Citizens Insurance dismisses adjusting company

The Miami Herald
December 28, 2005

Quantum Claim Service, the adjusting firm that allegedly offered kickbacks to former high-ranking executives at Citizens, was dismissed with short notice late last week.

The adjusting firm that allegedly offered bribes to a former Citizens Property Insurance executive was dismissed with little notice by the state-run insurer last Friday.

Despite the allegations against Quantum Claim Service that surfaced in mid-September and quickly led to a federal criminal investigation that's ongoing, the Richmond, Texas-based firm continued to work for Citizens in Tallahassee. Quantum was providing staffers at Citizens' catastrophe center and field adjusters who visited Citizens policyholders to resolve claims.

According to a letter sent by Quantum's founder Rodney Harrell to employees, the firm was surprised by Citizens' dismissal.

''While I don't understand why we are being released, it is a reality we must all face,'' Harrell wrote in the letter obtained by The Miami Herald. ``I am sorry for the short notice, however this decision was sent to me late yesterday evening [Dec. 21] via e-mail.''

Quantum had 25 employees working at Citizens at the end of last week.

Justin Glover, Citizens' spokesman, said Quantum was dismissed because of the investigation and because the insurer's operational needs didn't require its services.

Harrell didn't return three phone calls from The Miami Herald Tuesday seeking comment about his firm's dismissal. His attorney, James Simmons of Houston, said he relayed the message to his client and it was his client's decision whether or not to talk with reporters.

In his letter to employees, Harrell also said: ``Quantum worked faithfully, patiently and honestly with [Citizens] in a business manner and helped them to accomplish a catastrophe plan for their company, a plan that worked well for them. The past sacrifices made by the Quantum team have all faded into their past.''

Glover added there's no provision in Citizens' standard contract with adjusting firms requiring the insurer to hire these firms for any period of time or to provide certain services.

Quantum had started working for Citizens last year. Harrell and his wife, Sonya, both worked for Citizens and they set up a Florida-based corporation in February 2005.

The firm was paid $7.6 million in 2005 by Citizens for its claims adjusting service as well as for staffing Citizens' catastrophe center. Sources close to Citizens said that Quantum also inspected claims, including many that Quantum adjusters had handled. Between August 2004 and June, the firm had already earned $5.92 million, according to documents provided by Citizens.

In September, Houston-based Universal Risk Services, another adjusting firm working for Citizens, alleged in a lawsuit filed in Texas circuit court that Quantum had bought a motorcycle for R. Paul Hulsebusch, the insurer's former chief operating officer. The suit also alleged Quantum had bought a firm owned by Hulsebusch for $200,000.

Saucon Valley Consultants, the former Hulsebusch firm, was hired by Citizens last fall to inspect properties on Captiva and Sanibel Island insured by the company. The company was paid at least $370,360 for its work.

Among the more than three dozen outside adjusting firms working for Citizens since last year, when four hurricanes hit Florida, Quantum was among the top grossing firms.

Field adjusters are paid fees ranging from $60 to more than $4,000 for handling claims up to $395,000; on large claims, they're paid a percentage of the gross repair cost. Workers in Citizens' catastrophe center are paid a flat daily fee.

Copyright © 2005 The Miami Herald

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