As Citizens offers to settle disputed sinkhole claims, critics scoff
About 2,100 customers who have or are planning to sue Citizens Property Insurance over sinkhole claims will soon be getting offers to settle.
The state run company announced Wednesday it is mailing proposals to current and potentially future litigants this week that offer to pay for repairs. But there are strings attached, including a a requirement that customers will no longer be paid to make the necessary repairs. Instead, Citizens will pay the contractor directly.
Read settlement proposal: Download Citizensletter.pdf
Dubbed “Grout in the Ground”, the proposal is part of an effort to settle sinkhole claims, as well as avoid future risk. The letter invokes recent sinkhole mishaps in Seffner, Clermont and Dunedin to encourage customers to agree to settle.
“While we recognize that these events are extremely rare occurrences, Citizens’ primary goal is making you and your family safe immediately,” the letter stated.
The settlement offer comes after the Times/Herald reported frustration among customers with the claims process.
If homeowners accept the offer, they must drop their lawsuits against Citizens, agreeing to pay their own legal bills and fees.
“This is an attempt to see if we can settle some of these cases,” said Citizens spokesman Michael Peltier. “It’s been our policy not to write blank checks. This is an expansion on that.”
Sen. Wilton Simpson, R-Trilby, represents parts of Pasco and Hernando that are susceptible to sinkholes. He hailed the settlement offer, which he encouraged in meeting with Citizens officials, as a practical way to reduce litigation costs while providing customers with the coverage they need.
“What we’re trying to do is get the homes properly repaired,” Simpson said. “That’s the primary concern. This is the right way to do it. There’s no downside at all in this plan.”
Simpson said too many customers spent claims money on other expenses or didn’t spend the money at all, making the homes vulnerable for themselves or for those who buy the homes later.
Frequent Citizens critic and former state lawmaker Mike Fasano, who is now the Pasco Tax Collector, said he was happy to hear that the company will require that the money be spent on repairs. Too often, he said, customers would spend the money elsewhere.
But Fasano questioned the chosen method of repair: grouting. He said grouting is more expensive than other methods, such as pinning.
“This will cost Citizens a fortune,” Fasano said. “Grouting is expensive. Companies will pour cement just to meet the total cost of the claim. They’ll grout until the cows come home in some cases.”
Lawyers like Dan Fritz, who represent homeowners against Citizens, say the latest offer was an insincere one.
“Citizens is the only insurance company in Florida that is forcing homeowners to put ‘grout in the ground’, which is what they were doing in Dunedin when the collapse occurred,” said Fritz, general counsel at Sinkhole Public Adjusting, LLC in New Port Richey. “Citizens has a strategy which appears to disregard their customer’s best interests. We saw Citizens send out a similar letter after the Seffner tragedy, so it doesn’t look like a serious offer.”
According to the three-page letter, cash will no longer be paid to those with homes in need of underground repairs. Instead, those homeowners who have identified sinkholes must hire certified contractors to bolster the homes with grouting. Citizens will pay for those expenses. If the grouting doesn’t stave off sinkhole damage, Citizens will pay for additional repairs deemed necessary by Geohazards Inc., a Gainesville contractor hired by Citizens.
Once Geohazards identifies the necessary repairs to stabilize or repair their homes have been completed, Citizens would pay for a “neutral” evaluator to determine if further repairs are necessary if the engineer hired by the homeowners recommends more work.
The neutral evaluator, or contractor, would have geotechnical expertise to determine if further repairs are necessary. A key part of Wednesday’s settlement is that homeowners would agree to abide by the recommendation from Citizen’s neutral evaluator. Citizens would pay for all repairs the evaluator recommends.
Customers won’t be required to pay any out-of-pocket expenses for the repairs, the letter states.
Still, there’s some wiggle room for Citizens.
The letter states that if homeowners accept the offer, and the neutral evaluator agrees with the homeowner’s engineer’s method of repair, Citizens would pay the “reasonable cost” of the report and investigation by the homeowner’s engineer, along with any “reasonable” attorneys’ fees.
“Understand that Citizens is committed to working with you to put this litigation behind us and to put the ‘grout in the ground’ necessary to protect your property,” the letter stated. “We hope you are as well.”
To avoid customers handling the money, Citizens would pay the contractor directly. Homeowners would provide Citizens with any invoices for the grouting and repairs as the work is performed.
Citizens will monitor the work done by the homeowner’s contractor to make sure it is “appropriate and consistent with the engineer’s recommendations.”
Upon completion of the grouting, Citizens will inspect the home and determine if the repairs caused any additional damage to the home. If it does, Citizens would pay.