Fired investigators uncovered misconduct at Citizens' top levels

Herald/Times Tallahassee BureauNovember 18, 2012 

TALLAHASSEE -- The corporate watchdogs who were recently fired from Citizens Property Insurance Corp. had uncovered evidence of favoritism, improper compensation and poorly handled investigations at the highest levels of the state-run company.

A report reviewed Friday by Citizens' Audit Committee shows that one of the final investigations conducted by Citizens' Office of Corporate Integrity targeted top senior officials at the company. The four corporate watchdogs were investigating how Citizens had handled previous allegations of sexual harassment, drunken disrobing, irregular severance payments, falsified documents and other improprieties by employees.

All four investigators were given termination notices last month.

The report released Friday "focused on the mishandling of investigations, the mishandling of discipline and the mishandling of Citizens' funds," said Chief Internal Auditor Joe Martins, who recently decided that the Office of Corporate Integrity was no longer need

ed at Citizens.

The investigation by the now-terminated employees found that, among other things, Citizens:

n Gave large severance packages to some top employees accused of misconduct, including more than $80,000 to an underwriting executive who resigned after being accused of "inappropriate behavior" with another employee.

n Gave only a warning to its deputy director of human resources after she got drunk at the Coyote Ugly bar in Tampa, removed her bra and danced on top of a table during a company retreat.

n Failed to complete certain investigations or did not file them into the official complaint system, potentially shielding them from public view. Certain employees were shown favoritism after they were discovered breaking company policy.

More to come

Citizens declined to respond to several follow-up questions about the various allegations, stating that more public records would be released on Monday.

The state-run insurer disbanded its Office of Corporate Integrity abruptly in October, terminating all four members and presenting them with confidentiality agreements. The move sparked rebuke from government watchdogs, state lawmakers and Gov. Rick Scott, who had recently called for an investigation into lavish corporate spending at the company.

The reports of corporate excess and impropriety come at a time when Citizens is raising insurance rates on homeowners and slashing coverage in order to reduce risk on the its 1.4 million policies it ensures.

Citizens said the move to terminate the four investigators -- T.W. Smart, Selisa Daniel, Melanie Yopp and Meghan Walker -- was actually a restructuring effort aimed at beefing up its fraud detection system and "avoiding unnecessary redundancies." The company is currently looking to hire new fraud detectors. Citizens categorically denied that it had eliminated the OCI as a way of silencing the investigators.

The report reviewed Friday is the first evidence of what the Citizens investigators were doing shortly before they were told their services were no longer needed.

In March, an anonymous tipster complained that Citizens had mishandled internal investigations, spent funds on improper severance agreements and shown favoritism to certain employees engaged in misconduct. The accusations implicated some of the highest-ranking executives at the multibillion-dollar insurer.

OCI, which was led by a former economic crimes investigator and an agent with the Florida Department of Law Enforcement, was brought in to investigate.

A five-page report issued by Martins summarizes the findings of the OCI's probe in broad terms, omitting many specific details.

Though members of the Office of Corporate Integrity spent months conducting the investigation, their names are not listed on the final report. Martins, whose name is on the report, played a major role in dismantling the unit OCI.

Internal emails at Citizens indicate that Martins' final report was not as comprehensive as the one report drafted by OCI before it was disbanded. It is unclear what information gathered by OCI was left out of Martins' report.

'Under the rug'

"It looks like the Integrity Office investigation is being swept under the rug," said Dan Krassner, executive director of Integrity Florida, which advocates for tougher ethics laws. "Citizens gagged their now-terminated watchdogs with confidentiality agreements, so the public is still just hearing one side of the story."

While Martins' report does not name any of the employees involved in the allegations, other reports reveal that several top officials were involved in various improprieties. Some have since resigned. A few examples:

Susanne Murphy, Citizens' chief administration officer, was accused of practicing law without being licensed in Florida. She was the target of an investigation into "Falsification or Destruction of Information." While one report indicated some accusations against her were "unsubstantiated," she resigned abruptly in August. She will remain on the payroll through Dec. 31, presumably receiving salary, medical benefits and retirement benefits despite not working.

Citizens' director of human resources, Gena Buonamici, and General Counsel Dan Sumner both led departments accused of showing favoritism to employees within their units. Both are still with the company.

Citizens' former director of underwriting was accused of getting drunk during a Key West business retreat and sexually harassing a co-worker. He resigned abruptly, days before he was to be questioned by OCI. It is not clear whether the employee, who was paid $145,000 annually, received a severance package.

The news of large severance payments to departing employees comes at a time when Citizens has a record amount of cash in the bank due to Florida's seven-year streak of no hurricanes. The company is under investigation for using corporate cash to fund lavish business trips for executives, including $600-a-night hotel stays.

Citizens -- which has more than $6 billion in cash on hand -- is also facing scrutiny as it considers shifting $350 million to private companies in the form of low-interest loans.

The improprieties announced Friday add to the swirl of controversy engulfing the state-run insurer of last resort.

"Legislators may want to consider oversight changes for Citizens beyond the rubber stamp board (of directors), to hold them accountable," Krassner said.

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