I read Law360 five days a week for insurance law, class action matters, and California cases. One article, Insurer Says Condo’s Engineer Padded $30M Hurricane Claim,1 caused me to ask our Merlin Law Group Knowledge Manager, Ruck DeMinico, to get me more of the pleadings and reports from the case since it involved an engineering report which was allegedly changed in a wrongful manner to support a policyholder’s position rather than an insurance company’s position.

In, Are Baseless and Outcome Oriented Engineering Opinions the Normal State of Affairs in Property Insurance Investigation?, I admittedly assumed that just the insurance industry was wrongfully changing engineering reports because virtually all of my clients coming to me had no engineering reports, but the insurance industry had reports with alterations:

Let’s not kid ourselves, these practices are not limited just to flood insurance claims. With the insurance industry vendors competing for business, providing insurers with reports that reduce claims severity is a significant reason why ‘peer review’ and other similar ‘standard’ processes exist. Wording of these reports that dovetail with exclusionary policy language seems to be an expertise of these so called ‘peer reviewers.’

The Eastern District of New York has fashioned a very practical manner to expose this by requiring all drafts and revisions to be turned over. Hopefully, this discovery requirement will be commonplace everywhere. It will help stop wrongful denials and underpayments of claims.

But it still concerned me that if I was standing in the shoes of an insurance claims manager or insurance defense attorney, and I would receive an engineering report that just did not make sense, a valid peer review should be able to be called for. I am not naive enough to dismiss that the insurance industry may be faced with local retained engineers having a bias to favor their neighbors and friends suffering from a catastrophe or that they could simply make a miscalculation. So, how does a claims manager go about ethically obtaining a proper peer review and, if proper, a corrected opinion?

In 2016 at the Windstorm Conference, I put together a presentation answering that question and suggesting how insurance companies in good faith could properly question an initial engineering report and do so with a valid peer review. Engineer Bill Bracken—whose firm almost exclusively worked for insurance companies—and insurance company attorney Matt Litsky did a masterful job explaining the ethics and procedures about how to request and conduct a peer review of an engineer’s report. (As a plug for the Windstorm Conference, it will occur next week in Orlando, and any claims professional dealing with windstorm-related claims should be there to learn from presentations just like the one I put together several years ago.)

My point was that the honest and most correct opinion is what mattered. Nobody likes to make mistakes in a report, but it is inevitable that they will occur. Corrections that are not outcome-oriented, not fraudulent, but truthful are important. Corrected reports may raise a question of competency and whether the expert is deserving of being followed and believed. But it is far better than allowing a wrong report or worse, a fraudulently changed, outcome-oriented report to perpetuate injustice.

Turning to the Law360 article, I suggest that everybody read the Motion to Amend and the two engineering reports regarding the damage. An email cited in the motion noted the following from those working with the policyholder:

I had recent conversation with Craig Applebaum at Global Pro he expressed concern that the Falcon Report was inadequate for the needs of the insurance claim he said that we were behind in our filing and asked for the breakdown budget explained to him that Falcon came highly recommended by Dan and that it was made abundantly clear to Falcon on numerous occasions that this report was to be used to bolster the insurance claim for Southpoint. DSSC assumed that because of the seemingly close relationship between Global Pro and Falcon that Falcon was clear on how the report should be written. Craig did express concern that Global Pro was not included in the Falcon inspections though he did not elaborate on in what capacity DSSC or Southpoint Management should have included them or at what point we should have contacted them. We finished the conversation with an understanding the Global Pro was to reach out to Bill Pyznar at Falcon to discuss the issues with the report.

I have no idea what was said after the email and if proper protocols, like those discussed and taught by Bill Bracken, were followed to get a corrected report which is admissible and the corrections explainable in a transparent manner. It is obvious from the pleadings that the insurance company is taking the position that the changed report is not from a legitimate peer review but a fraudulent attempt to obtain insurance money not owed through an outcome-oriented report.

Thought For The Day

I think it’s a good thing that there are bloggers out there watching very closely and holding people accountable. Everyone in the news should be able to hold up to that kind of scrutiny. I’m for as much transparency…as possible.
—Anderson Cooper
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1 Carolina Bolado, “Insurer Says Condo’s Engineer Padded $30M Hurricane Claim,” Law360, Jan.17, 2020. Available online at https://www.law360.com/insurance/articles/1235571/insurer-says-condo-s-engineer-padded-30m-hurricane-claim (subscription required).

  • Bruce Holmes

    Having a PE prepare a report and then say it was “peer reviewed” by a senior person in the same firm is not “peer review”. There are a lot of sins in this area. For that and other reasons, I prepare all my own reports, do not do drafts or solicit others comments.

  • I reinspect properties daily as the Technical Expert for Premier Claims. My role is to examine the property for storm related damages with Adjusters and Engineers. I have recorded a pattern of ignoring mislabeling or manipulating onsite collateral indicators, damage, and weather data. To create a false narrative the hail was to small to have created damage to the building materials. Standing on limited laboratory studies many times not representative of real life events. They assume all hail is equal, round and smooth with out protrusions. Irregular shaped hail would drastically change the effect and impact marks would would find on site after the event. This is ignored in most cases by Engineers we have dealt with. There are some exceptions that I have worked with that try to maintain a professional neutrality. Which is difficult in this industry these days. That is what I do I find everything they ignore, mislabel, or try to manipulate even in their own test squares and thoroughly document it. Which is a real peer review. It is what it is! If the evidence exists and your looking for it and know where to look. We’ll find it. IF it isn’t there it isn’t there! We are setting the Standard for how this should be done! here is an example of Insurance Fraud by an Engineer in Omaha NE. This is what I do!

    https://db.tt/aOtbrgMouL

    • Bruce Holmes

      Go get them and their license.

  • We have been tracking a pattern of manipulating on site evidence and weather data to create a false Narrative of Hail size. Using selected collateral indicators that support hail size under the threshold to create damage according to limited laboratory testing. While ignoring others just like the ones selected (sometimes in their own photos). As well as ignoring more reliable indicators on softer materials that record a greater percent of the hail stones diameter. As a volunteer for CoCoRaHS a weather data collection service we are instructed to use a soft foam that does not recover when crushed to record hail size and shape. This is because more of the full diameter of the hail stone is able to press into it intact giving us a much more reliable record then Spatter Marks, Indentations in various metals of various shapes, or even roofing materials. Or softer metals like A/C coils which are often compromised by the Angle of impact, and protective grids, screens, etc from being representative of the hail that struck them. These all help but interpretations can be complicated and this is where those seeking to create a desired outcome live. In the generalized and inherently biased interpretations based on limited laboratory testing. Having recorded these and other indicators heavily since 2001 in digital format. and 35 MM before that. From numerous storms throughout the midwest. I have recorded in some cases Hail collected from the property and the damage it created on that property. AS well as tracked the hail pattern, damage and collateral indicators all along the storms track. In file after file I can demonstrate the inherent bias in the way these indicators are applied and interpreted. As well as the evidence and indicators ignored. misinterpreted from generalized statements not applicable to the particular point of interest. Such as testing that shows the inner dent in a flue cap is more consistently reliable in estimating hail diameter. So even though the testing it’s self was not proven to be repeatable and reliable to a degree one could use to establish it as fact by any means. It is used in that manner by many Engineers. Not taking into account the testing was on a specific flue cap and they in thickness and stiffness pretty dramatically. Add to that location of the impact changes everything as radiuses, bends, creases, etc are formed into the sheetmetal from manufacture or repeated impacts that deform it during the event. All of these factors will corrupt the outcome dramatically from that of the testing. Such as a 3″ indentation commonly seen on a galvanized steel flue cap with multiple smaller deep indentations in inside it’s rim. The smaller dents measuring 3/8″. SO was s single large 3″ dent caused by 6 or more 3/8″ hail stones in a stiff galvanized flue cap with one rim formed with out additional creases. Or was it struck by a 1-2″ hail stone with protrusions (not smooth round) as commonly seen when large hail is present? Engineers ignore the plethora of photos of irregular shaped hail even sited by HAAG and others when convenient! When the likely hood of irregular shaped hail proven to leave smaller deeper impressions in building materials than smooth round hail as used in the Testing. They assume it had to be smooth round hail like the ones they use for testing in order to apply their criteria! This is fraudulent at it’s core and is the basis used to cover up real damage in the field. This can not be detected by Pier review unless someone who knows what they’re doing is there to collect the Data they ignore and fail to collect. Can’t get in discovery if it is never collected in the first place can you. I have seen the amount of markings and notations shrink in the field. Especially with Engineers and firms I have worked with before as I inspect their test squares and documented what they miss or ignored. This shows it is deliberate not a mistake or ignorance in many cases. Not all Engineers are like this I work with some that attempt to be neutral but there training has built in some inherent biases. But they have a team player attitude and are willing to consider the arguments we present and adjust to real world evidence and environments. I have a great deal of respect for those in the field who are trying to do it right even when we do disagree to some degree over where to draw the line on damage requiring repair or replacement. We have been told by an Engineering firm on a recorded line the Org they are in forbids them to be employed by a PA. So what does that say about their Peers? Why would their opinion change depending on who hires them? Bottom line in order to have a real Peer review that can help us get to the truth you need 2 parties one from inside and one outside the Engineering industry that still has the background and experience with the materials, Installing them, Repairing them, Developing them, Manufacturing them, Inspecting them, etc. Who also knows the argument, practices and criteria used by the industry better than they do as well as it’s inherent biases and fallacies. The training that has been used to train the Engineers in Storm related investigation has at it’s core some short comings. This can be demonstrated by taking any number of reports I have filed and compare the Engineers assumptions and conclusions, with the real world evidence we have collected on site and see the contradictions! This what Premier Claims does to deal with Engineering reports prepare for a predetermined outcome.