Florida’s Citizens Property Insurance Officials Blast Media Coverage of Corporate Integrity Terminations

 

At a workshop today, November 27, 2012, Citizens Property Insurance Corporation (“Citizens”) CEO Barry Gilway and Board of Governors (“Board”) Chairman Carlos Lacasa denounced the media, saying recent negative news coverage of Citizens’ staff changes, personnel matters and company policy has unfairly tarnished the huge insurer’s reputation and “dragged employee reputations through the mud.”

To view the meeting materials, click here.

An indignant Chairman Lacasa blasted news stories describing Citizens as “having lost all credibility” as “shameful” and “unfortunate.”  Mr. Gilway characterized the accounts as “pathetic.”

“This company is not perfect.  We have made mistakes, no question about it.  Any organization with $3 billion in revenue, over 1,000 employees and 1.5 million policies is bound to make mistakes,” Mr. Lacasa said.  He said Citizens may have a few “bad apples” but that most employees are working hard to support an important mission that supports the economy of our state.

Mr. Lacasa urged the press to act responsibly and “give us a little leeway as we do our best to make this institution as strong as it can be and to foster trust and confidence in government.”

Responding to claims that Florida’s insurer of last resort is scandal-ridden, fiscally irresponsible and corrupt, Mr. Gilway defended Citizens’ disbanding of its Office of Corporate Integrity (“OCI”), and explained the investigative role of Citizens Office of Internal Audit (“OIA”).  He offered detailed breakdowns of recent investigations into the questionable behavior of employees.

Outraged at the tone of recent news coverage, he said that employees who had been found “totally innocent of wrongdoing” had their names “dragged through the mud” by the media.

Mr. Gilway acknowledged that some allegations of inappropriate employee behavior have also disgusted him, especially those that have been found to be accurate.  He said such behavior should not occur at any company.  He added that Citizens received an anonymous complaint on March 30, 2012 that included a series of allegations, such as the mishandling of discipline, as well as resources and funds by a number of Citizens’ employees and management.  An investigation and numerous news stories ensued.

By law, such allegations fall under the jurisdiction of the OIA, but because that office was in transition, OCI was asked to assist in performing the initial investigation into the claims, Mr. Gilway explained.

A preliminary report was subsequently presented to newly-hired OIA Director Joe Martins on July 19, 2012.  The preliminary report uncovered “very little,” Mr. Gilway stated, saying all OCI did was review closed investigations and disciplinary actions that had already been taken.  He said their actions incited “rumors and innuendo.”

He said the responsible follow-up was to do what had not been previously done – reach conclusions and recommend action as a result.  The OIA looked at the source of the issues and subsequently did that, Mr. Gilway said.  To accomplish this goal:

• 12 interviews were conducted
• 76 personnel files were reviewed
• Computer hard drives were confiscated and evaluated

Outside counsel was also hired to review matters involving management.  The OIA and outside counsel reached the same conclusions, Mr. Gilway explained, adding that “A complete and thorough investigation shows that the anonymous allegations did not stand up to the test of proven fact and evidence.”

The following are highlights from some of the cases Citizens’ OIA reviewed:

• A female employee received written counseling for a drunken February 18, 2009 incident at a Coyote Ugly bar in Tampa in which she allegedly removed her bra, and then later threatened someone who played a minor joke on her, screaming that the person was “so fired.”  It was determined that the matter was investigated twice before and corrective action was taken.  At the time, no formal disciplinary measures existed.  Such measures are now being developed, Mr. Gilway noted.  He pointed out that the incident occurred two year ago.
• No action was taken against a male employee, who was accused of getting drunk while in the company of his staff on a trip in 2011 to Key West.  Allegations also said he used foul language, danced and “got physical” with employees.  The case was found to be unsubstantiated, Mr. Gilway stated.  He said 13 people were interviewed who were in attendance at the event where the alleged behavior occurred.  The employee eventually left Citizens, but not because of the allegations, Mr. Gilway added.
• An allegation of the unauthorized practice of law by another employee was investigated twice, in November 2010, and again in the recent OIA review, Mr. Gilway noted.  Both times, the allegations were found to be unsubstantiated, he said.
• An allegation that a male employee sought a loan from subordinate employees was never investigated because the initial report was mistakenly labeled as a sexual harassment complaint. Because both the employee and his accuser left Citizens, and no legal action was taken, Mr. Gilway said.
• An allegation that outside counsel hired by Citizens are in a “back pocket” of Citizens employees so officials can control the outcome of their investigations is “preposterous” and “absurd,” Mr. Gilway emphasized.
• Regarding claims of extensive severance payments to certain employees, Mr. Gilway stated that no severance policy had existed and individual supervisors applied their own judgment.

“We looked at 67 and every single one was different,” Mr. Gilway said.  Development of a new policy is underway, he noted, saying that the final OIA report documented the need for consistent policies related to discipline and severance.

He then explained why changes were made at the OIA, noting he was greatly concerned when he was hired in June to learn that the OCI reported directly to him.

“In my opinion, it was completely inappropriate,” he said.  “(That Department) needs to report to the Board.”

He made changes so that the OCI reported to Mr. Martins in OIA.  He also suggested that OIA and OCI become integrated.

“The vast majority of issues handled by OCI were personnel issues,” Mr. Gilway stated.

OCI reports contained factual inaccuracies and OCI focused more on personnel grievances than anything else, Mr. Gilway stated.

“They were not watchdogs.  Watchdogs go in and root out problems,” Mr. Gilway stated.  He said OCI had no sense of urgency in facilitating investigations.

OCI was disbanded in mid-October 2012 after an internal review revealed that department’s internal practices that were “more reactive than proactive,” with its employees focused mostly on workplace complaints and staff grievances instead of actual fraud.  Sometimes as long as two years was spent on a single investigation, according to the OIA report.

Mr. Gilway said he decided it was best to start with a clean slate, but acknowledged it was a “dumb” decision in regard to timing with the Office of the Florida Attorney General in the process of completing an investigation on fraud control.

“The bad decision was not to eliminate OCI.  The bad decision was how we did it,” Mr. Gilway said.  “The inference that Joe Martin and I in any way would have tried to cover up the preliminary report or retaliate against OCI–why would we do it?”

“Neither Joe nor I had any personal knowledge of the alleged wrongdoing,” Mr. Gilway added.  “I am committed to taking a fresh look at the organization.”

In closing, Mr. Gilway added, “I don’t condone the negative actions that were taken by employees.  I think they were disgusting in many cases but let’s not tarnish the reputations of the 99.9 percent of Citizens employees who bust their tail for you because of the irresponsible actions of a few people.”

Mr. Gilway noted that a stringent new expense policy has been put in place because the old policy was too vague.

Board member John Rollins said any organization that has been asked to grow as rapidly as Citizens has is bound to “get a bad apple in the barrel along the way.”

He said Citizens needs to move on.

“It is not appropriate to take the results of several investigations which were found to be unsubstantiated and springboard to innuendo,” Mr. Rollins said.  “We need to deal with these issues today and put them behind us.”

In other business, the Board voted to receive and approve the Outsourcing Implementation Plan as provided by Senate Bill 408 for submission to the Florida Financial Services Commission at its December 11, 2012 meeting.

In October 2011, the Board had approved the engagement of a firm to conduct the required study and prepare the necessary report.  The Board received the report in June 2012 and must now submit it for Financial Services Commission review, modification and approval.  Once the plan is approved, the Board will begin its implementation by January 1, 2013.

At today’s Workshop, the Board also began an extensive review of Citizens’ proposed 2013 Operating Budget, touching upon staffing issues, budget assumptions, administrative expenses and capital acquisitions.  No final action was taken on the budget.

With no other business before the Board, the meeting was adjourned.

 

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