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After the Hurricanes of 2004, Florida Created a Mediation Program

Posted on: Saturday, 12 April 2008, 06:00 CDT

After the hurricanes of 2004, Florida created a mediation program to help homeowners resolve claim disputes quickly so residents could begin rebuilding their houses.

The free program is open to all Floridians, but many homeowners may not have heard of it.

A lawsuit filed in Leon County Court this month claims that insurers failed to notify their policyholders that the mediation program was available. State law requires that insurers provide information on the program when claims are filed or when a claims dispute arises.

Paul Berger, the Boca Raton attorney who filed the suit, said he has gathered sufficient evidence to show that insurers violated the "spirit and the letter of the state consumer protection laws" by failing to notify policyholders about the mediation program.

By doing so, insurers saved themselves millions of dollars by underpaying claims and not paying the $350 cost of the mediation sessions, he said.

Berger said that many homeowners believe their claim is over when they get a settlement offer from their insurer. They don't realize they can dispute a claim through mediation even if they've cashed a settlement check. Policyholders also can file a supplemental claim if the initial payment from their insurer didn't cover all of the repairs needed.

The point of the lawsuit, he said, is to require the Office of Insurance Regulation and the Department of Financial Services to enforce the state statute by requiring insurers to send notices to their customers about the mediation program.

While OIR, which regulates insurers, couldn't comment about the lawsuit, the agency said Insurance Commissioner Kevin McCarty supports using mediation as an effective tool for resolving disputed claims.

DFS, which oversees the mediation program, said it is focused on helping homeowners reach mediation so they can resolve their claims. It disputes the allegations in the lawsuit and said it will respond in court.

The mediation program, which has been extended through July 31, is run by the Collins Center for Public Policy in Tallahassee. "We're getting 140 to 150 requests for mediation a month. It has slowed, but it's still steady," said Mark Pritchett, who administers the program.

More than 13,000 requests for mediation have been referred to the center in the past 27 months. About 91 percent of the 2004 storm claims that went to mediation have been resolved, with about 80 percent of the Wilma claims settled as well, said Pritchett.

Berger and other attorneys said they've worked with clients who have never been told about the mediation program by their insurers -- private carriers or Citizens Property Insurance, the state-run company. They said the same is true for the Florida Insurance Guaranty Association, which handles claims for insolvent companies.

Berger has represented three clients who weren't told of their right to mediation by FIGA, which has been busy since mid-2006 settling open claims from the three Poe Financial insurers that were shut down by state regulators.

Joanne Sica's Coral Springs home sustained more than $98,000 in damage, according to her lawsuit. FIGA, after having several adjusters review the damage, paid her about $5,000. The agency never notified the homeowner about the mediation program, according to a letter an attorney representing FIGA sent to her attorney, Nicole Freedlander, who works with Berger on some cases.

Sica, insured during Wilma by Poe Financial's Atlantic Preferred, has sued FIGA in Broward County Circuit Court to wrap up her claim. That lawsuit is still in litigation.

Michelle Lovern, FIGA's deputy director, says the agency generally didn't notify former Poe clients of their right to mediation as it picked up open claims after the state shut down the Poe companies in June 2006.

However, once the agency is notified by a homeowner that there is a problem with the claim, either during the adjustment process or when a settlement offer is made, then FIGA sends out information about the mediation program, said Lovern.

Lovern added that her staff researched some of the Poe's files and found evidence that indicated that the Poe companies had told homeowners they had a right to mediation.

Berger's lawsuit alleges that DFS sided with insurers and unfairly blocked some homeowners from using mediation last summer.

Citizens Property Insurance, the state-run insurer, and other carriers said they saw a slew of claims being removed in late summer by public adjusters.

DFS said it began to review requests for mediation more closely in August. DFS said it was checking with the insurers to see if the issues at stake hadn't been already mediated or if the homeowner had the appropriate coverage for the damage on the claim.

A DFS spokesman said in late December that DFS discontinued this practice of closely reviewing all mediation requests because most of the requests were going to the Collins Center, anyway.

DFS said the goal of the extra review was to be sure the time set aside for a mediation hearing was beneficial to homeowners and insurers.

Source: The Miami Herald

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