Assignment of Benefits…Lots & Lots of Dots!

More and more, it seems, the enumerable and often disparate dots of Assignment of Benefits (AOB) are being connected. Both the commentary and the data calls from Insurance Consumer Advocate Sha’Ron James and Insurance Commissioner Kevin McCarty beg acknowledgement of a major cost driver and a growing willingness to attack it head on. (See NOTE #1 below).

The Florida Chamber of Commerce released a video for consumers that connects the dots between “shady operators…” and the “trial lawyers” they “..team up” with. Watch the short video here and after you do, send it far and wide.

More details are under analysis here at Johnson Strategies that also warrant your consideration– not only to buttress the hard data being gathered by regulators but, to rouse legislative action. Too many lawmakers have not connected enough dots to understand that Florida’s home insurance premiums are America’s highest, not because of hurricanes and reinsurance; but, from an impervious underbelly of fraud and those turning a blind eye.

First, consider these definitions:

RACKETEERINGThe practice of conducting or engaging in a racket, as extortion. A fraudulent scheme, enterprise, or activity; usually illegitimate enterprise made workable by bribery or intimidation. An easy and lucrative means of livelihood.

CONSPIRACY–Usually involves a group entering into an agreement to achieve some illicit or harmful objective.

It’s not my purpose to specifically accuse anyone of fraud, racketeering or conspiracy; though exposing the activities of those who’ve been accused, charged or convicted of it may appear to the contrary. Nor, is it my purpose to allege that those in the professions of those who commit fraud are all fraudsters. The names that appear herein are merely the outliers extracted from public documents. All innocent until proven guilty.

My intent is simply to reveal what’s out there, share my opinion, and let you make your own decision about who’s doing what to whom and, most importantly, why.

In my last report, “The Predators”, I revealed information (regulatory data and court decisions) on two outliers, The Strems Law Firm in Miami and Cohen & Battisti in Orlando, as examples of what I believe Governor Scott may have had in mind using the term “Predatory” during his inaugural address. In the court cases a judge accused Cohen & Battisti of filing “…meritless lawsuit[s]” and engaging in “…a fraudulent practice that [it] was well aware of and complicit in.”

Also, while it may shy away from using AOB or the courtroom, the Strems Law Firm is clearly not bashful about filing suits. According to fourteen(14) transmittal letters DFS provided, Scot Strems filed 448 lawsuits against 22 insurance companies, just since January. Including, 78 multiple lawsuits. “Multiples” are when more than one suit (usually two) is filed by the same policyholder against the same insurer.

I’ve queried DFS records again and found that since January of last year one lawyer, Scot Strems, has filed 2,057 individual lawsuits against insurance companies.

I swear I’m not making this up! See the DFS report here.

And from this data my researcher identified 223 “multiple” suits. Again, that’s when the same plaintiff sues the same insurer twice using the same law firm.

The full analysis can be viewed here where you can see the plaintiff’s name, the number of suits filed against the “same” insurer, the insurer, the restoration companies working with Strems and the date of all multiple suits; which are usually filed on the same day.

I’m sorry to say…there’s more.

You’ll also find plaintiff’s who filed three, even four, suits against the same insurer–a practice that, to my knowledge, doesn’t happen anywhere else in the world except at the Strems firm. Ana Galliani filed two suits against the same insurer twice–Southern Oak and Citizens. Osman & Antonia Mohammed filed three suits against American Integrity in less than ten days. Ana Abraham filed four suits against Homeowners Choice all on the same day! Ana Nunez filed three against American Security on the same day. Patsy Sehuweret did the same against Citizens. And, Bernardo & Monica Iriarte filed four against Citizens… all on the same day!

Lots of suits, lots of plaintiffs and lots and lots of dots! To help connect them all, and to learn more about the “why” underpinning virtually every AOB suit and so many “multiple” suits by Strems, read the white paper by Mark Delegal and Ashley Kalifeh regarding abuse of Florida’s attorney fee statute. (See NOTE #2 below)

Now, following up on sources in my last blog stating that Strems may have just brought in more attorneys, DFS also provided data on Greg Saldamando who may have been one of those hires. Just since April he’s filed an additional 241 suits (see DFS report here) and consistent with his bosses work plan, 30 of those were “doubles”. See that analysis here.

That’s a minimum of 2,298 lawsuits, including a total of 257 “multiples” filed by the same policyholder against the same insurer, from only two lawyers with the same firm; one of which didn’t really get started until seven months ago.

No matter who I talk to, including attorneys, I hear no reasonable explanation for so many multiple suits except the unprincipled gaming of the system described by FPIC in my last blog. (See NOTE#3 below).

Nor can I find much room to believe that discussions between the attorneys and remediators (“shady” operators?) fall outside the definitions of “Conspiracy” and “Racketeering” provided above. (See NOTE #4 below).

In fact, you remember my piece on “Operation Flames & Flood” titled “Conspiracies Abound.” I described “…an investigation into a monumental conspiracy involving far more than just two very bad public adjusters. A conspiracy that included “…Lawyers who, according to official affidavits, were not only aware of the scheme but who many times participated in ways beyond just filing suits.”

Hang in there while I provide some more dots to connect.

To determine which entities may have conspired with one another, especially attorneys, my research team analyzed 42 “Flood & Flames” incident reports provided by DFS and the Miami Dade State’s Attorney’s office. These instances of insurance fraud were rearranged in chronological order with participant names extracted and listed separately. Finally, and most pertinent, any reference to attorney involvement was isolated in footnotes and quoted verbatim.

You can read our full compilation titled “AOB Fraud & Public Adjusters” yourself. Or, get the gist with one example on page 7, “Incident #5”. Notice the footnote from the Confidential Informant (CI) regarding an Examination Under Oath (EUO) with attorney Kenneth Duboff of the Duboff Law Firm. I have no idea what was actually said, or how credible the statements are, but… here’s what appears in documents provided by the State’s Attorney’s office:

While at the EUO, Attorney Duboff said to Perdomo, “Don’t act nervous, if they (meaning insurance investigators) know you did this intentionally you’re going to have problems”. Perdomo replied, “No this wasn’t intentional, this was an accident”. Attorney Duboff then said, “Come on Felipe, I know everything Espinosa does along with his son, that’s why they hire me as a lawyer.” After the EUO was over, he went to Espinosa and told him that Attorney Duboff knew everything. Espinosa replied back, “Yes, that’s why we hire him, but he doesn’t know everything, just what we are doing.”

Again, this is just one quote excerpted from an arrest affidavit. Just dots that you can connect yourself, or not. For more you can review the entire list of fraudulent incidents excerpted by my team from the “Flood & Flames” arrest affidavits.

Of course, as I’ve been told many times, attorneys can often crouch behind plausible deniability. It’s not their fault that an insurance company didn’t pay a remediators invoice, no matter how inflated or unreasonable. It’s not the attorneys’ fault the remediator engaged in fraud to inflate the invoice; or, even created a loss where none existed. In fact, it isn’t even the attorneys fault when fraud occurs as a result of a seminar the attorney conducted helping remediators inflate their invoices.

When you look at the list of plaintiff firms crawling all over Citizens you can decide exactly whose deniability may be the most plausible. At the top of a list I was provided by a confidential source are the same names: Duboff, Morgan, Strems, Trujillo, Perez, Cohen, Battisti, and more. The top 25 hauled in $11.5 million in fees over just nine months. The remaining 136 firms only $3.5 for the same period. (See NOTE #5 below).

I’ve also received credible information showing the same water remediators are involved. So are the same plumbers. So are the same plumbing supply firms. And now, even air quality firms who invoice for certifying that the premises have been adequately dried by a wholly owned subsidiary. I’ve been given lots of names and dots to connect. All are in cahoots. And, the hub is always an attorney, a public adjuster or both.

In conclusion: for those with any wits, once you have the dots, connecting them is fairly rudimentary. Behind my “Library” tab above, under “Assignment of Benefits”, you’ll find every article, report, advertisement, video, white paper, court case and study I have regarding AOB; except for a few held in reserve for future blogs. Learn more by scanning the titles here.

And finally, I urge my loyal readers to continue sending me anything on AOB and lawsuit abuse so I can keep providing “lots of dots” to those as obsessed with connecting them as I am.

##end##

NOTE # 1: Read about the OIR’s data call and water losses in an article by the Insurance Journal, here. Both the ICA and the OIR have sent out data calls to carriers on AOB. Dating as far back as I can remember; to the early auto reform efforts in the early 1970’s, workers compensation in the early 80’s, to PIP and Sinkholes only a few years back, data calls have laid the ground work for meaningful reform by revealing the factors driving premium increases. In this case premium increases are being offset by welcomed declines in reinsurance costs due to no hurricanes in over a decade. Soon, that gap will erode and, with or without storms, premiums will once again be on the rise.

NOTE #2: Since the beginning of the AOB debate I’ve been looking for a more scholarly analysis than the one my laymens lens can provide on these pages. I found it in a white paper written by two prominent industry lawyers, Ashley Kalifeh and Mark Delegal. In their report titled “Restoring Balance in Insurance Litigation” they point fingers not just at the intentional misuse of AOB but, at the “one way” attorney’s fee language FS 627.428, which forces “… the insurer to pay grossly inflated costs or risk even higher litigation costs.”

Delegal and Kalifeh’s answer is for the legislature to amend the attorney fee statute to protect policyholders as it was intended. The policyholder retains the right to assign benefits but, the service providers with AOB contracts are no longer in the hunt for windfall profits available from meritless lawsuits.

The data provided by Kalifeh and Delegal is compelling and traces the origins of the issue as well as identifying the top law firms, Glass repair entities, and a case study on how AOB and the attorney fee statute impacted the need to reform PIP. Read it here.

NOTE # 3: Because it was sued more by the Strems firm than any other private carrier, I asked several questions of Florida Peninsula and received the following response(s):

“We are very familiar with the Strems firm. On Monday, I received (13) new suits from this firm. The firm is more a manufacturing plant than law firm. He appears to use claims consultants and PA’s as feeders to his operation. I would describe Strems as a venture capitalist disguised as a lawyer. As you pointed out, his firm frequently files more than one suit on behalf of an individual insured. In my opinion, he does this to be a nibbler of the apple rather than to take the whole apple. In other words, he is content with two small bites which entice a carrier to pay versus a big bite which a carrier is more resistant to settle. The end result is when the two or three small bites are added up, he has a good return on investment while still staying underneath the radar.”

So, how does the Strems firm acquire so many double lawsuits?

“It is very common for one of his ‘feeders’ to arrive on the scene to investigate a purported water loss from a plumbing leak, look around the property and perhaps identify a stain on the ceiling, and then report a roof leak as well. Both will be reported on the same day, but given different dates of loss. That is the primary basis of what I have referred to as the nibbler approach”.

And finally:

“To date, the Strems firm has not been a major player in the AOB arena. Instead, they have chosen to focus on actual or alleged water losses. At present, we have (126) open law suits from the firm. Only (1) of them is an AOB suit. We conduct EUO’s on many of the Strems claims before they get to suit. The firm makes every effort to stall those, or not show up by creating some excuse or illness.   Historically, the firm has not tried any cases. However, I believe they have recently hired some new attorneys in recognition they were ill equipped to truly lawyer a case from start to finish.”

NOTE #4 : At the end of our compilation you’ll find the remediation firms appearing on the SOP report from DFS for the Strems firm for the period of 1/1/14 to 10/1/15. They are: Dry Solutions Express Corp (3 suits against Citizens); All Insurance Restorations, Inc (3 suits against Citizens); On The Go Restorations, Inc; Dry Force Restorations (4 suits against Citizens), and; Restoration 1 of Miami (2 suits against Geovera Specialty).

NOTE #5: I requested a list of every opposing law firm from Citizens and the most recent data on fees that each has been paid. There are numerous hurdles to overcome in complying with this request, not the least of which is determining which lawyer works for which firm. Citizens worked hard to provide me the list but was not able to do so in time for this blog. So, I went with another list received from a protected source for a nine month period beginning January 1, 2013. Even though it’s for 2013 I believe it’s accurate for the time period upon which it was based and another good “dot” you can connect to the present. Citizens did not confirm or deny its accuracy. If and when I receive an update from Citizens I will replace this 2013 report.

Speak Your Mind