Integrand Assurance Company and its owners Víctor and Ana Salgado sued Insurance Commissioner Javier Rivera, Sub-commissioner Rafael Cestero-Lopategui, Alexander Adams, a lawyer in the Insurance Commissioner’s Office, and the officer in charge of its rehabilitation, Juan Moldes for an alleged civil conspiracy intended to harm the insurer’s reputation and thwart its capacity to bounce back from its financial difficulties.
All the defendants were sued in their individual capacities.
In the verified complaint, filed yesterday in the U.S. District Court of Puerto Rico, plaintiffs are demanding $30 million in compensatory damages, punitive damages to be awarded by the court and attorneys’ fees and costs.
“The actions described herein by co-defendants in their individual capacity and as co-civil conspirators are against the interests of plaintiffs, are crass violations of the NAIC (National Association of Insurance Commissioners) regulatory scheme for rehabilitation and they have misused their authority under the Puerto Rico Insurance Code and the NAIC prototype insurance code”, lawyers Damian LaPlaca and José Antonio Fusté argued in the 28-page lawsuit.
LaPlaca and Fusté alleged that in the aftermath of hurricanes Irma and Maria the co-defendants engaged in a conspiracy to deprive Intregrand of its rights under the U.S. and Puerto Rico constitutions. They also claimed that Rivera has an ethichal conflict of interest.
For instance, LaPlaca and Fusté noted that Rivera serves as the president of the Board of Directors of the Puerto Rico Insurance Fund and knew that the Fund had hired the insurance adjustment firm Scott Favre LLC. This public adjuster also represented “about four of Integrand’s insured clients who presented loss estimates to Integrand that were exaggerated, uncorroborated, and fraudulent.”
According to the lawsuit, Empresas Rivera Siaca presented through Scott Favre LLC a claim for hurricane damages for the former headquartes of the Department of Education in Hato Rey for over $50 million. The claim exceeded the limits of the company’s policy. In contrast, Integrand’s adjusters estimated the losses between $3 and $4 million. By the end of 2017, Empresas Rivera Siaca reduced its original claim to $3.465 million.
Consequently, Intregrand complained to Rivera about the estimates prepared by Scott Favre LLC in this and other cases. But the Office of the Insurance Commissioner resolved the claim “in a manner that minimized the significance of the exaggerated, uncorroborated, and fraudulent adjustments made by Schott Favre LLC.”
The lawsuit also contended that Rivera, Cestero-Lopategui, Adams and Moldes took actions to derail Integrand’s rehabilitation request. An example of those actions was the imposition of a $535,000 fine despite the recommendation of the Examining Officer “that there was not a shred of evidence to justify the fine”.
Among other things, the lawsuit alleged that Rivera invited the press to go along with him on investigative proceedings that breached the confidentiality of the process and that Cestero-Lopategui pressed for a $60,0000 payment for a claim denied to Caribbean Franchise (Subway) because it was excesive. In exchange for the payment, according to the lawsuit, Cestero-Lopategui would hold back an order preventing Integrand from doing business on the island.
“Fearful of this threat from the Sub Commissioner of Insurance, co-defendant Cestero-Lopategui, Integrand authorized an immediate payment of $60,000 to its insured,” the lawsuit stated.
Later, Integrand found out that an uncle of Cestero-Lopategui’s wife partly owned Caribbean Franchise.
When contacted for a reaction, the public relations officer for the Office of the Insurance Commissioner Angie Álvarez said that Rivera had not been served with the lawsuit.