Property Insurance Coverage Law Blog : Florida Insurance Lawyer & Attorney : Merlin Law Group Law Firm : Tampa, Houston, Coral Gables, Gulfport

Examinations under oath are often not needed if the insurance company has only non-fraudulent concerns. Discussion and exchange of information is far quicker and much more in depth than the typical questions and answers in most examinations under oath. Insurance adjusters, claims managers and their attorneys must know must know this, so the only real reason for examinations under oath is to help the insurance company attorneys make final coverage suggestions before their claims managers make the decision.

Corey Harris wrote an excellent piece in When Can An Insurer Require An Examination Under Oath? Readers should note that this post involves Florida law and many states have different case law, regulations and statutes that may apply. Most regulations and statutes require insurers to quickly invoke examination requests or lose the right. United Policyholders remarked in Examinations Under Oath on the various consumer protections regulations and statutes that are needed to keep insurers acting in good faith:

Companies use this procedure to screen out fraudulent claims and test a policyholder’s credibility and/or evaluate what kind of a witness he or she will make if a claim or coverage dispute goes into litigation. The EUO procedure was abused by insurers after past disasters to intimidate and frighten policyholders. So United Policyholders helped pass legislation in California to stop the abuses and protect policyholders. (empahsis added) But the EUO procedure is still a legal and valid requirement in homeowners policies, and the law in most states is vague on the subject. A homeowner who makes a claim for policy benefits must cooperate when an insurer makes a reasonable request to examine them under oath or risk losing the right to recover the funds they’re entitled to. Courts have traditionally been hard on policyholders who refused to cooperate in EUOs.

In California and in most states there are “Fair Claim Handling Regulations”, and there are laws that tell insurers what they must, can and cannot do. Above all, your insurance company has the legal duty to investigate and process your claim fully, promptly and in good faith and deal with you fairly.

Florida and other states in the Southeast need more consumer protections to prevent and discourage the delays that routinely occur when some insurers’ investigations seem to last forever and do not lead to a claims decision, but further excuses for more delay--- usually the excuses of needing and analyzing more information. Some insurers are trying to avoid this by re-writing policies with increasing and detailed conditions precedent.

Nevertheless, Corey Harris correctly notes the general majority rule: Examinations Under Oath should be demanded timely, before payment or denial, and definitely before a properly filed lawsuit where the insurer had not reqested an examination. His discussion gets to the heart of the matter:

...the Court ruled that because the insurer had requested the examination under oath prior to the lawsuit, the examination under oath was a condition precedent to filing suit. Therefore, the Court determined that the insured had breached the contract and was not entitled to payment under the policy.

A much different scenario exists when the insurer does not request an examination under oath prior to the lawsuit being filed. This situation arose in Willis v. Bankers Insurance Company, 736 So.2d 1272 (Fla. 4th DCA 1999). In Willis, the Court distinguished the facts in Goldman because of the time when the examination under oath was requested. Since the insurer did not request the examination under oath until after the suit was filed, the court held that the examination under oath was not a condition precedent to filing suit. Therefore, the insured in Willis did not breach the contract by refusing to sit for the examination under oath.

In The Mind Of The Insurance Fraud Adjuster And Investigator, I made the following remarks:

Some may question why I spend time studying the insurance company's perspective. From my viewpoint, even a broken clock is right twice a day. And, I need to understand the mind of my opponent and anticipate his actions to do a better job for my clients.
...

Guy "Sandy" Burnette invited me to speak at the International Association of Special Investigation Units over a decade ago. I was the token insurance attorney for policyholders. During my presentation, I cautioned that the two major human problems facing fraud investigators would be the issue of wrongly accusing innocent people of fraud and the tendency of some in an investigative role to view everybody as a potential crook. Well meaning or not, seventeenth century witch hunts can be repeated by modern groups. If all you concentrate upon in life is uncovering fraud, you may start seeing signs of it everywhere.

When I get called about possibly working on a case where a claim is dragging along and a possibility of an examination exists, getting the insurance company to act promptly and in good faith becomes paramount. Asking who opposes the claim, why the claim has not been paid, whether there is any concern about fraud and, if so, what those fraudulent issues are, and demanding that information be exchanged informally or through a prompt examination under oath moves the matter along. These demands should be made politely and cooperatively, trying to get payment while still pointing out the seriousness of not having a prompt adjustment.

The Florida appellate court found as follows:

We have held that “the insured must meet all of the policy's post-loss obligations before appraisal may be compelled.” U.S. Fid. & Guar. Co. v. Romay, 744 So.2d 467, 468 (Fla. 3d DCA 1999) (en banc). This includes the obligation to submit to an EUO. Id. at 469. Our court has said, “ ‘[T]he failure to submit to an examination under oath is a material breach of the policy which will relieve the insurer of its liability to pay.’ “ Stringer v. Fireman's Fund Ins. Co., 622 So.2d 145, 146 (Fla. 3d DCA 1993). The insurer argues that, at a minimum, the lawsuit must be dismissed and appraisal must be denied.

We agree with the trial court in rejecting the insurer's arguments. First, the insured and his wife appeared for the EUO at the designated time and place. The substantial issue before the trial court was whether the insured and his wife were justified in leaving the EUO. The insured testified that he was badgered and yelled at, and that he was required to answer the identical series of questions twice, once in English and once in Creole.

After the insured's exit from the EUO, he obtained counsel who offered to present the insured and his wife for a resumption of the EUO. This was before the insured filed suit against the insurer. The insurer refused the offer. It was not until after the insurer refused the offer that the insured filed suit. On these facts we entirely agree with the trial court that the lawsuit was not premature, and appraisal was properly ordered. (emphasis added)

There are a number of lessons to be learned from this case. First, policyholders should seek to retain counsel to prepare them for and attend the examination under oath. Usually, reputable policyholder's counsel can move the matter along.

Second, the demeanor of opposing counsel and the insurer is important. Professional conduct is required of insurance counsel. Policyholders and policyholder's counsel should indicate on the record when the tone of the questioning by the insurer's counsel becomes badgering, demeaning, unfair, or unprofessional. Insurers and their representatives have an obligation to cooperate and treat their customers in good faith.

Finally, refusing to adjust, investigate or take any action in response to a reasonable request by  recently retained policyholder's counsel may not be the best course of action for an insurer, especially after prior problems dealing with the insured. The insurer should not force a situation where the insured is not in compliance with technical pre-loss conditions and then use it as an excuse to avoid payment obligations. This has become a frequent tactic by some insurers and their counsel.

"Wouldn't it be nice" if insurers and policyholders cooperated and got along with each other? 


 

Yesterday, I was talking to a lawyer who practices in a different area of the law and in a different state. We were having a friendly chat, but then the conversation turned. She began telling me how unhappy she had become practicing in her area of the law. She felt she was not serving her client. My friend wanted to be evaluated on her assistance to the client and the client trust she built over the years but, instead, her boss recently only offered her feedback on the number of hours she billed. She asked me whether I thought her client relationships and quality of assistance mattered. I told her that her clients appreciated her work, even if the firm seemed to have a different focus. She then told me she felt it was time to change from defending medical malpractice claims to something new. She said she wanted to help people and wanted her work to have meaning. She wants to do plaintiffs work.

It sounds simple, but helping a client can be a challenge. Assisting policyholders with insurance claims is a great way to help people get what they rightfully deserve -- the benefit of what they bargained for when they purchased an insurance policy. However, the path and tactics used to help the client can vary.

With respect to demands for examinations under oath, the best approach is what will help the client. Consider how your actions affect the client’s claim in the short term and in the long run. Think about how your actions will encourage a positive resolution for the client. The words seem simple, but I think public adjusters sometimes feel personally attacked when an insurance company adds an additional hurdle to a claim payment. If the insurance policy has a provision which stretches the EUO requirement to those other than the insured, consider the claim, the client and what is the best way to get the claim paid quickly. Whenever an examination under oath is demanded, a lawyer should be retained.

Lawyers who handle examinations frequently know how important the examinations can be in connection with the claim as a whole. Also, a lawyer who has a “client focus” can help to ensure the actions taken before, after, and during the EUO are in the client’s best interest. One example of a way to help includes pre-EUO stipulations. The lawyer can help the client with the claim by reaching agreements about who will testify, the documents requested, and the time, place, and manner in which the EUO will occur. The lawyer may be able to substitute the requested testimony of one insured for another or for a public adjuster. Depending on the case, a public adjuster’s assistance in the EUO may help the client’s claim reach a prompt and proper resolution.

By making sure your focus is on the client, you will be able to best resolve the claim. For example, consider the elderly or widowed client who has relied on hired professionals for the entire claim. If the insurance company really wants answers about the claim presentation, the PA may be the best person to testify. The client’s responses may be incomplete, and the public adjuster may be able to speak to various aspects of the claim and explain the claim evaluation in a sophisticated manner based on first-hand knowledge. As in any industry, there a common language in insurance, and an EUO between two professionals may go more quickly and with fewer instances of miscommunication.

In sum, I challenge you to truly consider what is the best for a prompt resolution of your client’s claim.

Before the change in Citizens’ policy, analysis of a requirement for an examination focused on the word “insured.” The insured is usually required to submit to an examination under oath when demanded. The term insured is usually defined in the policy, and this helps lawyers to determine who is required to give an EUO. A look at the case law shows that arguments have been made about how far the definition of insured can stretch with respect to commercial policies and commercial- residential policies. This debate has been going on for decades.

Recently, in Florida Gaming Corp. v. Affiliated FM Ins. Co., 502 F. Supp. 2d 1257 ( S.D. Fla. 2007), the U.S. District Court for the Southern District of Florida addressed issues regarding who is required to give an examination under oath under the Affiliated policy issued to Florida Gaming. It is important to remember that in Florida Gaming, the policy language was different than the policy considered in this blog. The facts of this case, like all cases, are unique.

In Florida Gaming, the Court considered who should be required to give an EUO. The Vice President of the company gave a lengthy EUO but could not answer all questions. He admitted that he had no personal knowledge relating to the amount of loss and relied on the public adjuster’s analysis and the contractor, who was hired by the public adjuster, to estimate the damages. The insurance company requested that the contractor be subject to an EUO. Based upon the policy and the facts, the Court declined the request, stating:

Affiliated argues that Florida Gaming must submit Al Paxton to an examination under oath because PCA performed the analysis upon which Florida Gaming has relied in its sworn proof of loss. Florida Gaming responds that the policy requires only that “the insured” submit to examinations under oath. The Court agrees with Florida Gaming, that given the language of the policy, which authorized the examination of “the insured,” an examination of the insured's adjuster (or its agents or representatives) does not appear to have been contemplated. The Court therefore applies the rule requiring that the policy be interpreted in favor of the insured, and finds as a matter of law that Al Paxton is not required to submit to an examination under oath.

The Court’s explains is important; the obligations of those involved were determined by the policy provisions and what was contemplated by the wording of the policy at the time of drafting. This is how insurance policies and other contracts are routinely interpreted, and it provides some guidance in interpreting the new Citizens policy.

Does the exact wording of the provision matter?

Yes.

In Florida Gaming, the Court also explained that when a policy of insurance is ambiguous, the ambiguity is resolved in favor of the insured. This may be an angle used to help public adjusters determine their responsibility with the Citizens policy. The language requesting the EUO does not say “public insurance adjuster,” it says “anyone you hire in connection with your claim.” Perhaps there is enough ambiguity here for a court to agree the policy is unclear and overly burdensome.

What about the policyholder?

One of the common themes in the comments and the discussion about this provision relates to the policyholder. Suppose the insured has a loss and has problems or a complicated claim. The policyholder needs help and hires a public adjuster. The public adjuster’s contract is signed and the claim is presented to Citizens. Citizens demands examinations under oath and lawyers are hired. There is a dispute concerning the obligations of all involved, and the matter ends up in court. The matter is one of many pending on a very full docket. Meanwhile, the insured has to wait just to figure out what is required under the policy. The insured’s home or business is in limbo and the public adjuster is spending more and more time attempting to figure out how to help the client.

While the purpose of this blog is to have a discussion and evaluation of this issue, I also want to remind everyone that examinations under oath must be demanded. If there is no demand, there is no issue. Until an EUO of a public adjuster is demanded and the matter litigated, we will have no definitive guidance on the issue. While no one can predict the future and changes are always happening with property insurance, everyone should understand the policy provisions and be aware of new policy language that could affect your job and your clients’ claims. In the meantime, taking extra care to be prompt in communications and forthcoming with the claim presentation may save unnecessary headaches later.

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:

1. What happens if the PA refuses?
2. Is the PA always required to give an EUO?
3. Can the PA fill the shoes of the policyholder and give the only EUO?
4. 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.

This is the Examination Under Oath (EUO) requirement in the Citizens’ policy. The highlighted portion, lines 5 a-b, are new and controversial part:

FORM CIT HO-01 10

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;

Generally, insurance policies contain a requirement that the insured must give both a recorded statement and an Examination Under Oath (EUO) in the “Conditions” section of a policy. A recorded statement may be used to gather information by insurance company at the onset of the claim. An EUO is a more in-depth interrogation by a lawyer for the insurance company. The requirements of policyholders in connection with an EUO depend on the policy language. Many policies require insureds to sit for an EUO, sign the recorded transcription, and give the EUO while not in the presence of any other insured. Essentially, an attorney for the insurance company asks a long series of questions while a court reporter records the whole thing. An EUO is more similar to a deposition than a simple recorded statement, except that the EUO is governed by the rules explained in the policy and not the Rules of Civil Procedure. EUOs are adversarial. Now, at least for Citizens claims, it seems public adjusters are subject to the same requirements.

The insurance company has many other ways to learn about a claim and the public adjuster’s involvement and evaluation of it. This series of posts will consider the implications of Citizens’ new policy language and will discuss what is happening now on the front lines.

-Nicole Vinson

First, when a theft loss avails itself to you, look at it through a lens of common sense. Are the circumstances asserted by the claimant plausible? Was there forced entry, for example? Simply stated, if the facts do not bear scrutiny, pass on it. Any decent insurance defense attorney will harp on inconsistencies at an EUO. The claim mentioned above is an excellent example. Think about things logistically, that is, in order for a burglar to steal furniture, they need assistance moving the furniture, a truck to transport it, and a place to store it until it may be sold. Primarily speaking, three guys moving furniture into a large truck is substantially more likely to be seen than a lone thief in the night pocketing jewelry. Further, it is not very plausible that petty criminals have access to moving trucks and warehouses for storage. Finally, do thieves typically take the time to inspect power tools, leaving their casings behind? Of course not, they would simply take case and all. These points may seem picky, but they are precisely the type of suspicious facts that carriers will exploit and, often, ring true with jurors.

Especially in today’s economic climate, there will be no doubt that the insured’s finances will be poured over with a fine-tooth comb by defense counsel. Be prepared to give tax records, income documents, records of debts, etc. and, YES, the carrier does have the right to ask for them. Now this does not mean that legitimate theft losses do not happen to people in financial trouble, but financial trouble may be a motivating factor to commit insurance fraud. To those ends, the insurance professional looking at a suspicious theft loss must be extremely mindful of the list of stolen contents, as this is often the source of big problems. All too often, policyholders are tempted to exaggerate just a bit on that contents list. This is usually done in three ways: adding items that simply did not exist, changing an item’s value, or changing the age of the item in order to thwart potential depreciation. Take care to make sure the policyholder is not stating that they purchased $25,000 in contents in the last 12 months with a $35,000 salary, for example, or that they purchased several big-ticket items within the past year but with no savings and little disposable income.

Finally, the carrier will ask for receipts and proof of purchase for every single item claimed in a theft loss. It is very important to provide these receipts to substantiate the claim. What if the client can not locate receipts? I guarantee the insurer will say they are unable to pay for items which are not substantiated by receipts. This is complete foolishness. Most people do not retain receipts for every item they own. Further, I know of no policy provision stating, “no receipt, no payment,” rather, there are plenty of other methods to justify contents. Photographs, owner’s manuals, affidavits from people who can confirm the contents etc., all may be used to justify contents… so long as they actually existed!

Tune in next week insurance fans when we discuss Typical Questions Asked During an Examination or Sworn Statement Under Oath of a Disputed Structural or Personal Property Valuation Claim Suspected of Being Inflated, Exaggerated, or Made Up.

First, the key element of fraud is the intent to deceive. Obviously, intentionally setting one’s property ablaze for the purposes of duping the insurance company demonstrates a clear intent to deceive. The problem is 999 times out of 1,000 there will be no Hollywood-film moment with the dastardly perpetuator of the fraud breaking down in an EUO, admitting the fraud, and begging forgiveness. It just rarely, if ever happens. In fact, out of all the fraudulent fires I investigated this happened once. And the woman did not admit the fraud, she merely asked for a break to use the rest room… never to return to the examination.

But I think it is very important for me to stress this next point to public adjusters and attorneys who handle first party property claims alike: look at your claims with a skeptical eye. If it looks like a duck and quacks like a duck, it’s probably a duck. That is, if you have a fire claim about which you have suspicions, you do not have to represent that person. In this industry the players on both sides of the ball need to weed out fraudulent claims. There are enough legitimate claims to go around, and advancing fraud just gives our industry a huge black eye. For example, raise your hand if you have seen this scenario: “Well, I was cooking fish with a huge pan of hot oil on the stove, when [insert weak excuse here: the doorbell rang, someone called, I fell asleep, I needed an ingredient and went to the store] and I forgot I was cooking and left the stove on.” Twenty minutes later the oil ignited and started a fire in the kitchen. But it was a controlled burn, with smoke damage throughout the house. Ever hear that before?

Well, a few years back there was such an epidemic of this type of claim in Dade County a task force was created. Am I saying this fact-pattern never happens legitimately? Of course not. Unattended cooking is covered under most policies. But I am saying these types of claims occur few and far between without fraud. Certainly attorneys and public adjusters who accept any claim that comes their way, all the while turning into the proverbial three monkeys, “I don’t want to see fraud, hear about fraud, or talk about fraud.” should be ashamed of themselves.

What public adjusters and attorneys should be doing is looking at these types of claims through a filter of skepticism. Ask your client the questions they would be asked at an EUO by defense counsel, not to prepare them for how to lie and get away with the fraud, but to ferret out the fraud before you sign and perpetuate it. First, discuss the facts and circumstances of the claim. For example, I once investigated a kitchen fire claim identical to the facts above where the policyholder stated in a recorded statement after the fire that she was cooking, suddenly remembered she had to pick up her daughter from school, and left the house in a rush, failing to turn off the stove. That could happen, right? Well… the problems were the date of loss was in July after school was out for the summer and further investigation showed that the daughter was not even in the country at the time. That’s pretty damning evidence. Second, you can bet dollars to doughnuts that the carrier is going to delve into the policyholder’s finances attempting to prove economic hardship facilitated a fraudulent fire claim, so ask the policyholder those hard questions during your assessment of the claim’s viability. Hence, perform your due diligence, investigate the facts of a suspicious fire and if the circumstances do not add up, walk away.

Additionally, pay close attention to the rest of the claim. That is, ALE (additional living expenses) and contents, specifically. Greed is inherent to all people. Even Ghandi probably had to fight off urges to take an extra spoonful of rice. This is important when regarding suspicious fire claims, as people who will commit fraud for money are all too often overcome by greed. They very often will make demand for additional living expenses (ALE) which are drastically over-inflated or outright phantom. I cringe when I am meeting a potential new client and I see those little paper receipt booklets for alleged rent payments. For example, I once investigated a claim where a young woman had a kitchen fire and stated under oath that the house was uninhabitable and she had to move in with her grandmother until repairs were made. How nice. Family helping family. Of course, she also produced a lease and little paper receipts claiming Granny was charging her $2000 per month. Unfortunately, she could provide no evidence as to where that money came from (re: cancelled checks, ATM receipt, etc.) and it was plainly obvious she was outright lying. In most jurisdictions if the policyholder is fraudulent with ALE the whole claim may be denied. In Florida, Wong Ken vs. State Farm, 685 so2d 1002 (3rd DCA 1997) holds that very premise.

The other area that must be scrutinized very closely is contents. Fraudulent policyholders will typically include every item they own –and then some—to their contents claim. Review that contents claim with a fine-tooth comb. Be reasonable, that is, if the policyholder is a working-class person making $40,000 per year chances are they do not own three gold Rolexes. And for that matter, how are three gold Rolexes allegedly located in a bedroom on the other side of the house from the kitchen damaged by fire? Much like fraudulent ALE, in most jurisdictions a fraudulent contents portion may lead to the entire claim’s denial. In Florida, see Schneer vs. Allstate, 767 so2d 485 (3rd DCA 2000).

So the moral to this blog: look hard at suspicious fire claims before agreeing to advance them. Ask your potential client the questions posed above, not to prepare them on how to commit fraud, but so potential fraud claims may be unmasked well in advance of EUO where, I promise, any competent defense counsel will unveil any ill intent.

Tune in next week insurance fans when we discuss Typical Questions Asked During an EUO of a Suspicious Theft Loss.

Assuming, however, that there are no outstanding requests from the carrier once the EUO concludes, the PA has one course of action: PUSH! That is, pressure the carrier into making a decision and/or paying the claim. For example, under Florida Statute 627.70131, an insurer has ninety days from a residential claim’s inception to either pay or deny, unless factors outside the insurer’s control prevent such. Well, by the time the EUO has occurred, all requested documentation has presumably been provided and a re-inspection at least offered by the PA/policyholder.  Thus, upon EUO’s conclusion, there should be no excuses by the carrier. Remind them of this statute. Demand a decision. But always do so professionally. (As I am fond of saying: being a rude jerk does not make you a hard-nosed professional, merely a rude jerk.)

If the carrier does demand a re-inspection post-EUO or more documentation, coordinate the re-inspection or gather the documents immediately. If you suspect that the insurer is asking for more information as a delay tactic, review the matter with an attorney and see if filing a civil remedy notice is warranted. For those not from Florida, a civil remedy notice (CRN) of insurer violation may be filed with the Department of Financial Services to formally place the carrier and the state on notice of the carrier’s bad faith actions. In Florida, if the carrier refuses to pay within 60 days of filing the CRN, they may be subject to suit for bad faith actions at the conclusion of the underlying claim for direct damages. Texas has a similar requirement, but the letter placing the carrier on notice of bad faith allegations is sent directly to the insurer. But whatever jurisdiction in which you work, use all methods at your disposal to push the carrier into rendering its decision post-EUO, unless the carrier wish to place itself in a position of being liable for its own bad faith.

Tune in next week insurance fans, when we discuss Typical Questions Asked During an EUO of an Arson or Suspicious Fire Case.

First, navigating through the post-loss obligations is essential to having any claim paid. It is also one of the chief tasks of a public adjuster. The first area in which the PA must assist the insured is in gathering the documents that are requested by the insurer. Oftentimes, policyholders will look at the list with incredulity, thinking, “What do these documents have to do with my claim?” All public adjusters reading this: do not fall into the trap of unilaterally deciding that a certain document requested is not relevant, for if you do, you may be practicing law without a license and you also may be risking the claim being denied. Believe me, as I tell my clients, “We do not want to be sitting in a courtroom waiting for a judge or jury to decide whether the claim was rightfully denied because we refused to give the carrier a piece of paper.” In addition, the documents requested are likely to be given to the carrier in discovery if suit enters litigation, so just give them the documents. I know it is not any fun to gather documents, especially with a reluctant client, but it is very important in the claim’s processing.

Second, and this too is very important: go over the estimate you generated with the policyholder. The policyholder need not understand the nuts and bolts of the estimate, just the areas of damage listed and the cause of said damage. I can not tell you how many times a client has told me he has never seen the estimate or, even worse, disagrees with the estimate as to certain areas being damaged! If an insured is confronted by the estimate during an examination and disagrees with areas listed as damaged or if the insured is asked to list all areas of damage and leaves out of his/her testimony areas included in the estimate, there will be problems. The defense attorney is likely to scream “FRAUD!” or, at the very least, say that the insured did not testify that those areas were damaged, so the carrier will not pay for them. Therefore, it is essential for every public adjuster to review the estimate with the policyholder prior to EUO.

Finally, should a public adjuster attend an EUO? There are several factors to consider. Primarily, may the PA attend an EUO? I know of no legal authority prohibiting a PA from attending. Further, the plain language of the policy usually says something to the effect of, “Upon the carrier’s request, the named insured or spouse of a named insured must submit to an examination under oath outside the presence of any other insured and sign the same.” That is pretty clear that unless the PA is somehow a named insured or spouse of a named insured, the policy makes no mention of a public adjuster’s exclusion from the EUO. But the PA must also consider being put on the spot and asked to be sworn in and answer questions under oath himself. And if the PA refuses, it looks like he is hiding something. In general, if the client will be more comfortable with the PA being present, he may want to attend.

Allow me to leave you with this caveat, however, public adjusters must be very careful not to advise a client to refuse to answer a question under oath, interpret policy language, case law, or statutes, as they would be guilty of practicing law without a license, for which their PA license could be revoked and they could suffer substantial civil penalties from the local bar association. Tune in next week insurance fans when we discuss “The Examination Under Oath is Over: What Now?”

First and foremost, I implore everyone reading this, before you sit for an EUO hire an attorney. While I know that sounds self-serving, I mean it. If a carrier requests an EUO, its representative will undoubtedly say something like, “We are here to evaluate all facts and circumstances surrounding this claim so that the carrier may make an informed assessment of the claim.” And while this may be true sometimes, many other EUOs are called with an eye toward looking for reasons to deny the claim.

Insurance defense attorneys reading this just cringed. Why? Insurance companies are mandated by law to evaluate claims in terms of looking for coverage and, in fact, it is an act of bad faith for insurers to misuse the post-loss obligation in an attempt to search for reasons for denial. With that being said, I attended an EUO recently in which opposing counsel opened the questioning by holding the policyholder’s application for the policy and asking the policyholder the same questions contained within said application. The insured was very confused and asked for a break to confer with me outside the room. I, however, was not confused. Under Florida law, and most other jurisdictions, if a misrepresentation has been rendered by the insured on the application for the policy, it’s possible for the insurance company to void the policy ab initio, that is, as if it never existed and return the policyholder’s premium. Thus, no policy, no claim.

My point is, in the EUO process, the insurance companies have attorneys working very hard for their best interests, most insureds are by no means experts in insurance law, and even a question innocently answered could lead to a denial. If the same question had been answered in a different fashion, but still honestly, no denial would result. For example, let’s suppose an insured suffers a pipe break. Water from the pipe is spraying behind a wall and soaking the dry wall. Within a few days, even if reasonable effort is employed to dry up the area, mold may grow in the effected area. If the insured is called to EUO and innocently testifies that his/her loss consists of mold all over the drywall the defense attorney will squeal with delight, as mold is usually excluded or severely limited under most policies. What should have been said is: the drywall was wet by the water from the broken pipe and later, despite efforts to dry the area, mold grew on the drywall. What’s the difference? The drywall being wet by a broken pipe is completely covered under most policies without limitation. Further, the mold growing on the wet drywall would also be covered up to the limits for mold on the policy, but even if mold is excluded from coverage, the wet drywall is still covered. This is a prime example of why the policyholder needs an attorney advocating for them at an EUO.

With that being said, what can a policyholder do to prepare for an EUO? First, I recommend that a policyholder sit down and create a time line for the claim. When did they become aware of damage? What was the property’s condition prior to the loss? What steps were taken immediately to mitigate the damage (taking steps to temporarily repair the property so it is not further damaged is another post-loss obligation with which an insured must comply)? When was the insurance company called? Were any statements made by the insured to the insurer? And if yes, consistency is a must in the EUO process. What repairs were made? Who effectuated the repairs? How much did they cost? If an estimate has been submitted by a public adjuster or other professional, have the person who generated the estimate explain it to the policyholder so everyone agrees on the damage being claimed. Also, it is important to note that EUOs are not memory tests. If a policyholder wants to write down a list concerning the above questions and refer to it at an EUO they may. One caveat, however: if notes are being used, be prepared for the defense attorney to ask for a copy and possibly attach the notes to the EUO as an exhibit.

Further, the insurer has probably asked the policyholder for documentation to be provided in conjunction with the examination. The policyholder should diligently gather these documents and provide them to defense counsel BEFORE the EUO in order to avoid having defense counsel demand to review the documents and ask the insured to come back for a second examination in which they are asked questions about the documents. In addition to gathering and providing the documentation, the policyholder should review and become familiar with the contents of said paperwork in order to be able to answer questions directed to them by defense counsel. In other words, the policyholder should become an expert about the facts and circumstances surrounding his/her own claim. I know some people reading this are saying, “Why? Isn’t the insurance company there to help me?” In a perfect world, yes, but, unfortunately, the world we live in is all too often imperfect. For even if one is an expert on the facts and circumstances surrounding the claim, they are still not an insurance expert. As a mediator I know is fond of saying: hire a good attorney, get a good result, and this is especially true during the EUO process.

Tune in next week insurance fans when we discuss What Public Adjusters Need to Tell Their Clients About Examinations Under Oath and Why Public Adjusters Need to Be Careful About Giving Legal Advice.

Therefore, in order for the policyholder to place his/her claim in jeopardy, the incorrect answer must have been asserted intentionally. But do all willfully made incorrect answers place the insured’s claim at risk? For example, suppose an insured was a bit touchy about their age and misrepresented it when asked at the examination. Does this misstatement alone lead to a potential denial? I would tend to doubt that. For unless the policy at issue is a life insurance policy, for example, or for some other reason the policyholder’s age is germane to either the underwriting of the policy or the claim directly, it would not seem just for the insurer to be able to deny a claim over the misrepresentation of a fact or circumstance that had nothing to do with the actual loss or evaluation thereof. Hence, as was previously discussed in this blog, it would appear that an incorrect answer given at an examination must be material to the loss and/or the carrier’s investigation and evaluation of the claim in order to place said claim in danger of denial.

Thus, willfulness and materiality appear to be the hallmarks necessary for an incorrect answer given by a policyholder an examination under oath to lead to the carrier to potentially conjure the specter of denial. In fact, a case from the Supreme Court of the United States of America concurs with this analysis. In Claflin v. Commonwealth Ins. Co,, 110 U.S. 81, 94-95 (1884) the High Court held:

The object of the provisions in the policies of insurance, requiring the assured to submit himself to an examination under oath, to be reduced to writing, was to enable the company to possess itself of all knowledge, and all information as to other sources and means of knowledge, in regard to the facts, material to their rights, to enable them to decide upon their obligations, and to protect them against false claims. And every interrogatory that was relevant and pertinent in such an examination was material, in the sense that a true answer to it was of the substance of the obligation of the assured. A false answer as to any matter of fact material to the inquiry, knowingly and willfully made, with intent to deceive the insurer, would be fraudulent.

So there you have it: “A false answer as to any matter of fact material to the inquiry, knowingly and willfully made, with intent to deceive the insurer, would be fraudulent.” Of course, materiality may be viewed as a nebulous term which may be looked upon by a judge or jury as all-encompassing. As such, as in almost all circumstances, but especially when answering questions under oath, honesty is the best policy. Tune in next week insurance fans when we discuss how to prepare for an examination or sworn statement under oath if you are a policyholder or public adjuster.

In Claflin v. Commonwealth Ins. Co., 110 U.S. 81 (1884) the Supreme Court of the United States stated:

The object of the provisions in the policies of insurance, requiring the assured to submit him-self to an examination under oath, to be reduced to writing, was to enable the company to possess itself of all knowledge, and all information as to other sources and means of knowledge, in regard to the facts, material to their rights, to enable them to decide upon their obligations, and to protect them against false claims. And every interrogatory that was relevant and pertinent in such an examination was material, in the sense that a true answer to it was of the substance of the obligation of the assured. A false answer as to any matter of fact material to the inquiry, knowingly and willfully made, with intent to deceive the insurer, would be fraudulent.

Id, at 94-95.

That’s all well and good, but hauling a policyholder in to sit in a room and answer questions under oath posed by a defense attorney is a very harrowing experience for most. It’s my opinion that the EUO should only be employed when absolutely necessary and not as a matter of course. For example, defense counsel is often fond of saying, “We need to know the building’s history to evaluate the claim.” In a word: nonsense. Every policy of insurance issued is preceded by the policyholder submitting an application including questions about pre-existing damage and, further, the carrier has the right to inspect the property prior to underwriting the claim, hence, I don’t care what the building’s history is: the insurance company took the premium and wrote the policy, if it failed to investigate the property’s condition prior to agreeing to insure it, why should the carrier be able to roll back time and indemnify its own negligence in failing to operate in due diligence before accepting the risk? The answer: it shouldn’t.

So when do I think an EUO is proper? I will answer in general: under very limited conditions. That is, the vast majority of policyholders have no training in the evaluation of property damage or construction, hence, they may only testify to what they see with the naked eye. So how much does it really assist the insurance company in evaluating the claim to hear the policyholder assert under oath, “After Wilma I saw brown spots on the ceilings in the den, living room, and master bedroom.” I mean, didn’t the pictures your adjuster should have taken during his/her inspection illustrate these water stains infinitely better than the policyholder’s words? Further, to whom should the insurer listen: the policyholder with no training or the Independent Adjuster who is supposedly an expert in evaluating said damage? I’m sorry to sound so negative, but it’s my observation that EUOs are usually called as a tactic to either prolong the post-loss obligations (usually trying to stave off appraisal) or to bully the policyholder, while defense counsel sits there with a copy of Goldman vs. State Farm, 660 So2d 300 (Fla. 4th DCA 1995) in their mitts, checking their watch, hoping vainly that the policyholder doesn’t show up.

So when do I think EUOs should be taken? First, if there is evidence of fraud. And note I said evidence of fraud, not when the insurer takes their canoe, rod, and bait and decides to go on a fishing trip looking for fraud. Second, if there are multiple claims before an insurer during the same policy period. That is, if the insured has, for example, a fire loss and a pipe break and there may be overlapping areas of damage (and, YES, to insurance defense people reading this blog, multiple legitimate claims do happen to good people). Additionally, when a policyholder has no receipts for repairs, but has mitigated the damage. For example, I recently had a claimant explain that after Wilma her brother applied roof tar to the leaking roof and replaced missing tiles. Moreover, I’d like a study performed by the State of Florida to determine exactly how many handymen were roaming door-to-door after Wilma accepting only cash to effectuate temporary repairs. These are the circumstances where the policyholder’s testimony is important and when an EUO is warranted.

The bottom line is this: almost every jurisdiction gives the insurer an unfettered right to take examinations under oath and to force the policyholder to answer seemingly any question, but the mere “illuminating all facts and circumstances surrounding the claim” shouldn’t be substantiation for putting the policyholder through the wringer of an EUO. There really should be some overriding reason the carrier needs this testimony, besides, of course, for defense counsel’s bi-weekly billing bonanza. Furthermore, this is the main reason why every policyholder should be represented by counsel at an EUO. As it is very clear the insurance companies are using EUOs for an agenda other than to merely ferret out “facts and circumstances,” hence the insureds need an advocate who may assist them in navigating the potential mine field of an EUO while also keeping the opposition in check and honest about the process. Tune in next week insurance fans when we discuss What is the impact of a wrong answer at an examination under oath? Do all incorrect answers lead to denial?

Case law is not abundant on this topic and I had to perform some serious searches to discover exactly what courts have held on this issue. Typically, an insured does not want to answer questions that are too personal. Often the subject of personal finances is one where policyholders raise a skeptical eye. That is, “What do my finances have to do with my insurance claim?” Well, I often explain to clients, the insurer has the right to delve into areas during the examination that may expose fraud. A policyholder under financial difficulty, especially in hard economic times, may be susceptible to committing fraud. In fact, case law bears this out. In the Eleventh Circuit Court of Appeals decision of Halcome vs. Cincinnati Ins. Co., 778 F.2d 606 (11th Cir. 1985), the insured was making claim for jewelry theft, but refused to answer questions about their income. The court declared that this refusal was a breach of the policy conditions and upheld the insurer’s denial of the claim. Echoing that sentiment, the Eleventh Circuit maintained this reasoning in Jacobs vs. Nationwide Mutual Fire Ins. Co., 236 F.3d 1282 (11th Cir. 2001). The court ruled that the insured’s refusal to answer questions about their finances during an EUO was non-compliance with the policy’s post-loss obligations and rendered the policyholder unable to compel appraisal.

While I was thinking about this blog, one of the first ideas that came to me was an insured invoking his or her 5th Amendment right to self-incrimination. That is, the insured refusing to answer questions under oath which may be used against him or her in a criminal proceeding. The Eleventh Circuit ruled on this issue as well in Pervis vs. State Farm Fire & Cas. Co., 901 F.2d 944 (11th Cir. 1990), in which the policyholder asserted his 5th Amendment rights and refused to answer questions about his fire loss. The court ruled that examinations under oath are contractual obligations which must be complied with in order for the insured to garner recovery. Thus, reasoned the court, the policyholder could not refuse to answer questions about the loss by asserting the 5th Amendment privilege against self-incrimination and the insurer’s denial was upheld.

The common thread seemingly running through these decisions is that the policyholder may not refuse to answer questions pertaining to the actual loss itself or circumstances surrounding that loss. Legally speaking, this is referred to as materiality. If the question is material to the investigation, i.e. pertaining directly to the loss or surrounding circumstances, then the policyholder must answer the question or violate the policy provisions. In fact, as I was pouring over ancient texts in order to afford readers of this blog with an exhaustive review of this subject matter, I discovered a dusty tome containing case law which said just that, and from the highest authority. In the 1872 case of Insurance Companies vs. Weides, 81 U.S. 375 (1872), the Supreme Court of the United States ruled that an insured must answer only those questions which are material to the investigation of the loss. In Weides, the insured had suffered multiple fire losses, for which he was compelled to sit for an examination under oath. During the examination, defense counsel demanded information concerning the settlements reached with other insurers. The policyholder refused to answer, and the insurer asserted that this was a violation of the policy’s conditions for which they could deny the claim. While there were other issues touched upon in the High Court’s ruling, their ruling was clear on this issue: “We are unable to perceive that the questions proposed had any legitimate bearing upon the inquiry, what was the actual loss sustained in consequence of the fire.” Further reasoning that there was no evidence that the insured refused to answer any material questions about the loss, the court ruled that the insured’s refusal to answer the questions concerning other claims was not a breach of the policy’s conditions.

Whether a question is material or not is almost always a question for the trier of fact, that is, the judge or jury, and every jurisdiction will have such case law. In Florida, the case which states whether something is material is a matter for the trier of fact is Haiman v. Federal Insurance Co., 798 So. 2d 811 (Fla. 4th DCA 2001). With these sage words, however, heed this warning, as a rule of thumb: ANSWER THE QUESTION! For all public adjusters reading this, you do not want to advise your insured not to answer a question during an examination. First, you will be practicing law without a license and, second, you will be placing your client’s claim at risk. Even for attorneys reading this blog, I submit the question: do you want to be sitting in a court room waiting for the jury to determine whether the question you counseled your client not to answer at an examination under oath is material, hence a breach of the policy, for which the claim may denied? I would venture a guess that the answer to this question is an emphatic NO! As I tell all my clients, the transcript of an EUO is not a public record, so unless defense counsel’s thousandth question to my client is, “What’s your favorite color?” you’ll probably hear my advice, “Just answer the question, Claire.” Tune in next week insurance fans when we’ll be discussing "The Practical Reasons Insurers Take Examinations Under Oath and Why Policyholders Need Representation By Legal Counsel."

Prudential Property vs. Swindal, 622 So. 2d 467 (Fla. 1993), is a Florida Supreme Court case in which the Court held that policies are read by their plain language, with terms and words which are undefined in the policy being defined by their plain everyday meaning. In Koikos vs. Travelers Ins., 849 So. 2d 263 (Fla. 2003), the Florida Supreme Court added the phrase, “plain everyday meaning as would be understood by an ordinary person.” Further, in Excelsior Ins. v. Pompano Park, 369 So. 2d 938 (Fla. 1979) the Court also stated that courts may not write terms and conditions into policies that do not exist in the plain language.

These cases may be Florida-centric, but you’ll find counterparts to these cases in just about every state in the country. That is because policies are really contracts, and it is standard under existing law in the United States that contracts are read by their plain and everyday language. In addition, “blue-penciling” (legal jargon for courts crossing out or writing in language in a contract) is almost universally disfavored. As such, the plain policy language controls its terms and conditions, including, but not limited to, post-loss obligations and EUO clauses.

Now I know what many people reading this blog are thinking, “Policy language? Who wants to read the policy language?” And I empathize and agree; reading insurance policies is not fun. If it was there would be a section down at the local Borders entitled, “Insurance Policies,” where they could be purchased for non-fiction reading. But I implore all industry professionals out there: READ THE POLICY. There is a plethora of useful information in the text, and it is amazing how many times insurance companies demand actions which are beyond the language of their policies.

Most residential policies say something along the lines of: “You must sit for an examination under oath at our request outside the presence of any other insured, and sign the same.” Additionally, the definition section of most residential policies defines “you” as, “Any named insured and the spouse of any named insured residing at the resident premises.” That’s pretty clear. That is, if the policy has this language, or a reasonable facsimile thereof, only named insured and the husband/wife of a named insured living at the insured residence may be forced by the insurer to submit to an EUO. No sons, no daughters, no aunts, no uncles, no public adjusters, not your friend Eddie who dropped the pan-full of water on the floor and chipped the tile: just the named insured and spouse of the named insured residing at the residence premises. Period.

With that being said, however, some policies are a little trickier. For example, I’ve seen State Farm residential policies which say that if the policyholder is going to rely on or defer to employee’s or expert’s opinions, the policyholder must assist the insurer in producing those employees or experts for EUO as well. Thus, if the insured is going to point to their public adjuster and/or the estimate produced when questioned about the damage or valuation of damage, for example, under this policy language, then the public adjuster would have to be sworn in answer questions as well. Of course, in this scenario, I argue that under the policy’s plain language, the PA need only answer questions in the area(s) in which the policyholder has deferred to the PA. Further, since the PA is not an insured, the insurer has no right to demand that the insured and PA be separated for questioning. This usually drives defense attorneys crazy, but I tell them, “YOUR CLIENT wrote the policy!”

Furthermore, some Royal Palm policies specifically include the right of the insurer to demand the PA’s EUO. Moreover, many commercial policies say: “The insurer has the right to examine any insured under oath, outside the presence of any other insured, as many times as they reasonably require.” Thus, any insured, as defined by the policy, in this instance may be called for EUO. The moral to this story is: read the policy language. It will tell you who may be compelled to submit to an EUO and, often times, it can stop the insurer that is simply asking for its policyholders and their agents to jump through imaginary hoops which do not exist in the policy’s plain language. Of course, if insurers do demand actions of the policyholders not stated in the policy, there is insurance jargon term for that, too: Bad Faith.

Tune in next week insurance fans when we discuss Under What Circumstances Can a Policyholder Refuse to Answer a Question at an Examination Under Oath and Not Lose Policy Benefits?

Since my practice is a little more national in scope than Bob’s (he has so much work in Florida he cannot get away) I conducted some more widespread research on his topic. In my practice, I have clients who own property all over the country and the world. I kept thinking that if my client owned property in Chicago, but lived in Timbuktu, a court may reasonably find that the client had to go to Chicago for an examination. “Timbuktu” is a relevant geographic place depending on the circumstances of where you are from and how small the world is for any policyholder. What is “reasonable” is a nebulous concept subject to extreme differences of opinion, even if it is the primary standard for determining where one can be obligated to show up for an examination under oath.

Policies are usually ambiguous as to where the examination or sworn statement must be held. Most language is somewhat similar to this:

The insureds, as often as may be reasonably required, shall exhibit to any person designated by this Company all that remains of any property herein described, and submit to examinations under oath by any person named by this Company, and subscribe the same; and, as often as may be reasonably required, shall produce for an examination all books of account, bills, invoices and other vouchers or certified copies thereof if the originals be lost, at such reasonable time and place as may be designated by this Company or its representative, and shall permit extracts and copies thereof to be made.

“Reasonable time and place” is not exactly apparent in complex commercial losses. For example, if a loss happens in a manufacturing facility in Tennessee, which belongs to a corporation headquartered in Tokyo, whose American finance operations are in New York, where can the insurer examine corporate representatives pertaining to issues of business income and extra expense? What is reasonable to the insurer may be extraordinarily frustrating to a risk manager; who pays the cost of transporting employees internationally? Of course, they ask me, “Chip, do we have to put up with and pay for this?” Most corporate clients do not want an “I dunno” answer—although that may be the best answer when the test is one of a “reasonable place” and the failure to comply penalty is no payment for an otherwise legitimate claim.

Since I represent the policyholder, I love an old Washington case, Pierce v. Globe & Rutgers Fire Insurance Company, 107 Wash. 501, 182 P. 586; (Wash. 1919), which holds that an examination more than 25 miles from the property damage is not enforceable:

The place where the loss occurs is the proper place for the examination, and neither the insurance company nor the insured has the right to demand that it shall take place elsewhere.

That rule may help in most cases, but I wonder if all the property examinations pertaining to Mt. Saint Helens were conducted in catastrophe zones if access could only be gained by helicopter? I could imagine some of my ingenious insurance opponents citing the language about “neither” party being able to change the location as an excuse to do so and demand my client somehow gets there. Usually, the twenty five mile rule from the location of the loss is pretty good to follow as a “reasonable” place.

Of course, the same result can be very bad for the policyholder if he or she owns property in a far away place, as demonstrated in the old case of Fleisch v. Insurance Co. of North America, 58 Mo.App. 596 (1894). There the insured, a resident of New York City, obtained insurance on his stock of goods situated in Missouri, from a Missouri corporation. The policy required that, in case of loss, the insured should submit to an examination under oath touching all matters relating to the claim and the cause of loss. The Missouri court held that the New York insured was required to present himself for the examination to the company's adjuster in Missouri. The refusal to submit to an examination outside of New York City was a violation of the policy. I would suggest that in 1894, Missouri was about as far from New York City as Timbuktu is from Chicago today.

Illinois courts may be a little more lenient with policyholders than those in Missouri. In American Cent. Ins. Co. v Simpson, 43 Ill App 98 (1892), the insurer sought to examine the insured under oath in another state. The insured declined to appear. The court stated that the insurer had no right to require the insured to bring his books and go to the office of the insurance company in another state to be subjected to an examination under oath. The court reasoned that persons insured would be harassed, and the expense of traveling to the general office of the insurance company was such that the benefit that the insured would derive from the insurance would be destroyed. The court rejected the insurer's contention that the insured could not recover because he had not substantially complied with the terms and conditions of the policy.

A New York court found that New York was a reasonable place to have the examination under oath despite the insured residing in Liberia and having business in Liberia. Ayuob v American Guarantee & Liability Ins. Co. 605 F Supp 713 (1985, SD NY), applied New York law and rejected the contention that New York was not a reasonable place to hold the examination. The court noted that the policies explicitly stated that the insured “shall appear at such reasonable time and place” as may be designated by the insurer. The court pointed out that Liberia was not the only reasonable location at which the examinations could have been held, and that local conditions in Liberia, including lack of facilities and political unrest, provided further reason why its suitability as a location for the examination was questionable. The court stated that as to those insureds who actually came to New York, or agreed to come, for whatever purposes after the alleged loss, that New York was not an unreasonable site for the examination. As to one insured who neither came nor agreed to come to New York, the court directed him to submit himself for examination in New York, gave him the right to demonstrate the infeasibility of his coming to New York and to suggest some other place, other than Liberia, where he could be examined.

The lesson from all this is that some judges may think that a “reasonable” place is a lot different than what a policyholder may find as reasonable. My experience is that most insurance defense counsel love to take examinations under oath in cities where there is something a lot more fun to do before and after the examination than in Timbuktu. I recently handled a significant Houston commercial loss, with the examination under oath held in our Tampa office. I bet the reasonableness of that location had something to do with my suggestion that the best wine cellar in North America is at Bern’s Steakhouse, a few minutes away from our office conference room overlooking Tampa Bay.

Is such a request binding on the policyholder? Must an insured “submit” to the whim of the insurance company and appear for an examination wherever the carrier requests or be considered to fail to comply with post-loss obligations?

The primary place to look for such information is in the policy itself. Policies must be looked at in their plain language as would be stood by an ordinary person. Thus, does the policy say the EUO may be held at the policyholder's insured premises? Unfortunately, policies are usually silent as to the potential location of the examination.

Policy language may be equally scrutinized as to what it does not say. For example, when Sunshine State requests that one of my clients sit for an EUO at their residence, knowing full well that the intent is not in the policyholder’s best interest, I tell the carrier that the post-loss obligations call for the insured to sit for an EUO at the insurer’s request and to show the damaged property as many times as reasonably required, but the plain language of the policy does not call for the insured to submit to an EUO while showing the damaged property.

What are the rules for where EUOs may be held? Depositions, for example, are governed by the Rules of Civil Procedure, but as defense counsel are so fond of asserting, EUOs are contractual arrangements which are not governed by the Rules of Civil Procedure. Nor is there a statute which speaks to EUO locations. Hmmm… what does case law say?

A survey of Florida law revealed a strange bedfellow for policyholders in terms of where EUOs may be conducted. Last week’s blog focused on what happens if the policyholder refuses to sit for an EUO. Unfortunately, case law is clear that failure to sit for an EUO is a material breach of the policy’s terms which may lead to denial. Specifically, every insurance defense lawyer loves to quote from Goldman vs. State Farm, 660 So2d 300 (4th DCA 1995) in saying just that: no EUO, no recovery. But a close reading of Goldman reveals a pearl for the policyholders.

The court in Goldman also held that examinations under oath must take place at, “A mutually convenient time and place as contemplated by the policy.” In essence, though the typical policy’s plain language is silent toward a specific location, the cooperation implied by the policy lends to the need for examinations to be coordinated mutually and conveniently. A very important point to emphasize when the insurers demand an EUO.

Tune in next week when we discuss who exactly may be compelled to sit for EUOs.

In last week’s blog, I mentioned the 1909 case of Southern Home Insurance Co. vs. Putnal, 57 Fla. 199 (Fla. 1909), in which the Supreme Court of Florida held that if the policyholder refuses to sit for the EUO, then the claim may be denied. Of course, that decision was rendered by the high court of Florida one hundred years ago. Is it still binding today?

In 1993, the Third District Court of Appeal in Florida held in Stringer vs. Firemen’s Fund, 622 So2d 145 (Fla. 3d DCA 1993), in a very brief decision, that an insured’s failure to submit to EUO is a material breach of the policy conditions for which denial will be upheld. Not much grey area there…refuse to sit for the requested EUO and the claim may be denied. But in another Florida case, Goldman vs. State Farm, 660 So.2d 300 (4th DCA 1995) (in which the court cited Putnal), an interesting counter argument was posed by counsel for the policyholders. It was argued that the insurance company was not prejudiced by the Goldman’s failure to submit to EUOs because State Farm had taken a recorded statement and could also depose the Goldman’s during litigation, hence the denial was improper.

The court, however, rejected this argument, holding that an examination under oath is a contractual agreement which is also a condition precedent to the policy; hence, the insurer need not show prejudice to deny the claim. Rather, the policyholder’s refusal to sit for the examination begets the denial. In addition, the court distinguished an EUO from a deposition, essentially saying that EUOs are contractual agreements where policyholders have a duty to volunteer information to the insurer, where no such duty exists during a deposition. Therefore, the Court concluded, depositions were not an adequate substitute for EUOs, and it upheld the denial.

A small sample of courts from other jurisdictions that agree with Goldman’s holding: Pervis v. State Farm Fire & Cas. Co., 901 F.2d 944 (11th Cir. 1990), Fineberg v. State Farm Fire & Cas. Co., 113 N.C. App. 545, 438 S.E.2d 754 (N.C. Ct. App. 1994), and Watson v. National Sur. Corp., 468 N.W.2d 448 (Iowa 1991). These cases all held that refusal by a policyholder to sit for an EUO allows the insurer to deny the claim.

The moral to this story? According to the courts, EUO requests MUST be complied with or the claim may be denied, period, end of story.

Please tune in next week for part 3 of our series on EUOs when we look into: Where Can Examinations Under Oath Be Held?

--Bob Reynolds

Insurance policies are contracts in which insurance companies agree to indemnify policyholders for sudden and accidental covered losses and insureds agree to pay a premium and comply with the policy’s enumerated post-loss obligations. Examinations under oath are typically one of those post-loss obligations. Effectively, when a claim is made by a policyholder, upon the request of the insurer, the insured must sit for an EUO. That is, they must appear at a designated time and place, take an oath under the law to tell the truth, and answer the questions posed by the carrier’s representative while a court reporter writes down every word that is said on the record.

Ironically, in Claflin v. Commonwealth Ins. Co., 110 U.S. 81, 94-95 (1884), the Supreme Court of the United States stated,

The object of the provisions in the policies of insurance, requiring the assured to submit himself to an examination under oath, to be reduced to writing, was to enable the company to possess itself of all knowledge, and all information as to other sources and means of knowledge, in regard to the facts, material to their rights, to enable them to decide upon their obligations, and to protect them against false claims. And every interrogatory that was relevant and pertinent in such an examination was material, in the sense that a true answer to it was of the substance of the obligation of the assured. A false answer as to any matter of fact material to the inquiry, knowingly and willfully made, with intent to deceive the insurer, would be fraudulent.

Hence, my pre-programmed statement quoted above was pretty much on the money, in light of the High Court’s decision in Claflin. Further, a look into a couple of other cases from older American Jurisprudence may shed some light on how courts viewed the rights of both parties in the EUO process. Most cases, old and new, spell out the carrier's right to take an insured's EUO, and penalties for the insured who fails to comply.

For example, in Southern Home Ins. Co v. Putnal, 57 Fla 199 (1909), the Supreme Court of Florida held that the policyholder’s failure to submit to an EUO justifies a denial of the claim, as it deprived the insurer of its right to fully investigate and evaluate the claim. But in Germania Fire Ins. Co. v. Stone, 21 Fla 555 (1885), the Florida Supreme Court held that the insured’s failure to sign the EUO transcript, where Germania refused to allow the policyholder to review said transcript, did NOT warrant the denial of the claim. Interesting.

Does this support the theory that the carrier’s failure to supply the insured with a transcript of the examination is a breach of the policy’s provisions? Hmmm... Further, is Putnal’s hard and fast rule of no EUO, no recovery valid today? You’ll have to come back next week for the answer to that question, insurance fans!

Next week: What Happens if A Policyholder Does Not Attend an Examination Under Oath?

For the past year, he has been sitting through countless examinations conducted by the Florida Insurance Guarantee Association (FIGA). I cannot imagine anybody having more experience in this setting than Bob for the past twelve months. So, he seems like the perfect expert to discuss the practical, legal and coverage aspects of the following articles we have lined up for you each Wednesday for the next thirteen weeks:

1. Examinations and Sworn Statements Under Oath: What Are They and Their Relevance to Insurance Coverage From a Historical Study of Older Cases
2. What Happens if A Policyholder Does Not Attend an Examination Under Oath?
3. Where Do and Can Examinations Under Oath Be Held? Does a Policyholder Have to go to Timbuktu?
4. Who Can Be Compelled to Attend Examinations Under Oath? Do Public Adjusters, Contractors and Employees Have to Attend Examinations Under Oath?
5. Under What Circumstances Can a Policyholder Refuse to Answer a Question at an Examination Under Oath and Not Lose Policy Benefits?
6. The Practical Reasons Insurers Take Examinations Under Oath and Why Policyholders Need Representation By Legal Counsel
7. What is the Impact of a Wrong Answer at an Examination Under Oath? Do all Incorrect Answers Lead to Denial?
8. How to Prepare for an Examination or Sworn Statement Under Oath if You are a Policyholder or Public Adjuster.
9. What Public Adjusters Need to Tell Their Clients About Examinations Under Oath and Why Public Adjusters Need to Be Careful About Giving Legal Advice.
10. The Examination Under Oath is Over: What Now?
11. Typical Questions Asked During an Examination Under Oath of an Arson or Suspicious Fire Case.
12. Typical Questions Asked During an Examination Under Oath of a Questionable Theft Loss.
13. Typical Questions Asked During an Examination or Sworn Statement Under Oath of a Disputed Structural or Personal Property Valuation Claim Suspected of Being Inflated, Exaggerated, or Made Up.

While Bob Reynolds is located in South Florida, like most of our attorneys he has a national practice and his discussion will be national in scope. I would encourage anybody that has a specific question regarding these topics to post them in advance or email Bob directly so he can address those particular concerns.

For those that have not studied the examination under oath clause, it is one of the few property insurance clauses to be specifically addressed by the United States Supreme Court. In Claflin v. Commonwealth Insurance Company, 110 U.S. 81, 94-95; 3 S. Ct. 507, 515; 28 L. Ed. 76, 82 (1884), the Supreme Court stated:

The object of the provisions in the policies of insurance, requiring the assured to submit him-self to an examination under oath, to be reduced to writing, was to enable the company to possess itself of all knowledge, and all information as to other sources and means of knowledge, in regard to the facts, material to their rights, to enable them to decide upon their obligations, and to protect them against false claims. And every interrogatory that was relevant and pertinent in such an examination was material, in the sense that a true answer to it was of the substance of the obligation of the assured. A false answer as to any matter of fact material to the inquiry, knowingly and willfully made, with intent to deceive the insurer, would be fraudulent.

In Claflin, the insured’s false statements during the examination under oath were not made to deceive the insurer, but to cover-up false statements previously made to other parties. Nevertheless, the Supreme Court held the false statements regarding the ownership and value of the insured goods were material, and therefore, a breach of the conditions of the policy and a bar to recovery.

...it is no palliation of the fraud that Murphy did not mean thereby to prejudice them [the insurer], but merely to promote his own personal interest in a matter not involved in the contract with them. By that contract the companies were entitled to know from him all the circumstances of his purchase of the property insured, including the amount of the price paid and in what manner payment was made; and false statements, willfully made under oath, intended to conceal the truth on these points, constituted an attempted fraud by false swearing which was a breach of the conditions of the policy, and constituted a bar to the recovery of the insurance.

Id. at 97.

For a number of practical and legal reasons, any policyholder being asked to undergo an examination under oath should always hire insurance coverage counsel and carefully consider who that counsel is going to be. I would suggest that opposing insurance company counsel and claims managers consider who the legal opponent will be if a denial is contemplated.

Good, experienced and reputable policyholder attorneys add value to claims and sometimes prevent claims disasters and litigation from ever occurring.

By electing Frank Artiles, a Florida public adjuster, for the Florida House of Representatives in South Florida, I don't see those kinds of things happening. My law firm is dedicated to helping this become a reality, and we need your help.

On Thursday, August 13, we are co-hosting a fundraiser for Frank Artiles with Miami-Dade County Commissioner Jose “Pepe” Diaz in our Coral Gables office from 6 pm to 7:30pm. Frank is a wonderful person and will make a devoted public servant. We need more bright individuals like Frank Artiles in our legislature who are willing to stand up for the average insurance consumer as Senator Mike Fasano does.

The Merlin Law Group is also presenting a continuing education seminar for public adjusters earlier the same day. At 4:00, I will make an hour-long presentation, Ethical Issues in Presenting Claims. I expect this class to be very interactive, as they usually are when a roomful of public adjusters come together to learn and share with fellow professionals. I have applied for 1 ethics credit for public adjusting continuing education for this class. The following topics are on the agenda:

• Unauthorized/Unlicensed Practice of Law: How to recognize it and to ensure you do not do it

• Unauthorized/Unlicensed Public Adjusting: The legal ramifications of contractors and others associated with the building trade who are not licensed public adjusters and who negotiate insurance recoveries with insurance adjusters

• Code of Ethics: Discussion of the public adjuster's ethical requirement to "put the duty for fair and honest treatment of the claimant above the adjusters own interests in every instance."

• Public Adjusting Contracts: Discussion of waiting periods, signing proofs of loss, appearing for EUOs, excessive fees, and all questions you may have on these topics.

The seminar is in the Westin Colonnade Hotel immediately adjacent to our Coral Gables office. We will host a cocktail party/fundraiser thereafter in our Coral Gables office at 6.

Everybody is welcome to attend the fundraiser. All public adjusters along Florida's east coast should make their way down that afternoon for education, political support, and fun.

You never know what can happen in life until you try. We need your help on this endeavor for Frank.

Public Adjusters can register for the Ethics Seminar by clicking here.

Guideone sought declaratory judgment in the U.S. District Court for the Northern District of Mississippi that it was entitled to rescind the homeowner's insurance policy and had no duty to indemnify the Rocks' insurance claims. The Rocks filed a counterclaim alleging bad faith throughout the claim investigations and subsequent claim denials. Guideone then filed a Motion for Summary Judgment that the Rocks' homeowner's policy was void due to alleged material misrepresentations on the insurance application, that the loss for home and auto was excluded due to material misrepresentations and concealment throughout the claim investigations, that the Rocks failed to perform contractual duties during the claim process, and that its claim investigations and denials did not constitute bad faith. The U.S. District Court for the Northern District of Mississippi granted Guideone's Motion for Summary Judgment holding that Guideone's investigation and subsequent claim denials did not constitute bad faith, but denied Guideone's Motion for Summary Judgment on all material misrepresentation and failure to perform contractual duties issues.

Under Mississippi law misstatements of material fact in insurance applications provide grounds to declare a policy issued in reliance on such statements void. A misrepresentation is considered material if (1) the application contains answers which are false, incomplete, or misleading; and (2) the false, incomplete, or misleading answers are material to the risk contemplated by the policy. The court noted, however, that an insurer cannot rescind a policy for material misrepresentations if an insured acted in good faith, and any false answers were inserted without his or her knowledge. Thus, an applicant had not misrepresented if he or she answered all questions asked. According to the Rocks, Guideone's agent never asked them the application question whether or not a household member had any criminal convictions, and thus answered all application questions in good faith. The record, however, contained conflicting testimony on whether or not Guideone's agent asked the Rocks the criminal history question. Therefore, there was a genuine issue of material fact as to whether or not the Rocks misrepresented their criminal history, and Guideone's Motion for summary judgment was denied on that issue.

The court also denied Guideone's Motion for Summary Judgment on other grounds and held that there was a genuine issue of material fact as to the Rocks' alleged concealment during the claims process and intentional acts, and also held that the Rocks' did not fail to perform their contractual duties by failing to produce their children for examinations under oath.

Guideone claimed they could deny the Rocks coverage based on the Rocks' home and auto insurance policies' concealment and intentional acts exclusions. First, Guideone claimed that the Rocks' inconsistent statements regarding their financial condition amounted to concealment that excluded coverage. Under Mississippi law, in order to deny coverage based on concealment the insurer must establish that the insured knowingly and willfully made false statements that were material. In Mississippi, an insured's financial matters are material to a fire investigation. However, Guideone used unsworn recorded statements and depositions without providing transcripts as evidence. The court concluded that such evidence was not proper Summary Judgment evidence because it required the court to make impermissible credibility determinations. Second, Guideone claimed that the Rocks' loss was excluded because the damage was caused by arson. Not only did the Rocks' policy have an intentional acts exclusion provision, but, in Mississippi arson is a defense to insurer liability even if it is not excluded in the policy. To invoke this defense, the insurer must prove (1) an incendiary fire, (2) motive of the insured to destroy the property, and (3) evidence that the insured had the opportunity to set the fire or to procure its being set. The court declined to grant Guideone's Motion for Summary Judgment on this issue, however, because inconsistent testimony created a genuine issue of material fact.

Finally Guideone claimed that the Rocks' failure to produce their children for examinations under oath was a breach of the Rocks' home and auto insurance policy provisions that required the "insured" to submit to questions under oath. The court concluded, however, that the Rocks' children were not considered the "insured" under the homeowner's insurance contract. The Rocks' homeowner's insurance policy defined "insured" as "you" and "your" and a spouse in the same household. The court reasoned that this language did not include the Rocks' children. Likewise, the court concluded that the children did not have to submit for questioning under the auto insurance policy because the auto policy provided that a person seeking coverage must submit to questions, and the parents, not the children, were the persons seeking coverage. Thus, the court denied Guideone's Motion for Summary Judgment on this basis.

The court ultimately granted Guideone's Motion for Summary Judgment as to the Rocks' bad faith counterclaim and held that Guideone's investigation and subsequent denial of the Rocks' claims did not constitute bad faith. In Mississippi insurers have a duty to perform an adequate investigation and make a reasonable, good faith decision based on that investigation. The court noted, however, that to show bad faith an insured must show more than mere negligence by the insurer. Instead the insurer must have denied a claim (1) without an arguable or legitimate basis, either in fact or in law, and (2) with malice or gross negligence in disregard of an insured's rights. In Mississippi a policy exclusion or defense may constitute a good faith, arguable basis for denial. Accordingly, the court held that Guideone's denials were not done in bad faith because they were based on valid policy provisions, and:

"were not the sort of tortuous conduct" such as "a conscious wrongdoing, dishonest purpose, willful wrong, malice, or reckless disregard of an insured's rights necessary to support a bad faith claim."

You can read the full opinion here.

After yesterday's post, I received a number of private questions as well as a public comment from Eric Hyman, an experienced public adjuster. I replied to his comment:

Eric,

I really have no idea how they go about classifying what you have stated. I have no idea how much Citizens pays in attorney’s fees to defend its cases nor how much it pays policyholders for attorney’s fees when it loses. Do you have any evidence to support your allegations? Send it to me, and I would be more than happy to share it.

I appreciate that you are upset that the manner in which you resolve cases with Citizens may no longer be available. You have told me that most of your cases go to appraisal because Citizens never comes close to agreeing with amounts you provide. And, you get significantly more money back for the policyholder.

Indeed, I predict there will be considerable "push back" because a cottage industry of appraisers for each side and umpires may no longer be making fees from the number one source of appraisal--Citizens.

Still, the process is inherently flawed. There is no due process. I have said that since there are no rules, the only rule is to be honest, but do everything you can to win.

In Florida, when the appraisal result is unfair, there is little either party can do about it. Unfairness may occur in arbitration or litigation, but I can assure everyone that they will be able to present their case, subject the opposing view to critical review, and submit the matter to a somewhat independent panel or jury. All of this guaranteed by the due process clauses of the United States and Florida Constitutions.

The other truth is that Citizens management may feel that the appraisal process results in unjust awards favoring policyholders. If so, they should explain why and how the appraisal process favors policyholders over insurers.

My impression is that the cases going to appraisal now have a policyholder who knows to get evidence and make a presentation to show the validity of the claim amount. In the past, insurers would run over policyholders, thinking their appraiser would do all this work. The appraisal process is no longer a "winning" proposition for insurers as it was in the past, and now some insurers are seeking other ways to game the system to lower claims payments to customers.

Citizens makes several valid points in its report, although I disagree with its publicly stated motive for requesting eliminating the appraisal clause.

Given that public adjusters are obtaining more money for policyholders through appraisal and that so many others, such as appraisers and umpires, have made careers in the appraisal process, you can bet those individuals with such significant financial interests oppose Citizens’ move. This is a normal reaction to the possibility significant change.

My opinion of appraisal has not changed much over the past fifteen years since I chaired a sub-committee of the American Bar Association's Property Loss Insurance Committee involving a study of the fairness and procedures of the appraisal clause. The procedures vary by state. Many states have noted the due process concerns and have required the process to be more of an arbitration. Florida's procedure for appraisal is what I call the wild west method. There are no rules. Shoot 'em out, and you better be standing when the smoke clears because there are no second chances for the dead.

I essentially said this when I was asked to be on a Keynote Panel regarding the appraisal process at the Windstorm Conference. While various attorneys, umpires, appraisers, and insurers have tried to set rules through a "Memorandum of Appraisal," that is not required under the terms in insurance policies, statute, or common law.

As an attorney, I always point out that the United States has long held many informal methods unconstitutional. One of the great protections to individuals is a right to have a jury decide controversies. This is a fundamental right with a longstanding history. Alternative methods to resolve controversies must satisfy due process safeguards. I have questioned how a system with no rules does this. Some States, like Florida, allow the informality without addressing constitutional concerns.

Dan Luby, of Precision Adivisors, sent me a private follow-up. It is pertinent to this issue:

"I read your blog today concerning the changes to the Citizens Appraisal clause. I appreciate the attribution.

As a follow up, attached is an excerpt from a recent Citizens filing with the OIR that details the proposed changes to the Appraisal clause in the ‘Homeowners 4 Contents Wind Only Form.’

Appraisal will now be an option available to either party provided that both parties agree to the “terms of a written agreement” to be determined at a later date.

I read this to mean a negotiated ‘Memorandum of Appraisal’ detailing what would be submitted to appraisal, how the appraisal would be conducted and the form of the award. Either party is not obligated to accept a “request” for appraisal.

Scroll down to page 10 of 12 in the policy form. While this filing deals with only one policy form, I would speculate that all of the Citizens policies will be similarly amended.

The complete filing (No. 09-11984) is available at http://www.floir.com/edms/temp1/SessionsPDFs/OnlyOrig09-11984.PDF

Additionally, this new form would require that “any one you hire in connection with your claim” must submit to an EUO if requested. I assume this is targeted towards public adjusters."

This is an important issue and will likely significantly change the way many claims are handled and resolved. I will try to keep everyone informed of these changes.

At the Massachusetts Association of Public Insurance Adjusters and National Association of Public Insurance Adjusters Fall Educational seminar last year, I started a heated floor debate regarding the topic of public adjusters appearing for examinations under oath. Participants offered the following options when an insurer demanded that a public adjuster appear for an examination under oath and the policy did not clearly mandate it:

1. An insured should write and demand for the public adjuster to do so.

2. File a Declaratory lawsuit determining what to do.

3. Appear for the examination.

4. Appear on a case by case basis.

5. "Hell, no! We won't go!"

I try to work it out on a case by case basis. My client is the policyholder--not the public adjuster. If it is at this stage of a proceeding, my client, the public adjuster, and I all want the same thing--getting paid what is due under the policy as quickly as possible. I try to remind everybody on my side of this concern while they are pounding on tables in frustration and getting upset at the insurance company because it could generally find out the same information by meeting, talking in person or a phone call.

The frustration is understandable. From the policyholder's perspective, many examinations under oath are taken months following the loss and are scheduled by the insurer's attorneys unilaterally and without a good faith attempt to coordinate time and documents requested. Once a request is made to change the time, the insurer's attorney often gives alternative times, months away, despite delay which should be avoided as a part of the insurer’s good faith obligations to the customer. Some insurance companies select defense attorneys who are argumentative and treat policyholders without respect. If the insurer applied the Golden Rule, they know they would fail miserably.

Given this scenario, my mission is to move the matter along while protecting my client and preserving claims for extracontractual damages caused by delay, lack of insurer good faith during the examination and document review process, and poor initial insurer adjustment. I have filed lawsuits when the examinations take too long, lead to a game of 101 questions, and where people the insurer demands to be examined are not required to be examined under the policy. Still, most clients would rather get to the purpose of the claim--getting paid and moving on with business and life. Most public adjusters have the same interest as well.

Sometimes, the public adjuster is a far better witness than my client. The public adjuster may appear more truthful, professional, provide quicker and better answers, explain the loss, the values, why the money is owed, and simply provide a better appearance of truthful, honest knowledgeable information than the policyholder. Often, this is all the insurance company needs in the first place and there are times when I pose no objection to the public adjuster appearing for the policyholder in an examination under oath. The problem is talking the policyholder or public adjuster into it because either may want to legally object. Again, I am focused on getting my client paid as soon as possible. If that practical concern is best served by not objecting to the possible illegal request by the insurer, I may not object and even strongly encourage the public adjuster to appear for the examination under oath.

Many times, I suggest that the insurer cannot legally take an examination under oath, but will suggest that the public adjuster meet with the insurance company's attorney, answer questions and even give a sworn statement, so that information can be exchanged in a framework that is quicker and will likely get the claim adjusted and paid. This practical alternative seems to avoid the legal questions surrounding an examination under oath and possible declaratory lawsuits regarding the process.

I treat the request for a public adjuster's examination under oath on a case by case basis. Whether a public adjuster’s testimony is binding on a policyholder is questionable. Accordingly, it is always important to note that the claim is the policyholder's claim and not that of a person hired to assist in determining the amount owed under the policy. However, the public adjuster is usually an independent contractor who does not make binding contracts, agreements, or is authorized to give legally binding testimony. Most state licensing authorities do not allow public adjusters to do so.

Are there other significantly different views than mine? Absolutely. Some policyholder attorneys file suit right away. Even in my law firm, there are differences of opinion as to the proper methodology in a given case--but I emphasize to the other attorneys that most policyholders want money sooner rather than later and without lawsuits. Still, some clients are best served by such lawsuits and even I have departed from my general course and filed a lawsuit when it served my client’s best interests.

This debate is highlighted by a recent article in the American Bar Association's Tort and Insurance Practice Section's publication, The Brief. The article, “The Power To Compel Submission Of "Others": Are Public Adjusters Subject to Examination under Oath Provisions?” written by insurance defense attorney, Keala C. Ede, suggests that public adjusters may be compelled to appear for examinations under oath. Her conclusion was stated early in the article:

"Notwithstanding the opinions expressed by Goodman and Hammond, the following survey of relevant jurisprudence indicates no prevailing view as to the applicability of EUOs to public adjusters, although cases suggest that such examinations can and should apply in the right factual circumstances."

She explains and argues for this in her final conclusion:

"Applying all of the foregoing cases, an EUO provision applying to "others" in addition to the insured, in conjunction with a factual showing that a public adjuster is within the insured's control, would likely apply to that public adjuster. It is nevertheless arguable that, given the detailed and inextricable role that public adjusters play in adjusting losses for insureds, public adjusters should be subject to an EUO if policy language includes "others," even without a factual showing that a public adjuster is subject to the insured's control.

Cases such as Gipps, where the public adjuster prepared and submitted two exhibits and was held subject to examination thereon, and Jacobs, in which the insured had so relied upon its public adjuster that it was unable to answer questions about the accuracy of the estimate prepared by the public adjuster, support the argument that public adjusters that "handle every detail of the claim" and "inspect[] the loss site immediately, analyze[] the damages, assemble[]claim support data, review[] the insured's coverage, determine [] current replacement costs and exclusively serve[] the [insured]" should be subject to an EUO without requiring any showing by the insurer that such an adjuster is within the insured's control. Indeed, in rebutting Goodman's argument, Hammond referred to the unpublished opinion of Active Fire Sprinkler Corp. v. American Home Assurance Co., which Hammond characterized as holding that the misrepresentations of a public adjuster are attributable to the insured. Like Gipps and Jacobs, Hammond's characterization of Active Fire Sprinkler Corp. would suggest that a public adjuster retained by an insured is by its very nature under the insured's control.

Based on the conflicting views of cases such as Gipps, Payne, and Florida Gaming Corp., however, if either the policy does not extend to "others" or the facts do not indicate that the insured has the power to compel submission of its public adjuster to examination, there can be no clear prediction of whether such an EUO provision would necessarily apply to a public adjuster."

So the debate continues without a clear answer. I am certain all insurers will say they can compel public adjusters to examinations under oath and use them, as they do policyholder examinations, argue defenses such as material misrepresentation possibly voiding the policy. Policyholders should fight this position.

I will look at each situation and policy on a case by case basis. I will try to do my best to help my client to cooperate with the insurer and get the claim paid as soon as possible while protecting my client and preserving my client's rights.

Significantly, it should be noted that "cooperation" is not defined as the slavish obedience to the demands of the insurance company. It is a joint process where both the insured and insurer act in good faith and for common purpose--getting full policy benefits owed to the policyholder as soon as possible.

Sometimes, insurance company attorneys and their client adjusters fail to remember that the policyholder is as much the customer after the loss as when the insurer sold the policy before the loss.

In my firm, there are some competing views on this topic. In my view, "better safe than sorry." Answer questions honestly and get it over as soon as possible. I generally require my clients to turn over all requested documents in their possession, including tax returns, when there is even a slight chance of relevance.

A question would have to be outrageous before I told a client not to answer because there is little upside and a significant potential downside--denial of an otherwise valid claim. In most cases, I ask a very simple question which usually points to what my client should do- "Why risk not slogging through the questions?"

As indicated in Goldman v. State Farm Fire Gen. Ins. Co., 660 So. 2d 300, 305 (Fla. Dist. Ct. App. 4th Dist. 1995):

"A provision... requiring the insured to submit to examination under oath must be complied with, and, if breached, the insurer will be deprived of a valuable right for which it had contracted... American Reliance Ins. Co. v. Riggins, 604 So. 2d 535, 535-36 (Fla. 3d DCA 1992)(insured is absolutely required to submit to an examination under oath when requested by an insurer). The purpose of the examination under oath provision was set forth by the United States Supreme Court in Claflin v. Commonwealth Ins. Co., 110 U.S. 81, 3 S. Ct, 507, 28 L. Ed. 76 (1884), in which the court stated that the object of the policy provision is to enable the insurer to possess itself of all knowledge and all information as to other sources and means of knowledge, in regards to the facts, material to its rights, to enable it to decide upon its obligations and to protect it against false claims."

So what happens if you do not fully comply with answers and requests for documents? Haiman v. Federal Insurance Company, 798 So. 2d 811, 812 (Fla. Dist. Ct. App. 4th Dist. 2001) answered that question in this manner:

"total failure to comply with policy provisions made a prerequisite to suit under the policy may constitute a breach precluding recovery from the insurer as a matter of law. If, however, the insured cooperates to some degree or provides an explanation for its noncompliance, a fact question is presented for resolution by a jury."

Again, why risk it? In the vast majority of situations the wiser course is to go through the examination under oath and then get paid.

Most Courts take a broad view of relevance and materiality when dealing with examination under oaths of insurance claims. Fine v. Bellefonte Underwriters Ins. Co., 725 F.2d 179, 184 (2d Cir. N.Y. 1984) provides an example of the logic:

"It thus appears that materiality of false statements is not determined by whether or not the false answers deal with a subject later determined to be unimportant because the fire and loss were caused by factors other than those with which the statements dealt. False sworn answers are material if they might have affected the attitude and action of the insurer. They are equally material if they may be said to have been calculated either to discourage, mislead or deflect the company's investigation in any area that might seem to the company, at that time, a relevant or productive area to investigate."

So, I get my clients ready for the same boring questions, background and otherwise, that are asked by the insurance counsel. I have even written out answers in advance and give them to the insurance company as we start. That usually upsets the opposing counsel. I don't know why, since we get through it all faster. I want to get to my favorite topic of claims--how much is getting paid and when.

For public adjusters, never represent the policyholder at an examination under oath. Do not object, interfere, or tell the policyholder what to do or say. Such conduct would be the unauthorized practice of law in most states. Policyholders going into examinations under oath should hire counsel. It is a serious proceeding with significant legal consequences.