Citizens legal costs continue to climb

Miami HeraldMarch 18, 2014 

Citizens Property Insurance has a lawsuit problem.

More than 12,000 policyholders have sued the state-run insurer to get their claims paid -- and, new data show, the cost of defending against those suits is rising, to more than $21 million for the last three months of 2013 alone.

Some of the longest-fought battles are in the so-called sinkhole alley -- the section of the state that includes Hillsborough, Hernando and Pasco counties, which rest on a porous, cavity-prone limestone bed. The amount the agency spends just on sinkhole litigation there has doubled -- from an average of $944,345 per month in 2012 to $2,050,106 in 2013, according to data provided last week to state Rep. Frank Artiles, R-Miami.

More than 2,100 homeowners have sued Citizens for compensation for sinkhole damage reported more than two years ago, with the combined legal bills now costing Citizens more than $4.4 million a month, or about $2,100 per sinkhole claim.

To deal with the mounting lawsuits, Citizens is fighting in the courtroom and at the Capitol:

• It is hiring the Palm Beach law firm Ackerman, Link and Sartory for $6.5 million over five years to "coordinate" a get-tough legal strategy that includes denying claims and delaying payment to force settlements.

• It is backing legislation (SB 416) that would bypass homeowners and leave the decision of how to repair a home to an approved set of contractors, many of which favor the controversial "grout in the ground" repair method.

• And it is urging homeowners to settle their lawsuits so both sides can avoid the expense of a court case.

Last week, Citizens announced it had reached a "global settlement" with the Central Florida law firm Boyette, Cummins and Nailos, which represents more than 300 policyholders with disputed sinkhole claims.

The agreement "will allow homeowners to make critical repairs to protect their families and their neighbors without spending more time in court," the company said in a statement.

There was one problem: The policyholders had not actually agreed. The law firm has 60 days to persuade policyholders it is a good deal, and the law firm would then be paid about $2 million.

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