Rule 69B-220.201 of the Florida Administrative Code sets forth the ethical requirements for Florida insurance adjusters. According to subsection (3), “The work of adjusting insurance claims engages the public trust. An adjuster shall put the duty for fair and honest treatment of the claimant above the adjuster’s own interests in every instance.”
Ethical constraints in this Rule include requirements that adjusters make “truthful and unbiased reports of the facts,” and “exercise extraordinary care when dealing with elderly clients.” Subsection (5) of this Rule adds additional ethical constraints on public adjusters if the Governor declares a state of emergency. For example, when adjusting a claim for damage that was incurred during a declared state of emergency, a public adjuster may only charge a fee up to 10%. The applicability of this limit was tested last week in the case of Ameriloss Public Adjusting Corp. v. Lightbourn, — So. 3d —, 2010 WL 3893912 (Fla. 3d DCA Oct. 6, 2010).
The Governor of Florida declared a state of emergency for Hurricane Katrina in 2005. Mr. Lightbourn’s property was damaged during Katrina, and he made a claim that his insurer paid. In 2006, the Rule limiting public adjusters’ fees to 10% during a state emergency went into effect. Then, in 2007, Mr. Lightbourn entered into an agreement with a public adjuster to reopen his Katrina claim. The public adjuster was able to get Mr. Lightbourn additional insurance benefits, but a dispute over the public adjuster’s 33 1/3% fee developed.
In 2008, Lightbourn contacted the Florida Department of Financial Services regarding the contract, and the Department asked the public adjuster to respond to Mr. Lightbourn’s inquiry. Later that year, Lightbourn filed a formal Petition for Declaratory Statement with the Department. One of the questions Lightbourn specifically asked was, “Is [the public adjuster] entitled to receive 33 1/3% fee pursuant to the Agreement?” As required by statute, the Department published a public notice of the Petition in Florida Administrative Weekly, but the notice was general and did not name the public adjuster.
In 2009, the Department issued its Declaratory Statement, applying the 10% fee cap to Lightbourn’s contract. The Department found that the public adjuster, “had prior notice that only a ten percent fee for such services rendered in connection with hurricane damage was deemed to be appropriate, because the rule at issue was already in effect at the time the parties entered into the fee agreement.” The Declaratory Statement also included a provision for appellate review, but only for parties to the proceedings.
The public adjuster appealed the Department’s ruling, but last week the Florida Third District Court of Appeal held that the public adjuster did not have standing to appeal, because it was not a party to the Department’s proceedings, nor did it intervene during the proceedings. The public adjuster argued that the notice of the petition was deficient, but the Third DCA held that the Department was not required to name the public adjuster in the notice, but only to publish notice of the proceedings in Florida Administrative Weekly.
The Court dismissed the public adjuster’s appeal on standing grounds, and specifically did not comment on the merits of his argument, but noted that if the issue came up in any other proceeding in which the public adjuster was a party, the public adjuster could seek judicial review of the Department’s order at that time. Although the Court did not comment on the merits of the application of the fee limit to this contract, it is clear from these proceedings that the Florida Department of Financial Services’ position is that this limit shall apply to all public adjusting contracts entered into after the Rule went into effect.