FPCA Homeowners Division: February 9, 2012 Panel Meeting of Neutral Evaluators and Florida Department of Financial Services

Florida Property and Casualty Association Homeowners Division Members:

On February 9, 2012, the Florida Department of Financial Services (“DFS”) held a panel meeting with neutral evaluators in order to “obtain input from neutral evaluators on a variety of topics pertaining to the Neutral Evaluation Program (“NEP”) in place pursuant [to] Section 627.7074, F.S.” 

A major concern raised during the meeting by evaluators and attorneys alike was the common practice of insureds withholding or delaying production of expert reports until after the NEP report is issued.  While some recommended that the evaluator should be required to supplement his or her report upon receipt of the plaintiff’s report, others thought the report should not be considered at all. 

The qualifications of evaluators and the individuals that they employ as part of the NEP was also an issue of much discussion. Currently, evaluators are only required to have a PE or PG license, and attest to the fact that they have experience investigating sinkholes.  Further, additional professionals employed by the evaluators are not screened at all.  There was also a lengthy discussion of the evaluators’ appearance of neutrality.  Most evaluators draft written reports on their company letterhead.  This is thought by many to be inappropriate, as the evaluator serves in his individual capacity and as an agent of the state.  Also, some judges have refused to refer to the evaluators as “neutral,” instead referring to them as “court experts” or “statutory experts.”  The scope of the NEP and subsequent report was also briefly discussed.  A question was posed about whether the reports should contain an assessment of cosmetic damages under the new statute.  The panel acknowledged that the new statute provided that cosmetic damages could be assessed in the report, but did not direct the evaluators to asses this damage in all cases.

Notably, the DFS letter directing the evaluators to apply SB 408’s definitions of structural damage only to claims under policies incepting after May 17, 2011 was also briefly discussed.  One of the evaluators asked what should be done when a policy requires “direct physical damage,” but the policy incepted after May 17, 2011.  Concerns were raised that, if the DFS directive is followed under these circumstances, the NEP report would be useless and potentially even inadmissible. However, the panel refused to comment on this, and only stated that their directive should generally be followed. 

The panel did not provide much guidance on any of the issues raised, except to state that the evaluator is in charge of the process and has broad discretion to conduct the NEP as he or she sees fit.  It was pointed out to the panel during discussion that the department is required by the statute to promulgate rules of procedure.  However, the panel members simply stated that they would examine their rule making authority, and did not indicate that any rules would be promulgated in the near future. 

The lack of direction from DFS and the tremendous amount of discretion given to evaluators makes vigorous representation during the neutral evaluation process extremely important.  Defense Counsel must guide the evaluator to consider all relevant issues, include all aspects of damages in the NEP report, and apply the proper criteria based upon the applicable statutory provisions and policy terms.

Should you have any questions or comments, please contact Katie Webb (kwebb@cftlaw.com) at Colodny Fass, P.A.

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