Public Adjusters Investigated While Insurance Industry Leader Acknowledges He Only Knows Public Adjusters That are Honest and Hardworking
Florida's Third District Court of Appeal, which sits in Miami-Dade County, ruled yesterday that a public adjuster constitutional challenge to the public adjuster fee limitation and solicitation restrictions that was filed in Miami-Dade County should have been filed in Leon County. As noted in Sink Appeals Public Adjuster Suit: Delay Possible For Miami-Dade County Public Adjuster Lawsuit, this venue dispute slowed this lawsuit significantly. In the interim, a similar suit was not ruled on favorably by a Leon County judge, as noted in Public Adjusters Lose 48 Hour Solicitation Ban Case.
The appellate court opinion had some interesting facts about the case I was not aware of:
The documents filed by the Adjusters show that the Department sent
correspondence to Ameriloss and Premier advising them that investigations had been opened concerning their insurance-related activities in Florida....
The Adjusters...also filed affidavits stating that Gene Cashier (“Cashier”), an agent of the Department, traveled to Miami-Dade County, visited and interviewed East Coast’s clients, interviewed a contractor used by one of the clients, and advised the clients that East Coast was being investigated on suspicion of fraudulent or excessive claims. In addition, the Adjusters produced the affidavit of Premier’s president attesting that a special investigator from the office of the Chief Financial Officer visited Premier’s business location, advised Premier that it was under investigation, and obtained copies of Premier’s files and fee calculation for a particular claimant. Lastly, the Adjusters indicate that while the lawsuit was pending, the Department sent a letter in January 2010 to Premier requesting information and documentation as to one of its contracts that contained a commission of 25 percent, despite that “[u]nder Florida Statute 626.854(11)(b)(2), the cap is 20 percent.
It is noteworthy that the Adjusters’ affidavits pertaining to Cashier reference his activities as “investigating an alleged fraud by East Coast,” “investigating allegations that East Coast had filed an improper claim,” and advising East Coast’s former client that “an investigation had been initiated . . . because he believed that one of East Coast’s employees . . . had filed an excessive claim.” The affidavit filed by Premier’s president states that the Department’s agent was “investigating allegations that [Premier] had charged in excess of the fees allowable under Fla. Stat. 626.854.” We note that section 626.854 includes limitations on public adjuster fees outside of those in section 626.854(11)(b)(2). In response, the appellants filed two affidavits, including one by Cashier unequivocally stating that he had “not been asked to enforce, [nor had he] attempted to enforce or prosecute any person or entity with a violation of the 48-hour waiting period provision of section 626.854(6), Florida Statutes (2009) and the fee cap provisions of section 626.854(11)(b), Florida Statutes (2009).” Cashier further attested that “[n]one of the referenced investigations cited therein concerned allegations of misconduct pursuant to the above-referenced statutes.”
Filing affidavits that become public record and which indicate that the government is investigating your business for fraudulent or illegal conduct does not seem like a very smart marketing move. I suppose this was the only method the public adjusters' counsel could present evidence to keep the matter in Miami-Dade County.
These facts are timely in light of Tuesday's post, Insurance Agents Should Not Adjust Claims and Public Adjusters are Not Insurance Agents -- But They Need to Listen to One Another. It produced a number of private and some public comments about the regulation and reputation of public adjusters. I suggested a greater need for audit and closed claim file reviews of public adjusting firms by the Department of Financial Services. I indicated that review of files was rare, but maybe I was wrong about that in light some of these new facts.
Also, in that post, I was wrong about statutes not existing concerning adjusting by insurance agents. Writing publicly is a certain method to show ignorance and gain knowledge. A comment by Gary Ahrens noted:
626.862 Agents; adjustments by.--A licensed and appointed insurance agent may, without being licensed as an adjuster, adjust losses for the insurer represented by him or her as agent if so authorized by the insurer. The license and appointment of the agent may be suspended or revoked for violation of or misconduct prohibited by s. 626.611(6). (emphasis added)
Please note that the insurance agents are acting as adjusters for the insurer under such appointment. Insurance agents should clearly indicate that to their clients. This statute may be useful to prove that actions, errors and omissions in the formation of making insurance contracts can be attributable to the insurer directly. It might also be used as negligence per se if the agent commits actions within the definition of adjustment without the appointment. I also agree with Gary that the "statute gives the right to an agent of an insurer to adjust a claim. If they can do it correctly, remains to be seen."
In my next life, maybe I will be as gracious as Scott Johnson. He acknowledged with a smiley face ":)" that I "systematically" critiqued his argument. Then, continued the debate which significantly included the following:
Finally, while I respect your push for more oversight and audits of PA's, I'm really not advocating that. The Public Adjusters I've had the honor to know, are like you, good, honest, hardworking people interested in helping consumers. But, isn't it possible that a statewide prohibition against holding back is attracting some bad apples? The good organization you founded has around 425 members but, there are another 2600 or so out there (more than the next five states combined); again, because of the lack of any hold back. (emphasis added)
The answer to the question is "maybe," because how do you prove that? I have never heard a new public adjuster or one coming from another state say, "I got into the public adjuster business in Florida because Florida requires its insurers to pay replacement cost benefits right away rather than having to wait for replacement." The point is that Johnson and some in the insurance industry are using a mythical witch-hunt of "fraud" as a basis to overturn consumer protection laws that require Florida insurers to promptly pay replacement cost benefits. There is no proof to support what Johnson and others claim. Significantly, he wrote that the public adjusters he knows are "good, honest, hardworking people interested in helping consumers;" this refutes his argument.
I am no lobbyist, but public adjusters should send this quote to every Florida legislator whenever any insurance industry leader or lobbyist wrongfully suggests that public adjusters are, as a whole, anything other than honest and dedicated professionals helping policyholders.
Since Scott Johnson was getting back to me with his comment and he likes the Beatles, this song is a very appropriate appendix:
The promise of immediate financial reward in securing a % of replacement cost in lieu of ACV is certainly attracting folks to the fold of public adjusting. Not having to wait or fulfill actual replacement with the inherent invoice tracking and submission sure minimizes the work involved in securing indemnity. While surely not the only factor contributing to the swelling ranks of PA's in Florida it's hard to believe it's not one of the factors.
Perhaps Mr. Johnson should check into this issue. How many times do we as Public Adjusters enter into someone's home or business, meet with them and discuss the loss and how they may be able to recover, only to find that they have insufficient coverage or incorrect endorsements. Upon further discussion, we find that they have dealt with the same insurance agency for years and yet have never met the agent nor have they been asked qquestions such as we were raising. In some cases, they clients obviously would have been trying to save money, but i have encountered an equal number who have the money and admitted they would have purchased the coverage gladly, but they did not know it was necessary?
I say a joint training session at a FAPIA session and a similar session for Agents to explain and cover some of these issues will be benificial to all- at least those that choose to listen and learn. Agents sell, PA's represent and prepare claim files for possible litigation. Wait until sufficient documentation becomes centralized and see what happens to E & O payouts and premium increases for each side.
the concept of selling someone more coverage A dollars and not the dam endorsements to cover jewelry, silver, furs, etc. is just not representing anyone except the commission earnings for an agent.
I for one would welcome the course or discussion panel
Enjoyed the report!!
ED
Chip,since you often say you aren't a lobbyist maybe you didn't mean to "stretch" my words quite so liberally; especially telling readers to tell all lawmakers. You said the following about my commments: "Significantly, he wrote that the public adjusters he knows are good, honest, hardworking people interested in helping consumers;this refutes his argument." First, my statement doesn't really refute any argument; certainly not regarding the Hold Back provision; technically, there was a question mark (?) at the end of my next sentence. Your article above on "East Coast" is more to the point of "bad apples". And, I feel you may have overstepped a bit in telling everyone to send out of context comments to every lawmaker. It would be like me telling everyone to tell lawmakers that you (the founder of FAPIA) says there are Public Adjusters who are not "good, honest and hardworking"? As it is, if a lawmaker now asks why I said that about the very few Public Adjusters I know, I may be in the position of having to tell them the names (and arrest affidavits) of the ones I do not know. Which conjures another Lennon & McCartney tune; "I Shoulda Known Better".:)
Nice blog.
Scott,
I do know some public adjusters that are not hardworking nor would I consider them the type that I would trust.
My role inherently comes across all types of people. I get to see the files, the work, and improper actions. I did not make the suggestion for greater audits lightly.
Most public adjusters with experience and a dedication want higher standards of expected conduct. They are also tired of being the scapegoat for obviously illogical attempts by many insurers to cast them as a problem to policyholders.
Seriously, despite the unsupported belief that some may have regarding public adjusters flocking to Florida because we have a law that makes insurers pay for a product they sell as "replacement cost" rather than a product that should be sold as "actual cash value with delayed replacemmennt cost," you have no statistic, survey, fact and anything to support what you say.
When I ask public adjusters from other states why they are here, they tell me Florida has a lot of storms compared to where they are from. Hundreds of the public adjusters in Florida are from other states. They are not here because of a law. They came and continue to come when the storms cause damage and go home. Nobody has ever said that the replacment cost laws are the basis for them coming. Indeed, some have suggested the ACV adjustment requires a greater need for their services.
The storms of 2004 and 2005 along with the then easy licensing laws are why the numbers of public insurannce adjusters increased. The number of claims along with the horrible adjusting that Citizens was doing made it, and still makes it, an easy sell for people to see the need to hire a public adjuster.
That is what my clients and public adjusters friends tell me. I have hundreds of them that tell me this. Zero have supported your position.
What you suggest is that your agents' customers becomme crooks when insurannce companies pay replacement cost right away. If this is so, why hasn't Chubb stopped selling its products that pay right away or have it say that its customers are made crooks by it? There is no proof. insurers used to use in arsonn
I'm not sure we're still on the same topic, but...you piqued my curiosity.
You said, I have no statistic, survey, fact and finally "anything" to support what I said? To save space...does that mean that "IF" I showed you one undeniably fraudulent action obviously designed to pocket the up front money without making repairs, you would say I was right? If not what would, in your mind, constitute "anything" or "any fact"?
Thanks, again, for the dialogue and for the open minded way in which you always deal with things. sj
Scott,
"Anything" is what I will consider. You have that promise.
After the consideration, the "anything" may end up in the circular file. And, sometimes, those things are brought back out of the circular file because I do not pretend to be a perfect seer...just a Merlin.