Company Linked to MMA Law Firm Still Paid by Florida; Case Highlights Issue with AOBs

The continuing saga of the Houston-based plaintiffs’ law firm of McClenny Moseley & Associates, suspended and sanctioned for flooding courts with erroneous lawsuits against property insurers in Louisiana, has taken a new political twist in recent days. It also has highlighted an unexpected result of the 2022 law that ended assignments of insurance benefits in Florida.

ARS Global, a 60-year-old restoration and emergency management company that was once connected to the McClenny law firm, disputed a report published last week by the Orlando Sentinel newspaper. The article said that ARS has been paid as much as $45 million by the state of Florida after ARS donated more than $99,000 to Gov. Ron DeSantis’ reelection campaign.

The millions of dollars were for some disaster recovery services but also to transport undocumented migrant workers to Democratic-leaning parts of the country, along with evacuation flights for Israelis fleeing the Hamas war, the Sentinel reported. The article quotes government watchdogs saying the state funding to ARS, despite its link to the McClenny firm and other legal questions, smacks of a “pay to play” scheme.

“The Orlando Sentinel article is untrue. It will be addressed with them directly,” said an email from ARS Global, also known as Access Restoration Services, with offices in Canada and Texas.

The company’s statement did not explain how the news article was incorrect. The firm acknowledged that it has contracted with Florida officials to provide logistic and emergency management services in the state.

ARS raised eyebrows last year after it was reported that the company had loaned the McClenny law firm $3 million to help generate business for the company after storms. ARS has since broken with McClenny, filing a lawsuit against the lawyers for allegedly reneging on the loan and for not paying almost $10 million for contracted inspections on storm-damaged properties. ARS is affiliated with Global Estimating Services, which provides property damage estimates.

“In our commitment to uphold the highest standards of service and integrity, we routinely evaluate our partnerships to ensure they meet our core values,” ARS officials said in the statement to Insurance Journal. “This vigilance led us to conclude our association with the (McClenny) firm, reaffirming our dedication to ethical business practices. We are currently pursuing legal solutions. As this is an ongoing legal matter, we will not have further comment until this is resolved.”

The case makes for strange bedfellows and conflicting interests for Florida insurance carriers: Property insurers have generally supported DeSantis, especially after his office helped craft sweeping insurance legislation in 2022 that wiped out one-way attorney fees, ended assignments of benefits agreements and disincentivized some claims litigation.

But giving state money to a company that had funded a law firm that has filed hundreds of duplicate, erroneous or unnecessary lawsuits against carriers could be seen as overlooking the mass-litigation and underhanded legal tactics that have driven insurers crazy – and has helped drive some into insolvency in Florida in recent years. The loan to the McClenny firm also has highlighted the growing concerns from the insurance and business sectors about the impact that litigation financing has had in generating or prolonging some lawsuits.

ARS officials said that the company has not accepted AOBs from Florida property owners and has not filed suit against insurance carriers. McClenny Moseley, often referred to as MMA, though, has helped file some 1,600 hurricane-related suits in Louisiana and about 700 in Florida, according to news reports.

And ARS is the defendant in two federal lawsuits involving property insurance, one in Louisiana and one in Texas. In a recent filing, a New Orleans dentist charged that Access Restoration knowingly cooperated with MMA in an effort to inflate storm damage claims and defraud Blackboard Insurance Co., an AIG unit.

When Hurricane Ida blew through Louisiana in 2021, Dr. Ammar Mekari and his dental offices suffered significant damage. Mekari hired McClenny to represent him in insurance claims, and MMA steered him to ARS for the restoration work.

But McClenny lawyers failed to disclose that the firm had a pre-existing relationship with ARS and that ARS had loaned the firm the $3 million, the lawsuit claims.

“MMA’s directive to plaintiffs to contract with ARS was nothing more than a fraudulent kickback scheme which violated public policy, state law, federal law, and was simply intended to reimburse ARS for the $3,000,000 capital investment into MMA’s marketing scheme in the state of Louisiana following Hurricane Ida,” the complaint reads. “Plaintiffs allege both ARS and/or GES utilized certain fraudulent methodologies to inflate mitigation estimates intended to be presented to insurance companies at the direction and in concert with MMA unbeknownst to insureds.”

The dentist is asking the court to block ARS from continuing arbitration proceedings against Mekari over the unpaid amounts on the restoration work. ARS attorneys are seeking to have the case dismissed, arguing that Mekari has no claim and that the loan agreement came after ARS’ contract with the dental group was completed.

The suit’s allegations of inflated damage amounts sound similar to those made by a group of field inspectors in a Texas lawsuit against ARS. The 17 inspectors claim that they were not paid big bonuses and overtime promised by Global Estimating and ARS. Read more about that here.

No AOBs Mean More Liens Against Properties?

ARS has also raised the ire of a number of condominium associations in southwest Florida that were hit hard by Hurricane Ian in 2022. Court records in Lee County, Florida, show that Access Restoration Services has filed liens against more than two dozen condo associations for unpaid amounts on restoration work, including one lien for more than $13 million.

The liens are a side effect of the Florida Legislature’s repeal of AOB statutes, said Larry Bache, a Tampa attorney representing the Punta Rassa condominium association. Until 2023, property owners could assign insurance benefits to contractors. If the contractor was not paid in full by the insurance company, they would often file suit. That led to abuse by some construction firms and excessive litigation, insurance advocates said, and the law was changed in a special legislative session.

But without AOBs and legal claims against insurers, contractors have little choice but to go after property owners and associations through the lien process, Bache, with the Merlin Law Group, said Monday. Plaintiffs have just a year to file a lien, while insurance companies can take more than 18 months to provide estimates and months more to make partial payment on an insurance claim, he said.

“I have no leverage to resolve the claims with the contractors because the Legislature got rid of AOBs,” Bache said. “We can sue the insurance companies for not paying for the work, but by that time, the contractor has already foreclosed on the property.”

He predicted a wave of liens and foreclosures actions over the next year against dozens of homeowners associations for lack of payments on mitigation and restoration jobs. That is likely to come back to haunt insurance carriers, Bache warned.

“What jury is not going to award my client the amount of a judgment against them for mitigation work,” he said, adding that insurers are losing the chance to negotiate the payment with contractors.

He hopes the issue will lead to new legislation that will allow a limited type of AOB, just for mitigation work after storms.

“I hope not,” said Matt Lavisky, president of the Florida Defense Lawyers Association. He said AOB abuse had reached such a level in Florida before the reform effort that it is unlikely to be resurrected in any form.

One Fort Myers Beach condo official explained that ARS representatives approached condo associations just days after Ian hit. One association agreed to an “open-ended” contract that had no ceiling on the cost, to remove boats, cars and debris that had washed into condos, as well as mud and mess inside the units. At the same time ARS was pushing the work, company reps also were recommending MMA to handle insurance claims, condo officials and the Sentinel article reported.

For the first few weeks of the work, the association and owners were satisfied with the cleanup, but the costs kept rising into the millions, raising questions about the true cost of the restoration work. Bache said some condo officials moved to cancel the contract with ARS because of the negative headlines associating the restoration firm with MMA. ARS said the liens are a normal part of seeking overdue payments and are designed to “preserve the collection position.”

ARS also was awarded a $14 million state contract to set up temporary operations centers following Hurricane Idalia in 2023, the Sentinel reported. Florida Emergency Management Director Kevin Guthrie would not say if he knew about the ARS legal issues when he signed the contract with ARS last May, the news site said.

A spokesman for Florida Chief Financial Officer Jimmy Patronis, whose office oversees insurance fraud investigations in Florida, told the newspaper that the office is monitoring the situation.

Top photo: Fort Myers Beach after Hurricane Ian. (AP Photo/Gerald Herbert)