Did Chip Merlin find a slabberator? Are Computerized Estimates by Pilot Catastrophe Adjusters Low Because of a Special Database? (with a Rigsby qui tam tag on from SLABBED)

Did Chip Merlin discover the slabberator mentioned in the scheme? That I don’t know; but, he definitely happened upon some interesting information  — cross posted below — and the title of his related postposes a very interesting question: Are Computerized Estimates by Pilot Catastrophe Adjusters Low Because of a Special Database?.  SLABBED tags on to the end of Merlin’s post with comments linking the Rigsby qui tam.

Some Mondays are more interesting than others. When I go to conferences with adjusters, I make a point to ask about “in the street” information on insurers I am litigating against. The information and leads to witnesses or evidence are often extremely valuable to my clients. Adjusters know when the orders from claims management are wrong and aimed at paying less than what is fairly owed. Most want to disclose facts about insurers that wrongly demand underpayment.

A current problem regarding the disclosure of such activities is that catastrophe firms and insurers usually make the individual catastrophe adjusters sign confidentiality and non-disclosure agreements preventing whistle blowing from ever taking place. These agreements should be illegal. Can you imagine any reason society should tolerate contracts that prevent employees from disclosing improper claims conduct? What if the mafia could enforce such agreements? Yet, that is largely why Renfroe sued the Rigsby sisters–to shut them up about State Farm’s multiple engineering reports indicating excluded flood rather than covered wind caused damage to State Farm’s customers. (emphasis added @ SLABBED)

Last night, a former Liberty Mutual adjuster, who is now a public adjuster, told me that while he was reviewing estimates from Pilot Catastrophe Services regarding damage to structures in Texas following Hurricane Ike, he noticed the amounts always seemed low. He took a Pilot adjuster to estimate a structure using the same Means software and the same measurements. He said the estimates were made on computers next to each other. He used the Means database and the other adjuster used the Pilot Means database provided by Pilot. The Pilot estimates were 30 percent lower than the unchanged Means database. I do not know why, but I will call Rodney Pilot to see if he knows. I will report on what I find. Maybe there is a good reason for this and the experienced, insurance industry trained public adjuster is mistaken.

Until then, the lesson policyholders should learn from this:

Get your own estimates and professional help anytime you have a significant loss.

Nowdy tags on for SLABBED

Be sure to follow the link Chip provided to Pilot Catastrophe Services.

One thing you’ll not see is a reference to the Means estimating data mentioned by the adjuster – but what you will find is information acknowledging the company has clients that use Xactimate — a familiar name as Xact software was mentioned in the Rigsby qui tam — as well as MSB’s Integriclaim, along with links to both.

However, you’ll also see mention of Pilot’s “flexible technology” and MIS staff with significant experience integrating our CIC solution with our clients’ existing platforms.

Adjusting firms comply with the requirements of their insurance company clients and if one of those requirements is to use the pricing database provided by the insurer, Pilot’s “flexible technology” and experienced MIS staff could easily integrate the company-required database – but, if not, Means could provide some of the know how.

In Chapter 4 of the scheme, I quoted text supportive of the Rigsby qui tam from the Plaintiff’s brief in Louisiana litigation against State Farm.

This is a case about State Farm’s uniform, corporate-wide practice of undervaluing Louisiana insured’s property damage after Hurricane Katrina and Xactware’s active and intentional collusion. State Farm required its adjusters to use the computer program Xactimate to compute the replacement value of damaged property for as much as 60% below the actual market place value.

Xactimate is an estimating computer program used to determine the value to replace damaged property. Defendant Xactware, Inc., designed the program. The Xacimate program is a computer program where the dimensions of the damaged property (e.g., sheet rock) are inputted into the program and a value is assigned to it, typically by square feet or linear feet.

The Xactware program itself is not at issue in this case but the price lists used to value the damage is at issue. Xactware contends to have divided the state of Louisiana into separate territories and issued pricelists for each of those areas, purportedly reflective of the market rate. Xactimate has approximately 10,000 line items in the price lists, ranging from sheet rock to roofing, painting to flooring.

However, Xactware created more than one version of the price lists. Xactware created price lists for Xactimate to be sold publically to contractors or estimators or anyone who wanted to purchase the program. Yet, Xactware created another version of the price lists for State Farm and other insurers that was far below not just the market price, but also far below its own publicly offered price lists. Xactware intentionally colluded with State Farm and other insurers to create this alternate price lists to drive down the value of the claims of Louisiana insureds after Katrina.

…Xactware’s wholly owned subsidiary Xactnet is a network which acts as the conduit for State Farm to assign claims to adjusters (through the Xactimate program), and for those adjusters to, in turn, submit estimates back to Defendant State Farm for final approval.

Small world is it not?