Judge stops Citizens Insurance from forcing claim disputes into binding arbitration

A Hillsborough County circuit judge has ordered state-owned Citizens Property Insurance Corp. to stop sending claims disputes to arbitrators employed by the state.

Circuit Judge Melissa Mary Polo said that the plaintiff, Martin A. Alvarez, a Hillsborough resident, demonstrated a “substantial likelihood of success” in his claim that Citizens’ practice of ordering cases to be decided by the Department of Administrative Hearings (DOAH) violates policyholders’ constitutional rights to fair trials.

Citizens obtained approval in 2022 from the Office of Insurance Regulation, and later from the Florida Legislature, to add a provision to all new and renewing policies that allowed the company to divert claims disputes from the court and into binding arbitration.

Last year, Citizens’ Board of Governors approved paying DOAH $19.3 million to administer the program through 2027.

Policyholders who wanted Citizens coverage were not allowed to refuse the provision.

Since 2024, Citizens moved more than 1,300 claims to the DOAH courts. Prior to July 10, the company prevailed in 47 of 51 cases that advanced to a final hearing.

For others, Citizens typically tendered settlement offers of $250 or $500, attorneys for the plaintiff told the South Florida Sun Sentinel. Refusal by plaintiffs to accept the settlement offers put them at risk of rulings ordering them to pay Citizens’ legal fees if they lost their cases or withdrew prior to hearings, the attorneys said.

Alvarez filed his lawsuit on July 11, a day after a similar lawsuit was filed in U.S. District Court in Miami by a 92-year-old Citizens customer.

Lynn A. Brauer, an attorney with the Miami-based Insurance Trial Lawyers firm, told the Sun Sentinel that she had filed eight motions for relief from the courts in cases that Citizens had sent to DOAH before Polo ordered the statewide injunction.

Brauer said Citizens invoked the arbitration provision after Alvarez filed an intent to sue over Citizens’ decision to cover only part of his claim that his home suffered damage during Hurricane Ian.

Citizens spokesman Michael Peltier said the company has received the order and is working on a response. “State law specifically authorizes the DOAH process, and we believe that the law is Constitutional. Beyond that, we do not comment on pending litigation.“

Peltier told the Sun Sentinel in July that while seeking attorneys fees against plaintiffs who lose or withdraw their DOAH cases, collecting the money requires the company to file a motion in state court. Citizens has not yet done that, though some losing plaintiffs have voluntarily paid legal fees imposed against them, he said.

In his lawsuit, Alvarez claims that the provision requiring Citizens policyholders to accept binding arbitration violates the Florida Constitution and policyholders’ due process rights.

Brauer said the state insurance code requires companies to offer the binding arbitration option, likely in exchange for a premium discount, and require policyholders to sign a document stating they accept the offer.

But the statute that Citizens convinced the Legislature to enact states that the requirement does not apply to Citizens, she said. “They can just put it in their policies.”

Following a hearing on Wednesday, Judge Polo agreed that Alvarez is likely to prevail on claims that the provision violated the due protection and equal protection clauses of the Fourteenth Amendment of the U.S. Constitution as well as Section 21 of the Declaration of Rights of the Florida Constitution, relating to access to the courts.

Chip Merlin, founder of Tampa-based Merlin Law Group, called attention to the lopsided DOAH hearing results in an April blog entry on his website, Property Insurance Coverage Law, on Friday called Polo’s ruling “welcome and overdue.

“There is no fairness when a government entity makes up and hires its own judicial system,” Merlin said in an email. “The legislature should never have approved this. Officials running Citizens should have a change of heart because they are losing all credibility and any good will which remains by sticking to this wrongful charade of justice.”

Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071 or by email at rhurtibise@sunsentinel.com.

Originally Published: August 2, 2025 at 8:00 AM EDT