Assignment of Benefits…the predators!

Despite Governor Scott’s inaugural pledge that “…we WILL NOT ALLOW a small group of predatory lawyers to stalk the business community in search of deep pockets…”, it appears that’s exactly what’s happening. (See NOTE #1 below)

At least with respect to residential property insurers a number of law firms seem to be working with way too many willing emergency remediators and “recruiters” in a massive “…litigation for profit scheme.” Citizens, in particular, is being overrun.

Citizens president Barry Gilway:

“Every time an attorney or public adjuster gets involved in these claims the costs sky rocket – that’s the bottom line.”

During the House Insurance Sub-committee workshop on Assignment of Benefits (AOB),   Representative Bill Hager and Representative David Santiago shared their concerns regarding abuse of the elderly and the role lawyers play in AOB. Their comments were just complemented a few weeks back by a presentation to the same committee from Florida’s new Insurance Consumer Advocate, Sha’Ron James. (See NOTE #2 below).

It was all this that prompted me to learn more about the role lawyers may have in what I believe to be a monumental insurance crisis.

I quickly found remarkable consistency between private carriers and Citizens. According to Citizens report on the top ten law firms with currently “pending” lawsuits (See NOTE #3 below),  it comes up against the same firms as private carriers: Cohen & Battisti, (See NOTE #4 below), Trujillo Vargas Ortiz & Gonzalez, Morgan Law Group, the Duboff Law Firm, and more.

This includes Citizens dominant front runner, The Strems Law Firm. Review the top ten list for Citizens here and you’ll see the Strems firm overshadows all others with 737 “pending” suits; just against Citizens. That’s 245 more than the second place firm.

For all carriers I went to the Department of Financial Services (DFS) and was given a transmittal letter from the Strems firm dated August 21, 2015 for Service of Process (SOP) related to the filing of 72 lawsuits statewide.

I thought that was bad.  Until I was shown another Strems transmittal letter just two weeks prior with another fifty (50) lawsuits–a total of 122 lawsuits in less than a month, all from one firm.

It gets better!

Assuming I counted correctly, DFS has a total of 14 Strems letters totaling 448 lawsuits filed against 22 insurance companies, just since January.

Please don’t trust me on this! Check it yourself by reviewing each of the 14 Strems transmittal letters on file at DFS, hereBUT… 

…look at the list of suits on each of the Strems letters closely. Notice anything unusual?

Of the 448 total lawsuits Strems has filed this year, 78 are doubles–meaning that the same policyholder filed two separate lawsuits for two separate claims against the same insurer…78 times!!!

I’ve never heard of that before and was told by those who’ve heard it a lot that “it doesn’t happen anywhere else in the world!”

A total of 218 lawsuits by Strems were filed against Citizens alone and 35 of those were “doubles”.

For private carrier results I started at the top with Florida Peninsula, with 41 Strems suits (second only to Citizens) 8 of which were doubles. I also contacted American Integrity Insurance Company (AIIC) for information on claim inflation.

Florida Peninsula:

“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 this from Florida Peninsula:

“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.”

My next task was to get a handle on “potential” claim inflation for the suits filed by the Strems firm against private carriers. I specifically asked for a comparison between the insurer estimate and the invoiced amount from AIIC which had six (6) pending Strems claims totaling nearly a quarter of a million dollars; exceeding the carrier estimate by a total of $176,819.78.  You can see a complete breakdown using the AIIC data here.

Don’t forget, these suits reputedly settle with attorney fee’s averaging around $5,000, give or take. If that’s true, and Strems has filed 448 lawsuits, it could’ve raked in close to $2.24 million so far this year without even going to court. Again, that’s assuming the average is accurate and assuming only 448 suits. (See NOTE #5 below)

But… Strems is far from alone in this.

The firm mentioned most often during legislative workshops and at the top of Citizens AOB list is Cohen & Battisti. (See NOTE #6 below).

For a handle on its modus operandi, here are two court decisions specifically on point.

CASE #1: In NextGen vs Homeowners Choice Circuit Judge, Michelle Sisco, said Cohen & Battisti’s suit “…set in motion a SCHEME intended to perpetrate a FRAUD upon the Court.” And: “Even after being put on notice before instituting this lawsuit that there were problems with its invoices, Plaintiff persisted in pursuing a claim for damages which it knew it was not entitled to receive.”

And, in lockstep with opinions expressed here about fraudulent invoices, and the “Insider Secrets” document presented during the AOB hearings, the judge stated “…it is obvious that Plaintiff was simply doctoring its invoice to achieve its goals…”

CASE #2: In Spring Hill Builders vs State Farm, County Judge John Moran ordered Cohen & Battisti to pay State Farms attorney fee’s, court costs and expert witness fee’s totaling $108,337.72.

Ouch!

Judge Moran wrote “Cohen & Battisti was 100% responsible for filing this meritless lawsuit.” and “…plaintiff…never even reviewed the Complaint before Cohen & Battisti filed the suit.” And…“Even if the court did not find it appropriate to award fees…it would assess attorneys’ fees on the basis of Cohen Battisti’s continued bad conduct throughout the course of this litigation.”

Judge Moran explained that the plaintiff would “…submit bills to Cohen Battisti for roof repairs then submit another bill…certifying it was done correctly, in essence charging the defendants for approving his own work. THIS WAS CLEARLY A FRAUDULENT PRACTICE THAT COHEN & BATTISTI WAS WELL AWARE OF AND COMPLICIT IN.” [emphasis added].

Please read this case. In fact, I double-dog-dare you to read it! In terms I could never express within these pages, it shows how our legal system is being abused by firms the Governor surely had in mind when he used the word “predatory”.

My prayer is that, during next year’s legislative hearings, a lawmaker will read excerpts of this and other cases like it. Nice and loud. So every TV camera can pick it up and so everyone can hear.

CONCLUSION: These court cases, and the information from Citizens and DFS prove that the problem isn’t just AOB and crooked remediators, roofers and public adjusters.

We should applaud the efforts of Governor Scott, ICA Sha’Ron James, Representative’s Hager and Santiago and Senator Dorothy Hukill, and all the lawmakers who sponsored or supported last year’s reform attempt. They need our help.

As both the data and the court cases show, the “predators” will stop at nothing!

##end##

NOTE #1: During his swearing in ceremony Governor Scott’s inaugural presentation included the following statement: “…we will not allow excessive lawsuits to strangle job creation. And we WILL NOT ALLOW a small group of predatory lawyers to stalk the business community in search of deep pockets. In the absence of serious tort reform, Florida will lose opportunities for job growth. No special interest group can be allowed to triumph over the goal of full employment.” Frivolous suits against property insurers is the single greatest driver of personal insurance costs; which affects employee’s relocating to Florida. Thus, it is a material impediment to job growth. Abuse is particularly acute in Southeast Florida, particularly Dade County which is the desired venue for many foreign corporations, especially those from South America.

NOTE #2: Representative David Santiago (R-Deltona) shared a tale of AOB horror for one of his elderly constituents. You can listen beginning at 1:18:57 here. Representative Bill Hager (R-Boca Raton) held up a flyer from the Cohen & Battisti law firm touting “Insider Secrets”. Listen beginning at 1:24:56 here. And, during a recent House Insurance & Banking Sub-committee meeting Florida’s new Insurance Consumer Advocate (ICA), Sha’Ron James, declared that AOB will be her top priority during the next legislative session. You can see her presentation here beginning at 6:56.

NOTE #3: Some have asked what period of time applies for the Citizens top ten opposing lawsuits and law firms. Remember, these are “pending” lawsuits, not those that have been filed and adjudicated or settled, only those currently active on the day the report was produced.

NOTE #4: With the help of Jayme Buchanan and her firm, Cohen & Battisti, United Water Restoration has filed 257 lawsuits against a wide array of insurers in 2013/14. Among those only 3 consumers were represented out of the 980 AOB suits she personally filed from 2013-2014. That’s a total of nearly 2 a day and 72% of the time, about once every work day, Buchanan sues an insurer for building, construction, or emergency repairs. See DFS report here.

NOTE #5: As always, I promise to print any response or commentary either The Strems Firm or Cohen & Battisti wishes to provide regarding any of this. I will do so without shortening and with no edits whatsoever.

NOTE #6: Though The Strems Law Firm is the leader overall in lawsuits against Citizens, according to this chart from Citizens of pending suits for property losses only, Cohen & Battisti is number one for Burglary & Vandalism law suits. Number one for Sinkhole law suits. Number one for Water law suits (triple that of the second place firm). And, number one for Roof Leaks and the “All Other” loss category. Cohen & Battisti is a close second in filing wind related suits against Citizens as well. Again, these are “pending” suits at the time the chart was constructed.

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