Contractors claim law meant to protect consumers violates their First Amendment rights.
A recently-filed federal lawsuit pits a Brandon roofing company against the state of Florida in a case challenging recently passed legislation the company believes infringes on its First Amendment rights. Florida officials, in response, say the legislation is essential to stop unscrupulous contractors from taking advantage of residents.
The lawsuit was filed June 21 by Brandon-based Gale Force Roofing & Restoration against Julie Brown, in her role as Secretary of the Florida Department of Business and Professional Regulation.
Gale Force is owned by Alex Gerhart, Zach Willard and Alex Dewey, court records show. A federal judge in Gainesivlle granted a preliminary injunction July 11, days after the law went into effect. The injunction stopped enforcement of the new law.
The legal fight is over a bill, HB 7065, that the Legislature passed in the most recent Session. Gov. Ron DeSantis signed it June 11.
It was drafted to curtail the use of an insurance agreement called an assignment of benefits. But Gale Force, and other contractors that have since joined the lawsuit, argue that law actually hurts citizens who may be stuck with damaged homes.
An assignment of benefits, according to Florida’s Division of Consumer Services, transfers the rights to claims and benefits from an insurance policy to a third party. That third party, then, can file a claim, make repair decisions and get insurance payouts.
"The act is a frontal assault on the First Amendment and an extraordinary intervention by the government that would be unthinkable in any other context." Gale Force Roofing & Restoration in lawsuit
State officials contend dishonest contractors use the assignment as a way to collect money for work that can be either unnecessary or gets left incomplete or undone — leaving homeowners on the hook.
Gale Force, in its lawsuit, argues that public statements made by state officials “make clear the act was motivated by hostility toward contractors based on (at best) flawed understanding of the complex financial picture surrounding insurance premiums in Florida.”
The lawsuit quotes one official as saying Florida has “become a beacon for companies who canvas neighborhoods creating roofing claims that would otherwise not be filed” and another of saying the new law stops “the abusive practices of these few bad actors.”
But, Gale Force argues, the new law doesn’t prevent fraudulent claims from being filed.
Instead, the lawsuit claims, the law forbids contractors from advertising to homeowners and encouraging them to contact a contractor to check their roof for damage and then filing an insurance claim when necessary.
Penalties for violators include a $10,000 fine per incident and the possibility of a license suspension. Gale Force argues that if a contractor sends an advertising mailer to 100 homes in an area devastated by a hurricane, the contractor could face a $1 million fine and lose its license.
This, the Gale Force says in court papers, is an “unconscionable attack on the right for homeowners to receive truthful information about how to repair the damage to their property.”
“The act is a frontal assault on the First Amendment and an extraordinary intervention by the government that would be unthinkable in any other context,” the company argues.
One sentence later Gale Force adds, “There would be widespread outrage if it prohibited doctors from ‘encouraging,’ ‘instructing,’ or ‘inducing’ a patient from coming in for a check-up —since that check-up would result in a claim for health insurance benefits paid to the doctor.”
In her response, Brown argues against an injunction, saying the law “plainly survives as a measure and narrowly tailored tool to protect consumers” and that the law is a “modest, and constitutional, regulation of contractors.”
Gale Force, the state's response to the lawsuit continues, fails to show it is suffering an irreparable harm or financial losses and that the state and public “maintain an abiding interest in upholding a consumer protection law that addresses insurance fraud of a magnitude responsible for increasing premiums on homeowners across the state.”
In his injunction decision, Chief U.S. District Judge Mark Walker writes that the state has an interest in regulating contractors and protecting citizens from fraud and exploitation and how those acts affect the insurance market. The legislature, Walker writes, is well within its rights to address those concerns.
“But it must do so within the bounds set by the Constitution. Here, the legislature failed to do so.”
The Florida Department of Business and Professional Regulation did not respond to a request for comment, saying the department “does not comment on current or pending litigation.”
Jeremy Bailie, the St. Petersburg attorney representing Gale Force, says in an email that the state may appeal the preliminary injunction to the Eleventh Circuit Court of Appeals or wait until the final judgment is entered and then appeal.
Meanwhile, the state has asked and been granted an extension and has until Aug. 13 to respond. “We will know within the next month what it intends to do next,” Bailie says.