On June 27, 2013 the Florida Supreme issued an important decision addressing the issue, “whether, under Florida Statute § 627.736, an insurer can require an insured to attend an examination under oath as a condition precedent to recovery of personal injury protection “PIP” benefits? In Nunez v. Geico General Insurance Company,1 the Florida Supreme Court ruled in the negative.
As I practice in the area of property insurance, I want to draw from this decision what I feel will greatly benefit a current issue in this area of the law. If you have followed my previous posts on this blog, then you are aware of a current dispute involving Liberty Mutual Fire Insurance Company and its claim that the May 17, 2011, amendment to Florida Statute § 627.707 is retroactive, limiting what is required from an insurer in adjusting sinkhole loss claims in the state for Florida. In essence, Liberty Mutual is denying claims of potential sinkhole loss without testing the properties for sinkhole activity.
Specifically, the new statutory framework includes a definition for the term “structural damage” that substantively diminishes sinkhole loss coverage. Liberty Mutual takes the position that the 2011 amendment is a clarification by the legislature and is therefore retroactive to all existing insurance contracts, even if the new definitions are not in the contract itself. Every federal trial court in Florida that has addressed Liberty Mutual’s position has denied it and found that the 2011 amendment is a substantive change impairing existing contracts between the insureds and the insurers and therefore retroactive application is repugnant under Florida law. Further, the courts have held that the changes are not a procedural clarification because the enactment does not specifically provide that the change is to apply retroactively and any alleged clarification six years after the initial legislation is not a clarification.
Liberty Mutual is currently trying to get this issue before the Eleventh Circuit Court of Appeals, which may, as they did with Nunez, certify the question to the Florida Supreme Court. Fortunately, for policyholders, the Nunez decision provides great insight to how the Florida Supreme Court will address the issue. In Nunez, a part of the opinion addressed whether the 2012 Amendment to the PIP Statute requiring an examination under oath as a condition precedent to payment of PIP benefits “may be viewed as a legislative interpretation of the original law and not as a substantive change therof.”
This is similar to Liberty Mutual’s argument that the 2011 amendments are a clarification to what the legislature intended in 2005 when it changed the definition of “sinkhole loss.” A significant difference is that Geico General Insurance Company did not even attempt to persuade the Court that the amendment should apply retroactively because it was clearly a substantive change. Instead, Geico General Insurance Company attempted to use the amendment as a legislative interpretation of the original law.
In Nunez, the Florida Supreme Court found that the 2012 amendment did not apply or act as a clarification and an examination under oath was not a condition precedent to recovery of the insured’s PIP benefits. The Court highlighted the fact that a requirement for an examination under oath did not exist at policy inception. I expect the Eleventh Circuit Court of Appeals and/or the Florida Supreme Court to apply this same reasoning when addressing Liberty Mutual’s argument and find that the 2011 amendment is not a clarification and the definitions for the term “structural damage” do not apply retroactively. The Nunez decision gives us a glimpse on how the higher courts may review this issue.