Background
Citizens Property Insurance Corporation issued a homeowner’s policy to the insured. After a loss, the homeowner executed a written assignment of benefits (“AOB”) in favor of Quality Assessments & Logistics, LLC (“QAL”), a service provider. QAL then transferred its right to payment—and the right to sue—to Black Diamond Funding Ventures, LLC, a company that purchases accounts receivable from servicing companies and pursues outstanding balances. When Citizens refused to pay, Black Diamond sued for breach of the insurance policy.
The central question was whether section 627.7152, Florida Statutes (2019)—which regulates “assignment agreements” transferring insurance benefits from policyholders to third parties—also governs the subsequent downstream transfer from the initial assignee (QAL) to a receivables purchaser (Black Diamond). The trial court entered judgment for Black Diamond, and Citizens appealed from the denial of its summary judgment motion.
The Court’s Holding
The Fourth DCA reversed, holding that the downstream transfer from QAL to Black Diamond constitutes an “assignment agreement” regulated by section 627.7152. The court reasoned that the statute’s purpose—to regulate the transfer of post-loss insurance benefits to third parties—would be easily circumvented if contractors could avoid the statute’s requirements simply by routing claims through intermediary receivables purchasers. The statutory language encompasses any agreement that “seek[s] to transfer insurance benefits from the policyholder to a third party,” and the economic reality of the transaction is that insurance benefits ultimately flow from the policyholder through multiple intermediaries to Black Diamond.
Because the downstream transfer was subject to section 627.7152’s requirements and those requirements were not met, Black Diamond lacked standing to pursue the insurance claim.
Key Takeaways
- The downstream transfer of post-loss insurance benefits from a service provider to an accounts-receivable purchaser is a regulated “assignment agreement” under section 627.7152, even though the purchaser has no direct relationship with the insured.
- Receivables-purchase arrangements cannot be used to circumvent the regulatory framework governing insurance benefit assignments in Florida.
- Entities purchasing insurance receivables from contractors must ensure the entire chain of assignments complies with section 627.7152’s requirements or face standing challenges.
Why It Matters
This decision strikes directly at a business model that proliferated in Florida’s property insurance market: companies purchasing accounts receivable from contractors who performed insurance-funded repairs, then suing insurers for payment. For Florida’s insurance defense bar—already engaged in extensive AOB litigation—this ruling provides strong ammunition to challenge claims brought by receivables purchasers who are not in direct privity with the insured. For the plaintiffs’ property-damage bar, it means that assignment chains must be carefully structured to comply with section 627.7152 at every transfer point. The practical effect may be to reduce the viability of receivables-purchasing operations in the insurance claims space.