Citizens Insurance Prez: Disbanding Corporate Integrity Office A 'Dumb Decision'

Nov 27, 2012

State-run Citizens Property Insurance has been under fire, as its new president disbanded the company’s corporate integrity office in the middle of an extensive ethics investigation in August. On Tuesday, president Barry Gilway gave the Citizens Board of Directors some answers to questions that had been swirling in the wake of the controversy.

Gilway came on board in June.  He inherited an ongoing investigation into several ethics complaints against employees, including mishandling funds and sexual harassment over the past few years. Gilway said, that investigation turned up serious organizational problems and policy flaws in the company.

But, he said, he’s addressing those issues, and the so-called "bad apples" have either been disciplined or let go for their “disgusting” behavior.

“Let’s not tarnish the reputation of 99.9 percent of Citizens employees who bust their tail for you every single day because of the irresponsible, irrational acts of a few people," he said.

The allegations against employees were revealed in a preliminary report by former internal auditors who hadn’t done any interviews or reviewed any personnel files. Gilway said, many of the charges, including at least one instance of sexual harassment, came from anonymous tipsters and were found to be untrue when external investigators were brought in. But, he said, the people accused in the report had already been "dragged through the mud" in newspapers around the state. And for that, he blasted the media.

“Last time I looked around, we were still in the United States of America. We have not been annexed into some communist regime. We still have basic rights, and those rights include 'innocent until proven guilty,'” he said.

Gilway told the board, when he took over, the Office of Corporate Integrity had four employees: two managers and two junior auditors. He said the managers were not qualified to conduct investigations and had several backlogged complaints going back a year and a half. He said, the office needed a change, but he regrets the timing of when he disbanded it in August.

“When we have the office of the attorney general in there, completing an investigation on expense control, we move forward and we get some headlines that we eliminate the Office of Corporate Integrity," he said. "Dumb decision? Yes.”

He said, internal ethics investigators no longer report directly to him but instead to the newly hired Internal Audit Chief, Joe Martins.

And, in the wake of the scandal, the company is working on a uniform severance-package policy after it was revealed that it paid out about $750,000 in severance pay, including $80,000 for a single employee, during the restructuring.

Board member Carol Everhart said, she appreciated the information, but she wishes the board had known about all of these issues sooner.

“I have been here for a long time, and this is the first time, at the beginning of the year, the first time, I heard of any of this," she said. "So much was kept from the board.”

To that, Gilway responded that all of the incidents had been viewed on a case-by-case basis until the new audit chief decided to take look at the underlying issues behind the mismanagement.

One of the company’s most vocal critics has been Dan Krassner, who heads government watchdog group Integrity Florida. But Krassner said, in light of Tuesday’s meeting, people should start trusting the company’s new leadership.

“Leaders admit when mistakes are made. They listen to others’ ideas and they change direction when necessary," Krassner said. "That’s what Barry Gilway did to give Floridians confidence that the direction of Citizens is improving.”

Board member John Rollins said, the company has experienced tremendous growth in the past few years, ballooning to take on more than 1.5 million policies in Florida. With that kind of growth, he said, there are bound to be some problems.

“Certainly, there have been mistakes made, individual cases that are perhaps head-scratchers and individual behaviors that are perhaps head-scratchers," he said. "We need to move on. We need to put in the policies and procedures in place that are going to allow us to do better. We have a new sheriff in town."

Rollins said, the media’s focus on the scandal has been a distraction from the real issue, that the non-profit insurer of last resort has taken on an unsustainable number of policies.