Florida court rules against ‘direction to pay’ strategy in roof repair claim

A Florida appeals court sided with a lower court ruling this week that a “direction to pay” by itself does not constitute an assignment of benefits in a disputed roof-repair claim.

The ruling is the latest in a series of decisions upholding the state’s assignment of benefits reform measures. Critics blame Florida’s sky-high property insurance rates on a lawsuit culture that flourished for years.

Florida's Assignment of Benefits reform prohibits property owners from assigning their insurance benefits to third parties, such as contractors or electricians, to file claims and receive payments.

The case in question began when Leonard Caruso’s house in The Villages sustained roof damage In 2019. Caruso reported the loss to his insurer, American Integrity Insurance Co. and selected Noland’s Roofing to repair the damage, court documents say.

Caruso signed a “Direction of Payment” instructing American Integrity to pay Noland’s Roofing directly. After receiving American Integrity’s valuation of his claim, Caruso signed an “Assignment of Benefits Contract” with Holding Insurance Companies Accountable in 2020, court documents say.

HICA “is a business that purports to help homeowners enforce their insurance rights,” the appeals court wrote in its decision. HICA is a plaintiff in similar unsuccessful lawsuits. The company actually filed a motion for voluntary dismissal in the Caruso lawsuit, but the appeals court did not accept it.

The court cited precedence: “’[b]ecause the issue presented is one of importance and for which a published decision would be helpful,’ we do not accept HICA’s notice,” the decision reads.

No physical improvements

Caruso’s contract with HICA did not call for them to make any improvements to his property, but it would collect payments from the insurance company, court documents say.

In addition, Caruso signed a second form in which he attested, “I want HICA to hold my insurance company accountable for their obligation(s) under the policy of insurance and also to ensure that the direction to pay that I signed with a separate company is honored.”

“HICA acts as essentially a general contractor in ultimately paying a roofing company to perform the repairs,” the Florida Justice Reform Institute wrote last year. “HICA’s entire business model seeks to make an end-run around the Legislature’s assignment of benefits reforms.”

The court concluded that Caruso’s agreement with HICA does not meet the amended assignment of benefits law.

“Without a valid assignment, HICA has no standing to sue American Integrity for its alleged breach of Caruso’s insurance policy,” the appeals court ruled.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.