On September 29, 2016, the Florida Supreme Court reaffirmed Florida’s protection for policyholders. In Johnson v. Omega Insurance Company,1 the Florida Supreme Court shredded insurance companies’ attempts to require malice before a policyholder is entitled to attorneys’ fees and costs under Florida Statute 627.428.

Generally, the custom in American law is that each party is responsible for his or her own attorney’s fees, regardless of the outcome of the action. An exception, however, arises when an agreement of the parties or a statute states otherwise. The Florida Legislature created such a statutory provision in Florida Statute 627.428, which allows insureds who prevail against an insurance company to recover attorney’s fees and costs.

Over the past few years, Florida’s insurance companies have been arguing that a policyholder is only entitled to attorneys’ fees and costs if an insurance company maliciously denies a claim. Often, insurers deny claims and upon the service of a lawsuit, pay additional benefits and then argue that no attorney’s fees are owed for its “honest” mistake. One can only imagine the profits realized for every claim that does not lead to a lawsuit and therefore no additional payment.

In Johnson v. Omega, the Florida Supreme Court reinforced the principle that once a policyholder proves it is owed more money after filing a lawsuit, that policyholder has a vested right to attorneys’ fees and costs:

Once an insurer has incorrectly denied benefits and the policyholder files an action in dispute of that denial, the insurer cannot then abandon its position without repercussion. To allow the insurer to backtrack after the legal action has been filed without consequence would “essentially eliminates the insurer’s burden of investigating a claim.”

Section 627.428 provides that an incorrect denial of benefits, followed by a judgment or its equivalent of payment in favor of the insured, is sufficient for an insured to recover attorney’s fees.

The court made clear that no malice or bad faith conduct on behalf of the insurer is required. If an insurer fails to pay what it is owed, whether intentional or innocent, a policyholder is entitled to attorneys’ fees and costs under Florida Statute 627.428.

The Florida Supreme Court took this opportunity to remind everyone why this protection is so important for Florida’s policyholders:

The need for fee and cost reimbursement in the realm of insurance litigation is deeply rooted in public policy. Namely, the Legislature recognized that it was essential to “level the playing field” between the economically-advantaged and sophisticated insurance companies and the in the individual citizen. Most assuredly, the average policyholder has neither the finances nor the expertise to single-handedly take on an insurance carrier. Without the funds necessary to compete with an insurance carrier, often a concerned policyholder’s only means to take protective action is to hire that expertise in the form of legal counsel.

A “level playing field” is all that we can ask for and, in Florida, we have a more level playing field than most as a result of Florida Statute 627.428.

1 Johnson v. Omega Ins. Co., SC14-2124 (Fla. Sept. 29, 2016).