A now-suspended Miami lawyer, along with his law firm’s successor, a public adjuster and restoration company, has agreed to pay a total of $1 million to settle a lawsuit filed by Citizens Property Insurance Corp. . who had accused the defendants of fraud in hundreds of insurance claims.
The settlement is far less than Citizens, Florida’s largest property insurer, originally requested from attorney Scot Strems and his co-defendants. But officials said it should help deter other bad actors in a fraud-ridden Florida court environment.
“This settlement certainly accomplishes what we set out to do, which was to seek justice for what we considered gross fraud and expose the threat of this type of activity,” said Joseph Theobald, senior director of the Citizens’ Special Investigations Unit.
The settlement, announced Thursday, is the latest development in what Florida insurers have called widespread and coordinated deception and exaggeration in assignment of benefits claims that have reportedly cost carriers millions of dollars. Citizens filed the lawsuit in 2020. It was around the same time that the Florida Bar decided to suspend Strems for violating numerous bar rules, including filing thousands of lawsuits against insurers, many of them for the same complaint. Strems’ suspension from training is due to end later this year.
Also named in the lawsuit and settlement are Contender Claims Consultants in Miami and its principal Guillermo Saavedra; and All Insurance Restoration Services and business leaders Cesar Guerrero and Derek Parsons.
Florida Chief Financial Officer Jimmy Patronis said the settlement and the investigations leading up to it were important.
“If this fraud had not been checked, it could have cost policyholders $16 million a year,” Patronis said in a statement. “As criminal investigations continue, this action sends a strong signal that if you defraud customers, we are going to find you and hold you accountable.”
Patronis did not say what it based the $16 million figure on, but a spokesperson for Citizens said the Strems law firm was responsible for $112 million in dubious claims and litigation filed from 2015 to 2020.
The Strems firm closed in 2020 and most of its lawyers formed a new firm known as The Property Advocates. An attorney for Strems and the new firm said Thursday the $1 million settlement pales in comparison to the $65 million Citizens demanded at the start of the legal proceedings and does not cover investigation costs. and justice of the insurer. The defendants agreed to settle in order to limit additional expenses and move on, said attorney William Schifino Jr., of Tampa.
“This is not a victory for citizens by any stretch of the imagination,” Schifino said.
He noted that during a hearing in 2021, Miami-Dade Circuit Judge Michael Hanzman, the same judge overseeing a billion-dollar settlement in the Champlain Towers condominium collapse, handed over into question the sagacity of the citizens to pursue the lawsuit.
“I strongly encourage citizens, before forcing taxpayers to fund this litigation much longer, to seriously explore a potential resolution, given the limited nature of funds that may be available as well as the legal impediments to this claim,” said the judge. said, according to an official transcript of the hearing that Schifino provided to the Insurance Journal.
Schifino said Citizens produced little evidence against its clients, despite months of work. “It was proving very costly for the citizens,” he said.
Citizens said his investigation unit began digging into the Strems company in 2016, after finding suspicious patterns in claims and claims litigation. Investigators sifted through more than 5,000 claims and found that many were following a similar path, explained Citizen Spokesperson Michael Peltier: Most were filed within 45 days of a claim; several applications were filed at the same time; the claims were filed after the repairs were completed and after an AOB agreement was signed; the same plumber, the same water mitigation company and the same fitter were generally used; and boilerplate plumbing bills were used in some cases.
Citizens sent about 400 cases to the Department of Financial Services’ Investigative and Forensic Services Division, which launched its own investigation. In 2020, Citizens continued its lawsuit, alleging the defendants had formed an illicit business, all working together to defraud insurers. The company violated federal and state racketeering laws, created false invoices and inflated the cost of claims, primarily for non-weather-related water damage, according to the suit.
The alleged fraud generally began with a Contender adjuster promising homeowners free renovations, the lawsuit’s 392-page amended complaint states. Once inside the house, “Contender relinquishes his duties as a public expert” and begins working for the company to file claims and damages.
“Competitor convinces owners to provide admission data and sign an agreement on a (computer) tablet to help them adjust their claims,” the complaint reads. “In truth, however, Contender serves as an illegal law firm agent to solicit clients for Strems Law Firm and a source for AIRS (All Insurance Restoration Services). The tablets point to hirestremslaw.com, which was designed to create agency agreements between owners and the Strems law firm, without any discussion with the law firm or a lawyer.
In responses to the complaint, the defendants denied any wrongdoing.
DFS’s own investigation of Strems, Contender Claims Consultants and another law firm appears to have made progress in recent years, despite the defendants’ lack of cooperation. Agency investigators subpoenaed the records of Contender and others, but the defendants refused to comply, according to court records. In 2021, a circuit court judge essentially ordered Contender to comply.
Then, in September of last year, DFS seemed to give up the pursuit of records. Agency officials said they could not discuss the reason, but said an investigation was still ongoing. Schifino said he was unaware of the DFS investigation and that DFS officials were unavailable Thursday night.
Citizen leaders did not say how the defendants in the civil lawsuit would share the burden of paying the million-dollar settlement, or whether it was paid. The case was closed in late March after the settlement was formalized, suggesting payment was made, Schifino said. It was unclear why the settlement had not been announced earlier.
The directors of the fitting business and the catering business and their attorneys could not be reached for comment on Thursday.
Lawsuits in Florida