Accused contractors settle, too
The infamous Scot Strems and his Strems Law Firm along with co-defendants Contender Claims Consultants and All Insurance Restoration Services have agreed to a $1 million settlement with Citizens Property Insurance to settle a massive fraud and collusion lawsuit. The allegations included violations of the federal Racketeer Influenced and Corrupt Organizations Act (RICO), including conspiracy, as well as two violations of the Florida RICO Act.
Citizens Special Investigations Unit (SIU) began its investigation of the firm in 2016 after detecting suspicious patterns linking Strems to the public adjusting and water mitigation companies. Investigators combed through more than 5,000 claims and sent more than 400 cases to the Department of Financial Services’ Division of Investigative and Forensic Services (DIFS), which initiated its own criminal investigation that is still ongoing.
In 2020, Citizens filed its lawsuit, alleging the defendants had formed an illicit enterprise, all working together to defraud insurance companies. The enterprise violated state and federal racketeering laws, created false invoices and inflated the cost of claims, mostly on non-weather water damage, the suit charged. It usually began with a Contender adjuster promising free home remodels to a homeowner and then once inside the home, “contender sheds its public adjuster duties” and begins working for the enterprise to manufacture claims and damages, according to the lawsuit.
“We had as high as $34 million a year in claims coming from this group with 600 claims a year,” said Citizens President & CEO Barry Gilway at a May 12 news conference with Florida CFO Jimmy Patronis. “And we filed the RICO lawsuit and guess what? How many claims did we get last year? Zero,” added Gilway. Patronis said Strems “was a major player in the fraud,” that if left unchecked would have cost policyholders $16 million a year, adding “This is why your insurance rates are going up.”
Under the settlement, Citizens will be paid $1 million and will dismiss the case against the defendants and all parties have agreed to pay their own legal costs. Strems and the fellow defendants continue to deny wrongdoing in the settlement agreement, while Citizens stands behind the allegations in its complaint.
Scot Strems has been under emergency suspension from practicing law since June 2020 due to disciplinary actions brought by The Florida Bar. The Florida Supreme Court has not rendered a final decision in any of the pending cases. The Strems Law Firm was restructured and is now doing business as The Property Advocates, P.A. (Read more about Scot Strems’ latest troubles.)
“This settlement certainly accomplishes what we set out to do, which was to seek justice for what we saw as an egregious fraud and to expose the threat of this type of activity,” said Joseph Theobald, Senior Director of Citizens SIU. “This action, combined with the actions of the Florida Bar and the Florida Supreme Court brought a swift end to this relationship.”
LMA Newsletter of 5-23-22