The state-run Citizens Property Insurance Corp. is suing a law firm recently identified by the Florida Bar as a serial bad actor in insurance litigation, arguing that multiple defendants’ conduct led to millions of dollars in losses for Citizens.
Citizens this week filed the claim in the Second Judicial Circuit in Leon County against attorney Scot Strems, his firm Contender Claims Consultants Inc., All Insurance Restoration Services Inc. and other individuals. The insurance company, which was set up by the state legislature as the property insurer of last resort, is asking for damages exceeding $30,000, not including lawyers’ fees, interests and other costs.
“This case arises from the conspiracy of the defendants to defraud Citizens into paying for sham first-party property insurance claims,” the complaint states.
The Florida Supreme Court last week signed off on an emergency order suspending Strems, whose law firm is based in Coral Gables, from practicing law. The Florida Bar’s petition for that suspension argued there was clear and convincing evidence that the law firm had done widespread public harm as it engaged in a pattern of serial litigation and fraudulent conduct, with the monetary costs ultimately picked up by Florida homeowners.
Citizens spokesman Michael Peltier said the company had to counter abusive legal actions to ensure it could operate effectively on behalf of consumers.
“This lawsuit is about what we contend are concerted actions by the defendants to abuse the claims process for their own gain, and to the detriment of both Citizens and our policyholders," Peltier told the Florida Record in an email. "These abuses have made it virtually impossible for Citizens to handle claims efficiently and effectively. We believe we had no choice but to file this suit to address the costs of these abuses that are shouldered by all Citizens policyholders through higher premiums.”
The alleged home repair scheme began in 2014 when Contender Claims Consultants portrayed itself as a public adjusting company, allowing it to present homeowners with contingency fee agreements for Strems’ law firm, according to the lawsuit. The company’s role would next evolve into “loss consultants,” Citizens argues.
“The defendants then referred the business to one another, securing each other’s involvement in thousands of first-party property claims – often without full disclosure to, or knowledge by, the insureds,” the lawsuit said.
The insurance company said in the filing that the defendants regularly discarded building materials that should have been safeguarded so that Citizens investigators could examine them. The defendants also obstructed the insurance investigators’ ability to gain in-person contact with policyholders, the claim says.
And many of the defendants’ lawsuits duplicated other legal actions filed for the same event, Citizens said.
“This conduct resulted in great harm to Citizens, which was compelled to defend this often-spurious litigation brought in bad faith,” the lawsuit states.
Strems' attorney did not immediately respond to a request for comment.