Photo: Shutterstock/niroworld
Insurance Coverage and Bad Faith

Assignment of Benefits Not Enforceable: Invoice Does not Satisfy Estimate Requirements

Assignment of Benefits Not Enforceable: Invoice Does not Satisfy Estimate Requirements

Not too long ago, the Florida Legislature passed Section 627.7152 in an attempt to curb rampant litigation abuse by Assignment of Benefit (“AOB”) holders across the state.  These AOB holders would receive certain rights from homeowner and commercial policyholders in exchange for services and/or repairs relating to claimed property damage.  Section 627.7152 carried out its intent by requiring AOB agreements to conform to strict requirements in order to be valid and enforceable under Florida law.  Specifically, 627.7152 strictly requires that an AOB agreement must be in writing and executed by and between the assignor and the assignee, as well as contain a written, itemized, per-unit cost estimate of the services to be performed by the assignee.  In essence, this statutory language requires that at the time the parties execute the assignment agreement, the agreement must expressly include a detailed, written estimate that contains a per-cost breakdown of the specific services the parties agreed to in consideration of the assignment.

As recent as last month, the Fourth DCA affirmed a trial court’s ruling requiring 627.7152’s strict compliance in order to be valid and enforceable under Florida law.   On June 15, 2022, the 4th DCA in The Kidwell Group, LLC, d/b/a Air Quality Assessors of Florida a/a/o Ben Kivovitz v. United Property & Casualty Insurance Company upheld the statute’s plain language “[requiring] that at the time the assignment of benefits is signed, the assignor must be provided with a list of the itemized services to be performed by the assignee, as well as the costs thereof.”

Kidwell Group appealed the trial court’s dismissal with prejudice of its breach of contract action over a disputed insurance claim involving property damage.  The Kidwell Group argued that it satisfied the requirements of 627.7152 by having provided the assignor with an invoice which was also attached to the complaint, along with the assignment of benefits.  However, the record reflected that the invoice was not only unexecuted, but also dated five days after the assignment was executed – which undisputedly established that the assignor could not have expressly agreed to the invoice at the same time the assignment agreement was executed. As such, the Fourth DCA affirmed the trial court’s ruling in that dismissal was proper due to the invalid and unenforceable AOB.

The rationale behind the court’s opinion enforcing strict compliance under 627.7152 can be explained by preventing AOB holders from subsequently – and often unilaterally – expanding the price/scope of the services to be performed once the assignment agreement has been executed by the parties.  This is because prior to 627.7152’s enactment, AOB holders had free rein to change the price/scope of the services in consideration of an AOB once it was obtained.  Florida Statute 627.7152, combined with the 4th DCA’s recent decision, prevents AOB holders from potentially deceiving assignors (and their insurance companies) into enforcing inflated estimates and scopes of repairs when trying to resolve the disputed insurance claim with the carrier.  This appellate decision may allow insurance carriers to prevent unilaterally inflated and disputed insurance claims from entering the courthouse’s doors.