Florida Public Adjuster Waiting Period Deemed Unconstitutional

By Steven Plitt | October 1, 2012

The Florida Legislature has statutorily prohibited public adjusters from contacting loss victims within 48 hours following the loss.

The state of Florida has been subjected to several devastating hurricanes resulting in catastrophic widespread property loss. As a result of these hurricanes, the Florida Legislature, in a 2007 special session created a Task Force on Citizens Property Insurance Claims Handling and Resolution (Task Force) to confer and make recommendations regarding hurricane claims of the Citizens Property Insurance Corporation.

One of the proposed recommendations of the Task Force was to prohibit public adjusters from “directly or indirectly through any other person or entity” engaging in face-to-face or telephonic solicitation with any insured or claimant under an insurance policy until at least 72 hours after the occurrence of a loss event. The Florida Legislature enacted Section 626.854(6) FLA. STAT. (2008) as a result of the Task Force’s recommended proposal. The Legislature reduced the period of the restriction from the proposed 72 hours to 48 hours, however.

In 2009, a public adjuster filed a complaint for declaratory and injunctive relief alleging that the statute violated the public adjuster’s constitutional rights to free speech, equal protection of the laws and to be rewarded for his industry.

In response to the suit, the Florida Department of Financial Services (DFS) responded that the statute did not prohibit a public adjuster from using written methods of communication to contact a potential claimant and that the statute only addressed face-to-face or telephonic solicitations. The trial court found that the statute was ambiguous but nevertheless ruled that the statute was constitutional because the statute primarily regulated conduct and not speech. However, the intermediate Florida Court of Appeals reversed the trial court ruling finding that the plain language of the statute prohibited all public adjuster initiated contact irrespective of whether it was electronic, written or oral and therefore the statute regulated commercial speech, not merely conduct.

As a result, the First District Court of Appeals found the statute unconstitutionally burdened the commercial speech of public adjusters. The Florida Supreme Court agreed. In Atwater v. Kortum, — So.3d —-, 2012 WL 2579677 (Fla. 2012), the Court found that the statute prohibiting contact with victims for 48 hours was not unconstitutional.

The Supreme Court in Atwater began its analysis by concluding that the Legislature intended to ban all public adjuster initiated communication with a potential claimant during the 48-hour period. This blanket prohibition violated protected free speech.

The Supreme Court of the United States had previously held that solicitation in a business context was protected commercial speech. See, e.g., Edenfield v. Fane, 507 U.S. 761 (1993).

The Florida Supreme Court in Atwater noted that DFS had offered no reason to explain why solicitation by a public adjuster would not be protected speech when the United States Supreme Court had previously ruled in the Edenfield case that a Florida regulation providing that a CPA was prohibited from having any direct, in-person, uninvited solicitation of engagements to perform public accounting services had been struck down as violating commercial expression protected by the First Amendment.

The Florida Supreme Court in Atwater also noted that the United States Supreme Court had previously distinguished non-expressive conduct from protected speech in United States v. O’Brien, 391 U.S. 367, 376 (1968). In O’Brien, the United States Supreme Court had rejected “the view that an apparently limitless variety of conduct can be labeled ‘speech’ whenever the person engaging in the conduct intends thereby to express an idea.” Id. at 376. Because of this, the United States Supreme Court had limited the protections that accompany pure speech to conduct that was “necessarily expressive.” Id. at 385. Building upon this United States Supreme Court precedent, the Florida Supreme Court found that “a public adjuster’s act of contacting or soliciting a potential customer is necessarily expressive.” Atwater, 2012 WL 2579677 at *6, the Court stated:

The purpose and intent of the public adjuster’s act of contacting the claimant is to inform the potential client of the services offered by public adjusters and to obtain the customer’s consent to a contract. There is no reason for a public adjuster—in his capacity as a public adjuster—to contact a claimant but to engage in communication about the commercial transaction of public adjusting.

Id. As such, FLA. STAT. 626.854(6) regulated commercial speech, not merely conduct, and was unconstitutional as an impermissible regulation of commercial speech.

The Florida Supreme Court adopted the Florida First District Court of Appeals’ analysis which utilized the four-prong test used by the United States Supreme Court in Central Hudson Gas & Electric Corp. v. Public Service Comm’n of New York, 447 U.S. 557, 566 (1980) to evaluate the constitutionality of a statute regulating commercial speech.

Under the Central Hudson four-prong test, a court must determine whether the expression is protected by the First Amendment. Under the Central Hudson analysis, in order for commercial speech to come within the protections of the First Amendment, it must (1) concern lawful activity and not be misleading; (2) the asserted governmental interest in regulating the activity must be substantial; (3) the regulation must directly advance the governmental interest asserted; and (4) the regulation must not be more extensive than is necessary to serve the government’s interest.

Although the Florida First District Court of Appeals had concluded that the statute did satisfy the first three prongs of the Central Hudson test, it found that the statute did not satisfy the fourth prong—the regulation must not be more extensive than is necessary to serve the government’s interest. The Florida First District Court of Appeals concluded that the DFS failed to demonstrate that prohibiting property owners from receiving any information from public adjusters for a period of 48 hours was justified due to the possibility that some public adjuster may unduly pressure traumatized victims or otherwise generally engage in unethical behavior.

A unanimous Florida Supreme Court affirmed the Florida First District Court of Appeals’ analysis finding that the statute unconstitutionally regulated commercial speech.

image of Steven Plitt

About Steven Plitt

Steven Plitt is the current successor author to Couch on Insurance, 3d. He maintains a national coverage practice with The Cavanagh Law Firm. He has been listed continuously as one of Arizona's 50 lawyers by Southwest Super Lawyers. He can be reached splitt@cavanaghlaw.com. To read additional articles by Steven Plitt, go to www.insuranceexpertplitt.com. More from Steven Plitt

Was this article valuable?

Here are more articles you may enjoy.

Latest Comments

  • October 1, 2012 at 2:52 pm
    Jester says:
    No sympathy PA's. Their strategy is to get to the insured before the insurance adjuster can make contact. They prey on the homeowners vulnerability and get them to sign a cont... read more

Add a CommentSee All Comments (1)Add a Comment

Your email address will not be published. Required fields are marked *


More News
More News Features