Title: Senior Field Adjuster Conflict of Interest

Transcription

1 INVESTIGATION REPORT Title: Senior Field Adjuster Conflict of Interest Date: January 24, 2014

2 Table of Contents: Page Executive Summary Background 1 Allegations 1 Audit Procedures 1 Audit Findings 2 Conclusion Recommendation Action Appendix Distribution 4 Audit Performed By 4

3 Executive Summary Background On April 15, 2013, an anonymous Informant sent several letters to members of senior management claiming an improper relationship exists between a Citizens Senior Field Adjuster (Subject) and a Tampa Bay restoration company. The Informant alleged that the Subject was recommending the restoration company to the insured(s) as well as informing the restoration company when to make contact with insured(s). Additionally, the Informant s letter stated that the Subject had attended various social events (i.e. golf, fishing and baseball game) as a guest of the restoration company. Allegations The following allegations were noted upon review of the information received: A Conflict of Interest 1 between the Subject and a restoration company exists, specifically: Subject is recommending the restoration company to insureds; Subject is communicating the location and name of insureds who have experienced a loss; and Subject is accepting gifts for providing the restoration company with the benefits/services stated above. Audit Procedures Office of Internal Audit-Forensics (OIA-F) performed the following: Reviewed public information to assess the relationship (i.e. personal or professional) between the firm, its members and the Subject. Reviewed Citizens complaint records to determine whether other similar complaints, on or between the restoration firm and Subject exist. If so, the outcome associated with these investigations. The purpose is to understand if any pertinent information can assist us in our investigation. Reviewed Citizens Claim Tracking System (CTS) data, specifically for large loss fire claims 2 assigned to the Subject, to analyze the data and understand if a relationship in claims assigned to the Subject include the restoration firm as well as understand claims the restoration firm was associated with. We contacted associated insureds to assess whether any potential unethical behavior was observed related to the Subject and/or the restoration firm. Analyzed associated Citizens and phone records to understand if the Subject was passing information to the restoration firm as well as identify if a correlation between insured visits existed with calls to or between the Subject and the restoration firm. 1 Citizens Code of Ethics identifies a conflict of interest as occurring when a personal relationship influences a business decision, interferes with the interests of Citizens, conflicts with the proper discharge of a person s duties or leads to a disregard of a public or corporate duty. 2 The Subject is responsible for performing Adjuster Services for large loss fire claims. Page 1

4 Executive Summary OIA-F Interviewed the Subject on September 27, 2013 and December 11, 2013 to discuss the allegations as well as understand the relationship, if any, between the Subject and the restoration firm. During these interviews the Subject: o o Acknowledged attending three sporting events (golf outing, baseball game and fishing trip), with representatives from the restoration company as well as other area contractors. The Subject indicated that these events were initially paid for by the contractor, after which the Subject would reimburse them via cash payments and that reimbursements of this type are not prohibited by Citizens Code of Ethics. The Subject provided OIA-F with three receipts obtained from the restoration company as evidence of his reimbursement. Forwarded to OIA-F a September 19, communication from the restoration firm s Owner and President detailing the various methods the firm utilizes in sourcing business. 3 The firm has several means (web and mobile platform based) of obtaining real-time and near real-time notifications. OIA-F inquired with and visited the restoration firm to obtain information and confirmation on various points identified during the procedures conducted above as well as understand the relationship, if any, between the Subject and the restoration firm. o During a phone call to the firm s Owner and President, he indicated that he has known the Subject a number of years and that the Subject has always paid his own way on any outings the Subject has attended. He indicated the Subject probably reimbursed the firm in cash as the firm was not able to accept credit card payments, but that OIA-F would need to confirm that fact with the firm s Director of Business Development as she was responsible for handling reimbursements. OIA-F met on-site with the firm s Director of Business Development (DBD). She indicated that the firm only processed reimbursement receipts per year from a small number of individuals. The DBD provided OIA-F with a copy of a reimbursement receipt that matched the receipts provided to OIA-F by the Subject. The DBD confirmed that the Subject only attended the events the Subject had claimed to attend and had reimbursed the firm in cash for each of the events. Audit Findings Based on the procedures performed above and the results of our investigative efforts: OIA-F confirmed the Subject attended several sporting events that the restoration company initially paid for; however, documentation was provided indicating reimbursement. Additionally, the documentation was reconciled to documentation (i.e. type of receipt, not actual) to that of the restoration firm. OIA-F confirmed via inquiry with insureds that the Subject did not recommend the restoration firm to them. Additionally, we confirmed that this restoration firm as well as others use various techniques (i.e. Fire Department RSS feeds, scanners) to identify insureds suffering losses and use this information to direct market to them. 3 The communication identified two paid subscription applications, LEADS and Incident Page Network (IPN) where the firm receives text message notifications of fire losses. RSS FEED is a free online notification available from most fire departments. The above notifications contain such information as type of loss (i.e. fire, water damage, vehicle vs. structure, etc.), property address, property owner s name, telephone number and address if available. The magnitude of the loss can be estimated by the number and types of units dispatched. Page 2

5 Executive Summary Conclusion Based on the procedures performed above and information received OIA-F found no evidence to substantiate the allegation. Recommendation OIA-F recommends the Ethics and Compliance Officer propose amendments to the Code of Ethics that would address how to disclose instances when employees participate in activities with business partners when a reimbursement is required, and how to document or provide proof of payment for items or services received from business partners which would otherwise be a gift. The purpose of this is to specifically address and implement procedures and documentation required to alert and document relationships as to ensure compliance and full transparency. Action The Ethics and Compliance Officer is in agreement with the recommendations above. A revision to the ethics code is currently in process and scheduled for completion by February 15 th. The revision will include proposed amendments that address the recommendations. Page 3

6 Appendix 1 Distribution Addressees James Johnson, Director-Claims Operations Copies Tom Lynch, Citizens Audit Committee Chairman John Wortman, Citizens Audit Committee Member Juan Cocuy, Citizens Audit Committee Member Following Audit Committee Distribution The Honorable Rick Scott, Governor The Honorable Jeff Atwater, Chief Financial Officer The Honorable Pam Bondi, Attorney General The Honorable Adam Putnam, Commissioner of Agriculture The Honorable Don Gaetz, President of the Senate The Honorable Will Weatherford, Speaker of the House of Representatives Investigation Performed By Auditor in Charge Michael Regan Audit Director Under the Direction of Josh Shilts Joe Martins Chief of Internal Audit Page 4