Insurers using RICO Act to strike back against alleged fraud

Ron Hurtibise, South Florida Sun Sentinel on

Published in Business News

Fed up with what they claim is deliberate claims fraud that is triggering skyrocketing costs — and ever-higher premiums for consumers — two Florida insurance companies have gone on the offensive against alleged fraudsters using a legal tool developed to help federal prosecutors fight organized crime.

Lawsuits by Citizens Property Insurance Corp. and Heritage Property & Casualty claim that repair contractors and their affiliates are operating as criminal enterprises as defined by the Racketeer Influenced and Corrupt Organizations Act, or RICO.

Invoking the RICO Act is a risky and complicated gambit, legal experts say. Private companies use it when they want to stop organized criminal activity that’s not being prosecuted by government authorities. But RICO suits are difficult to prove and are often shot down by courts when they do not meet precise criteria laid out in state and federal law.

In a suit filed Jan. 13 in federal court in Miami, Heritage is accusing brother and sister Angelica and Albert Sigler of using their respective companies Moisture Rid Inc. and Water Dryout Inc. to create multiple claims by duplicating documents that homeowners signed in the belief they were giving just one of the companies the right to bill insurers on their behalf.

Heritage’s suit describes 12 examples of a homeowner’s signature on one company’s claims assignment duplicated onto a document assigning a claim to the other company — “deceiving Heritage into believing that the insured had in fact, assigned its rights in two separate claims.”

The company’s owners did not immediately respond to a phone message left at Moisture Rid Inc.’s Doral office on Friday.


Citizens’ suit, filed in state circuit court in June, targets South Florida attorney Scot Strems, public adjusting firm Contender Claims Consultants Inc. and a repair company, All Insurance Restoration Services Inc. Citizens, the state-owned “insurer of last resort,” accuses the defendants of working together to inflate or manufacture insurance claims and submitting them through “false and fictitious invoices.”

Strems, whose law firm is headquartered in Coral Gables, is the subject of three Florida Bar complaints to the state Supreme Court, including one accusing his firm of misleading elderly and immigrant homeowners into hiring the firm to represent them in lawsuits they didn’t know were being filed. Strems, currently suspended from practicing law, has denied those charges and in court filings denied allegations in Citizens’ RICO suit.

In his motion to dismiss the CItizens suit, Strems said the company failed to meet the heightened standards of RICO claims and “merely track the boilerplate language of the statues and fail to provide any specific factual support” for the claims. The case, originally filed in Leon County, was recently transferred to Miami-Dade County.

RICO suits are difficult to win


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