Written By: Senior Partner, Brian Tenzer, Esq.
The short answer is a definite, no! However, that has not stopped AOB companies and those that represent them from arguing that the insurer has waived its right to appraisal due to the failure to provide the AOB company with a notice of its right to mediation. The fact is, an AOB company did not even have the right to demand mediation until after June 30, 2018.
First and foremost, it is important to note that the designation of “assignee” does not excuse an AOB company from the policy requirement of participating in the appraisal process. Certified Priority Restoration v. State Farm Fla. Ins. Co., 191 So.3d 961 (Fla. 4th DCA 2016); Damage Control, Inc. v. State Farm Fla. Ins. Co., 23 Fla. L. Weekly Supp. 806a (9th Judicial Circuit (Appellate) in and for Orange County. November 12, 2015); State Farm Fla. Ins. Co. v. Restoration 1 of the Treasure Coast, Inc., 23 Fla. L. Weekly Supp. 218b (19th Judicial Circuit (Appellate) in and for Martin County. October 15, 2014).
But despite being required to participate in appraisal upon demand of the insurer, many AOB companies and their counsel ignore the demand to appraise their claim and rush to the courthouse to file suit. They argue that, because the insurer failed to provide them a notice of their right to mediation, that they are not required to appraise the claim as a condition precedent to filing suit. This position is in direct contradiction to the plain language of the controlling statute.
Prior to March 30, 2018, relevant portions of Florida Statute, §627.7015 read as follows:
- …The procedure set forth in this section is designed to bring the parties together for a mediated claims settlement conference without any of the trappings or drawbacks of an adversarial process. Before resorting to these procedures, policyholders and insurers are encouraged to resolve claims as quickly and fairly as possible. This section is available with respect to claims under personal lines and commercial residential policies before commencing the appraisal process, or before commencing litigation. Mediation may be requested only by the policyholder, as a first-party claimant, or the insurer….
- At the time a first-party claim within the scope of this section is filed by the policyholder, the insurer shall notify the policyholder of its right to participate in the mediation program under this section.…
- If the insurer fails to comply with subsection (2) by failing to notify a policyholder of its right to participate in the mediation program under this section or if the insurer requests the mediation, and the mediation results are rejected by either party, the policyholder is not required to submit to or participate in any contractual loss appraisal process of the property loss damage as a precondition to legal action for breach of contract against the insurer for its failure to pay the policyholder’s claims covered by the policy.
(Emphasis added).
The statute is clear that it is directed to policyholders – not “claimants;” not “insureds;” and not “assignees.” The fact that the relevant statute uses the word, “policyholder” is intentional. The 2012 amendment, effective July 1, 2012, deleted every instance of the words, “insured(s),” “first party claimants,” and “claimant,” and replaced those words with “policyholder.” Most importantly is the statutory language requiring the insurer to notify only the “policyholder.”
Furthermore, the House of Representatives Final Bill Analysis, prepared subsequent to the Governor’s approval of the Bill, leaves no question that the purpose of the amendment was to prohibit all but policyholders from availing themselves to the statute:
The bill limits who can request mediation to policyholders, as first-party claimants, and insurers and makes conforming changes. First-party claimants are those in a direct contractual relationship with their insurance company. Limiting mediation to policyholders and insurers prevents other persons, such as vendors and contractors, who are involved in a claim and are assigned benefits of the claim by the policyholder from requesting mediation of the claim.
House of Representatives Final Bill Analysis (HB 1101).
The Florida legislature amended the statute again, effective March 30, 2018, to specifically permit a third-party assignee to request mediation under the statute; but it also provided that the insurer is not required to participate in any mediation with the assignee:
Mediation may be requested only by the policyholder, as a first-party claimant, a third-party, as an assignee of the policy benefits, or the insurer. However, an insurer is not required to participate in any mediation requested by a third-party assignee of the policy benefits.
While this language was added to the statute, the legislature did not modify the critical language referencing only “policyholders”. In other words, while this recent amendment permits an assignee to participate in the mediation process subject to the agreement of the insurer, the statute remained unchanged as to who had the right to notice of the right to participate in mediation: the “policyholder”.
Whether an insurer’s policy under which an AOB company is making a claim was executed before or after the 2018 amendment, the language in both statutes is clear that notice is only required to be given to a “policyholder”. Unfortunately, the plain language of the statute does not always prevent an AOB company from ignoring an insurer’s demand to participate in appraisal and filing suit for breach of contract. If a third-party AOB company takes the position that they were not required to appraise the claim as the insurer failed to provide a notice of the right to mediate, it should be met with a swift motion to dismiss the complaint or, perhaps, a motion for summary judgment; along with a motion for attorney fees as sanctions under Florida Statute §57.105.
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