Collapse of an Evil Empire! PART VI—The Sentence

Among those I’ve informally polled there’s a strong sense of disappointment, mixed with very little surprise that referee Dawn Denaro did not accede to the Florida Bar’s request to permanently disbar Scot Strems for his very bad behavior.  Instead she recommended that his license be suspended for two years, followed by one year of supervised probation.

Some have told me it could be a death sentence. Other’s called it a slap on the wrist.  I say… “Strems troubles are far from over!”

First, The Trial–Strems’ trial lasted from September 8, 2020 through September 16, 2020.  The Referee’s Oral Ruling on Liability was rendered on September 23rd and on September 24th a Sanctions Hearing was held with a final report from Judge Denaro released October 8th. It’s available in my online library here.  I’ve been in contact with the Florida Bar to gain as much clarification as possible and to be as accurate as I can in reporting on this case. It does not comment on pending litigation.  However, it did offer clarifications and pointed me to information available on its website regarding the overall process for disciplining a lawyer. It excerpted some steps as applicable in this case.  You can read the entire email exchange yourself here.

It’s possible, but… not likely the Supreme Court would disagree with its own referee’s recommendation and impose “permanent disbarment” as requested by the Bar. Besides, and to her credit, Judge Denaro had a difficult job which she conscientiously undertook following the letter of the law to which she is bound.

Twenty total witnesses appeared, fourteen called by one or more of Strems five attorneys—one a highly credentialed expert and former member of Florida’s House of Representatives, Bill Hager, who was paid $20,000 for testimony revealing that homeowner claims and remediator claims “…are separate and independent “ and AOB claims are “common and lawful.” (See NOTE #1 below)

As I’ve shared several times in this series, affidavits from judges, particularly Barbas and Holder, were especially damning to Strems, especially regarding the breadth of what’s been going on. Their testimony was not only credible but, in my opinion, largely responsible for the actions against Strems having been undertaken in the first place.

Anyway, except for the remote possibility the Supreme Court would modify Denaro’s recommendation, this trial is done—Strems guilt is a fait accompli for violation of 11 Florida Bar Rules of Conduct. (See NOTE #2 below)

The Consumer Protection Coalition (CPC) had a positive outlook, calling the two year suspension “a victory for consumers who have been harmed by his law firm and for taxpayers who ultimately foot the bill for his firm’s outrageous litigation-for-profit schemes and systematic disregard for judicial procedures across Florida.”  According to the Insurance Journal the CPC also felt Denaro’s findings would serve as a warning “for other trial bar firms across the state ‘whose business model is also to solicit unsuspecting homeowners and file thousands of often questionable lawsuits to drive up their attorney fees’.

Much More to Come–We should all keep in mind, it’s far from over. Scot Strems still faces many challenges, all formidable.

For starters, he’s still got a civil RICO action pending from Citizens. As we develop solutions it will deserve more attention as it implicates others, such as Contender Claims Consultants (CCC) in an alleged scheme where it “acted individually and in concert with Strems…” to create “false and fictitious invoices of services…” and conspired to “create or fraudulently increase policy claims….” and more.  Discovery documents, when available, should prove enlightening.

And, this suit by Citizens overlays allegations in yet another case pending against Strems–the class action known as Ortiz v The Strems Law Firm.

Here we also learn about alleged actions of other complicit players–Public Adjusters, or those posing as such and water firms and other contractors soliciting plaintiff’s for the Strems firm. According to plaintiff Sonia Ortiz, these “feeders” conducted inspections, identified damage (often more than one claim) and asked for signatures on an electronic tablet. Some of the alleged victims didn’t know they were also signing a contingency agreement for Scot Strems or his firm.  Again, discovery documents and depositions should be enlightening.

There’s still more.

I’m not a lawyer but, the two pending actions above both contain allegations of criminal behavior, including insurance fraud, which is a felony.  This raises the specter of criminal prosecutions that could produce prison time and monetary fines and consequential permanent disbarment. Such would certainly be the collapse of an “Evil Empire” and I suspect,  most importantly, a cautionary lesson to those with a parallel mindset.

And finally, for some carriers, Scot Strems’ ultimate destiny may not be as important as what happens to the thousands of cases still in his hopper.

Recall on July 1st,  Strems formally changed his firms’ name evidenced by a letter to all of his clients advising it had been sold to three associates.  The Bar cried foul with an immediate request for a contempt proceeding against Strems alleging he had violated the suspension order in both “letter and spirit.”

According to the Bar…  “Beginning shortly after SLF’s transition into the Property Advocates, courts and litigants across the state expressed confusion about whether Property Advocates were in fact authorized to represent its purported clients.”  This was the predicate for courts to issue “stays” of the cases—first being Citizens and Southern Fidelity.  (See NOTE #3 below)

Insurers I’ve contacted are hopeful the Supreme Court will issue stays at some point for every Strems case. Strems argues nothing should change, and that Property Advocates was just a name change. The Bar asserts, however, that Strems directly contravened his license suspension and every client must affirmatively consent to using the new firm.  Affirmative consent from what could be as many as 9,000 clients asserting they desire to stay with a firm whose former head has just lost his license for two years, doesn’t seem likely to me.  (See NOTE #4)

Solutions–What’s taken place is mere prologue to what now must be addressed: Tort reform; Florida Bar rules, investigations and enforcement; penalties and deterrents; Public Adjusters and Loss Consultants in cahoots; carrier claims procedures and global settlements; actions or inaction’s by Florida’s regulators, DFS, OIR and the Florida Bar.

Where did the wheels come off? What can be done to stop a player this bad from continuing to harm thousands even after it is known they are being harmed.  If Strems was in business for ten years and handled 10,000 cases that means it was possible to avoid harming 3,000 clients during the three years it took to build and prosecute the case.  The CPC said it best…“What is especially troubling in this case is that Strems’ and his law firm’s behavior lasted for years – drawing sanctions from judges across Florida and harming consumers all the while – before any disciplinary action was finally taken against him…”   That definitely needs to be fixed!

What’s really going on with “Global Settlements” and how many firms are following the harmful practices alleged as “common practice” at Strems?

What in heavens name is going on within Florida’s Public Adjuster Community?  How many are in cahoots with attorney’s to gain more than their statutorily limited fee’s?  How many attorneys are sharing their fee’s with non-licensed, non-employee’s?  How many are fraudulently inflating losses as some have confessed to doing?

Knowing that you are not likely to do so, I encourage my readers to become familiar with the Strems allegations and conclusions of fact.  As a minimum read Referee Denaro’s 59 page final report.  It provides an adequate roadmap to reform, in my opinion.

Johnson Strategies has already begun to analyze all the allegations, conclusions and activities of Strems and most especially the peripheral players, to develop a list of solutions for lawmakers and others who may want to take action.

Stay tuned, there’s much more to come.

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NOTE #1:   See page 13 of the Report for Denaro’s summary of Hagers’ testimony. His prior experience included: being an Assistant Attorney General in Iowa assigned to the Department of Insurance; an administrative law judge where he heard first party claims against insurers and disputes between two insurers, and; the Iowa Commissioner of Insurance. In addition, Mr. Hager was the Chief National Counsel on compensation insurance, which is regulated by the Florida Office of Insurance Regulation. He was elected to the legislature from Palm Beach County, Florida for eight years and was Vice Chair of the Insurance and Commerce Committee. He’s a member of the bar in Iowa, Illinois, and Florida and has testified as an expert approximately fifty times in Florida. He was paid, $20,000 for his testimony in this case.

NOTE #2: For a list of the rules violated see page 34 of the report. If, for some reason, you’d also like to listen to these proceedings you can do so (at least for the time being) at the 11th Circuit Court of Appeals YouTube site.    Each of the 18-plus hearings, some with nearly 3,000 views, are currently available.

NOTE #3: See Part III of Collapse of an Evil Empire and see the Bar’s contempt petition

NOTE #4: Technically existing clients of Strems need to be sent a certified letter giving them the choice of staying with the firm or finding a new lawyer. If the client doesn’t respond within 30 days they stay with the firm.

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