Citizens Insurance’s diversion of cases to arbitrator unconstitutional, federal lawsuit alleges

A new federal lawsuit asserts that state-owned Citizens Property Insurance Corp.’s ability to divert claims disputes to state arbitrators is unconstitutional and must be stopped.

The complaint, filed on July 10 in U.S. District Court in Miami, seeks to prohibit the so-called insurer of last resort from enforcing a binding arbitration clause that the complaint says violates the due process and equal protection clauses of the Fourteenth Amendment of the United States Constitution.

In 2022, Citizens obtained approval from the Office of Insurance Regulation, and later from the Florida Legislature, to add a provision to all of its new and renewing policies allowing either Citizens or policyholders to move any claims disputes away from court and into binding arbitration.

Since 2024, more than 1,300 disputes have been submitted to the state Division of Administrative Hearings (DOAH), which employs administrative law judges who preside over the cases, the division’s website shows.

But attorneys for plaintiffs say that it’s nearly always Citizens that refers disputes to arbitration, and a budget request approved last December by the company’s board of governors shows that Citizens plans to spend up to $19.3 million to have DOAH settle 320 cases a month through 2027.

Citizens began frequently referring disputes to DOAH last year, and plaintiffs attorneys began speaking out about it this past spring, saying it provides Citizens with an unfair advantage it wouldn’t have in the state court system.

The new lawsuit, filed on July 10 by Hollywood-based attorney Michael Citron on behalf of Stainton Williams, a 92-year-old Citizens policyholder, says the provision requiring referrals to DOAH was inserted through an “automatic policy renewal.”

The provision “was never negotiated,” the suit states. “It was imposed unilaterally.” Policyholders “were not given an option, not asked for consent, and not told that their fundamental rights were being waived.” In addition, Williams was not provided with any premium discount, election form, or non-arbitration policy alternative, the suit states.

“The impact is staggering,” the suit states. “As of July 2025, Citizens has prevailed in nearly every DOAH arbitration conducted” under the provision.

“Worse still,” the lawsuit continues, “policyholders who attempt to dismiss their own claims are punished. Citizens routinely demands attorneys’ fees, and DOAH ALJ (administrative law judges) reliably grant them.”

Williams, through his daughter, filed a notice of intent to litigate after Citizens denied his claim for wind-related damage to his roof and interior contents that he says occurred last Sept. 26, as Hurricane Helene spread tropical-storm-force winds through Miami-Dade County.

In its Oct. 11 claim denial, Citizens asserted “that the loss was caused by storm surge rather than a covered hurricane or wind event,” the lawsuit states.

During the arbitration, Citizens opposed all constitutional objections raised by Williams, the suit continues.

The administrative law judge, not named in the complaint, agreed with Citizens and refused to provide disclosures required under state law, including DOAH’s financial relationship with Citizens and the fact that his spouse formerly served as a corporate officer of Citizens and is currently an executive within the insurance industry, the suit states.

Williams’ arbitration remains set for hearing by Zoom conference, the DOAH website shows.

Citizens spokesman Michael Peltier declined to comment on any pending litigation.

But he defended his company’s arrangement with DOAH, saying “it provides a well-established, fair, and efficient process for policyholders, who no longer must wait nearly two years, on average, for a resolution.”

Citron said he was motivated to file the lawsuit by “a deep sense of shock over what is happening to Florida’s policyholders.”

“Regardless of the outcome — win, lose, or draw — the public deserves to know what has been embedded into their policies,” he said. “This endorsement strips consumers of fundamental rights, and the burden falls squarely on the shoulders of Citizens’ policyholders, many of whom are already financially vulnerable and rely on state-subsidized insurance.”

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 [email protected].

©2025 South Florida Sun-Sentinel. Visit sun-sentinel.com. Distributed by Tribune Content Agency, LLC.