Citizens Property Insurance Corporation has accepted a $1 million settlement in a lawsuit in which defendants, a now-suspended Miami lawyer and the successor to his law firm, a public claims adjuster and a restoration company, were accused of fraud in hundreds of insurance claims.
Citizens, Florida's largest property insurer, initially sought $65 million from attorney Scot Strems and his co-defendants early on in the legal process. Officials have noted that the $1 million settlement will still help deter other bad actors in a Florida litigation environment that seems to be fraught with fraud.
Citizen's investigative unit began to investigate the Strems firm in 2016, after noticing suspicious patterns in claims and claims litigation. Investigators examined more than 5,000 claims and found that many of them followed a similar course. Most were filed within 45 days of a loss, many claims were filed at the same time, they were filed after the repairs had been completed and after an assignment of benefits agreement had been signed. The claims used the same plumber, water mitigation company, and adjusters were usually used. Some of the claims even involved boiler-plate plumbing invoices.
Citizens filed a lawsuit in 2020 alleging that the defendants had formed an illicit enterprise, all working together to defraud insurers, and in doing so violated state and federal anti-racketeering laws, creating false invoices, and inflating the cost of claims, mostly on non-weather water damage. According to the complaint, to begin the fraud, a Contender adjuster would promise a free home remodel to a homeowner, shed its public adjuster duties and begin to work for the enterprise to manufacture claims and damages. The adjusters would then convince homeowners to provide intake data and sign an agreement to help adjust the claims, when actually Contender, served as an unlawful law firm agent to solicit clients for the Strems firm and as a feeder to All Insurance Restoration Services.
The case was dismissed in late March when the settlement agreement was formalized. The $1 million settlement did not cover the insurer's extensive investigative and legal costs.
Editor's Note: This type of fraud is particularly egregious in the Florida property insurance landscape. The increasing number and severity of tropical storms and hurricanes have already been pushing property insurers to the limit. Paying out millions in fraudulent claims every year forces some smaller property insurance providers out of the business, and costs other insureds millions of dollars in premium increases.