Does Florida’s Public Adjuster Law Limit Free Speech?

Public adjusters would have more access to homeowners in the immediate aftermath of a storm if the Florida Supreme Court rules Florida’s current public adjuster law unconstitutional.

The high court recently heard oral arguments in the case of Atwater v. Kortum after the state’s First District Court of Appeals found that the state’s 2008 law limiting public adjusters’ contact with homeowners is unconstitutional on the grounds it interferes with their rights to commercial free speech.

The 2008 law states that a public adjuster “may not directly or indirectly, through any other person or entity, contact or engage in face-to-face or telephonic solicitation or enter into a contract with any insured or claimant under an insurance policy until at least 48 hours after the occurrence of an event.”

Michael Davidson, representing the Department of Financial Services, said the law was narrowly drafted in light of any constitutional issues. He said that is why the law addresses face-toÂ-face or telephone calls, but still allows the distribution of written materials and the use of other means of advertising. But Davidson conceded that without the reference to face-to-face or telephone calls, the law would be unconstitutional since it would be a total ban on communication.

Several Supreme Court justices proved skeptical about the argument, focusing instead on the clause that states adjusters “may not directly or indirectly” contact homeowners. Justice Charles Canady described the statutory language as ‘broad.” He questioned whether there is there really a difference between the methods of communication and their goal. “Even the person putting out door hangers is initiating contact and hoping to generate business,” he said.

Justice Barbara Pariente said the court had to address the fact that the law plainly says a public adjuster could not directly or indirectly contact a homeowner.

“I’m sympathetic to your argument that you thought the law banned telephone and face-to-face contact, but we have to deal with what was said,” she told Davidson.

Pariente remarked that the Legislature would have the opportunity to revise the law next year.

Davidson noted that the state has previously restricted commercial speech in other situations that have passed constitutional muster. For example, the state has placed restrictions on when attorneys can contact individuals involved in auto accidents. There are also restrictions on the time of day individuals can be contacted. “If lawyers’ speech can be limited, so can public adjusters’,” he said.

The underlying issue is economic. The state found that in the aftermath of the 2005 hurricane season that Citizens policyholders employing a public adjuster received settlements averaging 747 percent higher than other policyholders. The same trend held true in non-catastrophic claims where Citizens policyholders received settlements 574 percent higher when they used a public adjuster.

Pariente implied that the law seemed designed to marginalize public adjusters in order to give insurance companies first crack at settling claims. “The motivation of this statue is not entirely to protect consumers,” she said.

Wilbur Brewton, representing Kortum, said that the rule of law had traditionally supported that the “commercial transmission of information is not illegal and protected by the first amendment.”

He added that adjusters performed a valuable service given the inexperience most homeowners have with claims and “Byzantine” clauses of insurance contracts.

“It is hard to understand the rules,” Kortum said. “Those are the most important times for a policyholder to have the service of a public adjuster.”

He also said that while the state imposes the 48-hour ban on direct contact by adjusters, there is no such ban on contractors, mitigation specialists, and other clean-up companies. As a result, homeowners may make wrong decisions such as throwing away ruined property before a claim can be settled while entering into contracts with other companies.

In a brief filed on behalf of Kortum, the lawyers also pointed out that in the event of a major catastrophe, public adjusters can find it hard to even locate homeowners who may have had to find shelter elsewhere after a total loss to their property.

Several insurance industry officials filed amicus briefs. Maia Elena Abate, with the law firm of Colodny, Fass, Talenfelf, Karlinsky & Abate, representing the insurer’s Florida Property and Casualty Association, wrote that the law is constitutional on the ground that it addresses adjusters’ conduct as opposed to strictly speech.

She argued that the law is designed to prevent adjusters from taking advantage of homeowners traumatized in the immediate aftermath of a disaster.

“This is a time when one is most vulnerable and open to the relief of others offering advice and comfort. However, the confusion in such times does not lend to sound decision-making and clarity on the part of those affected,” Abate offered.