Filed Court Documents on Class Action filed against Worley and BP by Adjusters on Overtime Issues/Daily Rate- Part II

February 11, 2011

We previously posted about the information learned about a Class Action lawsuit filed on behalf of BP adjusters working oil spill claims.

Here is a link to the original post if you missed it:

https://dimechimes.wordpress.com/2011/02/09/adjusters-handling-bp-claims-file-a-class-action-lawsuit-on-two-issues-overtime-pay-and-failure-to-receive-65-of-daily-fee-per-contract/

This post now contains the two Complaints filed by the adjuster seeking to represent the Class of adjusters who worked the claims:

Altier v Worley BP et al gov.uscourts.laed.145020.1.0 This is the Complaint filed seeking Class Action on Overtime Pay Issues although they were independent adjusters working on a daily rate

Alteir v Worley only  This is the Complaint filed seeking Class Action on alleged failure to pay BP Adjusters 65% of the daily rate they received per Adjuster

Thank you to the source who provided the copies of the court documents. We will continue to follow this case and post updates as we learn them as we feel this is a significant case that all carriers and adjusting firms as well as adjusters will follow due to the daily rate/ employee vs independent contractor/ and overtime issues involved.

Advertisements

What role are rising gas prices going to play in your deployment decisions for Hurricane season 2008? Carriers and Adjusting Firms should meet the need!

May 29, 2008

Here is an interesting article by Dow Jones on how rising gasoline prices are going to increase the cost of claim settlements should a big one hit this coming hurricane season:

http://www.lloyds.com/CmsPhoenix/DowJonesArticle.aspx?id=393043

Basically, the cost of material goods from building material suppliers will rise due to transportation costs of materials,etc thus increasing the cost to settle not only building but contents claims.

What I wish they would have included in the article is the effect rising gasoline prices will have on independent adjusters decisions regarding deployment this hurricane season. For those not familiar with independent adjusters, they must pay their own expenses unlike staff adjusters who are employees for an insurance carrier who have their expenses covered by their employer- the insurance company.

Independent adjusters basically have four options:

1)Deploy and absorb the extra expense greatly cutting into their profits (which are now often greatly reduced to begin with due to partial assignments while the carrier staff works part of the coverage on contents and ale losses). Current hot topics on this subject include adjusters discussing different vehicle options moving from the SUV’s and trucks to smaller vehicles with better gas mileage. This presents a real issue for independent adjusters who live on the road following storms needing larger vehicles for one and two story ladders, estimatic and computer equipment, and living supplies needed for survival in often very unpleasant living circumstances at the beginning of any severe storm. Here’s a link to just two of many ongoing discussions on this topic: click here and here. The first link you may have to login to CADO to read as it’s in the adjuster den forums which require login. There is also a 3rd ongoing discussion about adjusters changing vehicles but I couldnt get my hands on the topic and will update this when I do so.

2) Deploy but only accept in office assignments in insurance companies claim central operations as many carriers have catastrophe claim central operations and use independents in this capacity for the great demand when necessary. I’ve seen many experienced independents accepting these assignments who in the past would never want to be tied to an in office cubicle environment on a daily rate instead of working off fee schedules on field inspections because of several issues to include the unfortunate increase in non paying adjusting firms on fee schedule handled files (they’ll know within 2 weeks  or so if the firm is paying or not working in office) and because of the guarantee of atleast biweekly if not weekly pay versus the unreasonable delay in some carriers offices in settling field catastrophe files so adjusters get paid (as well as insureds of course).

3) Many independent adjusters who prefer the independent adjuster lifestyle are moving to carrier staff adjuster positions. If you missed our blog on the pros and cons of each position- here is a link.

4) The last option is to leave the field altogether which many are doing due to the lack of work the past two seasons. They need a dependable stable income which the independent adjusting business has not been able to provide the last two years.

Here’s a link to an interesting AP article out this week indicating we are getting ready to break US records this tornado season on claims so hopefully independents are finding much more work these past few weeks. We’ve gotten some great news from long term ClaimSmentor trainees who picked up storm assignments in the past few weeks as assistants on rope and harness teams with some of the major independent adjusting firms which I feel sure is due to their committment to continuing adjuster education knowing these individuals who have definitely prepared for this career with licensing, estimatic courses, carrier certification exams successfully passed,  and field mentor training they’ve gone through. This is an outstanding opportunity for them to work with an experienced adjuster on the rope and harness teams to learn the practical application of all of their training in a real claims environment while being coached by this other half of their team. Hats off to the adjusting firms using this approach to develop new adjusters!

So what are some of the things adjusting firms and insurance companies can do to ensure more independents do not leave the field due to rising fuel costs?

1) Carriers and/or adjusting firms (depending on who is making the assignments to the independents)should ensure that their catastrophe claim automation folks on large cats or local field operations on smaller cats are using automated zoning systems utilizing the 9 digit zip codes to ensure that claims are assigned in tighter zones for independent assignments getting their group of claim assignments as close together as possible to  lower their gas expenses.

2) Hopefully, carriers and adjusting firms are all using current technology using CMS (Claim Management Systems) so adjusters can download assignments and upload inspection/claim documents without the need to waste precious fuel to come into pick up  and drop off assignments. CMS systems not only reduce fuel expenses but provide much more prompt settlement of claims for policyholders as carriers have immediate access to claim file documents. My top recommendation on CMS systems if you do not have one is Click Claims which won the AM Best’s Efusion Award for CMS systems- here’s a link if you want to take a free demo. I personally managed adjusters throughout FL during the 4 in 04 hurricanes in FL and cannot image accepting an assignment working without this particular program again. By the way, vendors using email only processes for catastrophe claim documents should be history as it leads to nothing but confusion and loss of claim file documents and unnecessary delays in processing file closures for prompt payments to insureds when no one can find the emailed documents. I am also aware of numerous new adjusters who were burned on adjuster fees when files were not uploaded in their name after emailing them in and a supervisor uploaded them into a different adjuster’s name. I was totally surprised but heard it enough to believe it was true for some inexperienced adjusters.

3) Keep unit meetings during a storm to a limited number reserved for critical information sharing otherwise minor details can be shared by email and teleconferences where managers conference call unit members versus requiring travel to cat offices. This would apply to meetings required by adjusting firms and for insurance carriers.

4) Many adjusting firms share in any gas allowance fees which may be incorporated into a carrier’s fee schedule. For instance, if the fee split in the independent contract with the adjuster is 60% to the adjuster and 40% to the adjusting firm, the firm will take their 40% of the mileage allowance as well as the gross billing on the amount of loss fee. One of the forum links above had adjusters discussing this issue. I’d like some light shed on this practice by SOME adjusting firms as I do not see any reason whatsoever that an adjusting firm should be taking a percentage of the travel fees when they incurred ZERO percent of the cost. If there are reasons they do so, please reply and let us know!

For those that aren’t famililar with insurance company  independent fee schedules, many require the adjuster go a given number of miles with no allowance such as 50 miles before they then consider an allowance for mileage traveled. Typical schedules say the first 50 miles is included in the regular fee on the claim.

Adjusting firms that are doing this should consider offering 100% of the travel allowance to the independent adjuster incurring the cost. Adjusting firms should also consider negotiating a gas allowance per claim particularly if the independent adjuster is assigned a rural territory incurring unreasonable mileage. During the 4 in 04, I had no trouble negotiating a gas allowance for our independent adjusters with many regional carriers at all. I know some carriers such as the recent Citizens RFP says there will be no negotiating on their fee schedule. This could work to their detriment if other insurance carriers are allowing this gas mileage allowance.

5) Carriers can host carrier certification classes online through podcasts and webinars versus requirements adjusters travel to their pre-qualified independent firms offices for testing. Today many offer IDL (Interactive Distance Learning) webinars the adjusters can take in field locations throughout the nation at agents or carrier regional offices yet they then require the independent adjuster actually travel to the independent adjusting firms assigned their claims to take the actual certification test which follows the IDL. For example, an adjuster residing in FL may be able to watch the preliminary IDL in FL at a regional office for the carrier yet the closest adjusting firm office to take the test is in LA. This makes no sense when the carriers can provide monitored testing at the same locations at their offices where the IDL sessions are held or use an examination center like the AICPCU program does for the CPCU or AIC exams where they are proctored at local colleges.

6) Carriers should seriously consider helping with this problem by assigning rural territories to their staff adjusters as their gas expenses are covered if they wish to keep independents working claims. This may not be possible during the clean up phase where territory assignments are more difficult but this should be no problem whatsoever at the onset of a large storm.

Carriers need to consider that independent adjusters when not deployed on cat are working other positions at home and also do not have unlimited time to take off of daily work they are doing at home to travel during the week to take all of the various carrier certification exams required for them to work claims and should also consider offering these exams and IDL programs on Saturdays.

7) Adjusters- have you considered two story rope and harness team assignments where you split the fuel costs? Most of these assignments are paid on daily rates so you will also be paid regularly and on a stable schedule.

8 ) Carriers need to consider claim managers dedicated to reviewing and approving independent claim files as they are often set aside by cat managers to review later due to the extra work involved reviewing and approving the fee bill. During the storms in 04, it wasn’t uncommon to have delays of 60-90 days AND MORE on adjusting firms being paid due to back logs in carrier claim operations reviewing and approving files. Thankfully, that year the FL Dept of Insurance imposed many deadlines on claim closures which helped atleast get them processed a bit more timely. The intent was to get the settlement money in the hands of insureds which is most important but it didn’t hurt getting the payments to independent adjusting firms either.

9) Adjusting firms definitely need to increase their office personnel during a major storm. I’ve had the unfortunate experience of managing independent adjusters and trying to keep them happy and funded when the adjusting firm had far below the number of office personnel to timely invoice the carrier on claims and just as important to timely follow up on unpaid invoices. Adjusters will not be able to sustain themselves this year for 60-90 day time frames with fuel expenses this high and ever going higher should a hurricane hit. Office staff also needs to be mentored on the importance of processing these payments when payments do come into the adjusting firm for timely payment to the adjusters. I have witnessed too often some pretty rude comments coming from office staff such as “if they want a regular paycheck go get a staff job” which does nothing for adjuster/adjusting firm relationships. In another case, at 4pm sharp each day the office staff walked out the door at 4pm as the adjusting firm wouldn’t authorize overtime at a time it was sorely needed to set up new catastrophe assignments and process invoices. Listen folks, if you don’t keep adjusters funded for work they have professionally completed, we will all see the fall of the independent industry. Due to partial assignments from the carrier and poor payment practices on the carrier thus the adjusting firm part, many independent adjusters are finding it most difficult to continue on this career path. This is not to say all adjusting firm office staff are negative, there are many adjusting firms who are proactive on invoicing and their staff runs an excellent operation. Adjusters just need to determine quickly what type of operation they are dealing with and depart the assignment at the first sign of payment issues.

A recent example is the Citizens policy posted in recent RFP documents where they indicate they have 30 days to pay the adjusting firm from the time a claim is submitted yet they require the adjusting firm pay the adjuster within 14 days of assignment.  So………..should all go like clock work an independent adjuster would be looking at a minimum of six weeks before they get paid on a claim from the day it is submitted for closure. How many Americans would work for six weeks without pay …not many I’d venture to guess and they are in a stable home environment not incurring hotel and these excessive fuel charges to service claims.

Here are some other ideas not just adjusting firm and carrier specific but some great ideas:

Offering incentives and rewards in the form of gas gift cards to employees is mentioned in this article which says in part:

A small but growing number of employers are offering gas and commuting incentives to help workers get to work. A May 6, 2008, survey of 553 human resource managers found the percentage of companies offering gas cards as employee rewards more than doubled between 2007 and 2008 — from 6 percent to 14 percent. The study, conducted by the Society for Human Resource Management, also noted that companies are organizing car pools, offering telecommuting options and public transportation discounts and giving cash incentives for employees to buy hybrid cars.

http://www.creditcards.com/credit-card-news/gas-card-price-poll-1277.php

How about gas card incentives offered by various hotel chains- you’ll be amazed at the results if you just enter “gas card incentives” in a google search to find results like the following article with numerous offers by hotel chains:

http://www.travelpost.com/articles/save-on-gas.aspx

Here’s another cool tool adjuster’s would find useful to calculate your fuel costs to deploy to another city for catastrophe duty based on your vehicle and your route from AAA:

http://www.fuelcostcalculator.com

Here is another great site for determining gas prices nationwide, mapping your trip and finding the best deals on gas along the way:

http://gasbuddy.com/

This is just another  challenging opportunity for us to work together with carriers, adjusting firms, and adjusters to find ways to solve this problem to properly service claims for our policyholders. We need to meet this challenge BEFORE the first hurricane hits by establishing plans for dealing with these gas price issues facing independent adjusters. June 1, 2008 is just days away….what a GREAT time to establish and announce your independent adjuster friendly policy for meeting the needs to cover this fuel cost crisis for independents this season!

If you know of other fuel cost savings for adjusters or some innovative way firms and carriers are dealing with this issue…feel free to reply and share your ideas with our readers.


Splish Splash don’t go takin’ a bath- Understanding independent firm contracts

August 12, 2007

 I love the way music so aptly expresses so many things going on in life and love to use songs that help express issues much better than words ever can.  It’s a light hearted way to remember a principle we’re trying to drive home for  adjusters. Last week, our claim song of the week was Peter, Paul, and Mary’s song “Where have all the flowers gone” as our theme song for adjusters on “where have all the claim files gone ” here in this blog. This week we’ll talk about splishin’ and a splashin’ out on your new assignments and delving through the terms in many independent contracts. Here’s the link to the Splishin’ and a Splashin’ lyrics so you can follow along!

Every storm season brings out some of the best and the worst of adjusting firms and  contracts. We hear of adjusters “takin’ a bath” on their fee payments over some of the contract issues and non payment issues going on with hopefully a small number of unscrupulous firms.

Here are links to two very good commentaries on contracts. The first  here  comes from a blog entry over on CADO made by a senior adjuster and this article  by Donny Greer of Gulf States Training at the University of North Texas who shared this article with us over at ClaimSmentor with permission to post it in our blog :

Selection of a CAT Firm or CAT Claims Company

by:  Donny Greer of GulfStates Insurance Training at University of North Texas

http://www.adjustereducation.org

CAT Firms or CAT Claims Companies come in all shapes, sizes and flavors.   Not to mention their expertise levels and experience in running a real business.  
This type of business model structure brings out the best of  people and unfortunately the worst.  

Here’s what I am saying:  

These types of firms are generally started and run by professionals who are truly educated and experienced in both business and the insurance field with an emphasis on claims processing.  By and large, these firms are honest, forth-coming, and are personally chartered to “do-the-right-thing”.   But as you know, each and every field has its wolves!

Firms that process claims for insurance carriers earn their keep by accepting under agreement a claims assignment report containing many claims, from ten to five hundred, maybe even into the thousands as is the case during a major storm.   These claims could be auto, home, business and even in some cases casualty claims.  These homeowner types of claims are then farmed out (contracted) to Independent Adjusters whom are then sent out on the adjustment path to glory.  At least that is how it starts out.   

When I/As (independent adjusters) take on these claims, they likewise do so under the control of a contract offered to them by the CAT Firm (firm).   This is where things can first start to erode.   First, you receive a call from some firm with whom you have earlier registered with.  Next they ask you to go to the distant site.   With all your excitement, you’re off and running.  Now all seems well.   

Soon on the site, you are usually required to attend a Storm Meeting held by the firm with the goal of orientating new adjusters.  This meeting is quite beneficial as this is the place where all information is conveyed to the adjusters now on-site.   Miss this meeting and you miss the boat on policies, procedures, introduction to storm support personnel and so on.  Sometimes unscrupulous CAT firms purposely wait until you are at the storm site, and have incurred expenses before they present you with a contract to sign.  Don’t sign, and you must go home.   Could this be a contract signed under duress?  

What? you Say! 

Any contract is necessary for you and the firm you are working for, as it is the sole document that list out your agreement to provide services and spells out expectations of both parties.   This is a good thing as Martha Stewart has Said a few times.   The problem is not all firms are looking out for the adjuster’s best interest.  Read on… 

Most of the better firms out there are good, honest and looking out for the adjuster, and ask the adjuster to sign the agreement prior to deployment and before you the IA incur expense, but some, want you to bring in money for them, and under a very strict agreement written with mainly their interest in mind.  These firms however, are only concerned with a fast buck, and a BIG BUCK at that.   

Be aware of any contract wording BEFORE you leave your home for a storm.   Do yourself a favor and read the contract they are asking you to sign, before you invest in doing business with a firm you don’t really know.   Never wait until you have arrived in Ft. Lauderdale, entrenched in a hotel, in debt. for a new laptop computer, and then review a contract!  Know before you GO! 

In reading the contract, look for clauses where you are waiving your right to sue in court.  Read carefully the section that covers the adjuster’s hold back portion (portion normally held back by the CAT firm until all claims have been paid and settled).   Know this percentage BEFORE you travel and begin working.  Holdback is normal and there is nothing wrong with this type of arrangement.   Just be aware of how a contract might address such an issue.    

Again:  KNOW WHAT YOU ARE SIGNING  AS BEST YOU CAN. 

CAT firms bill the carrier based on the gross amount of say one of your claims.   They publish to you a fee schedule showing how you earn a percent of the billing amount.   The billing figure being an arbitrary figure listed on the fee schedule.  Shown as a split, in some cases 40/60 with 40% for the firm and 60% for the adjuster.   One question that comes to mind is what is this percent actually a percent of?  It is a percent of what the firm says they are billing the carrier for the claim.  Fact is, you don’t really know the true amount of the billing from the CAT company to the carrier, only what you are shown on the fee schedule. Your fee schedule only reflects your percentage of some listed amount published for the sake of the fee schedule’s completeness.  You are only allowed to see and know what some limited number of these firms want you to see.   

Keep this in mind when shopping for a firm to work for.  A 40/60 split sounds good, but your 60% is 60% of what?  You should know this answer  before you get engaged with a firm and way before you travel on your dime to a storm site.  You just might be working for pennies, not knowing it, and lining the pockets of some unworthy CAT Firm.   Be wise to Check-It-Out.  And beware of ads that solicit adjusters with talk of 70/30 and 80-20 etc., etc., etc.   Without you knowing what this percentage works against, you might be actually working for less that other adjusters with splits of 40/60. 

Speak with other adjusters on adjuster web sites that post experiences from other more experienced adjusters.   Join some web site forums and ask other adjusters who the good companies are.   Check with the Secretary of State’s office in the state the CAT firm resides to see if they are in good standing as a corporation.    

The best way to check out a CAT firm is to ask seasoned adjusters on portal website forums.   Trust what they tell you,  its better information than no information at all. 

Watch out for CAT firms!  Most are good, but try not to get so absorbed in deployment, that you forget to tend to the basics of being a good business professional.   

Any truly good company would have no problem at all allowing you time to review a contract prior to deployment, and any truly good company would invite any questions you may have about their structure, their officers, and how long they have been in business.  

One more time:  MOST ARE GOOD AND HONEST. 

Donny Greer
Donny Greer of GulfStates Insurance Training at University of North Texas 

*************

Our Blog continued below:

Don’t go out their “reelin’ with the feelin’ and a movin’ and a groovin’ with your excitement at obtaining placement on a roster or receiving new assignments without getting this most important document finalized.

Already this year we are hearing from adjusters receiving independent contracts faxed or emailed to them that contain “blanks” in the contract forms for important things such as fee splits, holdbacks, etc.  We have reports from one group of adjusters attending recent seminars for carrier certifications that could not find one person in the adjusting firm office or at the conference that even knew who signed contracts for their firm nor could the adjusters get copies back signed by an AUTHORIZED person with the adjusting firm. The firm had no idea where they were filed and they were not with the adjuster’s personnel records they sent in.  We have other adjusters being told ” that’s ok on the blanks- we’ll fill those in later”.    Now what does that tell you? Hello????????

One of the concerning contract terms in many of this year’s contracts concerns fines assessed back to the adjuster. We haven’t seen any yet that spelled out what exactly those fines were or the dollar amounts involved although I’ve heard there are some out there with specifics. The Citizens FL RFP manual for the adjusting firms does outline the many $1,000 fines to be assessed to adjusting firms yet the companion independent contracts the selected vendors have that we have viewed only indicated “any fines assessed will be passed on to the adjuster” type clauses. You need to have specifics in writing.

How about the non compete clauses? We saw one firm’s contract last year that didn’t allow adjusters to work for any other adjusting firm in the Southeast USA for 2 years! You need to check with your attorney regarding the validity of such non compete clauses in your state. I see many postings from adjusters giving advice about those “not holding up” in court. We’ll see. I’m monitoring the development of a suit file right now over in Alabama that was recently filed in June and we’ll link to it as things develop beyond the initial complaint and answers as well as searching for other cases involving adjusters and adjusting firms. We welcome any links if you are aware of any others.Don’t believe that the firms won’t enforce them! They are there for a reason and you need to abide by these contract agreements you sign.

We are looking for a good employment contract attorney willing to volunteer some time to look at a few of the examples of contracts we have to provide some general advice to adjusters if you know of anyone interested.  We’ll post their advice and links to their services both here on our blog and in the ClaimSmentor forums.  We are seeing simple contracts about 2 pages long to hearing reports of some in excess of 18 pages long. BE CAREFUL about what you are signing.

We recommend you seriously consider these terms in contracts and consider running all contracts by your attorney. I am not an advocate of “forum advice” posts being your sole venue of information on something so important as an independent contract. In my never ceasing quest to get insurance carriers and state insurance departments to help protect adjusters, I’d like to suggest if they aren’t doing so that carriers exam the independent contracts that adjusting firms give to their adjusters. It is not enough that the carrier sign a contract with the adjusting firm outlining their expectations but they should get involved in making sure that independents are not being taken advantage of in the independent contracts with the adjusters. Is it the “employee” versus “independent issue” keeping them from doing so? If so, state Insurance Departments need to establish acceptable standards for acceptable terms adjusting firms can use and have a published area on all state insurance department sites that list adjusting firms and their complaint ratios just as they do for consumers to determine what a carrier’s complaint ratio is before buying an insurance policy. I have a real problem with the fact a carrier has first hand knowledge of firms they have fired for poor claim service yet where do they publish that information for other carriers to avoid using them or for adjusters protection in accepting assignments for such a firm? They would fear being sued I’m sure but if the Department of Insurance required this they’d have to report it. I cannot stress enough we need to improve the communication gaps in the independent adjusting community for the protection and preservation of our careers.

Effective dates, Hold Harmless terms, Fee Schedules, Fee Splits, Payment terms (before or after carrier pays?), Witholding provisions(how much they withhold as well as how long), Non Compete Clauses, Venue (City/State/Court?)for where any disputes are handled, Other provisions such as Arbitration of Disputes, Fines to be assessed to you, information on who provides the Errors and Omissions Coverage, and many other important terms.. Seek your attorney’s advice BEFORE signing such provisions if you are in doubt.

We have many adjusters who sign contracts but then do not ask for a copy of the contract back after an AUTHORIZED person with the firm has signed it. We had a large group of over 30 adjusters working for one firm in 05 who could not pursue legal action for non payment on over 90 days of work as they had never gotten back a signed copy of their contracts showing any agreements between them and the adjusting firm. ASK for a copy of the Independent contract up front before you leave home as Donny points out above. If the vendor tells you they will sign them at the induction center, make sure you have two original copies with you and sign both and request they sign both and take one with you and keep it in a safe place in case you need it later. This will help you  avoid running into those situations where the “gathering” place has no facilities or staff to give you a copy on the spot.

Don’t assume because it is a large well established adjusting firm that you are safe signing their contracts. We have reports from several adjusters that contracts they assigned with a large vendor signed for Katrina duty contained 60% fee split agreements yet the payments received were 40% and they were then told that the 60% only applied to experienced adjusters. I’m curious if this would hold up in court since the fill in the blank could be twisted on the 60/40..is that 60 to you or 60 to the adjusting firm….we don’t know if it’s not specified in the contract right? Folks, that is not what their contract said. Make sure the fee split does apply to YOU and not termed “in general fee splits are….”.

Go movin’ and a groovin’ this storm season with the comfort of knowing you are protected if you encounter one of the tough situations with a non paying adjusting firm. Splishin’ and a Splashin’ just isn’t the way to handle business contracts professionally! Put those “dancin’ shoes on” AFTER you have properly prepared for accepting new assignments! We hope you will pass the word on to other new adjusters so they don’t go “takin’ a bath” this season!