Florida Criminal Attorney Blog
A Seminole County contracting firm owner is accused of racketeering and insurance fraud after State Farm Insurance claims the company billed for work that was never done and charged for products that were never used in order to fix homes damaged by sinkholes from Orlando to Tampa Bay.
Although the source of the suspicions are dubious, it is suspected that the overcharges in sinkhole claims can be linked to the reason insurance losses from sinkhole claims have skyrocketed. This increase has allegedly increased premiums for all Florida policyholders and not just those throughout Florida’s “sinkhole alley.” Most likely this is the sort of talking point that an Insurance company lobbyist would feed a reporter to avoid the most obvious source of any rate hikes…the Insurance company themselves.
Citizens, a state-run company that insures more than one million property owners allegedly lost more than $200 million dollars in 2010, which they claim is seven times more than the premiums collected for sinkhole coverage.
It can be difficult to detect fraud when dealing with sinkhole repairs. The two primary methods of work involve operations predominantly performed underground and there are numerous people involved including engineers to oversee the work, companies that sell cement, companies that pour cement and companies that make the repairs that often play the role of a general contractor.
A criminal investigation involving the Office of Statewide Prosecution against a Brooksville, Florida sinkhole repair company allegedly was started by a homeowner complaint in Hernando County.
In 2007, a Spring Hill homeowner supposedly hired the company to stabilize a sinkhole at his home. The company allegedly sent an invoice to State Farm in the amount of $94,410.
The company supposedly proposed the work would take 24 days to complete, but the homeowner told State Farm representatives the work took about 14 days. The crew supposedly arrived from Orlando around 10 a.m. every day and left by 3 p.m.
The invoice also claimed that a Casselberry engineering firm spent 20 hours inspecting the site, but the homeowner claims he never saw anyone from that firm at his home.
State Farm supposedly started reviewing other claims from the Brooksville sinkhole repair company, focusing on invoices submitted by the Seminole County contracting firm.
A detective with Florida’s Department of Financial Services allegedly went to serve a subpoena to the contracting company’s corporate headquarters and found a rural residential lot with a locked gate and guard dogs, but none of the equipment used in sinkhole repairs.
In August, the owner of the Seminole County contracting firm was arrested on charges his company overbilled State farm $202,800 for grout at 11 homes in the Orlando area. Court records indicate that State Farm listed another 17 houses, some in the Tampa area, where grout was allegedly overcharged by as much as $33,825 for a single house.
State Farm believes that the Seminole County contracting firm and the Brooksville sinkhole repair company worked together to submit inflated bills.
The owner of the Seminole County contracting firm has plead not guilty to the charges and the Brooksville sinkhole repair company claims the allegations against them are false.
In 2009, State Farm filed a lawsuit against an independent sales rep for the Brooksville sinkhole repair company claiming the man contacted homeowners and offered kickbacks to persuade them to hire the company. The case was closed due to insufficient evidence.
Florida lawmakers made offering rebate sinkhole repairs a felony in May. Any known homeowner who accepts a rebate could have their sinkhole coverage voided and run the risk of possibly having to refund the rebate amount to the insurer.
State Farm has since dropped its case against the rep with the Brooksville sinkhole repair company, however State Farm still feels skepticism persists with the company due to missing permits for sinkhole work at various homes purchased in the Hernando area.
The Hernando County Development Department has supposedly opened an inquiry. Failure to obtain a permit can result in fines and the loss of permitting privileges in Hernando County.
Permits allow county officials to monitor construction work as well as provide a source of income for the county.
Because the company supposedly failed to purchase permits they also supposedly avoided creating a public record of sinkhole activity at any of the homes purchased, which does not provide potential buyers with public knowledge that there was a sinkhole on that property.
In the State of Florida, insurance fraud is classified as a criminal felony offense. When someone files a claim with an insurance company with the intent to defraud, the person may be liable for insurance fraud. While sinkhole fraud is unlawful and punishable by criminal penalties, committing this offense can be grounds for an insurance company to deny a claim as well as cancel an insurance policy.
There are several types of insurance fraud that can arise in sinkhole claims, including the following:
• Intentionally lying about the date sinkhole damage was discovered
• Falsely answering or misstating facts during the application process
• Faking damage to the home or making any known damage worse than it appears
• Not disclosing prior sinkhole activity to future insurance companies
• Not disclosing prior sinkhole damage to potential homebuyers
In many circumstances, alleged fraudulent activity turns out to be a legitimate mistake. Regardless, many insurance companies will attempt to cancel, rescind or deny your claim based on any suggestion of fraudulent activity. The Florida Sinkhole Fraud Defense Attorneys at Whittel & Melton can help answer any questions you may have concerning insurance claims and potential fraud charges.