Insurer’s suits are retaliation, customers say

People’s Trust rep: ‘Actions’ taken when clients don’t heed contracts

Imagine filing a claim with your insurance company for hurricane damage and, months later, not only is your home not fixed, but you get served with a lawsuit by your insurance company.

Dozens of South Florida customers of Deerfield Beach-based People’s Trust Insurance are finding themselves in an unlikely position — they’re being sued by their insurer.

Since July 1, People’s Trust has filed at least 242 lawsuits against its policyholders in Miami-Dade, Broward and Palm Beach counties, according to court records. Of those, 161 have been filed since Nov. 17, a day after the Sun Sentinel first reported the strategy.

The new suits include 113 against the company’s customers in Miami-Dade, 38 in Broward and 10 in Palm Beach County.

People’s Trust says the lawsuits are a last resort against customers who refuse to abide by contract terms they agreed to when they signed up with the insurer. Instead of allowing the company to send its affiliated repair contractor to their homes to make repairs, the company says, the customers hired attorneys and public adjusters to seek monetary payouts.

Attorneys for some of the defendants accuse the company of using the suits to bully their clients into accepting subpar repairs — and punish them for securing help from lawyers and independent public adjusters.

When People’s Trust decides to sue a customer, it’s intimidating, especially for people who have never been involved in a suit, said Anthony Lopez, a Coconut Grove-based attorney who specializes in insurance litigation.

Anthony Tinelli, a Miami attorney who formerly worked as a defense attorney for People’s Trust, said he’s representing seven Hurricane Irma victims who were recently sued by the company. “For one insurance company to sue its homeowners to that extent is unprecedented,” he said.

Another Miami-based attorney, Rafael Alonso, attributed the recent surge in lawsuits by the company to disputes over Hurricane Irma claims. “I’ve never seen an insurance company, especially after a natural disaster, suing its insureds,” he said.

People’s Trust says the attorneys and public adjusters generate disputes by preventing the company from sending its affiliated repair contractor — Rapid Response Team — to fix customers’ homes, as the customers agreed to allow when they signed up with the insurer. In exchange, policyholders were given a discount off their premiums, usually totaling $200 or less, the suits state.

People’s Trust and Rapid Response Team are both among a suite of related companies owned by entrepreneur George W. Schaeffer.

Asked why the company is filing so many lawsuits, chief marketing officer Amy Rosen responded that they were not lawsuits but “declaratory judgment actions” intended to compel customers to “give us the needed permission or documentation for us to fix their home.”

“Since they are represented, we do not have access to them,” she said. “Because of this, we cannot speak with them directly, and many times the only way to communicate our willingness and readiness to repair their home [is] to file a declaratory action. This is more a message to the attorney to let us repair their home than it is to our clients with the claim.“

Yet the cases are filed in Circuit Civil Court in each of the three counties; titled “Complaint;” refer to People’s Trust Insurance Co. as the “Plaintiff ” and the policyholder as “Defendant;” and include a “Demand for Jury Trial.”

Co-founded in 2008 by Schaeffer and the late Michael Gold, former owner of an office automation company who had no previous insurance experience, People’s Trust began with an unusual business model. The company could offer coverage for lower premiums because it was saving money by owning the contractor sent to make the repairs.

But in the past five years, disputes have increased between policyholders and the company over how those repairs are done. Attorneys say People’s Trust cuts costs by limiting the amount of work Rapid Response Team is permitted to perform. Rosen counters that People’s Trust’s customers are satisfied with Rapid Response Team’s work, which comes with a three-year “100 percent satisfaction guarantee.”

Long before it started suing its customers, People’s Trust — like many other insurers doing business in Florida — found itself on the receiving end of increasing numbers of suits filed on behalf of customers.

Back in 2013, just 78 suits were filed against the company, state records show. But by 2017, that number had grown to 698. In the first four months of 2018 — thanks in large part to Hurricane Irma — policyholders and contractors have filed 499 suits against People’s Trust.

Complaints against the company to the state’s Division of Financial Services increased by nearly 100 — from 148 to 246 between 2016 and 2017 and total 84 so far in 2018, records show. Among them are complaints about claims handling delays, which increased from 41 in 2016 to 106 last year, and are at 36 so far in 2018.

Several attorneys say the claims adjusting process often grinds to a halt when People’s Trust learns a policyholder has an attorney. “To date, we have never received any documentation of what they propose to repair,” Alonso said. “They just want [the insured] to sign the paper letting them into the house.”

If the policyholder disagrees with how People’s Trust says it plans to fix the house, the company invokes its right to seek a review by an appraiser. Invoking that right, however, requires the policyholder to share costs that can run into the thousands, attorneys said.

One of Lopez’s clients, Walter Gonzalez, said People’s Trust sued him almost immediately after learning that he was filing suit against the company over a dispute involving damages to his house caused by Hurricane Irma last September.

“I think they’re trying to scare people by putting the word out — ‘If you sue us, we’ll sue you back,’ ” Gonzalez said.

Rosen accused attorneys representing targets of the company’s suits with “slowing down this process by stalling in order to better negotiate or drive up costs.” If a client agrees to let the Rapid Response Team repair a home, the attorney cannot win a cash settlement — and collect legal fees — from People’s Trust, she said.

In addition to filing suits, People’s Trust is dropping policyholders who pursue damage claims with representation, Lopez said. This could be devastating for homeowners with pending lawsuits or unsettled claims, because most insurers won’t accept new customers with either. If they have mortgages, those policyholders could be forced into the state-run Citizens Property Insurance Corp. or another “last resort” insurer that charges high, unregulated rates, attorneys say.

Policy counts compiled by the state show that People’s Trust lost 17 percent of its customer base between the ends of 2016 and 2017. Statewide, its policy count declined from 146,106 to 120,758, and, in the tricounty region, it went from 59,762 to 49,582.

Rosen said reasons for the declines include the company’s “fiduciary responsibility” to policyholders to conduct business in a fiscally responsible manner.

“We have tightened our underwriting guidelines to conduct business in a fiscally responsible manner,” she said. In 2017, state regulators required the company to raise its rates by 16 percent — which was higher than the 14.5 percent it had requested.

People’s Trust’s financial house needed to be put in order.

A lawsuit by Schaeffer against the widow of his late partner that surfaced last week revealed the company lost tens of millions of dollars in 2016. An annual report released by the state Office of Insurance Regulation showed the company had a net underwriting loss of $47.2 million and a net loss of $26.8 million in 2016.

“As for shedding policies, we do not want to insure customers that do not believe in our right to repair,” Rosen said. “It is that simple. We do not hide the right to repair. It is plainly stated in our policy declarations and in the body of the policy and the [preferred contractor endorsement form]. Our agencies and sales agents are requested to explain our repair model to prospective insureds, and the insureds are required to sign a plainly worded one-page acknowledgment of PTI’s right to repair.”

Florida’s insurance industry has been complaining for several years about exploding litigation and costs arising from insurance disputes. Insurers say thirdparty representation significantly inflates costs of settling claims. Independent contractors perform unnecessary work, then file suit against insurers that deny claims or fail to pay full invoices, insurers contend.

But while many insurers have responded with steps such as limiting coverage for broken water pipes or refusing to cover older homes in parts of Broward and Miami-Dade — and to a lesser extent, Palm Beach County — People’s Trust’s lawsuits are an extreme response, says an official of a Fort Lauderdale-based insurance watchdog group.

“If the insurer and policyholder have a dispute over the scope of repairs, there should be some process to handle that without the insurer suing,” said Paul Handerhan, senior vice president of public policy for the Florida Association for Insurance Reform. “If the answer is to sue the policyholder, that seems heavyhanded and aggressive.”