• Draft Florida Inspector General Report Concludes Citizens Property Insurance Corporate Integrity Office Disbanding Was Legitimate, Not Retaliatory
  • May 13, 2013
  • Law Firm: Colodny Fass Talenfeld Karlinsky Abate Webb P.A. - Fort Lauderdale Office
  • An investigation of Citizens Property Insurance Corporation ("Citizens") ordered by Florida Governor Rick Scott in November 2012 determined that the disbanding of Citizens' Office of Corporate Integrity just prior to that was a legitimate business decision and not a retaliatory action.

    Conducted by Florida's Inspector General, the review concluded that Citizens' senior officials presented "legitimate nondiscriminatory" reasons for the State-run insurer's decision to disband the Corporate Integrity Office and restructure its internal audit capabilities by replacing the four departed employees with a new team of certified forensic auditors who took over in March 2013.

    The report, a draft of which is not yet public, but was made available for Citizens' review, recommended the appointment of an independent officer to serve as a central point for coordinating and managing the receipt and handling of Citizens-related complaints.

    " . . . I believe the creation of an Office of Inspector General under Senate Bill 1770 creates an opportunity for Citizens to have the Citizens Inspector General take on this role upon appointment." Citizens President and CEO Barry Gilway wrote in his acknowledgement of the draft report to Chief Inspector General Melinda Miguel.

     Background

    Citizens does not currently have an inspector general and is not required by law to have one.  However, its Chief of Internal Audit has duties and responsibilities similar to an inspector general.  The position, which was created within Citizens during 2006, has been filled almost continuously, with Citizens having employed four Chiefs of Internal Audit since 2007.

    Generally, the duties of Citizens' Chief of Internal Audit include fostering and promoting accountability and integrity in Citizens; holding Citizens' leadership, management and staff accountable for efficient, cost-effective operation; and preventing, identifying and eliminating fraud, waste, corruption, illegal acts and abuse.  Specific duties and responsibilities for the position are stated in s.627.351(6)(i), F.S.

    Citizens' Chief of Internal Audit carries out his or her duties primarily through audits,  management reviews and investigations.

    From December 2010 until October 2012, Citizens also had an Office of Corporate Integrity, which handled employee complaints--particularly those that could indicate ethics violations and internal fraud.  During that time, the employees in this office reported to Citizens' General Counsel and Chief Legal Officer.  Thereafter, they reported to the Citizens' Chief of Internal Audit.

    The Office of Corporate Integrity was disbanded by Citizens' Board of Governors ("Board") in October 2012, but its functions were absorbed by other Citizens staff, including Citizens' Office of Internal Audit, Ethics Officer and Employee Relations Office.

    Approved by the Legislature and awaiting final action, CS/SB 1770 establishes the Office of the Inspector General within Citizens to ensure accountability, integrity and efficiency.  The bill provides for Citizens' inspector general to be appointed by the Florida Financial Services Commission ("FSC").  That person may be removed from office only by the FSC.

    Should CS/SB 1770 be enacted, the inspector general would be under the supervision of the FSC until June 30, 2014, after which he or she would report to Citizens' Board Chairman.

    CS/SB 1770 specifies that the inspector general's duties are to initiate, direct, coordinate, participate in, and perform studies, reviews, evaluations and investigations designed to assess management practices, compliance with laws, rules and policies, as well as program effectiveness and efficiency.  In addition, the position must complete special projects and perform other duties as requested by the FSC.

    At least annually, the inspector general, pursuant to CS/SB 1770, must provide a report to the President of the Florida Senate and the Speaker of the House of Representatives on the extent to which Citizens' policies are returned to the voluntary market from the Citizens clearinghouse--another component of CS/SB 1770.  The report also must include an analysis on the effectiveness of the clearinghouse for depopulation of Citizens.