Citizens Property alleges law firm's actions amount to racketeering

Florida’s public insurance firm of last resort accused a law firm’s schemes with a public adjusting company and restoration company for causing it to lose millions of dollars.

Citizens Property Insurance Corp. filed a civil complaint that alleges a “pattern of racketeering activity in violation of [the Racketeer Influenced and Corrupt Organizations Act] RICO,” Insurance Journal reported.

The Florida Bar filed a petition with the Florida Supreme Court against Scot Strems that led to an emergency suspension order of his law license, Insurance Journal reported. Thousands of lawsuits have been filed against insurance companies by Strems and his firm. The Florida Bar alleged they engaged “mendacious, bad-faith conduct” and are “causing great public harm.”

Strems denied the bar’s claims through his attorney, Insurance Journal reported.

Citizens civil complaint against Strems and Fort Lauderdale-based The Strems Law Firm also included as defendants All Insurance Restoration Services (AIRS) of Miami, its president Cesar I. Guerrero, and its operations manager Derek Parsons, and; public adjuster Guillermo Saavedra and his public adjusting firm Contender Claims Consultants (CCC) of South Miami.

“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," Citizens spokesperson Michael Peltier told Insurance Journal. “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 complaint was filed in the Second Judicial Circuit Court for Leon County, Florida, on June 16. It alleges the defendants acted in concert and individually to defraud Citizens into paying for “sham first-party property insurance claims,” Insurance Journal reported.

Citizens’ claim alleges the scheme began in 2014 and the insurer discovered it in 2019.

The Florida insurer alleges in the scheme the adjusters get homeowners to sign contingency fee agreements that don’t necessarily let them know they agreed to legal representation. Those adjusters get retained as “loss consultants,” a move allegedly meant to avoid limitations on the adjusters’ recovery, also having them getting fees paid through litigation costs. In the process homeowners allegedly get convinced to sign assignment of benefits contracts, Insurance Journal reported. These actions often occur without the homeowner understanding what is happening.

Working together, Strems, AIRS and CCC refer 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,” according to the complaint.

In addition, Citizens alleges Strems and the other defendants have actively impeded investigations into claims and prevented direct contact with insured parties, Insurance Journal said. The law firm filed multiple lawsuits for the same damages or event also, Citizens said.

“The unlawful actions of defendants, and each of them, have directly and proximately caused and continue to cause injuries to Citizens in its business,” the complaint states, Insurance Journal reported.