Fla. court strikes down law restricting public adjusters

Friday, January 7, 2011

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A Florida law prohibiting public adjusters from initiating any contact with insurance policyholders for 48 hours after an accident or other mishap leading to insurance claims violates commercial free-speech rights, a state appeals court has ruled.

Public adjusters are licensed professional agents independent of insurance companies whom policyholders often hire to help them settle claims with their insurers. In 2008, Florida passed a law regulating the actions of public adjusters. The law says:

“A public adjuster may not directly or indirectly through any other person or entity initiate 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 that may be the subject of a claim under the insurance policy unless contact is initiated by the insured or claimant.”

Frederick W. Kortum Jr., a public adjuster, challenged the law in state court, contending that it infringed on his free-speech rights under the Florida Constitution. The state Department of Financial Services declared that the law should be interpreted to apply only to face-to-face or telephone solicitation. Kortum countered that the plain language of the law applied to any contact by public adjusters – even written and e-mail solicitations.

A Florida trial court followed the state’s interpretation. It upheld the law and rejected the free-speech challenge. On Dec. 29, 2010, the Court of Appeals of Florida, 1st District, reversed the lower court in its opinion in Kortum v. Sink.

The appeals court found that the statute language did apply to all contact by public adjusters for 48 hours and, thus, amounted to a complete ban on commercial speech. Applying the U.S. Supreme Court’s test for commercial-speech restrictions in Central Hudson Gas & Electric Corporation v. Public Service Comm’n of New York (1980), the Florida appeals court deemed the 48-hour ban not narrowly tailored enough.

The Florida court wrote that “it is clear to us that it [the statute] prohibits all public adjuster-initiated contact, whether electronic, written or oral.” The appeals court relied in part on a Pennsylvania Supreme Court decision in 1988 that invalidated a similar 24-hour ban.

The appeals court also rejected the argument that the law was justified because of U.S. Supreme Court case law — primarily the Court’s 1978 decision in Ohralik v. Ohio State Bar Ass’n — limiting solicitation by attorneys. The state appeals court determined that public adjusters are different from lawyers, writing: “lawyers are trained in the art of persuasion, public adjusters are not.”

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