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BEFORE THE FLORIDA DEPARTMENT OF FINANCIAL SERVICES

In re: AmeriLoss Public Adjusting Corp. )

Petition for Declaratory Statement )

Dated: November 19,2009

PETITION FOR DECLARATORY STATEMENT

AmeriLoss Public Adjusting Corp. ("AmeriLoss"), by and through its

undersigned counsel, hereby petitions the Department of Financial Services ("DFS") for a

declaratory statement regarding the application of section 626.854, Fla. Stat., section

626.878, Fla. Stat., and Rule 69B-220.201(5), F.A.C. (sometimes referred to as the

"Rule"), to its particular set of circumstances as described below. In support of the

instant Petition for Declaratory Statement (the "Petition"), AmeriLoss states as follows:

PROCEDURAL INFORMATION

1. The name and address of the petitioner is as follows:

AmeriLoss Public Adjusting Corp. 1440 J F Kennedy Causeway Suite 210

North Bay Village, FL 33141

2. ArneriLoss's authorized representative, who should receive on notices, pleadings,

orders or other documents is:

Tripp Scott, P .A.

Attn: Edward J. Pozzuoli

110 S.E. 6th Street, 15th Floor Fort Lauderdale, Florida 33301 Telephone: (954) 525-7500 Facsimile: (954) 761-8475

3.

AmeriLoss is a Florida corporation that is in the business of providi1NJ!~

DEPT OF FINANCIAl •• RVlCII DMSION OF LEGAL 8&RVIOES

adjustment services to clients pursuant to section 626.854, Fla. Stat.

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4. The statutes, rules and orders for which a declaratory statement is sought are as

follows:

a. Rule 69B-220.201(5), Florida Administrative Code;

b. Section 626,854 (11), Fla. Stat.; and

c. Section 626,878, Fla. Stat.

CIRCUMSTANCES GIVING RISE To DECLARATORY STATEMENT

5, The need for a declaratory statement on each of the questions presented below

arises out of a conflict that exists between the substantive provisions of Rule 69B-

220.201(5), F.A.C .. and section 626.854(11), Fla. Stat.

6. On September 3, 2006, the Department adopted Rule 69B-220.201, F,A.C. The

pertinent part of the rule is Rule 69B-220.201 (5), which provides as follows:

(5) Public Adjusters, Ethical Constraints During State of Emergency. In addition to considerations set forth above, the following ethical considerations shall apply to public adjusters in the event that the Governor of the State of Florida issues an Executive Order, by virtue of the authority vested in Article IV, Section lea) of the Florida Constitution and by the Florida Emergency Management Act, as amended, and all other applicable laws, declaring that a state of emergency exists in the State of Florida:

(a) No public adjuster shall require, demand, charge or accept any fee, retainer, compensation, commission, deposit, or other thing of value, prior to receipt by the insured or claimant of a payment on the claim by the insurer.

(b) As to anyone insured or claimant, no public adjuster shall charge, agree to, or accept as compensation or reimbursement any payment, commission, fee, or other thing of value equal to more than ten percent of the amount of any insurance settlement or claim payment.

(c) No public adjuster shall enter into any contract, agreement or other arrangement with any person, including an attorney, building contractor, architect, appraiser or repairman, by which the person would enter into an agreement to assist a claimant or insured on an insurance claim, utilize the services of the adjuster to carry out the agreement and pay the adjuster an amount that would exceed the limitation of the adjuster's compensation or reimbursement as provided in paragraph (b) above.

(d) This subsection applies to all claims that arise out of the events that created the State of Emergency, whether or not the adjusting contract was entered into ..

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while the State of Emergency was in effect and whether or not a claim is settled while the State of Emergency IS in effect.

Specific Authority 624.308, 626.878, 626.9611 FS. Law Implemented 624.307(1),626.611,626.621,626.865(2), 626.878, 626.9541(1)(i) FS. HistoryNew 6-2-93, Amended 12-18-01, Formerly 4-220.201, Amended 3-27-05, 9-3- 06.

7. On October 1, 2008, subsection (11) to section 626.854, Fla. Stat., became law,

which now provides as follows:

(l1)(a) If a public adjuster enters into a contract with an insured or claimant to reopen a claim or to file a supplemental claim that seeks additional payments for a claim that has been previously paid in part or in full or settled by the insurer, the public adjuster may not charge, agree to, or accept any compensation, payment, commission, fee, or other thing of value based on a previous settlement or previous claim payments by the insurer for the same cause of loss. The charge, compensation, payment, commission, fee, or other thing of value may be based only on the claim payments or settlement obtained through the work of the public adjuster after entering into the contract with the insured or claimant. The contracts described in this paragraph are not subject to the limitations in paragraph (b).

(b) A public adjuster may not charge, agree to, or accept any compensation, payment, commission, fee, or other thing of value in excess of:

1. Ten percent of the amount of insurance claim payments by the insurer for claims based on events that are the subject of a declaration of a state of emergency by the Governor. This provision applies to claims made during the period of 1 year after the declaration of emergency.

2. Twenty percent of the amount of all other insurance claim payments.

8. Section 626.854(11) establishes constraints on the fee a public adjuster may charge

III two distinct and mutually exclusive sets of circumstances. The first set of

circumstances, addressed in subsection (a), involves fees for reopened claim and/or a

supplemental claim. For a reopened claim and/or a supplemental claim, the public

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adjuster may base the fee only on the incremental amounts obtained for the insured, and is specifically prohibited from basing the fee on amounts previously paid to the insured. Section 626.854(11) places no other limits upon fees for reopened claims and/or supplemental claims. To avoid misinterpretation on this point, this subsection unequivocally states: "The contracts described in this paragraph are not subject to the limitations in paragraph (b)." (emphasis supplied)

9. Subsection (b) addresses the second exclusive set of circumstances: claim payments arising out of a state of emergency, such as a hurricane. With respect to original claims, the Florida Legislature rejected application of the same fee cap for original and reopened/supplemental claims that had been set out in the Rule. Instead, the Florida Legislature, through the enactment of section 626.854(11) specifically limited fee caps to original claims, "to claims made during the period of 1 year after the declaration of emergency", with no fee caps on reopened and/or supplemental claims.

10. In sum, the Florida Legislature, through the enactment of section 626.854(11), specifically rejected and overrode Ru1e 69B-220.201(5). It specifically rejected any fee caps on reopened andlor supplemental claims, and instead limited the ten percent fee cap to claims made during the one year period following the declaration of a state of emergency.

11. Rule 69B-220.201(5) was in effect for less than two years before the Florida Legislature passed, and the Governor signed into law, section 626.854, Fla. Stat. Nevertheless, during that. period, AmeriLoss did provide some public adjustment services with respect to supplemental and/or reopened claims arising out of a state of emergency as contemplated by both the Rule and the conflicting statute cited herein.

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UNCERTAINTIES CREATED UNDER STATUTES AND RULES

12. The addition of subsection (11) to section 626.854, Fla. Stat., creates uncertainty

with respect to the applicability of Rule 69B-220.201(5), F.A.C., both currently and in

the past. Moreover, the current existence of these two separate-- and conflicting--

sources of regulatory strictures upon public adjusters creates uncertainty regarding

AmeriLoss's current status and obligations with respect to fully complying with the

regulatory framework for public adjusters.

13. The past applicability of Rule 69B-220.201(5), FA.C., is particularly called into

question in light of the statutory basis given for the rule. The DFS purportedly adopted

Rule 69B-220.201(5), F.A.C., as an exercise of delegated legislative authority in the

implementation of section 626.878, Fla. Stat., not Section 626.854, Fla. Stat.. Section

626.878, Fla. Stat., provides as follows:

626.878 Rules; code of ethics.--An adjuster shall subscribe to the code of ethics specified in the rules of the department. The rules shall implement the provisions of this part and specify the terms and conditions of contracts, including a right to cancel, and require practices necessary to ensure fair dealing, prohibit conflicts of interest, and ensure preservation of the rights of the claimant to participate in the adjustment of claims.

In other words, Rule 69B-220.201(5), F.A.C., is a statement of agency policy in the

implementation of a general statute relating to a code of ethics to be prescribed for all

types of adjusters, while the Florida Legislature placed the statutory prescription on the

fee cap in the statute addressing public adjusters specifically.

14. Moreover, the match between the language of Rule 69B-220.201(5), F.A.C., and

section 626.878, Fla. Stat., is far from perfect. Although the above statutory section

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applies to all adjusters, Rule 69B-220.201(5), F.A.C., applies only to public adjusters and without any reference or link to section 626.854, Fla. Stat. The rule purports to be an exercise of delegated legislative authority, but the subject of the rule (limits on fees related to claims arising out of a state emergency) cannot be found anywhere in the statutes cited as being implemented. See generally, Southwest Florida Water Management District v. Save The Manatee Club, Inc., 773 So.2d 594 (Fla. 1 st DCA 2000),

15. Section 626,878, Fla. Stat., requires each class of adjuster to comply with a code of ethics specified by the DFS in rules that apply to all adjusters. In adopting Rule 69B- 220.201(5), F.A.C., however, the DFS implemented an agency statement that applied not to all adjusters, but only to public adjusters; further, the particular prohibition included in that rule does not appear to be within the legislative authority delegated to the DFS. Id. 16. The Department might disagree that Rule 69B-220.201(5), F.A.C., was an invalid exercise of delegated legislative authority at the time it was adopted; however, what cannot be disputed is that the Florida Legislature moved quickly to place new specific language into section 626.854(11), Fla. Stat. that rejected: (i) the Rule's application of fee caps to reopened andlor supplemental claims, (ii) the Rule's establishment of the same fee cap for original and reopened andlor supplemental claims, and (iii) the claim that such limits on fees are a matter of agency policy rather than legislative policy.

17. Further, with respect to fee caps on claims arising out of a state of emergency, the Legislature proclaimed that as a matter of legislative policy such a limit is only a temporary mechanism to protect consumers who turn. to public adjusters during a catastrophe, just as a declaration of a state of emergency is a temporary mechanism to

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protect the citizenry in general during such a time. The same rationale does not apply to reopened and/or supplemental claims.

18. Given all the above, AmeriLoss respectfully submits that Rule 69B-220.201(5), F .A.C., cannot be currently viewed as having been a valid exercise of delegated legislative authority at any time. At the very least, the DFS must concede that section 626.854(1), Fla. Stat., creates uncertainty as to whether the DFS accurately reflected legislative policy (as opposed to inventing or opposing it) when the it adopted Rule 69B- 220.201(5), F.A.C.

19. In light of section 626.854(11), Fla. Stat., there are questions as to the DFS' enforcement responsibility with respect to alleged violations of Rule 69B-220.201(5). For example, if the DFS does not enforce Rule 69B-220.201(5), F.A.C., is this nonenforcement the result of agency discretion not to enforce the Rule or is it the result of the DFS being without authority to enforce the Rule? Although such questions go to the DFS obligations and authority, they also bear on AmeriLoss's specific concern of assuring that it is in full compliance with the regulatory framework administered by the DFS.

20. Current concerns about regulatory compliance exist because the DFS has not yet moved to repeal Rule 69B-220.201(5), F.A.C., even though section 625.845(11), Fla. Stat., became law over one year ago. Thus, the enactment of section 626.854(11), Fla. Stat., and the DFS' failure to address its effect on Rule 69B-220.201(5), F.A.C., creates uncertainty for AmeriLoss as to the application of both.

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21. In complying with the aforementioned statutes and Rule, AmeriLoss also faces

uncertainty as to whether the statutes and rules create a private right of action in the

consumer.

QUESTIONS PRESENTED

22. For the purposes of these questions, a contract for a supplemental or reopened

claim as contemplated in section 626.854(1l)(a), Fla. Stat., will be referred to as a

"supplemental claim" and a contract for an original claim as contemplated in section

626.854(11)(b), Fla. Stat., will be referred to as an "original claim." The questions

presented are as follows:

a. On the applicability of Rule 69B~220.201(5)

Question 1: What is the applicability of Rule 69B-220.201(5) to a supplemental claim entered into either before October 1, 2008, or after October 1, 2008?

Question 2: What is the applicability of Rule 69B-220.20 1 (5) to an original claim entered into either before October 1, 2008, or after October 1, 2008?

Question 3: What is the applicability of Rule 69B-220.201(5), if any, to the fees received by an appraiser where an appraisal is done pursuant to a process set out in the terms of an insurance policy and a payment is made to an insured pursuant to the terms of that same insurance policy?

b. On the compliance with Section 626.878. Fla. Stat.

Question 4: To comply with to section 626.878, Fla. Stat., what is AmeriLoss's current responsibility with respect to Rule 69B- 220.201(5) for a supplemental claim entered into either before October 1,2008, or after October 1, 2008?

Question 5: To comply with to section 626.878, Fla. Stat., what is AmeriLoss's current responsibility with respect to Rule 69B-

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220.201(5) for an original claim entered into either before October 1, 2008, or after October 1, 2008?

c. On private right of action

Question 6: Do any of the following provisions, either individually or in combination with each other, create a right of private action in the consumer: section 626.854(11), Fla. Stat., section 626.878, Fla. Stat., or Rule 69B-220.201(5), F.A.C.?

DISCUSSION

23. In answering the above questions, the DFS must conclude that Rule 69B-

220.201(5), F.A.C., is incompatible with the plain language of section 626.854(11), Fla.

Stat., and thus void and of no effect. There can be no dispute that the Rule is an invalid

exercise of delegated authority. Indeed, upon enactment of section 626.854(11), Fla.

Stat., it was incumbent upon the DFS to enter into rulemaking to repeal Rule 69B-

220.201(5), F.A.C. With all due respect to the DFS, its failure to do so has created

significant uncertainty for AmeriLoss and led to this petition for declaratory statement.

On the applicability of Rule 69B-220.201(5)

24. The plain language of section 626.854(11), Fla. Stat., requires the same answer to

both Questions 1 and 2: Rule 69B-220.201(5), F.A.C., is inapplicable to either a

supplementalc1aim contract or an original claim contract irrespective of its date. There

are two basic reasons for this result, both compelling. First, as previously addressed, the

substantive statutory language specifically repudiates and overrides the language of the

Rule.

25. Next, the DFS' Rule can only operate within the public interest regulatory

framework established by statute. Under the plain language of section 626.854(11), Fla.

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Stat., there is no regulatory framework within which the Rule can operate. Rule 69B- 220.201(5), F.AC., stands completely outside the clear statutory framework for regulating public adjusters.

26. Rule 69B-220.201(5), F.AC., is not applicable to any fees paid to an appraiser pursuant to the appraisal terms of an insurance policy.

On the compliance with Section 626.878, Fla. Stat.

27. Section 626.878, Fla. Stat., requires a public adjuster to comply with a code of ethics established by the DFS by rule, and the DFS intended Rule 69B-220.201(5), F.A.C., to be included in that code. Questions 3 and 4 ask the Department to clarify AmeriLoss's current responsibility for compliance with section 626.878, Fla. Stat. with respect to Rule 69B-220.201(5), F.A.C. The answers, of course, tum on the current applicability of that Rule to supplemental claim contracts and original claim contracts. As has been established, section 626.854(11), Fla. Stat. rendered Rule 69B-220.201(5), F.A.C., inapplicable to such contracts. Thus, AmeriLoss has no current responsibility under section 626.878. Fla. Stat., or any other provision of law, to comply with Rule 69B-220.201(5), F.A.C.

On private right of action

28. No language can be found in section 626.854(11), Fla. Stat., section 626.878, Fla. Stat., or Rule 69B-220.20 1 (5), F.AC., that creates a private right of action for the consumer. Rather, the language of the provisions and the regulatory framework established by the chapter are congruent and clear. The substantive provisions of the statutes and rules operate to create and implement state regulation of public adjusters in the public interest, and do not grant substantive, enforceable rights that operate outside

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the regulatory framework. See Villazon v. Prudential Health Care Plan, Inc., 843 So.2d

842, 852 (Fla. 2003)("[a]bsent such expression of [legislative] intent, a private right of

action is not implied.")

WHEREFORE, Petitioner AmeriLoss Public Adjusting Corp. respectfully

requests that the Department of Financial Services issue a declaratory statement

answering the above six questions in the manner suggested.

Respectfully submitted this 19th day of November.

TRIPP SCOTT Attorneys for Petitioner

110 S.E. 6th Street, 15th Floor Fort Lauderdale, Florida 33301 Telephone: (95,4YS25-7500 Facsimile: \~j'4) 761-~1'5

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?' Edward 1. Pozzuoli Florida Bar No. 717363 Stephanie D. Alexander Florida Bar No. 0081078

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