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Last Post 02/18/2012 2:36 PM by  Alex_Chernov
Need Help - Claim fraud or Not/
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CatAdjusterX
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02/12/2012 8:51 PM

Posted By stormcrow on 12 Feb 2012 10:40 AM
Sleazy yes  fraud, in my opinion no. There is no rule I know for to stop a contractor from over bidding. But, is the insurance company is using a 21 college grad who does not know a ball peen hammer from a brad nail and do they blindly pay this because they are to cheap to hire real adjusters. The  ones who suffer are the policy holders, who will pay more. I drive contractor crazy  be demanding a detailed subtrade bids. You shold here the excuses!  Greed does not seem to be illegal, in fact it has become a normal part of business, no profit is obsene.

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Stormcrow, the keyword here can be found in the following sentence (your words) "There is no rule I know for to stop a contractor from over bidding".

1) The salesman to which works for this company and started a ficticious company is NOT a contractor.

2) The female employee who is taking bids from real contractors is then "pulling numbers out of the air" with no actual knowledge of ANY real job costs and writing a false estimate under a ficticious company name for "obscene profits"

Chuck is right in that when jobs are bid, the difference in bids can be astronomical. I have been a licensed/bonded concrete contractor in the state of California since I got out of the Army in 1992 (albeit I have not lifted a shovel nor have I done a bid in close to 7 years . As a contractor I have the knowledge and the right to bid whatever I want to. The homeowner has the discretion to either accept my bid or not, however the homeowner rightly has the belief that any bid received is from an equally knowledgeable licensed/bonded contractor. Atleast in California, it is against the law for an unlicensed person to submit any bid over 400.00. Stings are an often occurance and the unlicensed are forced to pay dearly in money and jail time.

So for this woman to falsely submit a bid to an insurer under the guise of a legitimate business (regardless whether said state requires contractors to be licensed or not) is fraud. She is attemting to make the carrier believe that the company name on the bid is in fact a real contractor and by association herself as a legitimate authority to which BOTH are neither an actual company nor a legitimate authority

"A good leader leads..... ..... but a great leader is followed !!" CatAdjusterX@gmail.com
CatAdjusterX
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02/12/2012 9:32 PM

Posted By Leland on 12 Feb 2012 04:34 PM
I would like to point out that there is a difference between common law fraud and statutory fraud. In a civil case I believe the standard is the common law fraud I explained above. When the State prosecutor goes after an individual for insurance fraud, the charge is based on a statute. It is a crime against the state, not a private party. The statutory definition of fraud is different than the common law definition. It might be a lower standard, I'm not sure. I just know that there are always certain elements that must be proven. What the person on the street thinks is a fraud may or may not meet the legal definition. And furthermore, as Chuck points out, proving it is altogether another step.

Notice that she appears to have been sued by the insurance company AND the Federal govt.

She also counter-sued the insurance company for defamation. Hopefully for the adjuster's sake he didn't use the word "fraud" in his written report so he could avoid being a defendant in the counterclaim.

As an adjuster go ahead and write down that the expert says the diamonds are fake. Go ahead and write down that the insured swore they were real. Just don't use the F word and you will stay out of unnecessary trouble. Leave that determination to the lawyers and police that are paid to do that

 

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Leland, your post is very thoughtful and backed up with proven facts. In particular, your last paragraph cannot be overstated. In addition, to the next generation of adjusters who read these boards and take what they read as gospel.

My very first year during Jeanne in 04, there was another young adjuster working, it was his second year I believe. He was on a claim in Homestead, Fla and apparently the insured offered the adjuster a couple grand to up the ante' (so to speak) Well this kid told the insured that is a bribe and something he cannot do. He left it at that and finished up the scope and went to the next risk. (he did NOT report this to his team lead or claims manager) Well the insured panicked and reported to the police that the claims adjuster offered to up the claim for a bribe. A big deal was made and an investigation was implimented. Granted in the end , the kid kept his job and the insured never went to jail (or anything for that matter). However, that showed me that if it happens, you have to be careful in how you react and just like you said Leland, even if you know something is fraudulant, it is not in our best interests to either confront the insured or even write ANYTHING stating as much ( as emails/claims documentation are discoverable and you could be held liable for using the F word). To the new folks reading these posts,you should keep your thoughts/opinions to yourself and notify your immediate supervisor ASAP upon leaving the site

"A good leader leads..... ..... but a great leader is followed !!" CatAdjusterX@gmail.com
ChuckDeaton
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02/12/2012 11:13 PM
Robbie, you keep saying that this example represents fraud.

I copied portions of documents related to fraud claims that I've been involved in.

Please post documents that support your position that simple puffery is actionable fraud.
"Prattling on and on about being an ass with experience doesn't make someone experienced. It just makes you an ass." Rod Buvens, Pilot grunt
CatAdjusterX
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02/13/2012 12:02 AM

Posted By ChuckDeaton on 12 Feb 2012 11:13 PM
Robbie, you keep saying that this example represents fraud.

I copied portions of documents related to fraud claims that I've been involved in.

Please post documents that support your position that simple puffery is actionable fraud.

 

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The people writing these estimates are not contractors, they are restoration employees "claiming" to be contractors. It would be different if these people submitted said estimates under XYZ Restoration. But they are not. If there is nothing fraudulent about this estimate, then why are they using a fictitious LLC to do so? 

They are trying to fool the carrier into believing that said supplemental estimate is from a legitimate contractor when it is NOT. 

Chuck, I am a legitimate contractor and have been since 1992 . Based upon what has been written in this thread, these people are liars and thieves

"A good leader leads..... ..... but a great leader is followed !!" CatAdjusterX@gmail.com
Leland
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02/13/2012 1:12 AM
Robby- there's a distinction here that I may not have made clear enough. When someone talks about "fraud" in the adjusting world, I am going to think of the legal concept of fraud, not the casual way the word might be used.

If a contractor submits a false invoice, it won't always be fraud.

You wrote "Based upon what has been written in this thread, these people are liars and thieves".

That may be exactly right. But lying and thievery are not always fraud.

And if you really want to be precise, the victim must do certain things for it to be a fraud, at least under the common law definition.

1) The victim must believe the lie is true.
2) the victim must get hurt.

So technically, if the contractor sees a loss worth $20,000.00, writes a grossly inflated estimate for $100,000.00, and the insurance pays the policy limit of $10,000.00, there would be no fraud, at least from a common law definition.

To bring this discussion back on track I would like to summarize what I think the issues are:

1) Fraud is a serious crime that requires several elements and may be difficult to prove. Adjusters should know what it is and look for the clues. Adjusters can gather evidence and present it to their employers, but should be cautious in accusing anyone of fraud. Many times a fraudulent claim can be denied based on policy language without ever using the word "fraud". Adjusters should be careful to avoid accusations of libel and defamation, but reports to law enforcement are "privileged speech" and an insured can't generally sue an adjuster for comments made to law enforcement.

As an adjuster you never want to be sued for defamation because you accused someone of fraud, and your only defense is to prove that it truly was fraud. You would need to prove that the contractor was lying, knew it was a lie, the insurance company didn't know it was a lie, and lost money because of it, etc. The burden of proof would be on you, and after depositions and subpoenas etc. it would cost at least $10,000.00 to make a decent defense. If the insurance company admitted that they thought the estimate was high but paid it to make the claim go away, you would have your butt in a sling and you would be found liable for defamation.

2) In the story that started this discussion it appears that the contractor may have been sleazy, stupid, and unethical. Fraud may have been committed. But we could use more details before making a final conclusion. Don't get me wrong- the details sound VERY fishy. But I would like more questions answered before jumping to a conclusion.

If the boss owns 20% of the painting contractor that is run by a guy who is also her salesman, then she probably has the right to prepare painting estimates for that sub. Imagine if you were an adjuster that accused her of fraud only to find out later that she was 20% owner AND an officer of the painting company. If you had told the world she had an undisclosed potential conflict of interest you would be smelling like a rose. But since you accused her of fraud you are looking at the wrong end of a lawsuit and who knows if your employer will defend you.

We need more info before we can render an opinion on whether the activity is fraud.
Leland
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02/13/2012 1:18 AM
Oh, another thing. You generally don't need a general contractors license in Texas, so you certainly can't say all estimates from unlicensed parties are fraudulent. But even if the law requires a license that doesn't make the estimate fraudulent. It just makes it an estimate from an unlicensed person. It might be illegal but that's not the same thing as fraudulent.
Alex_Chernov
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02/18/2012 2:36 PM
Your haggling over technicalities of what fraud is looks amusing. Alas, we live in a practical world, where the question of "what to do?" oftentimes trumps the question "what is it?". In my opinion, there are definitively elements of fraud to what has been reported. Having fake contractor give you estimates to inflate the price and submitting those as legit estimates to the insurance smacks of fraud, in layman terms or not. However, it is hard to impossible to prove, and carrier would probably choose alternatives to litigation. Requiring insured to get 3 competitive bids is a good start, then preferred vendors (hello Contractor Connection), then requiring the contractor to break down labor and material on the claim is a good start. Believe me, we are in the business of trust, aren't we? I have seen contractor's fallen out of the grace of God, strike that, carriers to weep publicly in Walmart parking lots. :)
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