A new assignment of benefits (AOB) law that came into effect here in Florida in July alters the practice of policyholders assigning third-party claim benefits of an insurance policy and could very well change the insurance litigation landscape in Florida.

The Bill’s Provisions

Prior to now, the combination of this practice with Florida’s one-way attorney fee statute allowed policyholders to recover attorney’s fees from an insurer.  However, the new law that went into effect establishes a number of requirements when it comes to assignment agreement, including:

• Prohibiting certain fees and provisions;
• Requiring insurers to report data on claims being paid by early 2022;
• Transfers multiple pre-suit duties to assignees; and
• Starting in 2023, enables insurers to prohibit assignment, revises the state of Florida’s one-way attorney fee statute, and requires service providers to provide insurers with at least 10 days’ notice before filing a legal complaint.

Purpose & Effect

According to the legislators behind it, the law was passed in response to a decade of “abusive litigation tactics in Florida’s market.” However, the bill has been labeled a “consumer protection measure,” passed in response to a policyholder benefit that has caused higher rates for Florida property owners.

According to some sources, AOB lawsuits have exploded in recent years – especially in South Florida – leading to some insurers to increase rates for most-all of its homeowner’s policyholders to offset litigation expenses. That being said, insurers have also cited the fact that three hurricane seasons in a row have created certain unavoidable obstacles when it comes to elevated insurance rates. In addition, it is important to note that the insurance industry is celebrating this as a legislative victory, and while they expect a reduction in AOB litigation, they do not expect an overall reduction in insurance litigation.

Other Measures Now in Effect

In addition to AOB reform, other legislation – referred to as Florida’s omnibus insurance bill – will also have effects on the state insurance industry by imposing a right to contribution for defense costs for insureds who owe a duty to defend an insured. This is expected to have an important effect on construction defect claims and litigation, where an insured is covered under multiple insurance policies. While, historically, the first insurer would end up covering defense costs, now, these expenses are apportioned in accordance with the terms of the policies. The bill also makes some important changes to Florida’s bad faith statute, precluding parties from filing Civil Remedy Notices for 60 days after an appraisal is invoked in residential insurance disputes, essentially allowing insurers to pay appraisal awards without potential liability for extra contractual damages. 

Contact Our Florida Insurance Litigation Attorneys with Any Questions

If you have any questions about the effect of the new law, or any insurance legal issue, contact our Sarasota insurance litigation attorneys at HD Law Partners today to find out how we can help.

Resource:

flarecord.com/stories/512713451-insurance-office-foresees-difficult-road-ahead-of-new-assignment-of-florida-benefits-law

Posted in Sarasota Insurance Litigation Attorney | No Comments »

An important insurance litigation decided by the 11^th Circuit (Florida) during the second week of March laid the foundation for when insurance companies can determine whether they can indemnify their policyholders.

At Issue in the Case

The case involved an appeal of a district court decision finding that Mid-Continent Casualty Company (MCC)’s complaint for declaratory relief regarding whether it had a duty to indemnify one of its insureds in a pending lawsuit was not yet ripe for adjudication until the underlying lawsuit was resolved because the company’s duty to indemnify depends upon the resolution of that underlying lawsuit.

Rule, Analysis, & Conclusion

MCC had issued a number of insurance policies to a Florida construction company (Delacruz) that built single-family homes. As part of those policies, MCC was obligated to defend and indemnify Delacruz under certain conditions if they are sued for defective construction. Once the project was completed, a number of homeowners sued the general contractor that hired Delacruz for defective construction. The general contractor then turned around the sued Delacruz and its subcontractors for breach of contract, common law indemnity, contractual indemnity, Florida building code violations, and negligence. MCC sought a declaration in court that it is not obligated to indemnify Delacruz, claiming that the alleged defective construction claims fell outside of the policy limits they set on Delacruz, and the District Court ruled that the duty to indemnify was not yet ripe for adjudication because the underlying lawsuit (i.e. the general contractor’s lawsuit against Delacruz) was not yet resolved. In other words, before MCC’s motions can be resolved, Delacruz’ liability has to be established.

While the 11^th Circuit had not, before now, directly addressed the question of whether it is appropriate for a district court to assess an insurer’s duty to indemnify before an underlying lawsuit is resolved, they had already considered the issue in an unpublished opinion, finding that the duty to indemnify is always dependent upon the entry of a final judgment, resolution, or settlement addressing the underlying claims. In addition, a number of Florida district courts had already ruled that an insurer’s duty to indemnify is not ripe until an underlying lawsuit is resolved or the insured’s liability is established. As a result, the 11^th Circuit agreed with existing case law and the district court’s opinion in this case that MCC’s duty to indemnify Delacruz could not be decided (i.e. was not “ripe for adjudication”) until the underlying lawsuit (the general contractor’s claim against Delacruz) is resolved.

Contact Our Florida Insurance Litigation Attorneys to Find Out More

When it comes to insurance-related litigation in Florida, HD Law Partners has that experience necessary to properly represent an insurance carrier such that they do not waste their time and money presenting motions in court that are not yet ripe for review. Contact our insurance attorneys today to find out more about our services.

Resource

Posted in Tampa Business and Corporate Attorneys | No Comments »

Given the devastation caused by hurricane Michael to Florida last October, there is still plenty to be done, especially as a number of property owners are still waiting for their insurance companies to ‘make them whole’ in terms of their losses. In an effort to provide some relief to affected Florida property owners, on April 16, Florida state lawmakers moved legislation that aims to provide assistance to Floridians that are still recovering from the hurricane. Specifically, Senate Appropriations approved two bills to provide assistance in debris removal, housing, infrastructure, and other necessary repairs.

Funds Set Aside for Hurricane Recovery

One provision would also create a $300 million program of “rainy day” funds for local governments and school boards, allowing them to prioritize funds for housing needs, task forces to oversee recovery efforts, and improving building codes.

If the bills are implemented, total Florida state commitment on Hurricane Michael recovery would come to almost $2 billion. In addition, another bill that was approved on April 16 would take some funds set aside for the 2010 Deepwater Horizon oil spill and allow them to, instead, be used for hurricane recovery needs. The measure would direct the state Department of Economic Opportunity to designate a number of recovery infrastructure project priorities, especially in counties such as Calhoun, Jackson, Liberty, Jefferson, Holmes, Jackson, Gadsden, and Washington.

What About the Florida Power & Light Controversy?

In May, state regulators will decide on the controversial issue involving Florida Power & Light’s costs to restore power after hurricanes; specifically, a number of business groups, as well as the state Office of Public Counsel, have argued that Florida Power & Light did not rely on the proper processes for paying storm costs and failed to follow its mandate of passing savings onto tax paying customers. Under a 2016 base-rate settlement approved by the Public Service Commission, the company was allowed to pass along hurricane restoration costs to customers in the event of a hurricane; however, by the company relying on a reserve to cover hurricane restoration costs, and then using tax savings to replenish the reserve, business groups and the Office of Public Counsel contend that the company failed to actually pass on tax savings to customers, as it was supposed to.

Contact Our Florida Hurricane Insurance Claim Attorneys If You Are In Need Of Recovery Relief

Northwest Florida in particular is still suffering after the category four hurricane, and Congress has been unable to agree on in a package for a number of disasters, including hurricane Michael.

If your home suffered damage, working with a Florida hurricane insurance attorney to file your insurance claim, or appeal any denied or delayed coverage, can make all the difference in ensuring that you get what you need to get back on the road to recovery. Contact our successful Fort Myers hurricane insurance claim denial attorneys at HD Law Partners today to find out how we can help.

Resources:

miami.cbslocal.com/2019/04/16/florida-lawmakers-hurricane-michael-relief/

www.miamiherald.com/news/politics-government/state-politics/article229361014.html

“What Hurricane Michael Damage Looks Like Today”

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The divorce process became significantly more complicated this year with the code changes. Not only did a number of Americans end up owing more than expected, but along with these changes also came a slew of unforeseen consequences. For example, the spouse paying alimony can no longer deduct the payment, and the spouse receiving alimony no longer has to pay taxes on it as income, making alimony payments in general costlier, and divorce negotiations more strained. This loss is not insignificant: for some, it amounts to thousands of dollars; and its loss becomes more and more significant as the income difference increases.

In an effort to offset some of the losses associated with the loss of the alimony deduction, as one example, a number of divorce attorneys and accountants are resorting to other money saving (creative) techniques, as we discuss below.

Grantor Trusts

One way to try and get around this loss is to set up a trust for the spouse who would otherwise receive alimony. Known as “grantor trusts,” they are effectively designed to pay out income without the tax burden, and are funded with assets designed to generate income. It is essentially a property settlement that must be established after the divorce decree has been finalized. Trusts set up like these ensure that payments continue even if the paying spouse passes away and when the receiving spouse passes away, the rest goes to heirs. However, some accountants have warned that the IRS could see this is simply disguised alimony.

Property Taxes & The Family Home

Another serious aspect of voice is changed is the decision to hold onto the family home. Before the tax code change, sometimes the spouse with less income would choose to hold onto the home for the sake of the children. However, this has now become significantly more expensive to do because property taxes are no longer fully deductible, and this has led some to sell the home.

Dependent Exemptions

Dependents and associated deductions have also changed significantly. The $4,050 exemption per dependent has completely disappeared, although the child tax credit was increased from $1,000 to $2,000. Still, this credit starts to phase out as soon as parents reach a certain income. This has changed circumstances for a number of parents, and some have found that allowing the spouse who makes less income to spend more time with the children could end up being helpful, financially, down the road.

Consider Doing A Practice Run

Overall, the divorce process has become far more complicated in states where standards are significantly different than the new federal standards. A number of accounting advisors suggest that couples go through a practice, or “pro forma” tax filing in order to provide them with some foresight about how certain choices with respect to filing will affect them. For example, couples may find that filing taxes jointly is more expensive than filing separately.

Contact Our Florida Divorce Attorneys to Find Out More

If you live in Florida and are contemplating divorce, contact our experienced Tampa divorce attorneys at HD Law Partners today to find out how we can help.

Resource:

nytimes.com/2019/04/19/your-money/taxes-tips-divorce.html

What Will And Will Not Impact A Divorce Settlement?

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During stressful times as going through divorce proceedings, it is common to let important issues and accounts, such as insurance coverage, fall by the wayside. However, during this time, it is extremely important to take a close look at any and all insurance policies in order to foresee whether your insurance policies may be impacted once your divorce is finalized – in order for you to strategically prepare.

Below, we discuss the two main types of insurance that are typically relevant during divorce: health and life insurance.

Health Insurance

When a couple is married, frequently, one spouse is covered in terms of their own health insurance on the other’s health plan. In order to help the spouse that does not earn an income after divorce, the purpose of the Consolidated Omnibus Budget Reconciliation Act (COBRA) is to allow them to continue the coverage under their ex’s plan for three years afterward.

However, while COBRA is convenient in terms of continuation of existing coverage, it is not necessarily the most affordable option. In addition, the time limit makes it somewhat impractical after a certain amount of time has passed.

Now that the Affordable Care Act has been passed, there may very well be cheaper health plans available for those who either don’t have their own health insurance through an employer and/or do not make enough income to purchase their own private plan. You can explore all of these options with a variety of advisers, including your divorce attorney.

Life Insurance

Life insurance is also important consideration during divorce, especially if spousal support is relevant to you. While spousal support stops when the payer passes away, typically, these payments can continue pursuant to a life insurance policy on the payer. In addition, sometimes your attorney can ensure that the life insurance policy is a required part of your divorce settlement. If this is of interest to you, you will want to make sure that you own the policy so as to retain control over that policy and ensure that changes are not made and payments regularly occur.

Life insurance needs to be arranged for before the divorce is finalized because the payer spouse ends up being uninsurable, in which case adjustments may need to be made to the divorce decree in some circumstances. In addition, existing policies may be considered a marital asset under some circumstances.

Contact Our Florida Divorce Attorneys To Find Out More

Like every other issue that you have to deal with before, during, and after divorce, figuring out how to address and deal with insurance policies may not be very straightforward. However also like everything else, you must be aware of all of the policies and details going into the divorce so that you are aware of what you might want to adjust for your divorce settlement.

If you live in Florida and have any questions about divorce, including insurance policies before and after, contact our experienced Tampa divorce attorneys at HD Law Partners today to find out how we can help.

Resource:

forbes.com/sites/catherineschnaubelt/2019/04/29/insurance-issues-to-consider-in-a-divorce/#e9dbaf0b5d1e

Posted in Divorce, Insurance Litigation | No Comments »

Seven months after Hurricane Michael hit Florida, the estimated losses from the Category 5 storm are currently over $50 billion. Property damage alone reportedly accounts for more than $5 billion, and many property owners’ claims have gone unpaid by insurance companies that are supposed to make them whole again in times like these. In addition, federal disaster relief funding has been stuck in gridlock and affected by other devastated areas, such as California and Iowa, as well as other hurricane effected neighbors of Florida.

The Significant Loss

Hurricane Michael hit Florida with significantly more force than even Hurricane Katrina hit Louisiana. The storm was especially felt in coastal cities such as Apalachicola, Panama City, and a number of others; shredding boats, businesses, and homes, and causing a number of people to go missing. People not only lost property, but a number of individuals died as well as a result of the disaster. To date, some residents are still without power. Even a number of Florida parks are still closed today. For example, the hurricane destroyed 80 to 90 percent of Florida Caverns State Park and its buildings. Thousands of trees are still uprooted throughout the state and its national forests, with agricultural and forestry losses representing more than $3 billion. There is no question that, in order to rebuild, people are going to need a lot of help.

Mexico Beach, Florida in particular has been hard-hit, with the beaches and businesses still just concrete slabs. Towns still have no banks, gas stations, or grocery stores, and very few homes are habitable. Even sewer services are still unavailable. In addition, devastating, catastrophic damage was inflicted in areas such as Bay County, where more than 45,000 buildings were damaged and destroyed, including hospitals.

Without insurance companies coming through on insurance claims, things cannot get better, and that includes the demolition of damaged buildings and the rebuilding of new ones, as well as cities. Structural damage alone done to homes has reached what some call the tipping point; translating into homelessness and unemployment.

There Is More To Be Done: Contact Our Florida Hurricane Insurance Claim Attorneys

While the Florida Legislature approved an additional $220 million in the budget—bringing the total funding to close to $2 billion—a more comprehensive federal package is still pending. In addition, while the Florida Department of Environmental Protection has been promised $4 million from the federal government, these funds will only cover debris removal.

If you have suffered from the hurricane and have concerns about your insurance claim, contact our experienced Fort Myers hurricane insurance claim denial attorneys at HD Law Partners today to find out how we can help you and your family get back on the road to recovery.

Resources:

https://wfsu.org/post/fema-reimburses-florida-hurricane-michael-debris-removal
https://cnn.com/2019/04/19/weather/hurricane-michael-upgraded-category-5/index.html
https://abc3340.com/news/nation-world/six-months-after-hurricane-michael-made-landfall-mexico-beach-waits-for-disaster-relief
https://tallahassee.com/story/news/2019/05/07/donald-trump-hurricane-michael-disaster-relief-trump-rally-panama-city-beach-puerto-rico/1130136001/
https://www.hdlawpartners.com/hurricane-michael-debris-causes-new-wildfire-devastation-to-florida-homes-properties/

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As attorneys who regularly practice in business formation here in Florida, one recent question we have received is whether an S corporation should switch to a C corporation after the passage of the Tax Cuts and Jobs Act, and whether there is a corresponding ability for C corporations to exclude any gain from the sale of stock held for more than five years.

Below, we discuss this possibility under section 1202 and the potential to gain a huge tax break by switching to a C corporation. In a nutshell, there is some inconsistency within the statutory language which makes how you convert from an S to a C corporation very important in this process.

What Section 1202 Does & Qualified Small Business Stock

Section 1202 allows for shareholders who acquire qualified small business stock after September 2010 and hold onto it for five years to sell that stock and exclude it as declared income the greater of $10 million or 10 times the shareholder’s basis in the stock. However, there are a number of requirements that must be met in order for stock to qualify as qualified small business stock; requirements that sometimes confuse even the best tax advisers, attorneys, and shareholders alike.

In a nutshell, in order for stock to qualify as qualified small business stock it must;

• Be issued while the corporation is already a C corporation;
• Have been acquired at original issuance;
• Be linked to the corporation whose total assets are less than $50 million starting from the date of that company’s formation up to the shareholder acquiring the stock; and
• Be linked to a corporation that is not a specified service business (for example, one that is not involved in accounting, health law, consulting, financial services, engineering, or any business where the principal asset involves the skill or reputation of the owner or its employees).

You want to ensure that you meet these requirements, as–even if you convert to a C corporation– you will not be eligible if you do not. For example, if the existing outstanding stock of the company was not issued while it was a C corporation, it will never be eligible for benefits upon sale, therefore, the C corporation would have to issue new shares of stock to the shareholders–who would then have to hold that stock for five years and meet all of the other requirements–before that stock can be sold tax-free.

Other Means Of Achieving Same Benefit

Keep in mind, however, that attorneys who practice in business formation may be able to advise you on other ways to exclude post-conversion appreciation under section 1202. For example, section 1202(g) also allows for a pass-through entity to hold qualified small business stock; as long as all of the aforementioned requirements have also been met. In addition, the owners of the pass-through entity can exclude their share of that entity’s gain upon its disposition of qualified small business stock as long as two additional requirements are met:

• The owners of the entity must hold an interest in that entity as soon as it acquires that qualified small business stock through the date of disposition; and
• Each owner can only exclude the gain up to their share on the date that the entity acquired the stock.

Contact Our Florida Business Formation Attorneys to Find Out More

The lesson here is; if you’re thinking of switching to a C corporation, you want to ensure that you consult an experienced business formation attorney first in order to ensure that you do it right, as a mistake could quite literally costing millions. Contact our Tampa business and corporate attorneys at HD Law Partners today to find out more.

Resource:

forbes.com/sites/anthonynitti/2019/05/13/switching-from-s-to-c-corporation-how-you-do-it-could-save-or-cost-you-millions/#5b09abb27f74

If You Are a Business Owner or Thinking Of Forming a Business, Make Sure You Do This before Tax Season Arrives

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Proposed changes to the law in Florida could ultimately affect the ability for policyholders to hold their insurance companies accountable in terms of delaying or failing to settle claims, including those related to hurricane relief. A bill recently submitted to the legislature would make a number of changes that would cripple the ability for the consumer to go after their insurance company in the face of bad faith behavior, including taking the claim away from a jury and placing it into the hands of an administrative judge and denying the consumer the right to discovery, which would effectively leave them without any evidence, and without a case.

Current State of “Bad Faith Insurance Law” in Florida

Florida imposes what’s known as a “duty of good faith” when it comes to settling a claim with the insured or a third party, which means acting “fairly and honestly” towards its insured with regard to their interest. This means that the insurer cannot expose the insured to increased liability by failing to settle any claims against the insured, nor can they harm a third party to the insurance contract by failing to settle a claim.

An insurer also owes two major contractual duties to the insured—the duty to indemnify (payment on a valid claim)—and to defend against any third party lawsuits brought against the insured in court. In other words, the insurer owes a fiduciary duty, whereby they cannot act on the sole basis of its own interests when it comes to negotiating claims. If the insurer does not attempt to negotiate in good faith, a bad faith claim can currently be filed against them. In deciding on the claim, a court focuses on the insurer’s conduct; and while a failure to settle does not necessarily constitute “bad faith,” the insurer must initiate settlement negotiations and, if it fails to reach a settlement, it has the burden of demonstrating that it did so because there was “no realistic possibility of settlement within policy limits.” Ultimately, the court relies on the “totality of circumstances” standard and makes its determination on a case-by-case basis. The courts have established a strong precedent that determining whether or not an insurer has acted in good faith is a question for the jury, not the court.

How That Would Change

The proposed legislation would effectively undo this case law and mandate that anyone claiming a violation of an insurer’s duty of good faith would have to file an administrative complaint with the Department of Financial Services, which would first determine “the sufficiency of complaints.” If the department determines that the complaint does not meet very specific requirements, that complaint would automatically be dismissed.

Contact our Florida Insurance Claim Attorneys to Find Out More

If you have questions regarding exposure to bad faith or extra contractual liability, contact our Florida insurance attorneys at HD Law Partners today to find out more about our services.

Resources:

flsenate.gov/Session/Bill/2019/751/BillText/c1/PDF

wfla.com/8-on-your-side/investigations/change-in-insurance-law-would-take-away-consumers-day-in-court/1851917864

http://A Look at Hurricane Michael’s Damage in Florida & New Rules for Insurance Companies

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HD Law Partners is proud to support The First Tee of Tampa Bay’s inaugural event, SpringSwing, on May 23, 2019. SpringSwing is a fundraising event at TopGolf Tampa to help support the children of The First Tee of Tampa Bay. SpringSwing is a team competition, wherein your 6 players compete against others in the field. The main contest is a target point-scoring game in which experienced players and novices alike can participate, compete and win. For more information on the event and The First Tee of Tampa Bay, click the following link: https://www.golfgenius.com/pages/1759284.

The First Tee of Tampa Bay’s mission is to impact the lives of young people in the greater Tampa area by providing educational programs that build character, instill life-enhancing values and promote healthy choices through the game of golf.

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A number of older individuals who have divorced or are contemplating divorce are concerned about the impacts of divorce on their Social Security benefits. This is especially the case for older individuals, who may have, since their divorce, remarried again, and now have questions as to whether they can obtain their divorced spouse’s benefits.

Fortunately, remarriage typically does not disqualify someone from being eligible for a previous spouse’s benefits, as we discuss below.

The Rules After Divorce

If you divorced, but your marriage lasted 10 years or longer, you can receive benefits based on your ex if:

• Your benefit is less than your ex’s;
• Your ex is entitled to their disability or Social Security retirement;
• You are 62 or older; and
• You are unmarried.

However, it is also important to remember that there are some exceptions to the marriage duration requirements when it comes to widows collecting benefits. For example, if a spouse’s death was accidental, you may be able to draw reduced benefits from the deceased spouse, and then switch to receiving benefits on the first spouse’s record at a later time (provided that the first spouse provides more beneficial benefits). This is beneficial if the first spouse has a higher benefit rate than the second spouse.

If you start receiving benefits at your full retirement age, your benefit (as a divorced individual) will be one-half of your ex’s full retirement (or benefit). However, if you remarry, you cannot collect the benefits based on the former ex’s record unless that subsequent marriage ends (for example, by annulment, death, or divorce).

Where Remarriage Ends in Death or Divorce

Let’s take someone who remarries; where that remarriage ends in death or divorce: this person is still qualified to receive their divorced spouse’s benefits, even if that spouse was their first spouse (i.e. before their remarriage). In order for divorced spouses to receive spousal benefits, the high earning spouse must either be deceased, age 62, or already engaged in drawing benefits.

Still, the individual who is seeking to collect the benefits needs to wait until they are full retirement age, or else they could risk receiving a reduced benefit. Full retirement age is typically around age 66, although it depends on the year you were born. After this age, it does not make sense to wait to file for your divorce to spouses benefits.

Contact Our Florida Divorce Attorneys to Find Out More

If you live in Florida and have questions about divorce—including how to protect yourself when it comes to Social Security benefits—contact our experienced Tampa divorce attorneys at HD Law Partners today to find out how we can help. We can guide you through what is necessary to help protect you, and provide you with the very best in experienced counsel.

Resources:

pbs.org/newshour/economy/making-sense/how-to-navigate-social-securitys-benefits-after-marriage-death-and-divorce

ssa.gov/planners/retire/divspouse.html

The Most Important Mistakes to Avoid During Divorce

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