Citizens Insurance stopped again from forcing disputes into binding arbitration while challenge proceeds

A Hillsborough County circuit judge reinstated an injunction that stops state-owned Citizens Property Insurance Corp. from forcing policyholders’ claims disputes to an arbitration panel that the company funds.

Circuit Judge Melissa Polo on Aug. 1 granted a temporary injunction requested by attorneys for Martin Alvarez, a Tampa man who was planning to sue the state’s insurer of last resort over its offer to settle his hurricane damage claim.

Polo’s order, rather than stopping action only in Alvarez’ case, barred Citizens from diverting any and all claims disputes to the state’s Division of Administrative Hearings (DOAH) and paused cases that were already underway. She ruled that Alvarez demonstrated a “substantial likelihood of success” in its claim that the practice violates policyholders’ constitutional rights to fair trials.

Polo also denied Citizens’ motion to move the trial to Leon County, where the company is headquartered.

On Aug. 5, Citizens filed a notice to appeal the decision to the 2nd District Court of Appeal, triggering an automatic stay of the injunction and allowing Citizens’ DOAH cases to proceed.

On Thursday, Polo ruled that failing to lift the stay while Citizens pursued its appeal “risks depriving policyholders of constitutional protections.”

After Thursday’s ruling, Citizens spokesman Michael Peltier responded, “We will certainly adhere to the order while it remains in effect. The DOAH process offers a fair and efficient venue for settling disputed claims and the statute that specifically authorizes Citizens to use DOAH is constitutional. We look forward to making our case on appeal.”

Alvarez’ attorney Lynn Brauer did not immediately respond to a request for comment about the latest ruling.

The DOAH system, approved by both Citizens’ Board of Governors and the Florida Legislature, is forced on Citizens policyholders through a policy provision they have no opportunity to reject.

By contrast, private market insurers can offer policy provisions — known as endorsements — giving them the right to divert disputes to arbitration, but those are typically in exchange for a premium discount and policyholders have the right to reject the provisions.

Under Citizens’ mandatory endorsement, policyholders surrender their rights to a “jury trial, access to courts, and due process on the breach of their contract claims” while being offered “neither a fair alternative nor a reduction in premiums,” Polo wrote in a four-page order.

Since 2024, Citizens moved more than 1,300 claims to the DOAH courts. A South Florida Sun Sentinel analysis in July found that Citizens prevailed in 47 of 51 cases that advanced to a final hearing prior to July 10.

Advised by their lawyers that the system sets them up to fail, a majority of policyholders either settle or drop their claims before advancing to a hearing, plaintiffs attorneys told the Sun Sentinel.

“Irreparable harm is unmistakable and severe,” Polo wrote. Alvarez has demonstrated that the DOAH forum is “structurally biased and deprives policyholders of neutral discovery, motion practice and judicial review,” the judge wrote.

Meanwhile, “the record shows that DOAH repeatedly awards fees and/or costs to (Citizens) while denying the same relief to the insureds,” she wrote.

Plaintiffs attorneys have said that Citizens routinely offers $250 or $500 settlements that, if rejected, subject policyholders to legal fee rulings by DOAH judges whether they lose their hearings or later decide to drop their claims.

The DOAH endorsement “itself does not provide a way to challenge the validity of any proposals for settlement served prior to a hearing on the amounts,” Polo wrote.

DOAH judges even “routinely award costs to [Citizens] in cases where [Citizens] does not file proposals for settlement,” the judge wrote. “The result is that ordinary citizens … are stripped of their constitutional rights and left powerless in a tribunal that appears to favor the state’s insurer.”

Last year, Citizens’ Board of Governors approved paying DOAH $19.3 million to administer the program through 2027.

Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071 or by email at rhurtibise@sunsentinel.com.

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