Examination Under Oath Language Changes in Citizens Policy, Part I
(Note: This guest blog is by Nicole Vinson, an attorney with Merlin Law Group in the Tampa, Florida, office. She will be writing a guest blog series on Examinations Under Oath and Public Adjusters).
After taking a look at the new Citizens Property Insurance Corporation policy, which potentially requires a non-party to sit for an examination under oath, lots of discussion has started and some of the same main themes keep coming up.
The provision reads:
As often as we reasonably require:
1. Show us the damaged property
2. Provide us with records and documents we request and permit us to make copies
3. You or any "insured" under this policy MUST:
a. Submit to examinations under oath and recorded statements, while not in the presence of any other "insured"; and
b. Sign the same;
4. If you are an association, corporation, or other entity; any members, officers, directors, partners or similar representatives of the association must:
a. Submit to examinations under oath and recorded statements, while not in the presence of any other "insured"; and
b. Sign the same;
5. Anyone you hire in connection with your claim and anyone insured under this policy other than an "insured" in (3) or (4) above, must:
a. Submit to examinations under oath and recorded statements, while not in the presence of any other "insured"; and
b. Sign the same;
Keeping the discussion limited to public adjusters for this post, these are the questions I have received most frequently:
- What happens if the PA refuses?
- Is the PA always required to give an EUO?
- Can the PA fill the shoes of the policyholder and give the only EUO?
- How can the statements given by the PA during an EUO change a claim decision?
The answer is the same for each question. It depends. The first thing to consider is the policy. At this time, the Citizens form seems to be unique. The entire policy should be reviewed by a qualified lawyer to determine the obligations of the parties.
Generally, the parties to an insurance contract are the insurer and the insured. The public adjuster is not a party to the contract, however, the PA is paid based upon the claim and has an interest. In fact, the first thing most public adjusters do is notify the insurance company of their involvement and request to be listed as payee on the settlement proceeds. The assignment of the claim payments and actual payment afforded to the PA is done pursuant to another contract; the contract entered into between the policyholder and the public adjusting firm. The contract with the public adjuster may say something like this…
In consideration of the services rendered by XYZ Public Adjusters, we hereby assign and agree to pay XYZ Public Adjusters a certain percentage___ of the funds when recovered in connection with this claim.
The insurance policy will likely have three more important sections to consider. The first is the definition section. Under the definitions, the term “you” should be defined. Typically, the “you” in an insurance policy is the insured and those who are bound to perform the obligations under the policy. The “loss payment” clause should be considered too. Does the insurance policy state what has to happen for the payment to be made? This section may outline what each party needs to do for payment to be issued. Also, the concealment and fraud provisions should be considered to determine if and how the testimony of a PA might affect a policyholder’s claim.
After looking at the policy, the claim needs to be evaluated. The status of a claim can make all the difference in how an EUO demand is handled. One thing to look for is whether the demand for the EUO is timely. Did the insurance company waive the right to take the EUO? Has the claim been denied or has there been a material breach of the contract by the carrier? While each claim is different and providing claim information to the insurance company is necessary, these questions should be answered by a trained lawyer. Depending on the case, sometimes providing an EUO (even if there was waiver) may help a claim to be resolved more quickly and leave the insurance company one less defense to the payment. However, an EUO should not be given by anyone without a lawyer. The insurance company has hired a lawyer to represent it at the EUO and a policyholder should always retain counsel too. An EUO is not an opportunity for a policyholder to try out his or her Matlock skills. Remember, even lawyers hire lawyers and doctors see doctors.
When the policy is originally issued, the average policyholder did not consider provisions that may affect non-parties to the contract, nor did they consider who would end up being paid insurance benefits from a claim for damage. Thus, who is the PA in connection with the contract? Is the PA a third party beneficiary or a non-party? A public adjuster involved in a claim typically should not be considered an intended third-party beneficiary. However, the public adjuster receives a benefit only if obligations of the contract are carried out by both parties. If the policy in total supports such a requirement, the public adjuster may have an obligation to sit for an examination under oath. Again, this will depend on the specific policy language regarding EUO and the contract with the policyholder. Remember, looking at one portion of a policy without considering the whole contract is similar to applying sunscreen to just one arm and assuming you won’t get burned after a day at the beach.
This post will continue on Monday. In the meantime, if you have given an EUO and having been dealing with similar issues and would like to share your experience, please send me an email at nvinson@merlinlawgroup.com, call directly at 813-415-8758, or post your comment here.
Hello Attorney Vinson. I enjoyed reading your blog entry.
Aside from the Public Adjusters who, in most cases, are retained by the insured and have a vested financial interest in the claim, do you think this EUO provision applies to restoration company employees retained by an insured following a flood? Or how about the landscaping crew hired by the insured following a tropical storm?
It sounds as if Citizens has given themselves a "free pass" to talk to EVERYBODY involved in a claim - not that they need any new reasons to deny a claim, of course.
Just curious.
SHIRLEY HEFLIN
Essentially I do not the answer to the question. Without being myself for a change, it sounds like Public Adjusters are encouraged to retain an attorney and sit for the EUO.
Is MLG prepared to partake in a dec action to thwart Citizen's from wielding their "self-perceived" God like almighty sword?
The whole issue raised by Citizens new form requiring third parties such as Public adjusters to provide a E.U.O. is just another attempt to intimidate public adjusters and make their already difficult professions that more difficult. That said...even if the public adjuster finds a way to avoid a E.U.O. does not in of itself get a claim resolved, which is generally the underlying intent of both the insured and their representatives.
I guess as a public adjuster, we all must get used to the idea that we better have a good attorney on stand by when representing clients with Citizens.
of course the provision is broad enough that they could ask the attorney hired to sit for the EUO, also, lets say we have a hurricane and for emergency repairs the insured hires a handyman and now they can't find him, what happens as the handyman was hired to do the emergency repairs to protect the property from further loss (is that enough to fall under "anyone you hire in connection with your claim"
If this is ambigous then it favors the insured. It will be interesting to see how the Courts will rule on a none insured who was not privy to the contract.
There is a PIP case with State Farm where they ruled that the doctor does not have to appear for the EUO however, the language of the policy is different
Dear Nicole,
Not much attention is given in your initial article about who has the authority and capacity to conduct the EUO or a recorded statement. I opine that any adjuster representing Citizens at the loss site meeting can request that the PA or retained engineer or contractor have a seat while the recorder is being turned on, and proceed to take a recorded statement at each and every meeting of the parties. If for economy reasons the Citizens adjuster elects or is directed to conduct the EUO, rather than an attorney, the insured retained person will be remiss if he fails to get an attorney to sit with him during the recording or the EUO. (there are no provisions for the retained person to be compensated for out of pocket legal fees in most instances) It may be that the PA may have to provide his entire file to the adjuster for his copying and review as I don’t think the PA has any file content privileges. But as often said, “attending an EUO without the presence of an attorney is very foolhardy”. Providing a recorded statement to an attorney or an adjuster without an attorney may also have its pitfalls for an expert or the insured’s outcome. Suppose an EUO requires one or two days to complete the insured retained party's EUO, the expert must eat those lost hours of production. Most PAs are retained on a contingency fee basis with no provisions for legal expenses. Considering the exposure that a four hour fee for the average attorney may be $1,000.00 or more to attend an EUO, and additional time is usually required to prep the attorney and the PA for the EUO, I must now reject all small cases as potential financial losers. Engineer contract's usually have a clause providing that they will be paid their usual rate for prepping and attending any legal hearings. (out of pocket expense for the insured) Perhaps the insured would be better off, not getting a policy from this insurer of "last resort" with this punitive policy language. Duties that will scare away any needed expert that doesn't want to deal this unanticipated hassle and expense to assist in securing the insured's contractual entitlements.
These are some of the random thoughts of a public adjuster looking for answers that I fear will not be addressed in your guest blog series but are of concern to this Florida PA.
William S Cook
Hi Shirley-
Thank you for your comment. I think the policy language is broad enough to potentially reach out to those hired by an insured to assist with the claim who are not public adjusters. The examples you listed are possibilities, as are contractors and subcontractors. If Citizens goes down this road, I can foresee many potential problems. After hurricanes, many insureds hired the first person with a ladder they can find to do mitigation efforts, and while some of these folks have receipts from the hired helper many do not. How would the policyholder find this entity later on if an EUO is demanded? Hopefully, this scenario does not happen and I think we can distinguish a difference.
I think it is important to distinguish between contracts with entities who are paid from the proceeds directly and by those paid by the policyholder separately. There is a difference. The person hired to put on a tarp will likely be paid a flat fee not contingent on the insurance claim outcome. The public adjuster and even some contractors may take an assignment of the insurance proceeds and this is what really concerns me.
I don't know exactly how the local courts are going to deal with this but my experience tells me we may be in a state of flux for awhile. What I do know is that an EUO is not the only way for Citizens to get their information and this language seems far too overreaching.
Jeff-
At first thought, I am thinking actions for declaratory relief will likely be filed. To do so, I think we have to have a case where the new policy is in effect and Citizens actually demands a PA’s EUO before we file a declaratory action. While under these circumstances I think we should file the dec action, the case facts can change how I feel about a PA giving an EUO. For example, having the PA sit for an EUO instead of the client might be the better way to get the elderly client paid. However, before I would suggest this, I consider the claim, the client, the PA, the attorney for the insurance company, and the facts of the case. As with all examinations under oath the lawyers for the parties can reach agreements about the EUO and certain particulars. Each of these factors matter to me if I am going to handle the EUO and helps me determine what kind of agreements I might be able to make with the defense attorney.
Then again, Citizens is able to investigate the claim and talk with the PA at length without the EUO being done. Doesn't a proper investigation by Citizens include meetings, discussions and communications between the adjusters? Adding an oath and a court reporter seems to me to suggest a proper investigation may not have been completed by the carrier.
I think a declaratory action may be the way to get help for PAs who are in this situation depending on the circumstances of the case and the clients’ needs.
Stephen-
Nice to see you are reading the blog. Hope all is well. I think your comment hits the nail on the head. As I have been writing about this issue and thinking about the ramifications, I have been thinking about how much this new policy provision can delay clients' claims. Bottom line the insureds are hurt again. No matter what the outcome of who has their EUO taken or who does not, the client continues to wait and this is a shame.
Hi David-
Thanks for posting on the blog.
I have been thinking about the handyman example too. I can't imagine the difficulty for policyholders if Citizens decides to attempt to use this policy provision to get to any and all persons who were paid by the policyholders. I know after the hurricanes homeowners and business owners were actively attempting to comply with the other policy provision requiring mitigation of the damage to their property. To do so, the insureds were mitigating through the help of handymen and clean-up workers and, as you know, after a storm- help is hard to find. Potentially getting the helper to sit for an EUO when demanded seems incredibly difficult. The insured does not have any control over this non-party and status of the person or entity is often unknown by an insured and has changed.
I like to think the courts will help the insureds and will read sections of the policy as ambiguous and agree non-parties should not be required to have policy obligations when they are not in privity of the contract but the difficult part is the ramifications for those waiting for a resolution with a damaged home or business.
Bill-
Your comment is precisely the reason for this blog. When I learned about this provision I was in a room filled with public adjusters who adjust in Florida and other states. This policy provision was not just a frustration for them but their sentiments told me they may have to change the way they do business. Whenever you have to change how you operate, people have questions and great concerns. Thanks for letting me know what the concerns are in the field. I hope we can have a discussion here and in other forums to discuss what to do now.
The first question you asked was who can take an EUO. Normally, the recorded statements of a claim are taken by the adjusters or the investigators of a claim at scene or over the phone. The Examinations are usually later on in the claim process, perhaps a few months or (sadly) even a few years later. Usually, a lawyer will send a letter to the policyholder demanding the EUO. The letter usually includes the policy language regarding the ability for the EUO to be taken and lists when and where it will take place. The letter will usually outline the documents the insurance company is seeking.
The policy outlines how the EUO is supposed to happen and while it likely does not say a lawyer must be the one who is taking it, I have never attended an EUO where the carrier did not hire counsel. There are often non-lawyers at the EUO on behalf of the carrier who have the lawyer ask questions they jot down on a notepad, but usually the lawyer does the talking. Now, I think what you are saying is what if this process changes and Citizens wants to start doing these exams on the scene? At first blush, I think it is important that the policyholder be given a certified copy of the policy that requires such an examination and outlines the duties. I think by asking for the policy the client is better able to contact counsel to see what is required for the claim to go forward.
I would also request all statements be done at a convenient time. Cooperation is required and the claim should be handled reasonably. Requesting a statement or an EUO be rescheduled is reasonable.
You make a good point about compensation. In the event the PA and the lawyer decide the PA should give an EUO, perhaps the testimony could be given only when payment is issued on an hourly basis.
The file is also likely not privileged and in my opinion should be something the insurance company already has a copy of in connection with the claim. I know, I am not a PA and it is easy for me to say, "show them the file". But I think when you show the file, I can say “Show us the MONEY".
I am sure public adjusters and clients will have more questions about how this provision will change claims and my take is for PAs for to continue advocating for the insureds. The landscape is changing in Florida and in the country for insureds and their advocates but if we all discuss it, we can have action plans and know about the resources available for the clients.