Today’s blog is not going to endear me to HAAG, Rimkus, JS Held, and other regularly retained forensic engineers working for insurance companies. These engineering and consulting firms are big business. So much so that Sedgwick, a large independent adjusting firm, has acquired a number of these engineering firms. I can imagine many of you wondering how an adjusting firm representing the insurance company’s interest can obtain an independent and honest opinion under such circumstances.
Many skeptical public adjusters, contractors, and critics tell me that they do not have to wait to know what the engineering report is going to say if a certain engineer has been retained. Not only are the scientific findings adverse to the policyholder, but the wording of the report also inextricably dovetails with the insurer’s exclusionary or limiting policy language. It is much easier to prove that an engineering report’s conclusion is wrong than it is to prove that the errors and wrong conclusions were the result of bias or an outcome-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. Detection and Prevention of Insurance Fraud: Causation, Notices and Types of Fraud, will, in part, discuss the recurrent issue of insurance fraud found in engineering reports. Doug Quinn of the American Policyholders’ Association (APA) and I will show examples of this conduct. But, more importantly, we will show what you can do to stop this wrongful practice.
Doug Quinn and other Superstorm Sandy policyholders were victims of this abuse. Many were denied claims after a peer review conducted by an engineering firm’s account manager changed the conclusions and wording to favor the insurance company client.
While preparing for this presentation and the topic of engineering peer review, I came across a 2015 academic paper, The Peer Review Process in Forensic Engineering,1 which stated that there was no recognized process for engineers to conduct the peer review of a forensic report:
While the principle of carrying out peer reviews is well established, the actual process has not been subjected to peer review. Consequently, ample opportunities for variation exist when a peer review is undertaken; therefore, the scope of any review must be fully communicated and agreed upon.
One part of the paper was meaningful because it reported that changed conclusions should be reported to not only the client but others the expert is required to inform:
Forensic engineering 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 be, ultimately, the primary witness in any testimony regarding the investigation. The named expert may carry out the site visit, remove samples, carry out any testing, and, finally, write the report. However, he or she may, instead, direct some or several aspects of the work and not personally engage in one or more activities. Nevertheless, much like the professional engineer who seals and signs drawings, the named expert must control the work directly. It is he or she who must provide an opinion, which must be his or her own and not adopted from other individuals. Assistance can be elicited for labor, data, or analysis, but formulation of an opinion or conclusion may not be delegated to another individual.
Hence, the signatory to any report must always be the named expert who has been responsible for and fully knowledgeable of all aspects of the investigation. This does not preclude the possibility of errors being found during the peer review process, any more than a design review precludes the possibility of errors being discovered in the design.
Typically, any errors uncovered during a peer review will be minor, involving clarification, numerical correction, need for abbreviated or more fully developed discussion, or similar, and will not result in altered conclusions. Nevertheless, it remains possible, and speaks to the integrity of the named expert, that a peer review that reveals errors in data, approach, test methodology, analysis, or other aspects of the investigation, and takes into account the receipt of new information, will result in a change of conclusions.
It is, of course, best for this to take place prior to issuing a report. However, if errors are identified after a report is issued, they should be communicated without delay to the client and any other parties whom the expert is legally obligated to inform.
It should be noted that in the small print, the vast majority of all insurance company forensic reports say that they are only for the benefit and use of the insurance company.
I recently attended the Georgia Association of Public Insurance Adjusters meeting, where an expert in fire damage and remediation gave an extraordinary admission about the types of financial pressure placed upon forensic experts regarding their reports. He explained how his testing resulted in conclusions that infuriated the desk adjuster, who would have to pay more on the claim. Rather than send his report to the policyholder, it was buried. The desk adjuster hired another expert who performed different testing to arrive at an erroneous conclusion. Eventually, the truth was uncovered. His point was that this was not an isolated instance and that many adjusters, unfortunately, are not looking for the truth but a report which leads to less paid on a claim.
A shout-out is deserved for Coppermark Public Adjusters for addressing the issue on their website, What To Do When The Engineer Report Is Wrong:
There’s three things that we like to do. First of all, we look up the engineer at the state level and find out what is his area of expertise? I want to know, is he civil? Is he electrical? Is he a computer engineer? Because I have seen computer engineers making structural opinions and trying to figure out why. Okay? So I want to see what kind of background they have. Number two, we look up to see if they’re associated with the company that they’re stamping the name on. A lot of times these engineers are stamping these reports and they’re not authorized to be working for that particular company. As far as the state’s concerned. That basically invalidates the entire report. It’s not valid. Not to mention the engineering board of that state wants to hear about stuff like that. So we start there.
Then you get out a red pen like back in grade school and you just start chopping it up, take out blurbs, add the photo. He says, “There’s no damage,” you put a photo next to it showing that’s patently false. After the 13th or 14th false thing, the only conclusion we can make is that he’s doing it on purpose. Right? A professional with a license is intentionally misleading or misconstruing the situation to the insured or to the insurance company’s benefit. Right? That’s a windfall. That’s a no, no. Right?
So the key to that is documentation, documentation through photographs, documentation through different scientific methods, thermal cameras, rulers, the same kind of stuff that some of these engineers do. So one of the ways that she was talking about not needing us, one of the first things we do, we check on the state licensing of the engineer. We check to see if they’re valid working for that company, then we chop up that engineering port as best we can.
Our law firm pays a lot to run 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 Upon Biased or Outcome Oriented Opinions:
Would you expect Americans to get a fair trial in Iran? Probably not, because most would believe that the judge and jury would rule against Americans no matter what the evidence showed. Many policyholders first call our office while waiting for a conclusion from the insurance company’s expert. Usually, the expert becomes involved after the policyholder complains about the insurance adjuster’s first conclusion. The policyholder, now worried about cementing an already bad situation with a bad finding from an alleged expert, calls to see how we can help.
Every now and then, an expert will jump sides and provide an honest and accurate opinion. I have retained a few with the understanding they could only do it quietly or on a very limited basis. This takes significant courage because the financial consequences are great–if found out by the wrong person, most would find they have been removed from the “approved” lists found in the claims offices.
…this problem is rampant throughout the property adjustment community. So long as the insurance adjustment community is looking 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 a lot more that can be done to help stop these wrongful practices. I hope you will join Doug Quinn and me at the First Party Claims Conference on December 5-7. The Encore Casino Boston Harbor Hotel is a great venue for fun learning about what you can do to help stop insurance fraud. Here is the link.
Thought For The Day
You will never do anything in this world without courage. It is the greatest quality of the mind next to honor.
1 Cohen, James, P.E., The Peer Review Process in Forensic Engineering. American Society of Civil Engineering, Seventh Congress on Forensic Engineering (2015).