Judge blocks key part of Florida property insurance law


TALLAHASSEE – A federal judge has blocked the state from enforcing a key part of a new property insurance law designed to fight fraud that bars roofing contractors from advertising to potential clients.

U.S. District Chief Justice Mark Walker upheld the appeal for a preliminary injunction from Brandon-based Gale Force Roofing & Restoration LLC, which argued that the law signed by Gov. Ron DeSantis on June 11 violates First Amendment rights by directly penalizing protected speech.

“It is also clear that the injuries threatened to the complainant to bar the complainant’s truthful commercial speech outweigh the state’s interest in preventing fraud, protecting consumers from exploitation and stabilizing the market. insurance, “Walker wrote in a ruling on Sunday.

Lawmakers passed the insurance measure on April 30 as property insurance rates skyrocketed and insurers abandoned policies in Florida.

Related: DeSantis to sign property insurance changes that could affect citizens’ rates

Gale Force Managing Partner Alex Dewey praised Walker’s decision.

“Gale Force absolutely opposes insurance fraud of any kind and agrees that the state should punish fraudulent actors, but this is no excuse to impose drastic restrictions on companies like Gale Force that follow rules and just help homeowners recover when Mother Nature strikes, ”Dewey said in a press release.

Representatives from the Florida Department of Business and Professional Regulation could not immediately be reached for comment on Tuesday. Department Secretary Julie Brown was a named complainant in the lawsuit.

The new law, which came into effect on July 1, allows larger annual rate increases for clients of Citizens Property Insurance Corp., prevents contractors from soliciting homeowners to file insurance claims through a ” advertising prohibited “, takes steps to limit attorney fees and reduces the time to file claims.

Walker’s order dealt with the provisions of the law relating to communications by contractors. The new law would prevent contractors from asking homeowners to file roof damage claims through “prohibited advertising,” which could include items such as emails, door hangers, flyers and brochures.

While the state has the right to regulate entrepreneurs and protect Floridians from fraud, Walker wrote, “it must do so within the limits set by the Constitution.”

“Here, the legislature did not do it accordingly,” added the judge.

As part of the lawsuit, Gale Force Roofing and Restoration said it is urging homeowners to contact the company for storm damage inspections to roofs.

“The plaintiff (Gale Force Roofing and Restoration) will then honestly communicate to the owners the nature and extent of the damage,” the lawsuit said. “The claimant will then encourage homeowners to contact their insurance company to make a claim under their home insurance policy and sign a contract with the claimant to assign the benefits available under the homeowner’s insurance policy to the applicant.”

The company also argued that the new law was aimed more at reducing insurance claims than at preventing fraud, saying the law served as a “thinly veiled attempt” to prevent homeowners from getting outside help to do so. valid insurance claims for home repairs.

Supporters of the bill and insurance industry officials have argued that dubious and even fraudulent claims for roof damage have played a significant role in driving costs up.

The state disputed that the restrictions in the law violate First Amendment rights, arguing that the law should be seen as a reasonable restriction on commercial speech fighting against exploitation and consumer fraud.

Under the law, “targeted digital advertisements or e-mails, door hangers or brochures distributed in person are prohibited if, and only if, they encourage a homeowner to make a roof insurance claim”, have writes state lawyers.

“Radio and television ads are allowed because they do not target ‘one particular person’,” they argued.

But Walker disagreed.

Under the new law, licensed contractors “are not permitted to encourage, instruct or induce a consumer to contact a contractor or public adjuster for the purpose of making an insurance claim for roof damage by consumers. written or electronic means – and no “unauthorized” person, ”Walker wrote.

In person, the oral communication of the message “does not appear to violate the law as it is written,” the judge noted.

“However, this law effectively prohibits this specific message by contractors – licensed or unauthorized – in written or electronic form in the state of Florida,” he added.

Gale Force argued that the law cools its First Amendment rights because it requires the company to stop its print advertising that encourages consumers to contact it for the purpose of filing an insurance claim for roof damage.

“As a result, the plaintiff is self-censoring by refraining from advertising that arguably runs counter to the new law,” Walker wrote, adding that the facts are sufficient to warrant a preliminary injunction to prevent the entry into force of the law.

The state has attempted to bolster its argument that the new law advances state interests by including an anecdote on “how a ‘direction of payment’ deal left a landlord with a ‘gutted house’ in the works. that were never completed and a lien of $ 100,000. “

But Walker called the state’s evidence “lackluster.”

Instead of “banning protected speech, couldn’t the legislature directly regulate agreements between owners and contractors or impose liability for incomplete performance?” He wrote in Sunday’s 44-page order, which detailed a list of other flaws in the state’s arguments.

“In short, this court is not convinced that the impugned law directly favors any of the interests of the state. Instead, the respondent seems to suggest that because the law prohibits advertising that exists in the same universe as the interests claimed by the state, it directly advances those interests. But the (American) Supreme Court has already rejected such a broad statement, ”he admonished. “To recap, the accused identified legitimate and substantial interests of the state. But none of these interests are directly involved with contractors advertising their roof repair services to homeowners and informing homeowners that they may experience storm damage that could be covered by insurance.

By Jim Turner and Dara Kam, Florida Information Service



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