Florida’s Heritage Stock Price Drops After ’60 Minutes’ Report on Adjusters

Just as Florida property insurers face another round of storm claims, CBS News has raised questions about alleged insurer fraud stemming from claims incurred in the last major storm – Hurricane Ian, which hit much of southwest Florida two years ago.

CBS’ “60 Minutes,” known as the longest-running investigative news show, aired a segment Sunday night that reiterated claims made by several independent claims adjusters. The adjusters have maintained that multiple insurance companies altered their repair estimates on homes damaged in Ian, in a way that lowballs and misleads insureds.

“I handled 46 of them; 44 of them were changed,” said adjuster Jordan Lee, one of the whistleblowers featured in the TV report. Some estimates were reduced by 98%, the show stated.

Another adjuster, Ben Mandell, said damage estimates on 18 out of 20 claims from Ian were altered. Altogether, adjusters found that six carriers had followed similar actions. “They all got the memo” to flatly refuse to pay for any roof replacements after the storm and to cover only repairs, he said.

The adjusters, all of whom are independent and work on a freelance basis for carriers, have turned over evidence to state authorities and have repeatedly asked that insurance company officials be prosecuted. More than two years later, no arrests have been made by investigators with the Florida Department of Financial Services.

The adjusters’ allegations were initially reported by Insurance Journal in late 2022, after they spoke up at a Florida House of Representatives committee hearing. Since then, NBC News and The Washington Post have produced reports on the alleged deceptive practices, but adjusters said they’ve heard little about the state investigation.

A DFS spokesman told Insurance Journal that that the department’s probe has not been forgotten about.

“From day one, DFS has taken these allegations very seriously, and the Department’s Criminal Investigations Division (CID) currently has an active and ongoing criminal fraud investigation related to this case,” said DFS Communications Director Devin Galetta. “Although the case is still open, I can tell you that our investigators have conducted dozens of witness interviews and collected thousands of documents of evidence.”

One claim spotlighted by the 60 Minutes report came from Jeffrey Rapkin, an adoption attorney in Northport, south of Sarasota. His family’s home had about half of its metal roof ripped off, with part of the plywood decking torn out near the ridge, according to the report. A neighbor filmed the destruction as it happened, showing the roof coming apart.

Rapkin held a homeowners’ policy Heritage Property & Casualty Insurance Co.

Lee, the adjuster hired by a claims handling firm hired by Heritage, said his inspection report estimated damage to be about $231,400. “The inside of the house was soaked,” he said.

But without consulting with Lee, a Heritage desk adjuster reduced the damage to about $15,000 and sent the report to the homeowners, keeping Lee’s name and license number on the revised estimate.

Rapkin said he was confused and angry because Lee had verbally told him that the damage was extensive. It’s not unusual for carriers and claims firms to collaborate with field adjusters to revise their reports. But the adjusters in this case have said they were not consulted and revisions went far beyond standard practices.

Heritage officials said the 60 Minutes report is in error.

“The accusation by adjusters … that we used ‘altered damaged reports to deceive customers’ is flat wrong,” Heritage CEO Ernie Garateix said in a statement. “Third-party field adjusters, like Jordan Lee, always have to collaborate with those higher up in their company on their estimates and the company Lee worked for during Hurricane Ian is no longer in business.”

In the 60 Minutes report, the carrier said in a statement that 42% of its adjusters’ estimates from Hurricane Ian had been revised downward, but 26% had been raised to a greater amount after review by a desk adjuster. Heritage also blamed its previous software for not including the names of desk adjusters on revised reports.

“It is important to point out that when we did our own review of Hurricane Ian claims following 60 Minutes’ outreach — using a random sample of 10,000 claims — we found that 4,162 of those were revised downward, 2,583 of them were revised upward and about 3,311 of them had no change from what the adjuster reviewed,” Garateix noted. “This is further evidence that we work to pay every eligible claim.”

The TV report appears to have had an impact. It received more than 610,000 views on YouTube and more than 3,200 comments. The share price of Heritage stock dropped sharply Monday, as soon as exchanges opened. The price had been holding steady at around $16 a share in recent weeks but dropped to about $12 by the closing bell on Monday.

Mandell said the 60 Minutes report did a good job of telling the story of how some insurers have made a habit of arbitrarily slashing adjusters’ estimates without looking at the property.

Others in the Florida insurance business declined to comment on the report. But some in the industry have said privately that Florida insurers, beset with a flood of unnecessary claims litigation in recent years – so much that the litigation costs led to several carrier insolvencies – have had to “fight for survival” by trimming claims costs any way they can, and that adjusters can go overboard in calling for replacement-level work.

To be sure, one of Mandell’s Florida inspection reports, examined by an Insurance Journal editor who is not a trained adjuster but is experienced in roof and construction work, showed that seemingly minor roof shingle damage should result in a full roof replacement. Florida lawmakers in 2022, before Hurricane Ian hit, encouraged repairs when they changed the state’s insurance law to allow more roofs to be repaired – not replaced – when storm damage affects only part of a roof.

Mandell has said that even minor shingle damage can result in leaks within six months.

Heritage’s CEO stressed that “there are often legitimate reasons to repair a roof versus replacing a roof.”

Garateix also said that some of Jordan Lee’s estimates had erroneously included swimming pool screen enclosures, which was not covered by the homeowners’ policies.

“Additionally, third-party adjusters are also paid based on a percentage of the claims they write,” Garateix said in the email.

He and the DFS spokesman also noted that the Florida Legislature in 2023 approved Senate Bill 7052, which now requires insurance carriers to provide more reporting, more transparency and more consumer protections during the claims process.

The 60 Minutes report “also ignored the fact, even though we sent them the links and documents, that we signed an order with the Florida Department of Insurance Regulation following their investigation back in March of this year,” Garateix said. “This signed report also included a fine paid by Heritage where we acknowledged failures after Hurricane Ian and improvements we were committed to make.”

The adjusters have said that since the early round of news reports about the doctored estimates, most insurers have backed off making wholesale changes to estimates. Instead, at least a few insurers now prefer inexperienced adjusters who may not notice problem areas, or they will demand that adjusters heavily revise their reports themselves. Some will; some won’t, the adjusters said. At other times, insurers might send multiple adjusters to look at a site, until one arrives at a lower cost.

Mandell and other adjusters have said that even if practices have been changed, prosecutions are needed to send a message that deceptively revising inspection reports is illegal – and policyholders deserve better. The Rapkin home featured in the 60 Minutes segment was obviously heavily damaged, Mandell said. A large section of the roof was missing in the video and the resulting leak appeared to cause mold on part of a ceiling, plus extensive water damage to contents and appliances.

“Anyone can see that it would cost a lot more than $15,000 to restore that house,” Mandell said Monday.

Replacing just the half of the standing-seam metal roof that was torn off could cost more than $18,000, according to some roofing estimate calculators, available online.

The 60 Minutes report, produced by longtime CBS investigative reporter Oriana Zill de Granados, may not have been as thorough or as balanced as it could have been. The show did not hire additional adjusters or contractors to examine the damage and provide their own repair cost estimates. And it did not include much input from others in the Florida insurance industry, nor did it mention the runaway claims litigation and fraudulent and exaggerated roof claims in recent years.

For now, Mandell, Lee and the other adjuster whistleblowers said they will continue to push state authorities to prosecute insurance carriers for what they say is fraud. But they also believe little will be done.

“We know why it’s taking so long,” Mandell said. “They don’t want to do it.”

Rapkin, the North Port homeowner, and his wife are continuing to pay premiums to Heritage while pursuing litigation against the company. An attorney for the whistleblower adjusters said on 60 Minutes that he has compiled evidence showing that carriers in five other states have wrongfully manipulated reports, claiming the estimates are the work product of the field adjusters.

Photo: Jordan Lee, interviewed by 60 Minutes’ Sharyn Alfonsi. (photo of the broadcast).