However, the report doesn’t end for another 21 pages – all spent wiping the lipstick off the wrong pig – earning Chaney a tube of State Farm Red all his own for content exceeding the stated Purpose and Scope of the examination:
This examination pursuant to its authority focused on whether the Company treated its policyholders fairly, honored the terms and conditions of its policies, and complied with Mississippi insurance law and regulations, as well as Department of Insurance Bulletins.
The scope of this examination did not encompass an investigation of specifically relating to fraudulent or criminal activity per se and no conclusions have been drawn as to the presence or absence of fraud. It should be noted, MID is not a law enforcement entity…
While the portion of the examination that is clearly pursuant to its authority provides data supporting the Rigsby qui tam claim, the narrative beginning on page 32 wanders through poorly supported conclusions contrary to the Purpose and Scope that require an overly broad interpretation of the relevant statutory authority. Likewise the information appears to lack relevance to the NAIC Market Conduct Examiners Handbook; but, given the history of the handbook, one never knows.
Current NAIC market conduct materials and systems are rooted in the McKinsey report and the activities that immediately followed.
However, it is interesting to note there are no such sections in the New Jersey Market Exam of State Farm using the NAIC model.
My objections to the so-called examination of allegations of fraud and abuse are that it relies on gossip as a source, not the actual claims made in the qui tam case, and uses quotes from depositions of the Rigsby sisters without context and then declares there are inconsistencies.
Instead of the ethically-challenged analysis of a case still in litigation and the considerable effort made to discredit the Rigsby sisters claims about criminal or fraudulent activity related to the engineering reports, the investigator could have followed this lead.
Professional engineer James K. “Ken” Overstreet said his assessments of property damaged by Hurricane Katrina were altered without his permission and, in several cases, his signature was forged on documents insurance companies used to minimize or deny policyholder claims.
Overstreet worked as a contractor for S&B Infrastructure. In turn, S&B contracted with Rimkus Consulting Group Inc. to supply damage assessments to insurance companies. S&B, he said, parroted orders from Rimkus.
“If they could get by with changing the wind to surge, they would do it,” said Overstreet, who has talked with the state Attorney General’s Office in connection with a Hurricane Katrina insurance-fraud investigation. “If you had affidavits in there where people saw houses blowing down, sometimes they’d just take those out entirely. They took out whole exhibits.”
The Sun Herald obtained copies of altered reports from the Merlin Law Group, which has subpoenaed the records for several lawsuits filed in Harrison County against Houston-based Rimkus, Rimkus employees managing Hurricane Katrina work, State Farm Fire & Casualty Co., Clarendon National Insurance Co. and the company adjusting Clarendon claims, CIG Group Inc.
If that wasn’t somehow sufficient, there was no shortage of others to choose from such as this one quoting the President and CEO of one of the other engineering firms working for State Farm.
In one e-mail, Forensic President and CEO Robert Kochan describes complaints about the firm’s work made by Alexis King, a State Farm manager in Mississippi. Randy Down, who was the firm’s vice president of engineering services, responded, “I really question the ethics of someone who wants to fire us simply because our conclusions don’t match hers.”
Of course, these quotes document what MID couldn’t find – fraud.
Fraud is generally defined in the law as an intentional misrepresentation of material existing fact made by one person to another with knowledge of its falsity and for the purpose of inducing the other person to act, and upon which the other person relies with resulting injury or damage. Fraud may also by made by an omission or purposeful failure to state material facts, which nondisclosure makes other statements misleading.
By definition, it would seem this section of the report might be considered the same – not to mention that it reads like State Farm commentary or that it appears to have been written by a different author from the one who wrote the very professional investigative analysis of claims.
Obviously, MID had an agenda beyond that stated in the Purpose and Scope – one that has earned Chaney a tube of State Farm Red, lipstick won’t wipe off.