Florida’s Auditor General has agreed to legislators’ demands that the state scrutinize the legitimacy of insurance and federal disaster aid payments in Miami-Dade County and possibly other parts of the state.
The review, which is expected to be completed this summer, will focus on hurricane damage awards made by the Federal Emergency Management Agency and Citizens Property Insurance Corp., Auditor General William O. Monroe told the South Florida Sun-Sentinel.
The study is the first investigation by the state into payouts by both FEMA and Citizens in Miami-Dade County. The federal agency has paid out $31 million to residents there and the insurance company more than $22 million for Hurricane Frances, even though the Labor Day storm made landfall more than 100 miles to the north.
Up to 25 percent of the money paid by FEMA comes from state coffers.
“I think that there’s a sense up here in Tallahassee that this is a very serious problem,” Sen. Ron Klein, D-Boca Raton, who has been pressing Monroe for the audit, told the Sun-Sentinel.
Klein has been joined in the effort by Republican Sen. Steve Wise, chairman of the Legislative Auditing Committee, and Hialeah Republican Sen. Rudy Garcia, chairman of the Senate Banking and Insurance Committee.
“It is a bipartisan effort to get to the bottom of what went wrong with Citizens and FEMA,” Klein said.
Citizens, the state-backed “insurer of last resort,” writes policies for high-risk properties that private companies will not cover. Citizens has told the Legislature that it faces a $527 million shortfall in its windstorm account after last year’s historic four hurricanes and is considering imposing a special, one-time rate increase on all homeowner premiums.
“Over $20 million of claims were paid in Miami-Dade County, without any explanation by Citizens, without any kind of red flags going up when the claims went in,” Klein said. “They were just cutting checks.”
Citizens spokesman Justin Glover said the company will cooperate fully with the audit, and welcomes any scrutiny of its business practices. He said the company has looked at wind maps from Frances in Miami-Dade County, and that winds were strong enough to cause minor damage to homes.
“If there’s a claim that’s legitimate that exceeds the deductible, we have an obligation to pay those claims,” Glover said.
FEMA spokesman James McIntyre said he was unprepared to comment immediately to the Sun-Sentinel.
The audit will address whether people received aid from both Citizens and FEMA, Monroe wrote in a letter to Klein on Tuesday. Under federal rules, people can collect FEMA funds only for damage not covered by insurance.
Monroe said the review will begin in Miami-Dade.
“There’s a good possibility we’ll look at it statewide,” he said.
Results of the audit will be used by legislators to craft any necessary changes to Citizens’ operation and policies and to the state’s participation in the federal aid program, Klein said.
If the review uncovers criminal activity, the senator said, he will turn the findings over to a grand jury. This month, 14 residents of Miami-Dade were indicted on fraud charges in an ongoing federal investigation by the Department of Homeland Security, which oversees FEMA.
State auditors requested FEMA’s claims records last week but were still waiting Tuesday for word on whether the federal government would share the information. FEMA has denied requests by the news media for names and addresses of those who received aid, citing privacy laws.
The South Florida Sun-Sentinel and three other Florida papers have filed suits in federal court for the records.
The state has not decided how far to pursue the claims records if FEMA refuses to hand them over, Monroe said.
“We’ll make our own judgment as to whether we believe whatever they’re citing,” he said. “If we have a different opinion, we’ll take whatever action we deem appropriate.”
Klein vowed to enlist the help of Florida’s Congressional delegation if necessary.
Without the records, he said, “How do you determine if they paid the right people and the right amount?”