Citizens CEO lashes out at media for reporting scandals

Herald/Times Tallahassee BureauNovember 28, 2012 

TALLAHASSEE -- Beleaguered by allegations of corporate misconduct and exorbitant executive spending, leaders at Citizens Property Insurance Corp. expressed outrage -- at the media.

During a special hearing Tuesday to address several corporate improprieties first reported by the Herald/Times, Citizens CEO Barry Gilway reserved some of his harshest criticism for news outlets that uncovered the laundry list of scandals at the state-run company.

"I am committed to making sure the reputations of innocent employees are appropriately protected," said Gilway, claiming that reporters had defamed former Citizens employees accused of wrongdoing.

Gilway used words like "preposterous," "absurd," "pathetic" and "shameful," when discussing media coverage of the company's internal troubles.

He defended his top officials -- who have been beset by a laundry list of scandalous allegations in recent

months, including questionable severance packages, sexual impropriety and falsified documents.

The board largely voiced support for Gilway -- who took the helm of the state-run insurer in June -- and saved criticism for the media, the former CEO and a few "bad apple" employees.

In recent months, at least two top executives at Citizens have resigned and Gov. Rick Scott has called for two separate investigations into its top management.

Gilway stood by a claim that Citizens terminated internal investigators who discovered the misconduct as part of a company restructuring effort -- not as retaliation for exposing the company's dirty laundry.

Scott's chief inspector general is looking into the terminations.

Gilway and board members acknowledged that Citizens needed to make some changes, and said the company is beginning to take "corrective action" to address the various scandals.

"We have a new day in this company," said board Chairman Carlos Lacasa. "And we will win back the credibility of the company in the eyes of the public."

Lacasa also lashed out at the media, referring specifically to a recent editorial in the Palm Beach Post that branded Citizens a "corruption-ridden scam artist that threatens Florida's economic recovery."

Such media criticism of Citizens is "shameful" and "designed to incite the public," he said.

Homeowners covered by Citizens have expressed outrage this year over the company's unpopular home re-inspection program, an 11 percent rate hike and news that executives were spending upwards of $600 per night for luxury hotel rooms across the globe.

Scott's inspector general is investigating such expenditures.

"The state of Florida gave them this blanket ability to pull in money from homeowners," said Sharon Goessel, a 65-year-old from Palmetto Bay whose Citizens insurance rates are skyrocketing. "I want to be one of those executives at Citizens and go spend the night in a $580 hotel room."

Sean Shaw, a former insurance consumer advocate who works for a law firm that represents insurance policyholders, blasted the board at Citizens and called for the resignation of top executives.

"Instead of spending time talking about fixing abuses of the public trust, the board seems more interested in blaming the media for finding out about it," he said.

Some board members attacked Shaw, whose employer regularly battles Citizens in court, as someone who "has a direct financial stake" in seeing the company tarnished.

The board had less criticism for former employees and executives whose actions sullied Citizens' reputation, including the underwriting executive who resigned after a sex scandal blew up and the chief administration officer who resigned after several allegations of misconduct occurred within her unit.

Both received lucrative agreements worth tens of thousands of dollars after resigning, and Citizens helped the underwriting executive apply for unemployment compensation.

Gilway stopped short of criticizing the hefty severance agreements, but said a new policy will be drafted to clean up the process.

Citizens' board also spent much of Tuesday's meeting discussing the company's preliminary budget for next year.

The company expects to shrink from about 1.5 million policies to 1.2 million policies by the end of 2013, advancing Gov. Scott's push to downsize the state-backed insurer.

"Unlike the private sector, that's a good thing if we're shrinking," said Chief Financial Officer Sharon Binnun.

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