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Insurance Commissioner Kevin McCarty hires $715-an-hour attorney to defend him in lawsuit

TALLAHASSEE — Insurance Commissioner Kevin McCarty has hired a $715-an-hour attorney to defend him in a lawsuit filed by a Texas-based insurance company, an expense that outrages Senate President Mike Haridopolos.

"The state is bankrupt and we're paying someone $700 an hour? This is crazy," Haridopolos said. "Even if it's $250 an hour, it's too much. Why don't they just use in-house counsel or the attorney general? Isn't the attorney general the biggest law firm in Florida?"

Through a spokeswoman, McCarty declined to comment because of the ongoing litigation.

"This is a complex federal case involving constitutional law," said Office of Insurance Regulation spokeswoman Brittany Perez. "We have contracted with Greenberg Traurig, which is on the list of approved contractors. The firm has been used by a number of government agencies over the years."

In the past five years, the Office of Insurance Regulation has hired outside counsel four times, including this one, Perez said, where McCarty hired Greenberg Traurig's Barry Richard, who represented George W. Bush in the 2000 presidential election recount.

"They hire me when the case involves issues that either they or the attorney general's office thinks requires somebody with more expertise and experience," Richard said.

The McCarty case, he said, is one of those situations.

Charles Wood, who owns Dallas National Insurance, filed a federal lawsuit in January against McCarty as well as the state Office of Insurance Regulation, claiming McCarty unfairly denied his company the right to sell insurance in Florida.

Wood contends McCarty, 51, acted on a longstanding "vendetta" because Wood did business with Bankers Insurance, which spied on McCarty in the mid 1990s in an attempt to out him as a gay man and get him fired.

Bankers hired a private investigator and illegally tapped McCarty's phone and rifled through his garbage when the company was passed over for a $16 million state insurance contract while McCarty headed Florida's Joint Underwriting Authority, an insurer of last resort.

The state filed a complaint against Bankers Insurance Co. in 2001, charging the company tried to manipulate insurance regulators by prying into the private life of a state official. McCarty also filed a civil suit, saying his privacy was violated in a case that made it public knowledge that he is gay.

The company settled both cases, agreeing to pay the state $1 million in fines and costs, and $2.55 million to McCarty.

Wood alleges that history prompted McCarty to reject his company's bid to expand into Florida.

In a state suit filed by Wood, the 1st District Court of Appeal ruled Jan. 20 that McCarty had the authority to bar Dallas National from Florida.

But about two weeks before that, Wood filed the federal complaint claiming the personal "vendetta."

"By his own account, Bankers' actions devastated McCarty, leading one of his doctors and a psychologist who was treating him to diagnose him as suffering from post traumatic stress syndrome," say court papers. "When one of the plaintiffs in this action, Dave Wood, subsequently loaned Bankers $5,000,000 and attempted to do business with Bankers, McCarty became deeply embittered against Wood, and fanatically determined that Wood would never engage in the business of insurance in Florida."

Although the Florida attorney general sometimes handles cases for state agencies, a spokeswoman said the attorney general's office has never handled an insurance case for the state.

The Office of Insurance Regulation has 20 attorneys on staff, who originally took the lead in the complaint against McCarty.

But in late January, McCarty hired high-powered Tallahassee lawyer Richard.

"It is important to note that our attorneys have expertise in insurance law — not expertise in constitutional law involving federal cases, which is the legal expertise that is required for the lawsuit in question," Perez said. "None of this would have been necessary if this frivolous lawsuit was not filed in the first place."

Richard is charging the state $715 an hour for his services, his standard rate for government agencies, a 20 percent discount on his rate for private clients.

Richard said he previously represented former Govs. Bob Graham and Jeb Bush and several government agencies.

Attorneys and staff members at Greenberg Traurig with hourly rates lower than Richard's are handling some of the work. So far, the company has billed the state $48,365.87, more than the annual salary of most state employees.

The disclosure comes at an awkward time for McCarty, who was appointed insurance commissioner in 2003.

McCarty serves at the pleasure of the governor and Cabinet. With a new administration, controversy raises the possibility that he could be replaced.

Under Florida statute, removing McCarty from his post would require the approval of the governor, the chief financial officer and one other Cabinet member.

Times/Herald staff writer Steve Bousquet contributed to this report. Janet Zink can be reached at or (850) 224-7263.

Insurance Commissioner Kevin McCarty hires $715-an-hour attorney to defend him in lawsuit 04/11/11 [Last modified: Monday, April 11, 2011 10:50pm]
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