WEST PALM BEACH, Fla. — The Florida Supreme Court is poised to decide whether Citizens Property Insurance's controversial arbitration system is constitutional, a ruling that could have major implications for homeowners across the state.
WATCH BELOW: 'Big ramifications if the Supreme Court decides in favor of Citizens,' Aaron Bass tells Investigative Reporter Kate Hussey
The development comes after months of WPTV investigative reporting into the state-backed insurer’s mandatory arbitration process, which requires certain policyholders to resolve insurance disputes outside traditional court and before a single administrative law judge.
Documents WPTV obtained show those judges are paid through contracts funded by Citizens.
Attorneys challenging the system argue that arrangement creates an inherent conflict and strips homeowners of their constitutional right to a jury trial.
“This is the textbook legal example of a thumb on the scale of the outcome here,” insurance attorney Aaron Bass told WPTV.
WPTV has interviewed at least five attorneys who have raised concerns about the program.
Emails WPTV obtained in a public records request show State Senator Erin Grall wrote to the state-run insurer, questioning its constitutionality, and Citizens' authority to enforce it, before the arbitration requirement took effect.
A WPTV review of one year of Citizens final hearing decisions also found judges ruled in Citizens’ favor in 99% of the cases examined.
“It’s unprecedented,” Bass said. “I’m not aware of anything anywhere else in the country where this occurs.”
Judge questioned why homeowners must give up jury trials
The constitutional fight escalated in May, when Miami-Dade Circuit Judge Milton Hirsch refused to force a Citizens policyholder into arbitration.
“Citizens policyholders — and Floridians generally — are entitled to ask — indeed, cannot help but ask — why they must be stripped of their right to trial by jury — as a condition of insuring their homes,” Hirsch wrote.
Citizens appealed.
The Florida Supreme Court has now agreed to take up the case.
"Big ramifications if the Supreme Court decides in favor of Citizens," said Bass, who added the implications could extend well beyond Citizens policyholders.
Last year, Florida lawmakers considered legislation that would have allowed other property insurers to require similar arbitration.
If the Supreme Court ultimately sides with Citizens, Bass believes the decision could open the door for more Florida homeowners to have insurance disputes decided through arbitration systems funded by the insurers they are challenging.
"There would be no reason to have property insurance at that point. I mean, you would essentially never be able to file a claim and then argue with your insurance company," said Boca Raton insurance attorney, John Tolley.
Homeowner challenges $0 arbitration award
The constitutional battle comes as another Citizens policyholder is separately challenging what happened in her own arbitration case.
Tolley represents a West Palm Beach homeowner whose roughly $32,000 water damage claim was denied by Citizens.
Her dispute went to arbitration, where the administrative law judge ruled in Citizens’ favor and awarded her nothing.
Tolley filed a motion asking the court to throw out that decision, alleging a “failure of the administrative law judge to remain neutral.”
His filing cited contracts uncovered through WPTV’s investigative reporting, arguing they show the judge had a financial relationship tied to Citizens.
“At the end of the day, if you’re getting paid by one of the parties, how is that not at least a look of impropriety, if not a conflict of interest?” Tolley said.
The motion was denied Aug. 4. The order did not explain the reasoning for the denial.
WPTV contacted the judge involved in the case by phone and email seeking comment but did not receive a response.
Citizens defends arbitration program
Citizens has repeatedly defended the arbitration process.
The insurer told WPTV that arbitration resolves claims more quickly than traditional litigation and “saves legal fees and costs on both sides.”
Citizens also said “the vast majority of trial courts that have considered the issue found the DOAH process constitutional” and that it “welcomes the Florida Supreme Court’s review.”
Attorneys on both sides are now awaiting guidance from the state’s highest court.
“It will be nice to get some finality out of it,” Tolley said.
“They’re going to have to figure out what they think is the best thing for the state of Florida,” Bass said.
The Florida Supreme Court has not said when it will rule.
If the court strikes down Citizens’ arbitration program, attorneys say the decision could also raise new questions for policyholders who have already gone through arbitration — and for homeowners whose claims are still pending.
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