About 300 homeowners have agreed to settle their disputed sinkhole claims with Citizens Property Insurance, the company announced Wednesday, leaving an estimated 1,800 more lawsuits still unresolved.
The group settlement involves policyholders who were challenging the state-run insurance company for failing to agree to the method and cost of repair for sinkhole damage to their homes.
The company has watched as lawsuits have ballooned in recent years as most homeowners were challenging Citizens for forcing them to repair their homes by putting grout in the ground instead of underpinning their homes with steel beams, or both.
The policies included in the settlement were all represented by the Clermont law firm of Boyette, Cummins and Nailos. The cost to Citizens for making the repairs have not yet been determined but the avoided legal fees and streamlined repair procedure is expected to save the company about $30 million, said Citizens spokesman Michael Peltier.
“Our message to policyholders and the courts is if there is a confirmed sinkhole, we do want to repair the home – but we do not want to write a blank check,’’ said Dan Sumner, Citizens general counsel, at the company’s board meeting in Orlando Wednesday.
Under the terms of the agreement, the repairs would be made according to the recommendation of engineers and by contractors selected from a list provided by the Citizens, Sumner said. The homeowner will not receive any money for the repairs but instead Citizens will pay the contractors directly.
A professional engineer will monitor the work and if the costs of the repair exceed the policy limits Citizens must make the improvements -- both for above ground repairs and below ground repairs. And if a neutral evaluator has made a recommendation, Citizens will abide by the terms of the evaluation and make the proscribed repair -- something the company has often refused to do.
In December, Citizens sent out letters to the hundreds of homeowners who have sued the company over their sinkhole damage urging them to settle their dispute under the company’s terms. Most of the cases involved homeowners who challenged the method of repair Citizens wanted to use, or were asking a court to intervene because the company had agreed to repairs recommended by a neutral evaluator and then failed to follow through with those repairs.
But as Citizens worked to get homeowners to drop their lawsuits, Florida legislators were working to give the company an extra advantage in court with new legislation. A bill by Sen. Wilton Simpson, R-Trilby, will force all homeowners, even those whose claims are resolved in court, to use a list of contractors selected by the company. The Senate Appropriations General Government Subcommittee approved the bill on Wednesday.
The pending legislation, and the fact that Citizens has coordinated its defense strategy in the 13 jury trials it has conducted since the letter was sent out, helped provide the impetus for these homeowners to settle, Peltier said.
In December, about the same time Citizens was writing to homeowners, its board of governors signed a $6.5 million contract to handle all of the company’s claims litigation. The firm, Ackerman, Link & Sartory P.A of West Palm Beach, had previously had a $1.5 million contract to handle only sink hole claims. The arrangement will pay attorney Scott Link $525 an hour, up to $1.05 million a year.
Chris Gardner, chairman of the Citizens Board of Governors, said in a statement that the agreement was possible because the law firm hired to coordinate the defense strategy for Citizens, “has had great success in requiring that claim payments be used to repair sinkhole damage and having that position upheld in court.”
Gardner said the settlement will provide closure to property owners by helping them repair their homes and repaired homes will improve property values for local communities and future buyers.
The legal fees and expenses for the homeowners in the settlement will be paid by Citizens, up to $5,000 per case, at a cost of about $2 million to Citizens, Peltier said.