An Update of the Abuse of Assignments of Benefits and its Correlation with One-Way Attorney’s Fees
by Mark Delegal and Ashley Kalifeh for Florida Association of Independent Agents,
As discussed in FJRI’s 2015 paper,1 the prospect of one-way attorney’s fees has encouraged a growing number of lawyers to partner with various service providers to solicit assignments of benefits (“AOBs”) from policyholders. The typical AOB relationship begins when a policyholder signs a contract assigning rights, benefits, proceeds, and causes of action arising under her insurance policy to a third party. This third party is often a service provider that agrees to make a repair or provide care for which insurance coverage will be sought. Indeed, often the repair or care is conditioned upon the assignment, which the provider will then enforce against the insurer in its own right. This transforms first party litigation—in which a policyholder enforces her own rights against the insurer from whom she purchased coverage—into a mutated first party litigation, whereby a third party purports to act as the policyholder.
One reason AOB litigation is so lucrative is because of the statutory, “one-way” attorney’s fees available for attorneys that represent prevailing service providers. Notably, the one-way attorney fee statute2 speaks to a “named insured,” “omnibus insured,” or “named beneficiary” being afforded the benefits of that one-way attorney’s fee. In fact, the Florida Supreme Court has recently reiterated that this fee-shifting statute was intended “to ‘level the playing field’ between the economically-advantaged and sophisticated insurance companies and the individual citizen,” as “the average policyholder has 3 | P a g e
neither the finances nor the expertise to single-handedly take on an insurance carrier.”3 This goal is best served when the statute is used to award fees to the policyholder, or any beneficiaries specifically designated by the policyholder at the time of contract formation—not sophisticated service providers and their attorneys.