The Florida Insurance Guaranty Association (FIGA) is Florida’s public entity for resolving claims for certain insolvent insurers. FIGA is controlled mostly by statute, and attorney’s fees are no exception. Generally, under Florida Statute § 627.428, attorney’s fees are available for an insured who succeeds on legal action against his or her insurance company. However, Florida Statute § 631.70 exempts FIGA from § 627.428 unless FIGA, “denies by affirmative action, other than delay, a covered claim or a portion thereof.”

Last week, Florida’s First District Court of Appeal read § 631.70 strictly, and denied attorney’s fees on a homeowner’s Hurricane Wilma insurance claim. In Gena v. FIGA, 1D11-1783, 2012 WL 955507 (Fla. 1st DCA Mar. 22, 2012), the homeowner’s insurance company became insolvent and FIGA took over her hurricane claim. There were significant delays, and two weeks before the deadline to file suit, FIGA advised the homeowner it would likely not have time to settle her case before the deadline and that she would need to file suit in order to preserve her claim.

The homeowner hired an attorney to file suit, and the claim was eventually resolved in her favor. She sought attorney’s fees in addition to the recovery she received on her claim, alleging that FIGA’s letter advising that it would not settle her claim before the deadline and without litigation was an affirmative denial of her claim. The Court disagreed.

We agree with the trial court that Appellant is not entitled to attorney’s fees under section 627.428 as FIGA never denied Appellant’s claim. Instead, it informed Appellant that it would not be able to investigate and settle her claim before the statute of limitations expired and advised her to seek legal counsel. Even if we were to say that the May 2008 letter constituted a denial of Appellant’s claim, Appellant would still not be entitled to fees because any denial resulted from delay. By including the “other than delay” language in section 631.70, the Legislature was obviously aware that FIGA might be unable to timely handle all of the claims filed with it following an insolvency and sought to shield the entity from liability for fees in those instances where insureds filed suit because of the untimely processing of claims.

Although the Court denied the homeowner’s request for attorney’s fees, Judge Thomas wrote a very well reasoned dissenting opinion finding that FIGA constructively denied the homeowner’s claim, entitling her to attorney’s fees.

As Appellant persuasively argues, the only logical interpretation of section 631.70 is to relieve FIGA of any responsibility of delays caused by the insolvent company’s prior actions, not to give FIGA the authority to refuse action on a covered claim by simply labeling its refusal as a “delay.”

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Were we to merely accept FIGA’s self-serving description of its actions, it could continue to deny claims with impunity by simply alleging there was “insufficient time” to resolve the claim, thus forcing policyholders to wait months for emergency and necessary payments and repairs and, as here, endure the cost of litigation to obtain their rightful insurance proceeds.

Judge Thomas reasons that FIGA could have waived its statute of limitations defense and finished with the homeowner’s claim, but it chose to advise the homeowner that her claim would be denied within two weeks if she did not file suit.