Florida Commissioner McCarty Accused of Vendetta by Texas Insurer

A Texas insurance company and its owner are suing Florida Insurance Commissioner Kevin McCarty, accusing him of being vindictive and defamatory in his efforts to ban the company from writing workers’ compensation in the state.

Charles David Wood and his Dallas National Insurance Co. claim they qualify to write insurance in Florida but have been unfairly held to a higher standard than other carriers granted licenses and been denied entry by McCarty and his Office of Insurance Regulation (OIR) because of a McCarty vendetta against Wood.

The complaint maintains that McCarty is pursuing a vendetta because of a 2001 attempt by Wood to do business with another insurer, Bankers Insurance, a firm with which McCarty had a legal dispute 15 years ago when he was working at OIR but before he was named commissioner.

Bankers Insurance hired a private investigator to illegally tap McCarty’s phone and spy on his personal life, including what bars he went to and who came and went at his residence. The insurer had been hoping to uncover embarrassing information to pressure McCarty because it believed he was raising unfair questions that jeopardized the firm’s $16 million contract with the state’s high risk insurance pool for homeowners.

McCarty, claiming that the insurer’s surveillance activities and subsequent airing of the matter affected his relationships at work and his own mental and physical health, brought a tort action against Bankers Insurance. He settled the action against the insurer in June 2000 for $2.6 million. Bankers also had to pay a $1 million fine and remove its chairman, Robert Menke, for three years.

The suit filed in U.S. District Court for Northern Florida accuses McCarty of abusing his regulatory authority to pursue a deep grudge against Wood because of a deal he struck with Bankers Insurance in 2001. Wood had agreed to loan Bankers Insurance $5 million as part of a deal to get workers’ compensation for one of the staffing firms he owns, AMS Leasing.

Bankers Insurance breached that agreement and Wood never got his workers’ compensation contract but the complaint alleges that as a result of the attempt McCarty became “deeply embittered against Wood, and fanatically determined that Wood would never engage in business of insurance in Florida.”

Wood accuses McCarty of “trumping up” charges that he is “incompetent” and “untrustworthy” — along with a charge that his proposal for a Florida license amounts to an illegal fronting operation — as pretexts for twice rejecting his application to write insurance, once in 2006 and again in 2008. Dallas National has appealed the denials in Florida court.

An OIR statement on the vendetta complaint said that it “is confident the trial court will ultimately determine the allegations in this lawsuit are frivolous and without merit.”