Sandy Burnette Defends Insurance Fraud Fighters
(*Chip Merlin's Note--Sandy Burnette is a prominent insurance defense attorney with exceptional experience in cases where insurance fraud or arson are suspected. I have known Sandy for 27 years. As you can see from his rhetoric, he is a fierce defender for those engaged in the fight against insurance fraud. Keeping with my Fair and Balanced blog, I invited Sandy to compose a guest post reflecting his views and experience.)
Well, seeing my name mentioned in your recent blog on insurance fraud was certainly enough to capture my attention, but the content of your remarks compels me to respond. Nobody who knows the two of us will be surprised to see we disagree, but in this instance you are simply wrong, Chip.
Let’s start with your analogy to 17th century witch-hunts. Suggesting that the investigation of suspected fraud by insurance companies is a “witch-hunt” is, to me, almost laughable. I realize your knowledge and experience with fraud investigators is limited to taking their depositions and challenging their findings, so I could hardly expect you to be objective about the individuals you make a living opposing, but your assessment of their abilities and their motivations is more than wrong, it is entirely unfounded.
The SIU investigators, private investigators and law enforcement investigators I have worked with for over 30 years are, with rare exception, among the finest, most ethical and most dedicated professionals I have ever met. (You might want to compare the number of fraud investigators implicated in corruption/dishonesty last year with the number of attorneys implicated in corruption/dishonesty. The numbers run about 100 to 1 for corrupt lawyers!) They work long hours under difficult—and sometimes dangerous—conditions to uncover the truth. When they do, their findings are challenged by the criminals they expose (and their lawyers) as being “biased”, “slanted”, ‘improper”, “incomplete” and even “untruthful.” When they testify in court, they will be called everything but an honest child. But for nearly all of them (Yes, there are always some bad apples in every barrel) they do it because they believe in their work and because they want to expose fraud in the interests of all of society. They don’t do it for the money, Chip. You have secretaries making more money than some of the fraud investigators I know. They don’t do it because they have some perverse interest in making false accusations to ruin the lives of innocent people, either. Most of them have more principle than the clergy I have met. They do it because they feel their work has a purpose and a value—to all of us. Ask yourself if what we have recently seen from the likes of Enron and Bernie Madoff suggests the uncovering of fraud is a worthwhile mission. I know how I feel about that.
When you call for “unshakable proof” of insurance fraud, are you suggesting some heightened standard of proof to uncover fraud? (Isn’t true proof “unshakable” by definition? I mean, is there such a thing as “shakable” proof?) Is there some social purpose in affording such protection to those who perpetrate insurance fraud? Should we give them greater protection than murderers and rapists, as if they merit some type of special protection? I would hope not!
Nobody wants to see an innocent person wrongly accused. Believe it or not, some of the people who feel most strongly about that are the same people you accuse of engaging in a “witch-hunt”. I have worked with many investigators who have gone out of their way to look for evidence which casts doubt on the suspicions of fraud, to pursue truth rather than seek evidence to support an accusation. But the sad truth is that insurance fraud in this country is not some “rare occurrence of fraud to justify an open season on policyholders” as you suggest, but is an epidemic of staggering proportions. When a national survey just a few years ago revealed that over 50% of the people in this country—the majority, for God’s sake!--think it is “okay” to pad an insurance claim to get back your deductible or recover some of the premium that has been paid “all these years,” we have a moral crisis on our hands. And after handling perhaps 5,000 fraud cases in my career, I can offer some first-hand testimony that the problem is real and the prevalence is rampant. Just from my own cases, I have proved fraud committed by persons from every walk of life—including CEOs, legislators, judges, clergy, accountants, lawyers, entertainers and professional athletes. Not to mention insurance contractors, adjusters and public adjusters in numbers which leave me shaking my head. Chip, insurance fraud is no “rare occurrence” in this country, it is a true epidemic.
When you say that “If all you concentrate upon in life is uncovering fraud, you may start seeing signs of it everywhere,” I beg to differ. When we go to a doctor, we want a specialist. When policyholders come to your firm, they want somebody who only concentrates upon your type of practice. (You wouldn’t want your law firm described as a place where “all they concentrate upon in life is uncovering bad faith, so that they see signs of it everywhere!”) And when insurance fraud is being investigated, I sure don’t want somebody doing it on a part-time basis, do you?
Your reference to the recent scientific developments in fire investigation and the suggestion “many innocent people were accused of arson” is a popular refrain in recent years, but it lacks any statistical basis in fact. Issues such as concrete spalling, depth of char analysis and flashover have certainly changed the way we look at a fire and the basis for determining the cause of a fire. But there were only a small number of cases where those issues were the determining basis for concluding a fire was arson. In almost all of the arson cases prosecuted over the past 50 years, they were only one small part of the proof. Those “bad cases” have drawn a lot of attention and deservedly so for the individuals wrongfully convicted. (Perhaps you saw me on CNN’s “Anderson Cooper 360” last year discussing this very point.) But to suggest there was some widespread misapplication of fire science so that hundreds or thousands of innocent people were wrongfully convicted of arson is just wrong, way wrong. There is absolutely no evidence of that on such a scale.
Chip, we all run the risk of developing “tunnel vision” from the work we do. I’m sure you and many others who visit your website feel that way about me. But after reading your blog, I have to tell you I fear you may have developed that affliction yourself when it comes to this issue. Insurance fraud is a threat to all of us. It drives up indemnity payments on claims, it causes tens of millions of dollars to be spent trying to uncover it, and in the end it hurts everybody when they go to pay their insurance premiums. And lest we forget, it is both legally and morally wrong. Rather than disparaging insurance fraud investigation, we should all be promoting and supporting it. I’ve spent my life doing just that and I plan to continue to do so. I would welcome your assistance, my friend.
Chip, I had to laugh when you let someone post on your blog who starts off saying you are wrong. However, I do think it is very good to have various views presented on a blog. So I commend you and your poster for the post.
I think it is very good to stop insurance fraud. However, I didn't see where Mr. Burnette mentioned fraud BY insurance companies. He seems to present his case without even entertaining the possibility that fraud is a two way street?
""Just from my own cases, I have proved fraud committed by persons from every walk of life—including CEOs, legislators, judges, clergy, accountants, lawyers, entertainers and professional athletes. Not to mention insurance contractors, adjusters and public adjusters in numbers which leave me shaking my head. Chip, insurance fraud is no “rare occurrence” in this country, it is a true epidemic.""
Logic would dictate that if an insurance adjuster would committ fraud against an insurance company for money, than they might very well committ insurance fraud FOR an insurance company for money. Perhaps he missed your appearnace on Good Morning America where one of your clients had found his engineering report from a major insurance provider was not written by his engineer. I know ALOT about this matter because the gentleman is a personal friend and co-worker of mine. I hesitate to write about the matter because you represented the man and I am sure you now have a clause in the settlement which prohibits you from discussing the matter.
That report was literally shaken in the face of the director of the NDIP by my Congressman who wondered how he(Gene Taylor) could find such a report and the director of NFIP couldn't find a single such case. So I wonder if the the gentleman supports massive investigations of the insurance industry to root out fraud? Should every insurance claim settlement offer by an insurance company be investigated by law enforcement?
Steve,
Thanks for defending me--maybe I am an insurance fraud fighter as well. Sandy Burnette and the rest of the insurance industry may not appreciate the implications of that truth.
I'll have a reply for Sandy soon enough. But, I just got back from some interesting depositions with AIG claims in Manhattan. Need a little break.
Steve: The incidence of fraud by insurance companies certainly merits consideration. My posting was not intended to identify and address all forms of insurance fraud and there are undoubtedly more forms of fraud than I mentioned, including fraud by an insurer. It does happen. The incidence of true fraud by an insurer in my own experience has been minimal, however. I could count the number of times that has happened on the fingers of one hand. But let's talk about what you mean by that. Outright fraud is pretty clear. We all know what that means. However, I suspect you mean something more than that by the tone of your comments. If you want to say it is "fraud" whenever an insurance comapny disagrees on the scope of loss or the damages claimed, don't ask me to buy into that. I don't think you want to go there, since one could just as easily say the fraud is on the other side when that happens and every claim has two sides to it. That is why claims are "adjusted", because in almost every instance except a total loss there is uncertainty about the extent of a loss and nobody knows who is right until after the work is done. Claim supplements are a way of life. One interesting note is that in all my time handling claims I have seen hundreds of claim supplements seeking additional money. But I have never yet seen a single instance where somebody has sent money back after the repairs were made for less than the amount paid--and I know of plenty of cases where that has happened. Keeping money you received for repairs which were never made or which were made for less than the amount paid sounds a lot more like the "F" word than what you may be suggesting.
Sandy I thank you for your reply. I truly think when people from both sides of the Courtroom get together and express viewpoints, both benefit. You do make a very strong case for your viewpoints and I have learned much from you.
I was more thinking of what you describe as true fraud. I don't think we will ever know what is going on in the area of true fraud by insurance companies untill we have a trained law enforcement community(state and federal) to look into the industry. Until then we will be in the dark, which is of course where most crime occurs.
Thanks.
Steve:
Well said. I agree that wherever fraud occurs it should be uncovered and appropriate action taken. Regardless of which side of the table you sit on, fraud is a problem for us all.
Thank you.
Steve and Sandy,
I am convinced that many in claims management intentionally place internal pressures on people to control the severities of losses in advance. This culture is largely responsible for all the hard nosed and wrongful actions which result in the insurance policy not performing in the manner it is designed. From the policyholder's view, this intentional underperformance is institutional fraud.
Most of the fraud noted by Sandy is individual. Sandy suggests that part of it comes about as a result of policyholders correctly understanding that claims management is determined on paying as little as possible. But, they are not professionally conspiring to do what they do as is the insurance claims industry.
Still, two wrongs do not make a right.
The tone of this post may be tough. But, all these "Kumbaya" feelings between you were getting to me.
Chip: As with so many of your comments, it comes down to a matter of perspective. You are "convinced" that "many" (most?)in claims management "place internal pressures on people to control the severity of losses in advance." The obvious implication is that there is some sinister purpose in that. Let's start with what that means. Do insurance companies try to control the severity of claim payments? Of course they do! What do you propose, that "insurance companies should make no attempt to control the severity of losses???" Try that and see what happens to your insurance premiums! There is nothing wrong with the concept of controlling a company's expenses. You undoubtedly do that with your own law firm. I do it with my firm. Any business will try to control its expenses if they want to remain in business. And since an insurance company's premiums are based upon risk exposure and claim severity, I want my insurance company to pay everything it owes for claims--but not one penny more, since in the end I know the bill comes back to me. (And now that the legislature has made me a stockholder in our state-run insurance company, Citizens, you better believe I want them to control claim severity so I don't get an assessment to pay for claims!) Artificially controlling claims severity by arbitrarily withholding indemnity dollars is wrong, as we all know. Nobody could argue with that. (I know you think that is done by literally every insurance company out there, but how many companies were proved to have done that last year? Two? Three? Out of 30,000+ companies?)But simply striving to control expenses and indemnity payments for legitimate purposes is not only legally right, it is ethically right and a sound business practice. Your suggestion that "trying to control claims severity for any reason at all" is inherently wrong is, well, inherently wrong! As for the notion of "professionally conspiring to do what they do" in the insurance claims industry, you need to stop watching those Oliver Stone films. There is no "vast right-wing conspiracy" out there, Chip.