Lawsuit accuses Citizens Property Insurance of wrongfully using no-bid contracts in Florida
Oct 22, 2010
The following article was published in the St. Petersburg Times on October 22, 2010:
By Kris Hundley
Published on October 22, 2010
A class-action lawsuit filed in Tallahassee on Thursday alleges that wrongful use of no-bid contracts by Citizens Property Insurance Corp. has led to excessive costs and higher rates for the state-run insurer’s policyholders.
The complaint, filed by attorney Rick Bateman, cites a “pattern of mismanagement” at Citizens and seeks unspecified damages for its 1.2 million policyholders. The lawsuit was filed in the names of two Wakulla County residents and Citizens customers, Jude A. Burk and David A. Pasquarelli.
A Citizens spokeswoman said the insurer had not received any notice of the suit.
Citizens was created by Florida’s legislature in 2002 as the insurer of last resort for homeowners and businesses unable to get property insurance on the private market. It is required to competitively bid all contracts worth more than $25,000, unless it is an emergency or there is only one vendor.
The complaint filed Thursday says that since 2004, Citizens has wrongly awarded 33 no-bid contracts with a total value exceeding $49 million. In January 2006, Florida’s auditor general also criticized deficiencies in Citizens’ contracting process.
“Citizens’ flagrant disregard for its own statutorily mandated contracting procedures has been a recurring problem,” Bateman said. “Because of the company’s actions, policyholders are being tagged with special assessments which have been couched as fund shortages from high numbers of claims from hurricane damages.
“These policyholders have already paid greatly for the mismanagement of Citizens and will continue to pay unless something is done to stop it.”
A year ago, the board awarded a $60 million no-bid contract for home reinspections to a Jacksonville company, Inspection Depot. After the deal became public, the board reduced the size of the contract, restricting it to a one-year pilot program. Citizens then issued a competitive bid for the work, 11 companies applied and three contractors, including Inspection Depot, were awarded the final contract, to begin next year.
Bateman filed a lawsuit against Citizens last year on behalf of a contractor, SagoTec Group, vying for the reinspection work. That action is pending.
Bateman said that, before filing the class-action lawsuit, he made a public records request for documents regarding any discussions between Florida Chief Financial Officer Alex Sink and Citizens’ chief executive regarding procurement violations. The CFO oversees the insurer. Bateman said he was told there were no such documents.
“If government won’t make Citizens protect taxpayer money, then it’s left up to the courts,” he said.
Find this article at http://www.tampabay.com/news/business/lawsuit-accuses-citizens-property-insurance-of-wrongfully-using-no-bid/1129536