KNOWLEDGE IS POWER: THE PURPOSE BEHIND A POLICYHOLDER'S RIGHT TO ATTORNEYS' FEES IN FIRST PARTY PROPERTY CASES

Written by Vanessa Ross, Attorney at law with Stockham Law Group, Sarasota, FL

Recently, Barry Gilway, CEO of Citizens Property Insurance Corporation, wrote an article in support of its new managed repair program. The program is intended to be “optional,” but recently there have been plans to force homeowners to either allow Citizens to repair their property using their preferred vendors, or limit the damages to $10,000.00 for water losses. One must question how a program is “optional” when there is a built in penalty if you decide not to participate in the program. Mr. Gilway recently wrote an article in support of Citizens’ managed repair program and coverage cap stating the reason behind the program as follows:

Citizens and other property insurers have been grappling with skyrocketing

water losses, assignment of benefit abuse and runaway litigation that have

forced higher premiums on our customers. Without statutory reforms

including changes to Florida’s one-way attorney fee statute,

many of our policyholders will be hit by these rate increases for years to come.

 When reading such a one sided, biased statement, it is important to be educated on the historical reasons as to why Florida policyholders have the “one-way attorney fee statute” and how it came to be in Florida. It is necessary to be educated on the rights of policyholders so we as citizens, tax payers and financial supporters of Citizens, can be informed consumers when we read articles like the one written by Mr. Gilway.

In Florida, policyholders have the right to receive funds to pay their attorney should they prevail against their insurance carrier in a lawsuit.[1] Florida courts have been explicitly clear on the reasons for this allowance. The Florida legislature has adopted the attorney fee statute for Florida policyholders as a means to ensure that public policy and Florida law can be enforced by private citizens who do not necessarily have the means to pay an attorney to assist them.

In Florida, normally, individuals must pay their own attorney’s fees.[2] However, when there is a public purpose that needs to be enforced, fee shifting statutes are a means to ensure private citizens can afford to enforce the laws of the state. Florida Supreme Court Justice Blackmun explained that:

the major purpose of fee-shifting statutes is to provide an incentive for

private individuals to enforce congressional statutory policy. The statutory

award of  attorney’s fees allows parties bringing actions to act both on their

own behalf and on the public’s behalf in promoting Congressional policy.

However, private enforcement of statutes is unlikely if aggrieved citizens

lack financial resources to pay lawyers for their services. Fee awards are an

integral part of the remedies available to ensure compliance with various

Congressional statutes.[3]

In this regard, the “one sided fee statute” is absolutely necessary to provide Florida policyholders the power to hold insurance carriers accountable for their actions. Without it, insurance carriers would be free to wrongfully deny claims and/or underpay claims and would only be accountable to those insureds with the financial ability to hire counsel.

It is important to remember that the fee statute is a critical part of the enforcement of state laws in regulating the insurance industry. Florida statutes impose numerous requirements on all private insurance companies to make prompt claim payments to insureds, inform an insured as to which coverage payments are made, and to settle all claims in good faith. The fee statute allows these laws to be enforced by the public at large when breaches of the law occur. The Florida legislature has determined that there is a compelling state interest to regulate the insurance industry and to ensure that insurance companies act in good faith in paying insurance claims. The attorneys’ fee statute plays a critical role in regulating the insurance industry.

The fee shifting statute is the only tool the residents of the state of Florida have to fight insurers, like Citizens Property Insurance Corporation, if their insurance claim is wrongfully denied or underpaid. In this regard, Mr. Gilway’s statement is like a criminal advocating for there to be less police on the streets.

Knowledge is power. Be an informed consumer. The attorneys’ fee statute which benefits Florida policyholders is here to help policyholders challenge insurance companies when their claims are wrongfully denied and/or underpaid. Without this statute, most policyholders would not have the financial ability to hire a lawyer to challenge decisions made by their insurance company and, thus, insurance companies would operate without any fear of repercussion of their actions. Clearly, there is a compelling state interest to ensure that the insurance industry is regulated and that Florida policyholders have access to the court system when insurance companies wrongfully deny and/or underpay claims. Such regulation cannot occur unless Florida policyholders continue to have a right to have their attorneys’ fees paid by their insurance company in the event they prevail at trial.

Vanessa Ross is an attorney in Sarasota, Florida representing only policyholders against their insurance carriers to recovery policy benefits that have been withheld. Ms. Ross practices throughout the state of Florida. She can be reached by email at vross@stockhamlawgroup.com and by phone at (941) 217-7580.

[1] A prevailing party is defined as a party in whose favor a judgment is rendered, regardless of the amount of damages awarded. Black’s Law Dictionary (9th ed. 2009); See also Wayne Paint Co. v. Gulfview Apartments of Marco Island, 739 So. 2d 1259 (Fla. 2d DCA 1999)(holding that a prevail-ing party, for the purpose of determining an entitle-ment to attorney’s fees is the party who prevails on the significant issues in litigation).

[2] Talbott v. American Isuzu Motors, Inc., 934 So.2d 643, 650 (Fla. 2d DCA 2006); See also Buckhannon Board and Care Home, Inc., et al. v. West Virginia Department of Health And Human Resources, et al., 532 U.S. 598, 602 (2001) (finding that “In the United States, parties are ordinarily required to bear their own attorney’s fees—the prevailing party is not entitled to collect from the loser.”); See Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 247, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975). Under this “American Rule,” we follow “a general practice of not awarding fees to a prevailing party absent explicit statutory authority.” Key Tronic Corp. v. United States, 511 U.S. 809, 819, 114 S.Ct. 1960, 128 L.Ed.2d 797 (1994)

[3] Standard Guaranty Ins. Co. v. Quanstrom, 555 So. 2d 828, 832 (Fla. 1990).

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