Insurer rebuts new attorney general’s claim he secured $30 million to resolve fraud claim

Ron Hurtibise, South Florida Sun-SentinelSouth Florida Sun Sentinel

Universal Property & Casualty Insurance Corp. — the state’s third-largest property insurer by policy count — has agreed to repay more than $30 million following an investigation into allegations it “fraudulently” submitted ineligible claims to the state’s Hurricane Catastrophe Fund, Florida’s attorney general said in a news release.

Attorney General James Uthmeier said in the release on Tuesday that the investigation stemmed from allegations in a whistleblower lawsuit filed in Leon County in 2020.

But a Universal spokesman on Wednesday told the South Florida Sun Sentinel that a settlement agreement signed by its CEO on March 27 merely capped the state’s probe of issues that were resolved in 2023. “There is no amount to be paid by the company resulting from this review,” spokesman Travis Miller said.

The whistleblower lawsuit triggered a state investigation into whether the Fort Lauderdale-based insurer had submitted “numerous” claims to the CAT Fund for compensation following Hurricane Irma in 2017 that were “unrelated” to the storm, which would violate the state’s False Claims Act, the attorney general’s release said.

The CAT Fund is a state-run trust fund that provides reinsurance support to insurance companies after hurricanes cause widespread or catastrophic damage.

“During the course of that investigation, numerous unrelated claims were identified in the submissions from (Universal) to the (CAT Fund),” the attorney general’s news release said. “As a result, the company agreed not to seek reimbursement for those claims, lowering the (CAT Fund) payout from Hurricane Irma to (Universal) by more than $30 million.”

Universal also agreed to pay “more than $4 million in fines and to implement changes to its policies and procedures,” the release said. Miller acknowledged that the company agreed to make “a payment” but said it was not identified as “a fine” in a settlement agreement signed by Universal CEO Steve Donaghy on March 27.

The agreement included the company’s statement that the action “lacks merit” and that it “denies any allegation of wrongdoing.”

While the attorney general’s news release said that Uthmeier — who took office on Feb. 17 — “secured the return of tens of millions of dollars” by the company, Miller told the Sun Sentinel that the issues raised in the whistleblower’s lawsuit were resolved in 2023 through the CAT Fund’s “standard process” of reviewing claims over six years after the storm.

The whistleblower was a former employee in Universal’s claims department who left the company in 2018, according to a separate statement released by Universal on Tuesday.

It added that the whistleblower, who “had no involvement in or familiarity with the company’s data analytics team or (CAT Fund) reporting procedures, alleged that the company improperly included certain non-Irma claims in preliminary reports submitted to the (CAT Fund). The assertions contain numerous fundamental factual inaccuracies and gross mischaracterizations.”

The company and the CAT Fund reached a “full and final resolution” in mid-2023, the statement said. “Although the plaintiff (not the state) alleged fraud, this is simply not the case and the state did not make any such finding. In fact, the state acknowledged in the settlement agreement that the company maintains processes, workflows and training on this very subject — a realization that is wholly inconsistent with any allegation of fraud.”

Claims evolve over time “as the insurer gains more information about the cause and origin of the loss,” Universal’s statement said. Some claims initially thought to result from a hurricane are later determined to not be associated with one, while others “not reported as hurricane claims are determined to be associated with a storm,” it added.

Universal noted that the state acknowledged it “fully and completely cooperated” with the state’s investigation and provided requested information.

The settlement agreement approved by the company and the state, Universal said, “does not identify any part of the payment as a fine, but rather the agreement includes among its terms a payment as part of the parties’ mutual decision that the case should be dismissed and the matter concluded.”

The agreement includes a provision requiring Universal to pay $6.5 million to the state. Of that, $2.4 million will be used for “the state’s reasonable expenses, attorney’s fees and costs,” the agreement states.

Michael Carlson, president of the trade group Personal Insurance Federation of Florida, said, “This looks like a good example of the government holding insurers accountable to Florida law. Consumers should expect nothing less.”

Universal Property & Casualty has long been one of the state’s largest insurers by policy count. According to the state’s quarterly Residential Market Share Report, the company controlled the third-largest number of personal residential and commercial residential policies — 557,114 — behind only state-owned Citizens Property Insurance Corp. and State Farm Florida.

Universal is also one of a handful of publicly traded Florida-based insurers, alongside Heritage Property & Casualty and Homeowner’s Choice. Universal’s stock price on NASDAQ rebounded to $23.81 in midday trading on Wednesday after falling to $23.43 shortly after the market opened.

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].