The Scheme: What’s the first case on the docket – the blame game (Chapter 4 qui tam)

Judge I got a boy here who can’t dance
Can’t dance?  Ah
Ninety days, thirty days for boogaloo
Thirty days to learn how to shing-a-ling
And thirty more for the Afro twist
Can’t dance, what is this

What is this? It’s more of the scheme – the shing-a-ling part of the scheme to boogaloo Judge Senter. It’s the twist danced with Judge Acker to conceal technology that would prove no documents were stolen. Don’t nobody buzz. Here comes the judge.

What is this? It’s more of the scheme – another one of the games.  First, there were word games; then, mind games; and now, the blame game. The games can be played separately; but, in the scheme they blend and layer- word games blend into mind games; and, the mind game, drama triangle, provides the victim needed to lead the blame game.  The insurance industry fits the role to a tee.

In an attempt to ease feelings of guilt or discomfort about something, the victim-role thinking of Look what you made me do…If it wasn’t for you drives the blame game even when those words are never spoken.  Play the game and shift the blame – others become your victim and they appear guilty instead.

We’ve certainly seen the blame game played since Katrina – often, in fact, most often, it follows one of these themes but not always the same routine:blame the whistleblower, blame the trial lawyers, or blame the victims. The playing field is nationwide; but, since our focus is Katrina, I’ll narrow the field accordingly with examples from here in Mississippi and our neighbor Louisiana andthe four insurers known to have used the Haag report as a claims handling bible of the storm’s damage – State Farm, Allstate, Nationwide, and USAA.

Blame the Victims
In the most common routine for Blame the Victims, the policyholder has purchased additional coverage for property damage from a hurricane.   After paying the additional premium for years, the policyholders filing claims after Katrina learned the meaning of anti-concurrent causationtranslated to not a dime and the flood exclusion in the base policy applied to this extended coverage – meaning no dime here either.

Rather than take responsibility for selling what Judge Senter called an illusion of coverage, insurers blamed policyholders for their failure to comprehend hurricane coverage does not necessarily mean hurricane damage is covered.  Frankly, I have more than a little trouble with the concept myself.

Blame the Whistleblower
Blame the whistlebloweris not a Rigsby-only game; but, thepin-any-tale on the sisters version of the eblame game has been played so often that most have forgotten the Branch Adjusters filed aqui tam claim in Louisiana.

Branch, like Rigsby, blew the whistle on allocating wind damage to NFIP flood policies.  If you type Branch into our search engine, you’ll find more about the court decisions in Louisiana that left the Rigsby sisters with the only active qui tam case. Rebecca Mowbray provided background on the practices cited in the claim in her award winning story Same house. Same repairs.  Same insurer. Why different prices?.

Now, taking my lead from Sop –Welcome to Slabbed, Soren Gisleson chair of the Insurance Law Section of the Louisiana Association for Justice.  I found his signature on this brief from Schafer v State Farm Rossmiller’s blog along with this compliment.  You’ll hear more about the case and the rest of the Schafer team in the next week or so.

The writing in the briefs was some of the best stuff I have seen in the Katrina cases, crisp, clear and concise. David Rossmiller

Although more than a year later, I totally agree and particularly like how well this brief introduces the XACT Total program mentioned in the Rigsby qui tam claim – but, even better, how well it describes the scheme.

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.

Readers like Proximo, for example, have questioned how so many could be involved yet not see the scheme the Rigsby sisters recognized and should be particularly interested in the next points.

The alleged existence and operation of an intentional, company-wide corporate level policy and practice of unlawful instituting a computer program to undervalue property claims presents precisely the sort of interrelated factual and legal issues that satisfies the commonality requirement

…Plaintiffs here charge both Defendants with just such a company-wide corporate level policy and practice of using a computer program to uniformly undervalue property damage claims in Louisiana after Katrina.

The blame game is forgameboys. Sit back and watch them try to playblame the lawyer.  You just know it’s going to happen. shing-a-ling…boogaloo…Don’t nobody buzz. Here comes the judge.

Blame the Lawyer

It seems strange to me for the insurance industry to be one the nation’s leading players of blame the lawyer.  Insurers employee so many that you’d think they liked lawyers a lot.

Nationwide Financial Services, the seventh-largest U.S. P&C insurer, works with 700 outside law firms on more than 87,000 legal matters each year.

State Farm’s Corporate Law Department is comprised of 176 lawyers providing a full range of legal services to the Company’s Home Office and 13 zones.  In addition, 531 attorneys, as well as legal secretaries and para-legal support staff, serve countrywide in State Farm’s in-house Claim Litigation Counsel departments.

Regardless of how much legal capacity State Farm has in-house, at one point the company had over 9000 cases pending in Federal courts alone.  I can’t imagine trying to keep up with so many attorneys and cases or, rather, can’t imagine how any company could without a system like the one co-developed by Nationwide.

Nationwide co-developed CSC’s Legal Solutions Suite, a Web-based billing system that eliminates paper invoices and automatically reviews the bills for accuracy and compliance with fee guidelines. The system, which tracks the performance of Nationwide’s outside attorneys, has helped the company cut its legal costs by 8 percent. Nationwide estimates the savings lowered its combined ratio by half of a percentage point.

The capacity of this module provides a generous portion of food for thought.

This module provides counsel and the case manager the necessary information to evaluate the strengths and weaknesses of the case. The application allows the client to work with outside counsel on a litigation strategy, describing planned activities needed to bring the case to its proper disposition. Assignments to the law firm can be made online and the system includes profiles of law firms and lawyers. Additionally, the client can define detailed performance ratings for ranking the lead attorney at the close of a matter.

Think of the possibilities. Searching for an attorney to depose the opposition who can twist questions into fact in your favor without need of an answer? James Robie is the name that filters from the mix.  Looking for a lawyer who can take Robie’s fantasy fact and assemble them in more convoluted positions than a Yoga master? Up come three – a set of buckin’ fuzzards with freon in their veins. Need someone who can close his eyes to the Fifth Amendment rights of the opposition while choking the Court’s electronic filing system? Watch John Banahan’s name hit your screen.

You just know the system is programmed to play blame the lawyer. I’m willing to bet there’s a file called greedy trial lawyer to search by special categories that pull up the really special ones that meet in trailers faster than you can type legalnewsline.

Technology can improve the speed and quality of any service delivery system.

That I know from my work on big system solutions – something I’ve done so long that data for my first project were entered on punch cards.

Today’s solutions are end-to-end; but, what comes out still depends on what goes in – the best place to hide a needle is in a haystack of needles. The scheme.

Introduction:The Scheme: you lived the movie

Chapter 1: The Scheme: the best place to hide a needle

Chapter 2:The Scheme: first there were just word games

Chapter 3:The Scheme: fingerlickin chickinpickin meat city mind games

Next – the power game