Citizens Outside General Counsel Resigns Due to Conflict

October 21, 2005

Citizens Property Insurance Corp.’s outside general counsel Michael Colodny resigned Thursday after questions about his firm’s representation of companies that have policies with Florida’s insurer or last resort. According to Fort Lauderdale Sun-Sentinel, Colodny announced his resignation at a board meeting during a stricter code of ethics was adopted for senior officers and employees.

Colodny’s resignation is the latest in a series of allegations surrounding Citizens employees. Citizens recently completed an internal investigation after allegations that its former chief operating officer solicited kickbacks from adjusting firms hired to handle claims from last year’s hurricanes. Allegedly one adjusting firm did comply, buying the executive a $25,000 motorcycle. The incident is being investigated by the Division of Insurance Fraud and the FBI.

According to state records, Colodny, Fass, Talenfeld, Karlinsky & Abate, represented eight takeout companies as well as two claims adjusting firms that have worked for Citizens this year. Colodny has steadfastly insisted that he has kept an arms-length distance between his firm and the work it does for the insurance companies doing business with Citizens. He told a Senate committee Wednesday that he always announced his conflict and left the room when one of his clients would come before the board, but several legislators and the governor, expressed concern about Colodny’s clients.

“It’s appearance of conflict,” Gov. Jeb Bush told the Sun-Sentinel after he heard about Colodny’s resignation. “It’s a good, good thing. Citizens is a quasi-public entity so it has to adhere to the same kind of standards as the public sector.”

Chief Financial Officer Tom Gallagher, who first appointed Colodny to the JUA and appointed the board that retained him as general counsel for Citizens, said he respected Colodny’s decision. Gallagher was also “very pleased with the policy changes that were adopted by the board,” Gallagher spokeswoman Tami Torres said. “They’ll go a long way towards improving the situation at Citizens.”

Gallagher, however, will continue to pursue legislation next session that will require an joint committee of House and Senate members to serve as a future oversight board of Citizens.

The board also adopted a stricter code of ethics for senior officers and employees that mirrors the state statute which covers state employees. This law prevents former state employees from lobbying their former employer for two years. Citizens’ new requirement will require that vendors disclose any financial relationship with the insurer’s employees.

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