Three companies accused by Citizens Property Insurance Corp. of fraudulently increasing property damage claims amounts over multiple years have agreed to pay Citizens $1 million to settle a lawsuit.
The companies – Strems Law Firm; Contender Claims Consultants, a public adjusting firm; and All Insurance Restoration Services – finalized the settlement back in March, but it wasn’t announced until last week. In agreeing to settle the lawsuit Citizens filed in 2020, all three denied any wrongdoing.
The settlement comes in the wake of investigations by Chief Financial Officer Jimmy Patronis’ office into alleged business collusion to carry out property insurance fraud. Patronis announced the Citizens legal settlement last week in Tampa.
“The settlement is significant in that it shut down a network that we allege was filing bogus and inflated claims,” Citizens’ spokesman, Michael Peltier, told the Florida Record in an email. “Such actions will deter others.”
Citizens, which was created by the state Legislature, will continue working to root out fraud stemming from abusive litigation and the gaming of the insurance claims system, according to Peltier.
“As the state-created insurer of last resort, Citizens is committed to paying legitimate claims while doing its best to ferret out fraud and abuse,” he said. “We owe it to our policyholders and Floridians who are ultimately on the financial hook for the losses we incur.”
Citizens’ initial legal complaint against the firms said they created false invoices and used other means to inflate the costs of many non-weather water-loss claims submitted to Citizens and other insurers in Florida, according to a Citizens news release.
“Citizens and our (Division of Investigative and Forensic Services) investigators combed through 400 different cases, and it became clear that Miami-based Strems Law Firm was a major player in the fraud,” Patronis said in a prepared statement on May 12. “Had this fraud been left unchecked, it could have cost policyholders $16 million a year.”
The Strems Firm’s principal, Scot Strems, was suspended from practice for two years by the state Supreme Court, with additional legal actions pending, according to Citizens.
In the settlement, Citizens agreed to dismiss the case in return for the $1 million payout. All the parties involved agreed to pay their own legal costs to settle the lawsuit. The settlement announcement came as lawmakers prepare for next week’s special session of the Legislature to stem the tide of insolvencies and financial losses in the state’s property insurance industry.