Report: Performance issues that led to sacking of Citizens investigators came out of the blue

Barry Gilway, president of Citizens Property Insurance, says that the inspector general’s report vindicates the state-run insurer.
Barry Gilway, president of Citizens Property Insurance, says that the inspector general’s report vindicates the state-run insurer.
Published May 8, 2013

TALLAHASSEE — Last October, four corporate investigators at Citizens Property Insurance Corp. were called into a conference room, asked to sit down and told their services would no longer be needed.

The bearer of the bad news was one of several company executives who had been implicated in a six-month investigation into corporate misbehavior, large severance packages and sexual harassment at the state-run insurer.

The employees said that their abrupt firing was an act of revenge. But a new report from the state's chief inspector general did not find direct evidence of retaliation.

"Based solely on the evidence, the evidence did not support a conclusion that retaliation was the reason for the decision to disband OCI," the Office of Corporate Integrity, wrote Melinda Miguel, chief inspector general for Gov. Rick Scott, in a draft report released Tuesday.

Citing the high bar needed to prove retaliation, Miguel's report said the fired investigators did not have enough clear evidence to do so.

It does point out, however, that Citizens' claims of poor performance by the investigators appeared to come out of the blue. The investigators, who made up the Office of Corporate Integrity, were not accused of underperforming until after their inquiries led to the abrupt resignation of a top executive, tough interrogations of several others and several policy changes.

According to the report, Citizens president Barry Gilway cited "performance issues that were not raised prior to disbanding OCI nor supported by other decision-makers involved in the decision."

The corporate investigators each said they were surprised by their abrupt firing and were not told of any concerns with their performance. Gilway said Tuesday that the inspector general's report vindicated the company, which has said the firings were part of a restructuring effort to beef up fraud detection.

"I believe the report provides a factual, independent and fair view of the nature of events leading to the closure of the Office of Corporate Integrity, and I have no further comment or specific changes to the content," Gilway said in a statement.

The report pointed out that several staffing and policy changes have taken place over two years at Citizens, and the disbanding of the OCI was another instance of business restructuring.

Gilway has stood by the decision to fire the OCI team, though he conceded last year that the timing was poor. At the time, Citizens was under a separate inspector general inquiry over excessive travel spending by executives. It was also the subject of several media reports documenting huge insurance premium increases faced by its customers.

Citizens has said the OCI firings led to a stronger antifraud effort at the company, with new forensic fraud detectors and changes to employee-complaint handling.

The change in complaint-handling policy did not occur until the day after a Times/Herald story unveiled the abrupt disbanding of the OCI. Citizens did not hire the new fraud prevention professionals until months later.

The OCI investigators were fired shortly after filing an explosive report that detailed allegations of corporate misconduct and financial mismanagement by top executives at Citizens.

According to documents compiled by the OCI team — T.W. Smart, Selisa Daniel, Melanie Yopp and Meghan Walker — Citizens had paid out large severance packages to employees accused of misconduct. One executive received more than $80,000 from Citizens in a severance deal after being accused of trying to cover up an affair with another employee. Citizens also helped him receive unemployment benefits after the $80,000 payout.

The company's chief administration officer resigned abruptly last year after OCI investigators began looking into allegations that she had engaged in the unlicensed practice of law. Citizens continued to pay her wages and benefits for five months after she resigned, under a special consulting agreement.

Citizens, which insures 1.2 million Floridians, has implemented several policy changes since reports of lavish travel spending, corporate misconduct and questionable contracting last year. The company has agreed to abide by state regulations on travel costs and contracts and to rein in excessive severance packages.

The company also could have its own inspector general later this year if Scott signs a bill that passed the Legislature last week.

"The bill represents the latest in what has been a series of steps by Citizens and the Legislature to hold the company to a higher standard and better serve policyholders and all Floridians," Gilway said.