Pressure may be mounting on Florida’s Citizens Property Insurance Corp. to reduce its use of state-agency arbitration for claims disputes, following new class-action lawsuits, court rulings and national news reports suggesting the alternative dispute resolution avenue is proving to be a dead end for policyholders.
ProPublica, a nonprofit news organization, reported Monday that the state-created Citizens has won more than 90% of the 1,500 cases it has sent to the Florida Division of Administrative Hearings (DOAH), a state agency that until 2023 mostly heard disputes between businesses and other state agencies. That’s a win rate almost double what Citizens sees in court-based litigation, the news site noted.
The ProPublica news article followed demands by U.S. Rep. Maxwell Frost, D-Orlando, for an investigation into the genesis of a 2023 state law that confirmed Citizens’ authority to move claims disputes to DOAH. Of the 29 Citizens cases Frost’s office examined, DOAH administrative law judges ruled in favor of the insurer in 20 cases, while the other 9 cases were withdrawn, Florida Politics news site reported.
An Insurance Journal review of recent Citizens claims disputes at DOAH shows that in recent weeks a different story has emerged. In August of this year, 115 Citizens cases were closed at DOAH. Only three of those reached a final arbitration award – all in favor of Citizens.
Almost all of the remaining 112 cases were settled, dropped, or were dismissed, with the petitioner’s agreement, DOAH’s online records show.
The DOAH data does not show the final settlement dollar amounts, and that is usually considered confidential. But attorneys representing the insureds in some of those cases said the settlements or acceptance of Citizens’ offers usually amount to little more than $250 per claimant. And most insureds have come to accept that, fearing they will be forced to pay thousands in attorney fees if Citizens Corp. prevails at a DOAH hearing or on appeal.
So, even when a DOAH case “settles,” it’s really a win for Citizens, attorneys said. As more cases have gone in favor of Citizens, more claimants seem to be opting for a paltry settlement.
“That’s why so many attorneys don’t want to touch these Citizens cases now,” said Robert Jameson, a policyholder attorney in Jacksonville whose firm has handled several claims disputes heard by DOAH.
Data compiled by south Florida plaintiffs’ attorney Michael Fischetti suggests that, of 37 DOAH cases concluded between September 2024 and April of this year, all were decided in favor of Citizens. And attorney fees were awarded to Citizens in 26 of those cases, forcing the policyholder to pay significant amounts.
The DOAH case website does not provide the claimants’ complaints, but does show Citizens’ arguments in its requests for arbitration hearings. In many examples, Citizens made arguments similar to what primary market insurers have made through the years: Inspections showed the damage was due to wear and tear of roof shingles, not from a windstorm; the loss was from flooding, not from wind and was not covered by the policy; that leaking appliances were excluded from coverage; that pooly maintained and longterm plumbing leaks are not covered; and that the damage was below the homeowners’ deductible.
DOAH officials could not be reached and Citizens’ officials declined to comment on specific cases. “The DOAH process offers a fair and efficient venue for settling disputed claims and the statute that specifically authorizes Citizens to use DOAH is constitutional,” Citizens’ Michael Peltier said in a statement.
Others familiar with the arbitration proceedings have said that many of the property insurance claims sent to DOAH are not compelling, sometimes lack documentation, were for losses that were clearly not covered by Citizens’ policies, or the petitioner’s lawyer did not show for a hearing.
Plaintiffs’ lawyers said the DOAH judges move cases too quickly and have been too quick to accept Citizens’ side of the story. Geniune disagreement can exist over the cause of leaks, for example. In one case, Citizens’ own expert engineer testified that relatively new roof shingles could have been lifted by a windstorm, allowing water to seep in, then re-sealed themselves in the hot sun before an inspection was made. Still, the administrative law judge held in favor of Citizens, said attorney Lynn Brauer, who has represented a number of clients in DOAH proceedings.
In the three cases decided by DOAH judges in August, Citizens’ expert witnesses said that the claimed damage could not have been caused by wind. In Hugo Garcia vs. Citizens, a Citizens inspection found that roof damage was due to foot traffic on the roof, as well as the effects of gravity and improper installation of the roof tiles. SDII Engineering, a reputable firm based in Tampa, provided the report for the insurer.
Garcia’s attorney argued that the decision was premature because the insured had requested an appraisal panel to review the value of the loss. He, like the lawyers in many other DOAH/Citizens cases, also asked the judge to pause the case while other litigation challenging the constitutionality of the DOAH arbitration continues. Two proposed class actions were also filed in recent weeks.
On the day of Garcia’s DOAH hearing, the claimants and their lawyer did not appear. Garcia’s attorney, Vyacheslav Borshchukov, avoided the hearing because he felt the case should have been suspended while the constitutionality question is pending, his office manager told Insurance Journal. The DOAH judge proceeded with a final arbitration award anyway.
“Petitioners offered no evidence and did not meet their initial burden to prove that the property suffered a direct physical loss during the policy period,” DOAH Judge Michael Billmeier Jr. wrote in the decision. “Thus, the loss is not covered by the policy and the amount of policy benefits payable on this insurance claim is zero dollars.”
Borshchukov also represented the claimant in another case decided in August – Rosalind Gonzalez vs. Citizens. The lawyer and his client did not make the hearing because of a scheduling conflict, Borshchukov’s office manager said. The DOAH judge proceeded anyway.
In a third case with a final award, the judge noted that the petitioner had failed to respond to discovery requests and could not meet the burden of proof. She awarded zero dollars on the claim.
Citizens’ staff and leadership have said the DOAH route was a smart innovation that has sped up claims resolutions and has saved thousands in legal fees. But Citizens, without shareholders and without a profit incentive, has also raised questions about why the insurer seems so zealous in defending claims and sending cases to a state agency arbitration.
“Well, wouldn’t you, if you had home-court advantage on all your cases?” attorney Brauer asked.
Citizens officials declined to comment on its practice of vigorously defending claims disputes. In June, Citizens staff reported that the average legal spend per DOAH case was $8,384, about 60% less than the average cost of cases that are heard in state courts. Corporation leaders have said in recent years that they have a duty to reduce expenses and avoid an emergency assessment on Florida policyholders.
And a few Citizens’ board of governors members have complained that “clickbait” national news reports questioning Citizens’ claims practices have generally missed the mark, failing to understand that some flood claims are not covered and many claims fall below the insured’s deductible level, and that Citizens often must deny a flood claim before a property owner can file a claim with the National Flood Insurance Program.