“SF [State Farm] used pre-conceived notions as to the cause of the damage and directed the resolution of the claim so that the ultimate outcome conformed to that pre-conceived belief.”
The written disclosure of the Rigsbys’ Risk Management expert, Louis G. Fey, continued and identified the first evidence documenting State Farm’s pre-conceived notions as to the cause of damage:
SF obtained a regional engineering study and instructed their adjusters to use that report as a reference or as investigative input at the least or to use it as “the bible” at worst. The industry’s fair claim practices hold that each claim must be addressed on its own merits and no pre-conceived assumptions should be used to influence the outcome.
This “bible”, the Haag Report, was the cornerstone of “pre-conceived belief” that a coordinated effort could reduce State Farm’s exposure by attributing damage to the excluded flood water. SLABBED examined the Haag Report in the September 2009 post Haag in the Church of What’s Happening Now in Rigsby qui tam. According to the “bible”, water came before the wind – a prophecy that would be revealed as Haag ascended into State Farm’s Wind-Water Protocol, FEMA’s Expedited Claim Handling Process, and guided by hell’s own angel, Lecky King, into the reports of Forensic’s engineering.
The Rigsbys’ Risk Management expert continued his report stating, “SF failed to meet its obligations to NFIP and FEMA with regard to the proper use of engineers”.
SF forced their pre-conceived opinions of causation upon their engineers. The engineers were not permitted to address the structural integrity of the house or investigate the structure to see if high winds compromised the structural integrity of the house. When confronted with an expert report that they felt was wrong and that didn’t conform to their preconceived opinions on causation, SF strong-armed the engineering firm into reversing their opinion and directed them to disregard key evidence.
SF failed to include the Ford report in their claim file, supply a copy of the report to their insured or include any analysis or discussion regarding the report in the claim file. This is a direct violation of fair claim practices. If an insurer is unsure of causation and retains an expert to determine that cause of loss, an untrained (as an engineer) employee cannot unilaterally reject the report and strong arm the expert into creating a replacement report conforming to the insurer’s desire. The entire purpose of retaining an expert is to evaluate an issue from an educated, professional and independent perspective as the expert has training in the field that the insurer does not possess. If an insurer disagrees with the opinion sought from an expert, they have to live with it. Any other course would only lead to the appearance of impropriety as we have here.
SF’s instruction to determine the “predominant cause” of the damage was inadequate and not based on any insurance concept. Instead SF should have requested that the engineers check the structural integrity of any homes that sustained significant damage (determined on a case by case basis by the handling adjuster) and the engineers should have been instructed to check for hidden damage or structural weakness. SF should have fully investigated the cause of loss including a neighborhood canvass and made that investigative information available to the engineers.
The task of determining the predominate cause of the loss should not have been the assignment. The assignment should have included a request to analyze the damage and itemize what damage was specifically caused by wind and what damage was specifically caused by flood. Where the cause of damage was uncertain and could not be concretely determined, the damages should have been itemized and treated as a covered loss under the SF homeowner’s policy since SF would have been unable to prove that those damages were specifically excluded from coverage.
SF’s instruction to FAEC’s second engineer Mr. Kelly to disregard eyewitness testimony is also an unfair claims practice. Upon learning of Mr. Church, SF should have immediately met with him to obtain his signed statement and to evaluate his testimony. The fact that he had no interest in the outcome of the McIntosh’s claim seems to lend credibility to his testimony. Likewise, a neighborhood canvass is a basic element of any investigation and SF should have attempted to talk to everyone in the neighborhood to see if there were any other corroborating eyewitness accounts. In fact SF failed to pursue this key evidence and even instructed their engineers not to rely upon eyewitness accounts, which is contrary to proper claim investigative procedures.
For the sake of argument, had SF not agreed with the first engineering report, the claim should have been fully investigated prior to any other action, especially before the call to the engineer to complain. Additionally, for the sake of argument, once an issue arose on the claim, a complete evaluation of the structure should have been commissioned. Of course this proper and thorough investigation should have been commissioned at the outset.
SF essentially used Federal funds to appease insureds and then “continued their investigation” with regard to wind damage rather than pay both claims at the same time. If they were sure of their determination on the split between flood and wind damage they should have been able to settle both claims at the same time. This seems to be another example of SF placing their own interests ahead of NFIP / FEMA and their own insured. For the above reasons, it is my opinion that SF completely mishandled this claim, violated various fair claim practices and breached its fiduciary duty to both the Federal Government and its insured.
How ya’ gonna keep ’em down on the Farm
After they’ve seen evidence of fraud…
So who the deuce can parlez-vous with an engineer’s report,
How ya’ gonna keep ’em down on the Farm,
After they’ve seen evidence of fraud?
What do you do when ya’ can’t keep ’em on the Farm? The answer is in the last of this three-part series on the Rigsbys’ Designation of Experts and Disclosure of Expert Testimony, coming soon on SLABBED.