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Rising sinkholes claims may bring tighter rules

Legislation aims to make it harder for homeowners to get insurance payouts. They'll have to offer proof.

By ANDREW MEACHAM
Published December 30, 2005

BRANDON - Judy Pulido came home from work one day in 2004 and found the crack that changed her life. A delicate line on yellow tile ran the length of her kitchen floor like a river.

Pulido contends that a sinkhole caused the damage. Her insurance company says otherwise and will soon defend its position in court.

Her home in the Timber Ponds subdivision sits unrepaired, with a crack running over her kitchen, living room windows that no longer open and close, and four inches of water draining from her swimming pool each day.

"I feel like I've been raped and nobody cares," she said.

Pulido, 45, has plenty of company. Insurance claims for sinkholes have skyrocketed in the past five years and payouts have nearly tripled statewide, from $22-million six years ago to $65-million in 2003.

In response, lawmakers are trying slow down what they call a gravy train of insurance claims. They say residents are bilking the system with questionable claims, blaming any and every tremor of the earth on a sinkhole.

"We have a 60 percent increase statewide in homeowners insurance rates, yet we have not been hit by a hurricane," said state Rep. John Legg, a Port Richey Republican.

Legg is backing a sinkhole bill that places new obstacles in the path of a person claiming damages. It limits ground testing in the early stages of an investigation and creates financial incentives for policyholders to accept mediation instead of filing lawsuits.

Legg said he doesn't deny that many sinkhole claims are real. "But they need to prove it," he said. "And in the past, they haven't been proving it."

Specifically, legislators and insurance companies are asking homeowners to prove that sinkholes really are on the policyholders' property.

Troubles for Pulido, a bank teller, did not end with the crack on her kitchen floor. A kitchen cabinet, once nailed to the wall, now leans out from it by about an inch.

When a tree limb fell on Pulido's roof, contractors refused to fix the leak. Any shingles they put down would just come off, the workers told Pulido. The reason: Her roof was bowed and out of level.

Pulido put a tarp over the leak and called her insurance company.

"I knew something was wrong," she said.

Some insurance companies also say something is wrong, but they are referring to the sudden upswing in money they spent on sinkholes.

In Hillsborough County in 1998, State Farm paid residents for eight sinkholes totalling $550,000. By 2004, that number had risen to 62 claims or nearly $7-million, the company said.

"I don't pretend to be a geologist," said Chris Neal, a State Farm spokesman. "But it's our understanding that you shouldn't see year-to-year spikes, and we've been getting far more claims in the past decade."

Resting on a shelf of limestone, Florida has always been a prime site for sinkholes, geologists say. Limestone dissolves when touched by acidic water. Sinkholes form when the ground above a cavity in the limestone can no longer hold its own weight. The earth collapses into the void beneath it, along with any structure built on the spot. Rain and drought can cause limestone to erode and trigger a sinkhole, but so can human activities such as construction or well fields.

As Pinellas, Pasco and Hillsborough counties began using four different well fields in the 1960s and 1970s for their water supply, sinkholes sprang up by each one, according to Ann Tihansky, a geologist with the Florida Geological Survey.

A sinkhole map by the U.S. Geological Survey rates Hillsborough County among the most vulnerable areas in the state.

Though sinkholes have been known to swallow up city blocks, most are far smaller.

"Nine times out of 10, all you see is cracking," said Michael Mosher, whose company repairs sinkholes. Though his work has taken him all over Florida, Mosher said he has seen a high number of sinkholes in Dover, Valrico and Brandon.

Geologists say that is not surprising. The state's thick clay soils in Hillsborough County are strong enough to hold a lot of weight as cavities in the ground deepen. But that clay eventually collapses, and so will anything resting on top of it.

To find out if a sinkhole exists, geologists scour the ground with radar, drive rods deep into the earth to measure resistance or insert magnetic probes to attract metals.

Yet houses often shift and crack for reasons that have nothing to do with sinkholes. These can include erosion, a poorly built slab, or tree trunks beneath the house that are rotting.

"It's unfortunate," Tihansky said. "But it doesn't mean you have a sinkhole."

A get-tough climate against questionable sinkhole claims began in June, when legislators tightened the definition of a sinkhole and allowed insurance companies to pay contractors - not homeowners - for any repairs. They did that so policyholders would not seek damages only to pocket the cash, Legg said.

Findings of the insurance company's geologist would be "presumed correct, a shot across the bow at claims profiteers.

A new bill by state Sen. Mike Fasano, a New Port Richey Republican, would divide sinkhole testing into two phases - a preliminary battery of tests and a more complex one, authorizing the insurance company's geologist to advance to the second level only if results from the first are inconclusive.

Results from this testing would be considered final, and could only be overturned by "clear and convincing evidence."

Homeowners could appeal the denial of a claim through an a mediator selected by the insurance company. Homeowners could always reject mediation and take their chances in court, but those who choose that path would forfeit the ability to collect attorney's fees later.

"It puts the burden on those who say there is an actual sinkhole," Legg said.

"If we don't do something immediately," he added, "we won't have homeowners insurance."

K.C. Williams, Pulido's attorney, called the bill unfair for forcing clients to pay attorney's fees, even if they win in court.

"If the insurance company knows that it won't be held responsible for attorney's fees, they can drag the case out forever with no penalty, and hope the client exhausts his resources."

For homeowners who accept mediation but want to appeal the ruling, the bill would elevate the standard to overturn it from a preponderance of evidence to "clear and convincing" evidence.

"That's the highest standard of proof possible," Williams said. "They are trying to change it to a 100 percent certainty."

Alan Marshall, a Palm Harbor attorney and veteran of the sinkhole wars, disputed the axiom that more insurance claims means the system is being abused. Rising population, the building boom, and a more educated consumer all contribute to the increase, he said.

"People are more aware that they have rights now," Marshall said.

Justin Glover, a spokesman for Citizens Property Insurance, the state-run carrier of last resort, said he has no doubt that sinkholes, not hurricanes, explain the exodus from private insurance companies.

In 2001, just 1,000 people in the Tampa Bay area used Citizens, Glover said. At the end of 2004, that number reached 150,000 and has continued to climb.

"We have seen advertisements that say, "Hey, pay your mortgage off. We know how to get insurance companies to pay for sinkholes,' " Glover said. "The companies cannot pay for those lawsuits."

Legg, who introduced Fasano's bill in the Florida House of Representatives, got interested in the subject when someone left a flier at his Pasco County home, promising to win sinkhole insurance money for a crack in Legg's driveway.

"Basically they're saying, "We'll find a sinkhole and we'll sue,' that's the essence of it," Legg said.

Pulido's troubles began before any of the sinkhole reform laws designed to protect insurance companies were proposed. After her inquiry to American National early in 2004, the company sent out an engineer and a geologist to collect data with a host of measuring techniques.

Six months after her initial inquiry, the company wrote back saying her house would not be covered.

"It made me really mad," Pulido said. "I said, "Well, they're not going to get the best of me.' "

Pulido hired Williams - billed on his Web site as "the sinkhole lawyer" - to contest American National's finding. He hired a Gainesville company called Geohazards to do its own testing at Pulido's property.

The company found a 10-foot void in the ground starting 60 feet underneath the house. Williams said experts turned up other soft spots as well, which he will use to argue that a sinkhole best explains the changes to the house.

Pulido said she felt vindicated by her own expert's findings.

"It showed I wasn't crazy," she said. "I always had the gut feeling that something was not right."

A representative of American National who worked on the case did not return phone calls from the Times.

Though Pulido's insurance company would not pay, two neighbors on the same street were luckier. In 2004, Jon Thornton, who lives just one house over from Pulido across Daphne Drive, noticed a 5-foot-deep cavity develop in his yard.

Thornton filled the hole with dirt. This June, it reappeared, so he called Safeco, his insurance company, who covered the damage. Workers poured a concrete mix into the ground and stabilized the hole.

Around the corner on Daphne Drive, Chris Sorge and his wife moved into their house in October. A square of concrete buttresses the outside of the garage.

Sorge said the square is the top of a piling placed by the investment company which sold him the house. Contractors often use pilings, or "piers," to shore up a house which has been affected by a sinkhole.

There are 39 such pilings around Sorge's house installed to deal with sinkhole damage to the house.

Geologist Frank Rupert of the Florida Geological Survey in Tallahassee acknowledged that without employing such tests as ground-penetrating radar, it is hard to tell whether Pulido's property stands at greater risk because of sinkhole activity in the neighbors' yards. But sinkholes do tend to occur in groups, rather than as isolated event, he said.

"It is somewhat unusual to have three simultaneous and entirely separated sinkholes in a limited period of time," Rupert said. "It's possible, of course, but it's not the norm."

A green tarp still covers part of the roof of Pulido's dream house. The long running battle has taken an inner toll as well, she said. Pulido still makes monthly payments to American National but is starting to wonder why.

"Why should we pay for insurance if they are not going to fix things?" she said.

Andrew Meacham can be reached at 661-2431 or at ameacham@sptimes.com

[Last modified December 29, 2005, 08:39:05]