“Vast campaign” unraveling
Speaking of cooking up and inflating claims, many of you are following the Strems Law Firm Supreme Court actions and now others are piling on. Last week, Citizens Property Insurance filed suit alleging Scot Strems and his firm, along with several associates, conspired to defraud Citizens into paying for sham first-party property insurance claims. This is the latest action against Strems and follows his law license suspension and subsequent complaints filed by The Florida Bar against him and a second attorney in the firm.
The Citizens complaint is against Strems and his Coral Gables-based firm; Contender Claims Consultants of South Miami (CCC) and its president Guillermo Saavedra; and All Insurance Restoration Services of Miami and its president Cesar Guerrero and operations manager, Derek Parsons.
Citizens alleges that CCC marketed itself as a public adjusting company but would also present unsuspecting homeowners with a contingency fee agreement with Strems. Afterward, CCC’s adjusters would transform into “loss consultants” retained by Strems, while they continued to adjust the claim.
“This fiction was carried on to avoid statutory limitations on public adjusters’ recovery and to claim their fees as part of litigation costs rather than being paid out of proceeds from the recovery by the homeowners,” according to the Citizens complaint.
The complaint says the defendants referred business to one another in thousands of first-party claims, often without the policyholder’s knowledge, and then systematically thwarted Citizens’ investigation of the claims. And in an effort to deceptively increase attorney fees, Strems and the others would file different lawsuits against Citizens for the same event or for damages covered by the same policy, while failing to disclose the related cases to the courts to avoid their consolidation.
Most notably, Citizens is alleging two civil violations of the federal Racketeer Influenced and Corrupt Organizations Act (RICO), including conspiracy, as well as two violations of the Florida RICO Act.
The Citizens suit follows Scot Strems emergency suspension by the Florida Supreme Court on June 9, following a filing by The Florida Bar alleging Strems “sits at the head of a vast campaign of unprofessional, unethical, and fraudulent conduct that now infects courts and communities across the state.” And like Citizens Insurance, the Bar also accuses Strems of illegally filing multiple lawsuits on individual policy claims, as well as delaying and ignoring court deadlines, and outright violating court orders.
The Bar has subsequently filed a second complaint against Strems, as well as a complaint against another colleague in the Strems Firm, Gregory Saldamando. The Bar wrote Saldamando “betrayed his ethical obligations to his clients in order to enrich himself at the clients’ expense,” by pocketing the cash difference between final settlements and the initial settlements that clients were told about. The Strems complaint is similar. Another Strems colleague is referenced in the Strems complaint as having told a policyholder that all their contingency fees are figured in the same way. His lawyer in media reports says Strems “strongly disputes the allegations.”
These cases should be a wake-up call to Florida legislators, regulators, and consumers that substantial reforms are needed to address the one-way attorney fee statute, contingency fee multipliers, and bad faith.
LMA Newsletter of 6-22-20