Nationwide Insurance Proposes One policy covering Wind and Flood Coverage

June 26, 2008

Nationwide Insurance is proposing a new policy covering the peril of flood and wind coverage. There are several news stories out on the issue as well as information Nationwide has now published on their website.

Would this not be fantastic news for adjusters? All of us who have had to make the determination after a hurricane attributing damage to wind and flood know the difficulty doing so. I am curious if the policy is written based on the posted information how adjusters would be trained and certified to handle the claims. Presently, Nationwide does have an independent adjuster certification exam. Flood claims are presently covered by NFIP requiring independent adjusters who have successfully obtained their flood certification. We’ll post more later as this information becomes available.

Here is the link to all of the news on the Enhanced Homeowners Policy as posted on the  Nationwide website: click here

Here is a link to the AP article advising Nationwide has petitioned Congress for permission to sell this policy:  click here

We continue to staff for an adjusting firm who is a Nationwide vendor and we do have a waiting list for adjusters waiting to take the next Nationwide certification class with them. If you need the Nationwide Independent adjuster certification exam and would like to be notified of the next class, submit your resume verifying a minimum of two years of adjusting experience to Dimechimes Claims Staffing and Claim Training (contact info on About page here on blog)  and we will notify you of the next scheduled certification class and testing.

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State Farm Seeks Dismissal on Rigsby False Claim Act/KLG update/ Levee Break (Sher) decision including Overhead and Profit issues

April 9, 2008

It sure is difficult to get to work these past few days with all of the breaking claims news involving Katrina cases.

First we have developments with State Farm’s move to have the Rigsby Whistleblower (False Claim Act )case dismissed, the attorneys removed which actually comes as no surprise after the decision last week that the Katrina Litigation Group (KLG which picked up where SKG- Scruggs Katrina Group left off) could not represent the remaining policyholders on their pending claims nor could the Rigsby documents any longer be used. The surprising news which also should have been anticipated was that State Farm says they have filed a counter suit against them. If you missed the news last week which I didn’t have time to blog about on those actions- just view this topic and this carrier press release to catch up to speed on the court decision on the Rigsby’s and the KLG.

State Farm has released much information including information from the Rigsby’s depositions along with many court documents. Here is a link to their site with more documents than I’ve seen released on any of the blogs and forums thus far (thank you State Farm!):

http://www.statefarm.com/about/media/media_releases/rigsby.asp

I have to say that I am very pleased to see several of the insurance carriers posting their side of these stories/hot topics in the news with links to documents and their summary of the carrier position. Years ago when a staff manager, I found it very frustrating when you’d read bad press and could only speak “talking points”  and I often wondered why a carrier wouldn’t respond with more details than the very limited press releases. Things have changed post Katrina I feel sure due to today’s internet environment to include blogs,  forums, and in response to policyholder attorneys posting their side of the story on their websites. Their posts are most helpful to independents who have a very hard time locating information to keep up to date with developments on major hot claim topics and cases between assignments and this is going far to help educate us all rather than just reading bad press in non insurance related news articles, forums, and blogs.

One comment …. I hope the carriers do a better job at maintaining the archived stories on their websites rather than untimely removing them as MS AG Jim Hood did in December 2007 with his web redesign taking down many documents he had up against the carrier. If you missed it, here’s a news story that ran about his site taking down the documents( it’s by www.legalnewsline.com run Dec 2007). Leaves you to ask the question- why? I’ve heard folks guesses which include this was within weeks of Trent Lott’s retirement and the Scruggs indictments. Is there something he didn’t want us to view any longer? I have no idea but the timing is certainly interesting. Also- wasn’t it January 2008 (yes it was- here is a news story that ran when this happened at www.insurancejournal.com and here is a link to that story here when he reopened the criminal investigation against the carrier? Something he didn’t want them to be able to link to any longer? Again, no idea! In addition. many of the links in forum blogs that were connected to the Scruggs Katrina group no longer work since they have pulled that site down now making it frustrating I’m sure for folks trying to read through former blogs that contained links to any of those documents referred to in posts.

In addition to reading State Farm’s official website with all of the documents you could want to read, run over to Rossmiller’s insurance coverage blog here for great details and opinions from an Insurance carrier attorney point of view, over here to FOLO for more outstanding information. I particularly enjoyed the Folo comment on the release of an aircraft carrier group of court filings having grown up myself as a Navy brat with my dad serving on numerous aircraft carriers so it was quite easy to envision the author’s description. Once you view the State Farm link above and see all the documents- no doubt you’ll agree with the comparison! Finally, the Sun Herald has several news stories up on the topic to include a quote by a Rigsby attorney you’ll definitely not want to miss-here on page 2 of the story. There are links in the story to about 4 other stories they’ve done on the case as well.

Before I move on to the Sher case, I want to point out this comment on the State Farm press release “State Farm has filed a counterclaim against the Rigsbys seeking damages for their admitted, unauthorized, theft of information from State Farm, in violation of the federal Computer Fraud and Abuse Act.” I didn’t know what that act was so doing a search for more information, I found this article by a law firm out of FL which addresses it and shows the fines and the departments having a right to investigate the fraud and abuse: click here to view it. I am curious if the Rigsby’s did this with several attorneys present as the State Farm site info says, would those other participants also be held to this act? Would the Rigsby’s then have an action they can file against the folks that were there acting as their counsel who didn’t tell them about this act or what they were getting themselves in to? It looks like this allegation if upheld will lead to years of more news on these issues, possible fines and sentencing depending on the subsections violated if this located article is up to date. It looks like there is MUCH we still don’t know about what really happened and when (see blog discussions and court docs- did they first meet with Scruggs in Feb 06, Dec 05, Oct 05…when?)

The second major claims news story deals with the levee break decision in the Sher case. Many of the blogs are reporting on the decision but not commenting on a concern many of us in claims have regarding the decision on page 25 where the judge allows 25% for overhead and profit and 20% for basically unforeseen contingency damages due to “unopposed” testimony of the insureds expert. Page 25 also discusses comments about “water hammer” damage which after over 30 years in claims, I have not heard that term used from the claims side. Someone want to enlighten us on that? Going back to the overhead and profit issues and trying to figure out why Lafayette’s Insurance counsel  did not oppose the plaintiff expert testimony, I am curious if that was a calculated move due to the other overhead and profit suit I posted about (click here) on the 20% standard used for overhead and profit on insurance claims by most carriers? They may have just preferred to let this particular claim settle and then those decisions be addressed under the other suit which named numerous carriers. I’d have to go back and look at that to see if Lafayette was one of them but in any case, it would be strictly a guess only. I tried to find the volume referred to by the judge in the  Louisiana Office of State Facility Planning and Control and couldn’t find it on a google search but did find an instruction memo they did release about hurricane damage to state buildings here written in Sept 2005 after Rita and it sure doesn’t sound like they  were letting contractors by with just adding 20% for contingency damages and expenses when you read their comments about inspections on contractors estimates and inspections required on the progress on repair projects. Without being able to review the exact Volume referred to by the plaintiff’s expert as discussed by the judge in his decision, it sure is hard to understand what that has to do with insurance practices and general insurance claim settlement standards isn’t it? You will find the entire decision ruling on the validity of the  flood policy exclusion language on the Sher case here at Rossmiller’s blog on the Sher decision as well as his supplemental blog adding more information found here.

All input appreciated on these cases and the overhead and profit issues addressed by the Sher decision. Just reply below.


Branch Consultants vs Multiple Insurers and Adjusting Firms Whistleblower case thrown out by Judge today!

October 17, 2007

Here is breaking news on the Branch Consultant case which is the case involving 4 unnamed adjusters alleging under the False Claims Act that a multitude of carriers and multiple independent adjusting firms moved wind damages to the flood program improperly charging them with wind damages by attributing the damage to flood.

Here is the news article today on this case indicating the judge threw out the case.

http://www.iht.com/articles/ap/2007/10/17/business/NA-FIN-US-Katrina-Insurance.php

Here is a 2nd article that came out tonight which reveals for the first time that I have seen in any articles the name of one of the adjusters:

“Kanner said that he believes that the only hope of a real investigation of possible overbilling of the National Flood Insurance Program is for someone in Congress to invite his key adjuster, Max Johnson, to testify about his findings and demand to know why the Justice Department and the Department of Homeland Security, which is in charge of the flood program through the Federal Emergency Management Agency, isn’t doing more. ” Read the rest of the linked article for additional comments by Branch’s attorney, Mr Kanner.

http://blog.nola.com/tpmoney/2007/10/whistleblower_lawsuit_alleging.html

* Note this link above also discloses many more reasons why Judge Beer dismissed the case because of the Rigsby/Renfroe/State Farm case. Simply interesting for those of us in the adjusting community. This link is a must read. Also from this link you’ll see a list of the carriers and adjusting firms that were named in the suit but read farther down in my blog entry for the article that says Allied adjusting firm was the 5th adjusting firm also named in the suit:

“The Branch case involved Allstate Insurance Co., State Farm, Liberty Mutual Fire Insurance Co., Fidelity National Insurance Co., Fidelity National Property and Casualty Insurance Co., American National Property and Casualty Co., American Reliable Insurance Co., Standard Fire Insurance Co., Pilot Catastrophe Services Inc., Crawford and Co., NCA Group Inc., Simsol Insurance Services Inc., and Colonial Claims Corp.

The Rigsby case was filed against State Farm, Allstate, Nationwide Insurance Co., USAA Insurance Co. , Forensic Analysis Engineering Corp., Exponent Failure Analysis, Haag Engineering Co., Jade Engineering, Rimkus Consulting Group Inc., Structure Group, Renfroe and several individuals.”

I hope Rossmiller’s blog  provides more in depth review of the activity today and links to the court documents. I’ll post more information as other news is released on this case.

Here you will find some links to a history of articles on the case and the court documents:

US Attorney won’t intervene in the case:

http://channels.isp.netscape.com/pf/story.jsp?floc=FF-APO-1333&idq=/ff/story/0001%2F20070531%2F1734614259.htm&sc=1333

May Times- Piscayne article “Insurers accused of overbilling the federal Government”

http://blog.nola.com/times-picayune/2007/05/whistleblower_suit_accuses_ins.html

June article (not part of this case but related) saying Government Accountability office (GAO) did not find problems alleged:

http://blog.nola.com/times-picayune/2007/06/flood_insurance_relies_on_priv.html

Just totally for the human interest of it..here’s Kanner’s picture- the attorney who represented the whistleblowers:

Here’s Kanners profile/picture:

http://www.kanner-law.com/CM/Custom/AllanKanner.html

I found the Kanner Law firm website- note on his publications page he sites a forthcoming article on Property Damage Claims and Business Interruption losses. While there are links to many cases they have handled, I don’t find one for this suit:

http://www.kanner-law.com/CM/Custom/TOCPublications.html

Dr Michael Birzon’s of the University of Central FL’s earlier blog on the case:

http://blog.360.yahoo.com/blog-4lk2FhszcrRr.5PFKQg9lJQ-?cq=1

The earlier articles above didn’t name the 5th adjusting firm but this article does list Allied as the 5th adjusting firm and goes into much more details on the fines:

We now have the 5th name in this National Underwriter article- Allied out of Ft Lauderdale:

http://www.propertyandcasualtyinsurancenews.com/cms/nupc/Breaking+News/2007/05/31-FLOODSCAM-dh

There is much more in this article also about 8 billion in fraud and 11,000 fines,etc…

Here’s a 2nd article that listed Allied Adjusting:

http://www.propertyandcasualtyinsurancenews.com/cms/nupc/Templates/website/PrinterFriendly.aspx?%7B79E60F75-0D0E-49FF-9FEF-D1E9F993470E%7D

Next was the important action in July 2007 by Judge Beer’s requesting the US Justice Department become involved:

http://blog.nola.com/tpmoney/2007/06/judge_in_whistleblower_case_de.html

I found the article specifying how much these whistleblowers stood to gain- here is what it says so if the federal government had gotten involved, they would get reduced fees but it would still be a huge windfall to these whistleblowers due to the extent alleged to be involved:

“If whistleblowers are successful in pursuing the suit without the U.S. attorney’s intervention, they could be awarded as much as 30 percent of the proceeds if the suit is victorious. If the U.S. attorney’s office decides later to take over the investigation and the effort is successful, the whistleblowers’ take is reduced to 15 percent to 25 percent of the proceeds, Dugas said, because the government is the one doing the heavy lifting.

Under the False Claims Act, anyone who knowingly submits fake bills to the government is liable for three times the amount of damages sustained by the government, according to the Branch suit. There is also a civil penalty. ”

http://www.nola.com/timespic/stories/index.ssf?/base/money-3/1180597383262250.xml&coll=1&thispage=4

It’s on page 4 of this 6 page story.

Here is a link to the original complaint filed:

http://www.insurancecoverageblog.com/Branch%20Consultants%20complaint.pdf

Here was an article coming out of Mobile, AL quoting Pilot Catastrophe Services attorney on the case:

http://www.al.com/news/press-register/index.ssf?/base/news/1181467015194040.xml&coll=3&thispage=1

Congressman Gene Taylor’s website comments on the allegations of carrier abuse:

http://www.house.gov/genetaylor/OIHearing.Docs.htm

Another June article out of LA on the reliance on private insurers involved in flood:

http://blog.nola.com/times-picayune/2007/06/flood_insurance_relies_on_priv.html

This July Claims Journal article advised Scottsdale Insurance had been dropped from the suit:

http://www.claimsjournal.com/news/national/2007/07/02/81384.htm

Here was a July Bloomberg.com article quoting several other carriers involved in the suit:

http://www.bloomberg.com/apps/news?pid=20601203&refer=insurance&sid=a9GhCOEreUzM

Forbes.com wrote a July 9, 2007 article which said in part that the request for Justice Dept involvement was withdrawn ( link is no longer working but with Forbes subscription I’m sure you can find it based on topic and having date written-below is a quote from that article):

http://www.forbes.com/feeds/ap/2007/07/09/ap3895535.html

“A federal judge on Monday withdrew an order challenging U.S. Attorney David Dugas for not intervening in a whistleblowers’ lawsuit that accuses insurance companies of overbilling the federal government for flood damage from Hurricane Katrina.”

Here’s another article..sounds like the 2 folks who commented on the article are ready to shout “guilty” against the insurance industry as they have no understanding of the NFIP directives to carriers:

http://blog.nola.com/times-picayune/2007/07/federal_judge_withdraws_order.html

Now here’s some of the best info I’ve seen on the whistleblower case and what happened  explaining it all with links to the US attorney’s brief and the original request..very interesting:

http://www.insurancecoverageblog.com/archives/first-party-insurance-united-states-asks-judge-beer-to-vacate-show-cause-order-denies-judges-authority-to-order-us-to-join-whistleblower-katrina-suit.html

Here is the US Attorney’s brief filed Friday:

http://www.insurancecoverageblog.com/Branch%20Consultants%20memorandum%20by%20United%20States%20in%20response%20to%20show%20cause%20order.pdf

Homeland Security Report- 18 pages worth reading- their survey and findings on the files. Make sure to note that this says they have subpeoned the wind files from the WYO carriers:

http://www.insurancecoverageblog.com/Branch%20Consultants%20preliminary%20report%20of%20DHS%20on%20NFIP.pdf

Here is Branch’s response to the court on IG brief filed:

http://www.insurancecoverageblog.com/Branch%20response%20to%20U.S..pdf

Links to various states whistleblower acts on False Claims Act- I didn’t realize they varied by states- some allow only for False claims involving health issues- anyway- here is the state by state guidelines:

http://www.phillipsandcohen.com/CM/StateFalseClaimsLaws/StateFalseClaimsLaws152.asp

And here is other information on the False Claims Act in general:

http://www.phillipsandcohen.com/CM/Custom/TOCFalseClaimsAct.asp

That’s the entire history of articles I had on this case. I will post the pdf document for the dismissal as soon as it’s located. This is an important case for adjusters to study and learn from.  I hate to think of the dollars wasted on E and O and other defense costs involved by the adjusters, adjusting firms, and carriers who had been named in the suit. No one in the claims industry including policyholders had anything to gain on this case as the expense all results in higher premiums for us all down the road. Make sure you read what these whistleblowers stood to gain in the links provided above. The hard part is to know the adjusters  making the allegations were anonymous and still out there working for carriers and/or adjusting firms. Cases like this cost all independents jobs…..we’ve all watched as carriers have increased their numbers of staff adjusters since this case and the Rigsby/Renfroe/State Farm case also involved independent adjusters.

The initial news article posted at the top of this blog addresses the possibilty of an appeal so this may not be over yet. After 30 years in the property claims business, I find it very tough to believe the allegations in this case but by viewing all information posted publicly on the case, I’m trying to learn both sides of the issue and hope that you will also by viewing all information available to us  like that found in the links above. I would imagine I’ll have lots of supplemental comments to this blog as new information becomes available this week.

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

**Update 10/18- I knew David Rossmiller of the Insurance Coverage blog would come through with an update on this. Here is today’s entry which ties all of this together for us and also mentions the connection with this case and the Rigsby whistleblower case:

http://www.insurancecoverageblog.com/archives/industry-developments-federal-judge-beer-dismisses-katrina-whistleblower-suit-in-louisiana-how-this-case-fits-in-with-usa-v-dickie-scruggs.html

Also, Dr Michael Birzon of the University of Central FL wrote the following blog last night found here:

http://blog.360.yahoo.com/blog-4lk2FhszcrRr.5PFKQg9lJQ-?cq=1&p=285

I’ll continue to update this throughout the day if any significant new things are learned. We only have 1 of the 4 adjuster’s names thus far and if I find the other 3 I’ll post it immediately.


5th Circuit upholds anti concurrent cause provision as unambiguous

August 31, 2007

Here is an update located on the Insurance Coverage Blog along with the AP article and a pdf of the ruling all found in this blog entry. This was on the Nationwide vs Leonard case.

http://www.insurancecoverageblog.com/archives/first-party-insurance-nationwide-v-leonard-fifth-circuit-upholds-anticoncurrent-cause-provision-as-unambiguous.html

Below is a PDF of the ruling:

http://www.insurancecoverageblog.com/Nationwide%20v.%20Leonard%205th%20Circuit(2).pdf

The AP Story

http://www.sunherald.com/306/story/131448.html

I highly recommend reading this article by Attorney John Pappas “When is a flood a flood” to understand the terms in the insurance policy and court interpretations. There is a citation in this article on this Nationwide vs Leonard case.

Here is also a good news journal article on the issue from 8/15/07. I’m surprised we didn’t catch this ruling before!

Update 9/1/07-Here’s some additional articles. You won’t believe Gene Taylor’s reaction mentioned in this article:

The Sun Herald has a link to the pdf court docs I’m also posting in case the other link to another copy comes down:

http://media.sunherald.com/smedia/2007/08/30/18/Leonard_opinion.source.prod_affiliate.77.pdf

This news article quote from Congressman Gene Taylor’s Public director- I cannot believe his comments on “any carrier with anti concurrent language in their policy should be barred from participting in FLOOD” (as a WYO carrier)..I wouldn’t be surprised to see the carriers drop the WYO service- you can see the writing on the wall for the next flood storm! This spokesperson obviously has no understanding about insurance coverage or maybe it’s just too early in the morning to soak in the comments today!

http://www.sunherald.com:80/278/story/131328.html