Federal Class Action Hinges on Retroactivity of Insurance Statute

Can a statutory amendment confer standing on putative class representatives who lacked standing prior to the amendment? The Eleventh Circuit recently certified a narrow version of this question to the Florida Supreme Court in Atkinson v. Wal-Mart Stores, Inc., 2009 WL 3320322 (11th Cir. Oct. 16, 2009).

Generally, insurance statutes are not retroactive. See, e.g., Moore v. United Servs. Auto. Ass'n, 808 F.2d 1147, 1153 (5th Cir. 1987) (finding that Florida’s “anti-stacking” statute was curative, rather than amendatory, and thus applied prospectively, not retroactively). However, if the statute is merely procedural, there may be grounds for retroactive application. See, e.g., Metro Transp. Co. v. North Star Reinsurance Co. 912 F.2d 672, 683 (3d Cir. 1990) (finding that, although a statute can operate retroactively when it “does not change or affect any substantive rights of litigants,” a Philadelphia insurance statute could not be applied retroactively when it would effectively eliminate any right to recovery).

At issue in Atkinson is Section 627.404(4) of the Florida Statutes. In July 2008, the Florida Legislature added a provision to that section giving an insured or his or her personal representative a private right of action to sue for benefits paid under an insurance contract procured by a party lacking an “insurable interest” in the insured. The trial court in Atkinson refused to apply the amended version because “[a]ll relevant events occurred prior to January 2000” and because there was no legislative intent supporting retroactive application. See Atkinson v. Wal-Mart Stores, Inc., 8:08-cv-000691, Order at 6 n.7 (M.D. Fla. May 26, 2009). The court dismissed the action for lack of standing. The plaintiffs appealed, and the Eleventh Circuit lobbed the issue to the Florida Supreme Court.

The Florida Supreme Court’s eventual decision could influence other cases grounded on insurance statutes that were enacted or amended after the events giving rise to the claims.