration contractor with an assignment of benefits.
As you know, in this article on Water Damage Claims, First Party Property Insurance Blog discussed various coverage issues with water damage claims. We also looked into Hail Claims, which make up a small but increasing share of water damage claims (not all hail claims involve ensuing water damage). These two First Party Property Insurance Blog articles focused on coverage for these types of claims; however, Johnson’s article urges us to focus on the actual claim payouts when the claims are covered.
Lawsuit: the restoration company files a lawsuit against the insurance company and demands “proper” payment (as the restoration company sees it), and thousands of dollars in attorney’s fees and costs at the outset.
Although it may sound like a reasonable process, no one can deny that over the past few years these claims have skyrocketed without any objective justification.
If you are not familiar with how big of a role these claims play in Florida homeowners insurance, don’t worry, we got you. Here is one of the most detailed reports on water damage claims from Citizens in 2012. This will help you understand the sheer number of water damage claims Florida’s homeowners insurers face.
So why is this such an important problem?
Johnson Strategies estimates that this industry’s excessive charges for bursting pipe cases alone could cost insurers $150M per year. That does not include the actual extra repair payouts, public adjuster fees, plaintiffs’ attorneys’ fees, defense attorneys’ fees, and vendor fees. These amounts probably dwarf that $150M annual figure.
In addition, if you compare certain parts of Florida to other parts of Florida, this AOB process noted above is closely associated with an approximately $5,000.00 increase in costs per claim, and don’t compare Florida to any other state, because there is no comparison. In other words, this is a problem because for some reason Tampa and South Florida are the only targets. The other areas must be doing something right.
Lastly, the article reminds us about what we learned from this video about AOB insurance fraud and how much insurance fraud could pervade this assignment of benefit process.
All of this suggests Florida homeowners insurers are losing control of their ability to efficiently resolve these claims.
Ultimately, the article concluded by urging the legislature to focus on fixing this problem. As you may recall, the Homeowners Insurance Bill of Rights Working Group tried, but failed, to place strong prohibitions on assignment of benefits for insurance claims.
Lawyers and Courts have not systematically defeated this issue, but from what I hear, they are all going to keep trying.
Up until now, it has been tough for Florida’s homeowners insurers to commit to paying tens to hundreds of thousands of dollars to try a case when they can settle it for less than $10,000.00. As Johnson Strategies points out, this willingness to compromise has added up to millions upon millions in additional recovery for the restoration industry and its attorneys.
Why settle? The better question today, in this current legal climate, is “why not?” If a Florida homeowners’ insurer has a good case it wants to try, it will have to spend at least $50,000.00 to try the case unless it is using our proprietary software CaseGlide, and even the best cases may not be enough to convince a jury more than 70% of the time. If the jury finds that the homeowners insurer undervalued the claim by $1.00, the Court could have to award the restoration company’s attorney hundreds of thousands of dollars in legal fees.
2. the cost to defend these cases with routine and manual legal work, on a case-by-case basis, exceeds the cost to resolve them.
As Johnson Strategies said, until the legislation comes (if ever), Florida homeowners insurers must use their power to take control today.
Insurers should not lie and convince themselves that powerful global defenses suddenly exist. Insurers should not continue paying millions of dollars to create arguments that have no statistically-justifiable results. So long as the law and insurance policies are the way they are (as I understand them), most of these cases are going to have to go to a jury trial if the insurer wants to prove its case.
What can insurers control? Their costs to get these results. No matter what you hear, these claims and cases aren’t going away. The only way to address them will be from the top. Insurers must use their power to take control of this process by demanding efficient legal services that produce better results at a fraction of the costs. Otherwise, their own attorneys – the people that should be on their side – become a contributor to their inability to resolve these cases. Continually charging insurers more than the cost to settle a case will never be an effective legal solution, especially when the results aren’t even very good.
But even if the attorneys can come up with legal defenses to efficiently litigate these cases, homeowners insurers still need to use their power to take control of the legal process. Insurers, when that attorney comes down from the heavens with the perfect legal strategy to control these claims, don’t pay for that same motion 1,000 times, pay for it once … and automate it. Again, use your power and take control.
Once Florida homeowners insurers (and not attorneys) take the power and control over these AOB claims and litigation, they will be able obtain the best possible results in every case while spending the least amount of money to do so. Until then, things will remain messy and continue to get messier.
Let’s share strategies on the assignment of benefits claims. If you share your strategies, I will share mine and those that I have received. Together, we can break this process down to the critical path for our clients.

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