Today’s blog will not endear me to HAAG, Rimkus, JS Held and other regularly hired forensics professionals who work for insurance companies. These engineering and consulting firms are large companies. So much so that Sedgwick, a large independent adjuster, has acquired a number of these engineering firms. I can imagine that many of you are wondering how a restructuring company representing the interests of the insurance company can get an independent and honest opinion in such circumstances.
Many skeptical public adjusters, contractors and critics tell me they don’t need to wait to know what the engineering report will say if a particular engineer has been hired. Not only are the scientific findings negative for the policyholder, but the wording in the report is also inextricably linked to the insurer̵7;s exclusionary or limiting policy language. It is much easier to prove that an engineering report’s conclusion is incorrect than to prove that the errors and incorrect conclusions were the result of bias or a results-oriented state of mind.
This topic will be explored at the First Party Claims Conference at the Encore Casino Boston Harbor Hotel on December 5-7, 2022. Insurance Fraud Detection and Prevention: Causation, Notifications and Types of Fraud, will discuss in part the recurring issue of insurance fraud found in technical reports. Doug Quinn of the American Policyholders’ Association (APA) and I will show examples of this behavior. But more importantly, we will show what you can do to stop this wrong practice.
Doug Quinn and other Superstorm Sandy policyholders were victims of this abuse. Many claims were denied after an expert review by an engineering firm’s account manager changed the conclusions and wording to favor the insurance company’s client.
While preparing this presentation and the topic of technical peer review, I came across an academic paper from 2015, The Peer Review Process in Forensic Engineering,1 which stated that there was no recognized process for engineers to perform expert review of a forensic report:
Although the principle of conducting peer reviews is well established, the process itself has not been subject to peer review. Consequently, there is great scope for variation when conducting a peer review; Therefore, the scope of any review must be fully communicated and agreed upon.
Part of the paper made sense because it reported that changed conclusions should not only be reported to the client but others the expert must inform:
Forensic investigations are led by a named expert engineer, who will be responsible for all aspects of the investigation and reporting. Typically, the named expert will ultimately be the primary witness in any testimony on the investigation. The named expert can carry out the site visit, remove samples, carry out any tests and finally write the report. However, he or she may instead direct some or more aspects of the work and not personally engage in one or more activities. Nevertheless, like the professional engineer who seals and signs blueprints, the named expert must check the work directly. It is he or she who must leave an opinion, which must be his or her own and not adopted from other individuals. Assistance may be obtained for work, data or analysis, but formulation of an opinion or conclusion may not be delegated to another person.
Therefore, the signatory of each report must always be the named expert who has been responsible for and fully knowledgeable about all aspects of the investigation. This does not preclude the possibility of errors being discovered during the peer review process, any more than a design review precludes the possibility of errors being discovered in the design.
Typically, any errors discovered during a peer review will be minor, with clarification, numerical correction, need for shortened or more developed discussion, or the like, and will not result in changed conclusions. However, it remains possible, and speaks to the integrity of the named expert, that a peer review that reveals errors in the data, procedures, test methodology, analysis, or other aspects of the investigation, and takes into account the receipt of new information, will result in a change of the conclusions.
It is of course best that this happens before a report is made. However, if errors are discovered after a report has been issued, they should be communicated without delay to the client and any other parties the expert is required by law to inform.
It should be noted that in the fine print, the vast majority of all insurance companies’ forensic reports state that they are for the benefit and benefit of the insurance company only.
I recently attended the Georgia Association of Public Insurance Adjusters meeting, where a fire damage and remediation expert made an extraordinary admission about the kind of financial pressure forensic experts are under regarding their reports. He explained how his testing resulted in conclusions that upset the desk adjuster, who would have to pay more for the claim. Instead of sending its report to the policyholder, it was buried. The desk adjuster hired another expert who performed various tests to come to an incorrect conclusion. Eventually the truth was revealed. His point was that this was not an isolated instance and unfortunately many adjusters are not looking for the truth but a report that leads to less payment for a claim.
A shout-out goes to Coppermark Public Adjusters for addressing the issue on their website, What to do when the engineering report is incorrect:
There are three things that we like to do. First of all we look up the state level engineer and find out what is his area of expertise? I want to know, is he civil? Is he electric? Is he a computer engineer? Because I’ve seen computer engineers do structural views and try to figure out why. Okay? So I want to see what their background is. Number two, we look up to see if they are associated with the company that they stamp their name on. Many times these engineers stamp these reports and they are not authorized to work for that particular company. For the state. It basically invalidates the entire report. It is not valid. Not to mention that the engineering board in that state wants to hear about such things. So we start there.
Then you take out a red pen like in grade school and you just start hacking it up, taking out the blurbs, adding the photo. He says, “There’s no harm,” you put a photo next to it that shows it’s obviously fake. After the 13th or 14th fake thing, the only conclusion we can draw is that he’s doing it on purpose. Right? A licensed practitioner intentionally misleads or misrepresents the situation to the benefit of the insured or the insurance company. Right? It is an unexpected case. It’s a no, no. Right?
So the key to that is documentation, documentation through photographs, documentation through various scientific methods, thermal cameras, rulers, the same kind of stuff that some of these engineers do. So one of the ways that she talked about not needing us, one of the first things we do, we check on the state licensing of the engineer. We check if they are valid to work for that company, then we cut open the technical port as best we can.
Our law firm pays a lot to conduct computerized research on insurance company engineers. We know how many times experts have been challenged in court, when judges have refused to allow their testimony, obtain prior depositions and past history of the expert. This is not a new problem that we have been fighting. In 2009 I wrote a post, Adjusters cannot in good faith rely on biased or results-oriented opinions:
Would you expect Americans to get a fair trial in Iran? Probably not, since most people would think that the judge and jury would rule against Americans regardless of what the evidence showed. Many policyholders first call our office while waiting to hear from the insurance company’s expert. Typically, the expert becomes involved after the policyholder complains about the insurance adjuster’s initial conclusion. The policyholder, now worried about cementing an already bad situation with a bad finding from a purported expert, calls to see how we can help.
Every now and then an expert will jump off the page and give an honest and accurate opinion. I have retained some with the understanding that they could only do so quietly or on a very limited basis. This takes great courage as the financial implications are huge – if discovered by the wrong person, most people would think they have been removed from the ‘approved’ lists held by the claims offices.
… this problem is rampant throughout the real estate customization community. As long as the insurance adjustment community looks for “conservative” (which is different from the social or political context) experts to provide “favorable” (which means paying less or not at all) conclusions, policyholders should know to get their own experts and consultants .
But there is much more that can be done to stop these wrong practices. I hope you will join Doug Quinn and me at the First Party Claims Conference on December 5-7. Encore Casino Boston Harbor Hotel is a great place for fun learning about what you can do to stop insurance fraud. Here is the link.
You will never do anything in this world without courage. It is the greatest quality in the mind next to honor.
1 Cohen, James, PE, The Peer Review Process in Forensic Engineering. American Society of Civil Engineering, Seventh Congress on Forensic Engineering (2015).