HERNANDO COUNTY, Fla. — A Spring Hill homeowner is battling Citizens Insurance after his nearly $100,000 vandalism claim was denied, highlighting concerns about Florida's new insurance dispute process that critics say heavily favors the state-backed insurer.
'You can't sue.'
Tom Luby contacted Tampa Bay 28 anchor Nadeen Yanes for help after Citizens denied his claim twice, saying extensive damage to his rental property was an "incomplete remodel" rather than vandalism.
"He was a contractor and he was in healthcare, I don't know the whole story," Luby said. "I had no idea. I thought the house was in perfect shape. It's a disaster."
The damage included torn-up floors, destroyed appliances, and debris left throughout the home by former tenants who were evicted by sheriff's deputies in March.
"Look at all the damage. Look at the floor is destroyed here, holes in the walls, holes here, they smashed the door there. They stole appliances," Luby added.
"This was the second denial, they said, due to that, you cannot sue us. You are forced into mediation. Actually, I went to three different attorneys and they don't want to take it, because you can't win," Luby said. "There's nothing I can do. And that's why I reached out, hoping you guys could help bring this to light and maybe make the people in Tallahassee aware of what's going on, because it's not fair."
Under Florida's insurance reform laws, Luby said, he cannot sue Citizens or fight his claim in court. Instead, he was told he must go through forced mediation with the Florida Division of Administrative Hearings, also known as DOAH.
According to a Pro Publica investigation, the result of these hearings showed Citizens wins more than 90% of the time.
Congressional investigation demanded
The concerning win rate has prompted U.S. Rep. Maxwell Frost to begin demanding answers. He sits on the House Committee on Oversight and Government Reform. After examining 29 final DOAH hearings, Frost found Citizens won 20 cases outright, while attorneys withdrew the cases from the other nine.
"So the problem with this is Citizens is winning about 100% of those cases, which means people out there are definitely getting screwed," Frost told Tampa Bay 28 anchor Nadeen Yanes.
Frost sent a letter to Gov. Ron DeSantis, the insurance commissioner, and legislative leaders demanding answers about the process.
"Alarmingly, it appears that Citizens policyholders are losing nearly 100% of their cases in these arbitration proceedings," the letter read.
Frost specifically wants to know why the state changed the law to force this mediation process instead of allowing policyholders to fight their claim in court.
"We have a lot of questions as to, why was this included in the law? What stakeholders were pulled in to write this part of the law? Why was it added? Anyone? Did anyone ask for it," Frost said.
'The most un-American, unfair system': Attorneys call system unfair
Miami attorney Anthony Lopez represents Luby in this case.
"Technically, in my mind, if this was in front of a jury and a judge, we would prevail," Lopez said.
He called the DOAH process "the most un-American unfair system I've ever seen in my life."
"It's a forum where the chips are so heavily stacked against the policy holder," Lopez said. "The neutral arbitrators, the judges in DOAH, are basically hand-picked by Citizens. A lot of them are former defense lawyers that represented insurance companies, and there's absolutely no chance a policyholder is getting a fair shake in this forum."
Lopez said to make matters worse, through this arbitration process, Citizens also has the ability to go after policyholders for their attorney's fees if the state-insurer prevails.
"I also think it's very telling that Citizens is winning basically 99% of all of these hearings," Lopez said. "And then what's worse is to put pressure on the clients, even if you have a valid claim, they're basically sending, minuscule offers of like, $500 and if you don't accept the offer, and they win, Citizens is going after the policyholders for attorneys' costs. So it's really an insane forum to try to litigate."
Citizens CEO defends process
Citizens CEO Tim Cerio defended the forced mediation process, which was included as part of Florida's insurance reforms for several reasons.
"It's a lot cheaper. It's a lot cheaper than spending two and a half years in circuit court when you can go to DOAH if you're a policyholder and your claim can be resolved in less than 90 days," Cerio claims.
According to Cerio, these DOAH hearings have been set up for decades as an alternative way to solve issues against government agencies, and since Citizens is backed by the State of Florida, this was a resource that could save policyholders time and Citizens money. Admitting, Citizens, as the governmental agency, pays for the hearings. However, Citizens does not hire or pay for the judges hearing the claims.
"We do not hire them. We may pay for the services generally, like anybody at any governmental agency, governmental agencies are the ones that pay DOAH generally," Cerio said. "We don't pay the salary of the judges. We pay the division of administrative hearings."
Cerio also said there is a 6-step review process of the claim before the policyholder is forced into a DOAH hearing.
According to Cerio, of all disputed claims sent to DOAH, 37% are settled by Citizens before the final hearing, and 52% are dropped by attorneys beforehand, Cerio said.
"That means that if the cases referred to DOAH, 89% of the time, there is an agreed to resolution. That is not unfair," Cerio said.
However, when pressed about Citizens winning most of the remaining 11% that reach final hearings...
"Citizens is winning most of the time," Cerio said.
"We've tried very hard to get it right, and if we think we've made a mistake, to go back and fix it. If we think we need to take the second look. We'll take a second look, a third look, by the time that final hearing comes, we are pretty certain about the outcome," he added.
'I want a chance to make an argument': Homeowner seeks justice
For Luby, the stress of the process has taken a toll. His lease clearly stated tenants could not remodel without written consent, which was never given. Sheriff's reports document the March eviction and vandalism complaint.
"It leaves me with a destroyed house and nothing to do about it. And that's why I had insurance," Luby added.
All he wants is a fair chance to fight his claim.
"I want a chance fight this case. I want a chance to make an argument. I can't even make an argument. I'm not saying I'll win or lose. I think, how could I lose? You can see the damages. But I can't even make an argument," Luby said.
"I don't sleep at night. I didn't sleep last night with a little bit of anticipation that I can finally have a voice."
After Nadeen's interview with Cerio, the Citizens said they will review Luby's case again.
Legal challenge underway
The forced mediation process now faces a legal challenge. A Hillsborough County homeowner has filed a lawsuit against Citizens, claiming it is a violation of the due process and equal protection clauses of the 14th Amendment.
In August, a judge issued a temporary injunction against the process.
MOTION TO DISQUALIFY c248801f-3c89-44ac-8d63-4a50393b71b0 by Tampa Bay 28
"Plaintiff also established that he and similarly situated Citizens policyholders will suffer irreparable harm absent injunctive relief. Specifically, enforcement of the arbitration clause at issue compels insureds into a forum that lacks neutrality, discovery, motion practice, an meaningful judicial review," the motion read.
Citizens is already appealing, filing a motion to disqualify the judge and to change the venue to Tallahassee. Citizens maintain that the DOAH process is fair and legal.
Share Your Story with Nadeen
As part of her commitment to help you navigate the state of insurance, Tampa Bay 28 Anchor Nadeen Yanes is here to listen to you. If there is an insurance problem you have run into or feel others need to be aware of, we want to hear about it. Just fill out the form below.
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