The CEO of state-owned Citizens Property Insurance Corp. on Wednesday lashed out at criticism over over the company’s use of an alternative arbitration panel to decide claims disputes. He called accusations of unfairness an effort by some plaintiffs attorneys to overturn reforms that have returned profitability to Florida’s property insurance industry.
But Tim Cerio, Citizens president and CEO, spent little time discussing a key accusation that the process violates policyholders’ constitutional right to have a jury determine resolution of their disputes. That claim, in a lawsuit by a policyholder whose dispute was sent to the panel, caused a Hillsborough County circuit court judge to issue an injunction in July preventing the company from using the process while the case proceeds.
In a 30-minute discussion during Wednesday’s meeting of the Citizens’ Board of Governors, Cerio defended the company’s use of arbitrators who work for the state’s Division of Administrative Hearings to decide disputes over the company’s coverage of damage claims.
Critics have alleged that the system is unfair because new and renewing Citizens policyholders are given no choice but to participate when seeking coverage from the so-called insurer of last resort. They also accuse DOAH judges of ruling in Citizens’ favor in more than 90% of cases that advance to a final hearing because Citizens pays their salaries.
Last December, the company’s Board of Governors approved a contract that calls for the company to spend up to $19.3 million to fund the program through 2027.
Cerio on Wednesday called the accusations that the judges are biased “a disingenuous and unprofessional narrative that completely ignores the history and practice of DOAH,” a system that has operated in the state for 50 years, resolving disputes for a myriad of governmental entities. He added that all government entities that use DOAH must pay for the service.
“Recent attacks on the fairness of DOAH are simply one part of a larger strategy to undermine the legitimacy of the insurance reforms that without question brought Florida’s property insurance market back from the brink of collapse.”
In 2023, the state Legislature allowed Citizens to require new and renewing policyholders to accept a policy rider that gives either Citizens or its policyholders the right to require claim disputes be sent to DOAH. Under the law, Citizens is the only insurer that can require policyholders to accept the rider while providing no premium discount or other benefit in exchange.
Since 2024, the company has referred 1,661 cases to DOAH, according to the division’s website. No policyholder has requested a DOAH hearing, according to the site.
Cerio pointed out that the number amounts to 1% of all claims filed by Citizens policyholders.
Of the cases referred to DOAH, Citizens reversed its initial rejection or underpayment of the claim and “cut a check to the policyholder,” Cerio said. In 52% of the cases, “the plaintiffs’ lawyer dropped their claims before reaching the final hearing stage,” he said, “settling for nothing or a nominal sum.”
Plaintiffs attorneys have said that Citizens typically extends “offers of judgment” of $250 or $500 to settle cases. Plaintiffs who reject the offers open themselves up to rulings requiring them to pay Citizens’ court costs if they lose at a hearing or even if they withdraw their claims prior to their hearings, critics contend.
In a July 10 report, the South Florida Sun Sentinel found that Citizens won 47 of 51 cases that had so far advanced to a final hearing.
Cerio focused on 45 cases that advanced to hearings between Jan. 2 and June 2 as identified in a recent letter by Rep. Maxwell Frost that seeks information about Citizens’ use of the DOAH process.
Cerio said, “In 25 of the 45 cases, we identified the claim was withdrawn by the insured or counsel, or counsel appeared at the final hearing and unbelievably just decided not to participate or didn’t offer any evidence; refused to participate.”
In those cases, Citizens was awarded a win and many of the plaintiffs were assessed court costs. Citizens won on the merits in the other 20 cases that proceeded to hearings, Cerio said. He invited reviews of those 20 cases “to figure out which ones were … supposedly wrongly decided.”
Cerio said the withdrawals or refusals to participate were not the fault of Citizens or the DOAH judges. The conduct, “at best, is a late realization that the claim lacks merit or at worst, frankly, it’s conduct amounting to malpractice.”
In June, Rene Delombard, a member of the Florida Justice Association, a trade organization for plaintiffs attorneys, told the Sun Sentinel that Citizens won’t allow policyholders who reject one of the $250 or $500 offers of judgment to withdraw their claims prior to a scheduled hearing.
An attorney for a policyholder who wants to withdraw should be able to call Citizens and say, “Hey, my client wants out,” Delombard said at the time. He said that Citizens responds, “‘No, that’s not on the table anymore. It expired. Do what you got to do, you can file your dismissal. We’re still going to the final hearing.’ And they’ll do it. And they’ll get their win.”
Cerio blamed the controversy over DOAH on “misinformation” by “certain plaintiffs attorneys and plaintiffs groups” who have made “sweeping claims of unfairness and even bias in the process.”
Those accusations, he said, “are simply part of a larger strategy to undermine the legitimacy of the [2022 and 2023] insurance reforms that have without question brought Florida’s insurance market back from the brink of collapse.”
Cerio did not name the plaintiffs attorneys he accused of trying to undermine the effectiveness of the company’s use of the arbitration panel. He said his “comments and criticism are directed toward the attorneys who have really engaged in frivolous and fraudulent litigation” who “drove up policyholder premiums and helped create Florida’s insurance crisis.”
DOAH cases are required to be resolved in 90 days or less, Cerio said, adding that cases in state court can take “two to three years” and generate far more in legal fees for plaintiffs attorneys.
By challenging the reforms, including DOAH, the plaintiffs attorneys seek to “undo all the good work that’s been done.”
If the reforms are overturned, he said, “we will return to the days of double-digit insurance increases, private insurers will reduce business or leave the state, and we will again, as a company, Citizens will grow again to well over a million policies.” As of Aug. 31, Citizens had 771,916 policies, according to information displayed during Wednesday’s meeting.
Citizens’ use of the panel has been on hold since August, when a Hillsborough County circuit judge agreed with a plaintiff’s claim that the process was unconstitutional and issued an injunction barring future DOAH cases until the plaintiff’s claim is resolved. Citizens has appealed the injunction but no decision has been made by the 2nd District Court of Appeal.
Cerio said that the Hillsborough case is so far the only one of more than 100 constitutional challenges raised against the DOAH process that has been allowed to proceed.
He stopped short of discussing the merits of the case when asked by a member of the Board of Governors, saying “we’re still litigating it.”
“We do believe that the statute expressly authorizing the resolution of claims through DOAH is constitutional,” Cerio said. “And we will believe it does provide a well established, impartial, and efficient process for resolving the disputes of policyholders who no longer must wait two to three years for a decision on their claim.”
Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071 or by email at rhurtibise@sunsentinel.com.
