One Step Forward, Two Steps Back: Roofers, Insurance And Commercial Speech – Insurance

On July 11, 2021, Chief Judge Mark Walker of the U.S. District Court for the Northern District of Florida issued an order prohibiting the Secretary of the Florida Department of Business and Professional Regulation from taking any steps to enforce subsections 489.147 (2) (a) , (3) and 4 (b), Florida Bylaws Regarding “Prohibited Advertising” unless otherwise directed. The injunction binds “the defendant and their officers, agents, servants, clerks and attorneys – and others in active cooperation or involvement with any of them.”

On June 11, 2021, Florida Governor Ron DeSantis signed SB 78, creating Section 489,147 of the Florida Bylaws. Subsection 489.147 (2) (a) prohibits any contractor from soliciting a homeowner directly or indirectly through “prohibited advertising”. “Prohibited advertising” is defined as “any written or electronic communication by a contractor that prompts, instructs or induces a consumer to contact a contractor or expert in order to assert an insurance claim for roof damage, not limited to door hangers, business cards, Magnets, flyers, brochures and e-mails. “Section 489.147 (1) (a), Fla. Stat. However, personal, verbal communication of the same message does not appear to be against the law. Subsection 489.147 (3) subjects a contractor to the Violating this Section, disciplinary proceedings and a fine of up to $ 10,000 for each violation.Sub-section 489.147 (4) (b) provides that any unlicensed person engaging in prohibited speech is guilty of unlicensed contracting and civil penalties through department disciplinary action and fines up to $ 10,000 each Violation is subject to.

Ten days later, on June 21, 2021, the plaintiff, Gale Force Roofing & Restoration, LLC filed a complaint and motion for an injunction. After the procedural issues were resolved, the court established the plaintiff’s first amended complaint and amended request for injunction for expedited disclosure and hearing plan. The hearing took place on July 9, 2021. The plaintiff argued that the new law affects his business practices and prohibits him from providing truthful information to consumers. The plaintiff went on to claim that the law deterred her supplementary rights by forcing the plaintiff, under threat of disciplinary action, to cease its written advertising encouraging consumers to contact her to file a roof damage insurance claim.

The court found that the law was subject to an interim examination under Cent. Hudson Gas & Electr. Corp. against pub. Serv. Comm’n of NY, 447 US 557,561 (1980). If the speech in question is false, misleading, or involves illegal activity by this standard, the speech is not protected by the First Amendment and the government is free to regulate it. If not, the state’s interest in regulating the speech must be substantial. Should the state advance a substantial interest, the regulation must advance this asserted interest directly. Even if so, the Court must determine whether the state interest could also be served by a more restricted restriction on commercial speech.

The court found that while the state can prohibit fraudulent or misleading commercial expressions without further justification, the defendant in this case acknowledged that the speech merely asked consumers to seek help from a contractor or public expert in order to do so Making an insurance claim for roof damage is not false or misleading and does not involve illegal activity. On the next step in the Central Hudson test, the court found that Florida had a significant interest in cracking down on the behavior of predatory contractors who exploit consumers through unlicensed public adaptations and trick homeowners into surrendering their insurance benefits and then fail complete the work despite full payment by the household contents insurance. The court also noted the state’s interest in mitigating the threat to the Florida insurance market from the alleged onslaught of insurance disputes caused by these practices.

However, the court questioned whether the ban on making commercial statements that were not false, misleading, or related to illegal activities directly served the interests of the state. The court noted that it was unclear why a homeowner would be deliberately or unknowingly put “on the path to assisting insurance fraud” simply by knowing that their insurance company could pay for roof repairs from a contractor’s solicitation rather than during one Conversation that takes place after the contractor has already assessed their roof. The court found that the Florida Legislature had exceeded the limits of the First Amendment when it determined that the correct remedy for speech it considered “evil” was “enforced silence” as opposed to “more speech.” . According to the court, the state tried to enforce silence when the downstream effects of the speech – and not the speech itself – were viewed as “evil”. The court found that Florida’s Insurance Consumer Advocate’s “education initiative” had already been launched to provide “more speech” to combat the “evil” allegedly arising from advertisements by contractors who encourage consumers to Contact contractors or public appraisers to file insurance claims for roof damage.

Eventually, the court found that the same bill containing the provision at issue contained additional measures aimed at licensed contractors acting as public experts, prior notice requirements for potential claimants and the limitation of legal fees in insurance litigation. The court found that the remaining provisions, aside from the state prohibition of certain advertisements, appear to directly address the maladministration in the Florida insurance market. These targeted laws deal directly with behavior that contributes to Florida insurance diseases and refute defendants’ assertions that the prohibition on “prohibited advertising” is appropriate to advance the essential interests identified by the state.

While the court’s order is just an injunction, the court’s detailed opinion indicates that the Florida legislature needs to address this component of the Florida insurance crisis in a different way.

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