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Archive for the ‘Corruption’ Category

Sen. Alario’s SCR 122 offers appreciation to Mike Edmonson, passes Senate unanimously; let’s review LSP payroll record

Posted in Corruption, Ethics, Finances, Fraud, Governor's Office, Lawsuits, Legislature, Legislators, Politicians, Public Records, Retirement, Senate, State Police on June 6, 2017| 11 Comments »

You just gotta love Louisiana politics.

No, really. It’s probably the only institution where one can set up his own little fiefdom, reward those in positions to promote his career, get caught up in multiple scandals, be forced to resign and be commended, appreciated, and otherwise recognized for his years of “dedicated and distinguished” service.

Take, for instance, Senate Concurrent Resolution 122, hereafter referred to as SCR 122, by State Senate President John Alario (R-Westwego), which commended, expressed appreciation and otherwise praised former State Police Superintendent Mike Edmonson. It passed by a 27-0 vote with 11 members either absent or not voting.

The resolution, which runs on for three full pages when a single paragraph would’ve sufficed, concludes with:

“BE IT RESOLVED that the Legislature of Louisiana does hereby commend and express appreciation to Superintendent of Louisiana State Police Colonel Michael David Edmonson on his retirement after thirty-six years of dedicated and distinguished service in law enforcement, including nine years as superintendent, and does hereby extend to him and his family full measures of continued success and happiness in their future endeavors.

BE IT FURTHER RESOLVED that a copy of this Resolution be transmitted to Mike Edmonson.”

It seems entirely fitting that this resolution would have been authored by Alario. After all, his son John W. Alario, serves as the $115,000 a year director of the DPS Liquefied Petroleum Gas Commission. That’s in the Department of Public Safety, where Edmonson also served as Deputy Secretary until his resignation.

LouisianaVoice also reported in September 2014 that John W. Alario’s wife, Dionne Alario, was hired in November 2013 at a salary of $56,300 to work out of her Westwego home supervising state police personnel in Baton Rouge—something of a logistics problem, to say the least. Well today, she is still there and now pulls down $58,500 per year. And she still works from home.

We were perfectly willing to let go of the Edmonson story after he resigned. But Sen. Alario’s resolution, however, compels us to review some of the highlights of Edmonson’s tenure as Superintendent of State Police.

Our first encounter with Edmonson came at the end of the 2014 legislative session when we learned that Charles Dupuy, who would rise to the rank of Lieutenant Colonel, conspired, along with State Sen. Neil Riser (R-Columbia) and Gov. Bobby Jindal, to sneak the amendment to Senate Bill 294 during the closing minutes of the session that allowed Mike Edmonson a “do-over” on his decision to enter the state’s Deferred Retirement Option Plan (DROP) which froze his retirement at his pay at that time of his decision to participate in DROP.

The major problem with that little plan is that it left other state troopers and state employees who similarly opted to enter DROP and then received significant promotions or raises out in the cold because the amendment did not afford the same opportunity for them. Before it was revealed by LouisianaVoice and before State Sen. Dan Claitor successfully filed a lawsuit to prevent the move, Edmonson was in line for a whopping pension increase estimated as high as $100,000 per year when the raises to state police were factored into the equation. (Claitor, incidentally, was one of those voting in favor of Alario’s SCR 122 demonstrating, we suppose, that he does not hold grudges.)

Here are some other Edmonson actions we wrote about in 2014:

  • “Consultant” Kathleen Sill, placed on the state payroll and being paid $437,000 plus $12,900 in air travel for 21 flights for her between Baton Rouge and her Columbia, S.C. home.
  • DPS Undersecretary Jill Boudreaux’s taking a $46,000 cash payout incentive to retire early from her $92,000 per year salary as Deputy Undersecretary, plus about $13,000 in payment for 300 hours of accrued annual leave and then re-hiring herself two days later—with a promotion to Undersecretary and at a higher salary of $118,600—while keeping the incentive payment and annual leave payment. Then-Commissioner of Administration Angele Davis ordered her to repay the money but Davis resigned before she could follow through on her instructions. Under her successor, Paul Rainwater, the matter was quietly forgotten.
  • Boudreaux’s son-in-law Matthew Guthrie who, while employed in an offshore job, was simultaneously on the payroll for seven months (from April 2, 2012 to Nov. 9, 2012) as a $25 per hour “specialist” for the State Police Oil Spill Commission.
  • Danielle Rainwater, daughter of former Commissioner of Administration Paul Rainwater, who worked as a “specialist” for State Police.

And then there are the spouses brought into the fold.

  • Jason Starnes benefitted from two quick promotions from 2009 to 2014 as his salary jumped from $59,800 to $81,250, an increase. Three years later, he makes $150,750 an overall increase of 152 percent.
  • As if that were not enough, his then-wife Tammy was brought in from another agency as an Audit Manager at a salary of $92,900. Today, she makes $96.600. So not only did make nearly $11,700 a year more than her husband initially (until he was promoted to Lieutenant Colonel), she also was in charge of monitoring the agency’s financial transactions, including those of her husband.
  • In January of 2008, just before Edmonson was named Superintendent of State Police by Gov. Bobby Jindal, State Trooper Charles Dupuy was pulling down $80,500. Today, the one-time Edmonson Chief of Staff makes $161,300, a bump of more than 100 percent.
  • Kelly McNamara and Dupuy, both troopers, met at work and eventually married and Kelly Dupuy’s star began ascending almost immediately. Her salary has gone from $65,000 in 2009 to $117,000 today
  • On Sept. 7, 2011, Mike Edmonson’s brother Paul was promoted from lieutenant to Captain, filling the spot previously held by Scott Reggio. On Oct. 10, 2013, Paul Edmonson was again promoted, this time to the rank of major. This time however, he was promoted into a spot in which there was no incumbent, indicating that the position was created especially for his benefit.
  • His rise has been nothing less than meteoric. Since December 2006, he has gone from the rank of sergeant to lieutenant to captain to major at warp speed and his pay rose accordingly, from $57,500 to $136,800 a year, a 138 percent increase—all under the watchful eye of his brother.

Doesn’t it give you a warm fuzzy to know that the good folks like Alario and Riser (who also, of course, voted for SCR 122) are looking out for us?

And isn’t it interesting, by the way, to know that Angele Davis, who tried to get Jill Boudreaux to repay her ill-gotten gains from her pseudo-early retirement, is pitted against Riser, who tried to sneak that illegal pension boost for Edmonson, in the upcoming election to succeed John Kennedy as State Treasurer?

As our late friend C.B. Forgotston would say if he were with us: You can’t make this stuff up.

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Why would FBI conduct Dentistry Board audit? We can think of several reasons as legislature considers board move repeal

Posted in Audit Reports, Campaign Contributions, Commissions, Corruption, Ethics, House, Senate, Lawsuits, Legislature, Legislators, PACs, Politicians on May 16, 2017| 5 Comments »

It’s been nearly a year since we’ve written anything about the Louisiana State Board of Dentistry and while there appears to be little going on with the board, there is quite a bit of activity going on beneath that veneer of tranquility, including, apparently, an ongoing FBI audit of the board.

Despite the efforts of State Sen. Daniel Martiny (R-Metairie) who, in 2014 passed legislation to move the board’s headquarters from New Orleans to Baton Rouge, the board has continued to resist the move from its posh high-rent offices on Canal Street.

Our last story about the LSBD was last July. https://louisianavoice.com/2016/07/18/case-of-slidell-dentist-illustrates-unbridled-power-of-dentistry-board-to-destroy-careers-for-sake-of-money/

Apparently the FBI has taken an interest in the LSBD.

The AGENDA for a special March 10 meeting (a Friday, no less) of the board caught the eye of one of our regular readers, a dentist who was put through the board’s mill and ground into so much fodder a few years ago.

Buried on page three of the agenda, under the heading “New Business and any other business which may properly come before the board,” was item IX which said, “Discussion of FBI audit results (p. 50).”

We had no prior knowledge of any FBI audit, although we have been aware that the board’s former attorney is awaiting a disciplinary hearing before the Louisiana Attorney Disciplinary Board. https://louisianavoice.com/2015/11/16/dentistry-board-facing-difficult-future-because-of-policies-contracts-with-attorney-private-investigator-are-cancelled/

At the very bottom of page 3 was a call for an executive session “for the purpose of discussing investigations, adjudications, litigation and professional competency of individuals and staff; because discussion of these topics would have a detrimental effect on the bargaining and litigation position of the Louisiana State of Dentistry.”

It was unclear if the proposed closed-door session was related to the FBI audit or not.

LouisianaVoice will be making a public records request for that FBI audit report and we will publish our findings.

Meanwhile in his farewell address in the winter 2014 LSBD BULLETIN, outgoing President Dr. Wilton Guillory said, “Legislation was recently passed to move the Board’s domicile to Baton Rouge. If that legislation is not changed in the upcoming legislature as I hope, then the Board, who self generates its funds, will have to raise the license fees to fund the move. We have been able to prevent this in years past but will have no choice. We are working with the LDA (Louisiana Dentists Association) and legislators to try to prevent this unnecessary move.”

That self-generation of funds has been a bone of contention between the board and the dentists its disciplines. Because the board sets itself up as accuser, prosecutor and judge, dentists who appear on the board’s radar have little chance of prevailing in disputes.

That is, if they choose to dispute the board—and that’s a big “if” that carries high risks, as in high dollar risks. Often a token fine, if disputed, quickly becomes a five- or even a six-figure fine and more than one dentist has been run out of business by the sheer cost of defending himself from the board’s kangaroo court.

That’s why Martiny, when his own dentist fell into disfavor for a minor offense, took it upon himself to rein in the board by moving it from its Taj Mahal to more modest headquarters in Baton Rouge.

Thanks to State Reps. Robert Johnson (D-Marksville) and Frank Hoffman (R-West Monroe), Martiny’s efforts may be overturned before the move can even be implemented.

House Bill 521 by Johnson and Hoffman has been reported out of committee and is scheduled to be taken up for debate before the full House tomorrow (Wednesday, May 17). Simply put, the bill would amend Act 866 by Martiny, effectively negating that action, and allow the board to remain in either New Orleans or Jefferson Parish.

Hoffman has received $3000 from the Louisiana Dental Political Action Committee since 2011, $500 from Appel Dental, LLC in 2007, and an additional $500 from two individual dentists in 2007 and 2011.

Johnson, meanwhile, has received $6,250 from the Louisiana Dental PAC since 2011, and $500 from the Kid’s Dental Zone of Alexandria, LLC in 2015. He also received $500 each from the same two individual dentists as Hoffman.

We have documented several cases of the board’s heavy-handedness in dealing with dentists, its unscrupulous investigative methods, its dictatorial dealings with dentists and its exorbitant system of fines imposed in order to pay the rent on its office space and to pay its contract private investigator and attorney. We have also written about the legal troubles of that investigator.

Perhaps legislators might like to refresh their memories about the board before they vote on Wednesday. Here are links to just a few of our stories:

https://louisianavoice.com/2016/03/18/like-dental-board-louisiana-board-of-medical-examiners-survives-on-fines-and-incentive-to-punish/

https://louisianavoice.com/2015/04/16/13976/

https://louisianavoice.com/2016/07/07/dentistry-board-member-was-witness-in-earlier-case-now-he-also-decides-insurance-claims-benefits-paid-to-other-dentists/

https://louisianavoice.com/2015/04/15/remarks-by-former-head-of-state-dentistry-board-on-suit-dismissal-reopens-louisianavoice-investigation-of-tactics/

https://louisianavoice.com/2014/03/23/appeal-court-slams-lsdb-tactics-in-reversing-kangaroo-court-license-revocation-board-attorney-rules-on-his-own-objection/

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‘Troopergate Fatigue’ notwithstanding, new revelations keep on coming: private eyes, and no good deed goes unpunished

Posted in Corruption, Ethics, Finances, Governor's Office, Public Records, State Police on May 14, 2017| 19 Comments »

At the risk of an onset of “Troopergate Fatigue,” details keep emerging involving expensive TRIPS to conferences by members of former State Police Superintendent Mike Edmonson’s inner circle on the taxpayers’ dime.

But while The Baton Rouge Advocate’s Jim Mustian was busy documenting yet another of those trips, this one to Orlando back in 2014, LouisianaVoice has learned that members of the Louisiana State Police Commission (LSPC) now recognize that they were apparently asleep at the wheel when they approved the creation of a Chief Accounting Officer (CAO) position last August at the behest of Edmonson.

Of course it didn’t hurt that Edmonson, described by virtually anyone who knows him as a slick snake oil salesman, was able to schmooze the somnolent commission into approving his request.

But the thing that is really tragic about the whole affair is that it led directly to the forced resignation of LSPC Executive Director Cathy Derbonne when she pointed out irregularities in the procedures employed to elevate Maj. Jason Starnes into the position.

Once she was onto the scam, she simply had to go.

Events were set in motion when Edmonson, getting the cart ahead of the proverbial horse, listed Starnes as “undersecretary” on the State Police Web page. Derbonne pointed out to the Edmonson that the designation of undersecretary was incorrect because Starnes did not occupy the position. In fact, the designation of undersecretary was not Edmonson’s to convey; that responsibility belongs exclusively to the governor.

Edmonson conceded that her assertion was correct but said that he had given Starnes “oversight” over the Office of Finance and that he “has assumed those duties in his current position.” From that moment on, Derbonne’s fate was sealed.

“What I’d like to do in this position is create an unclassified position just like we have with all the lieutenant colonels. We still hold and maintain a classified position of Major so that, if I brought (in) a lieutenant colonel and said, ‘We’re making a change,’ they can go back to that classified position.”

In his August appearance before the board to pitch the new position, Edmonson explained that he was asking to “create this temporary assignment. I am not increasing my T.O. (Table of Organization, i.e. actual permanent positions) I am not creating any additional funding issues…He’ll do that position within that rank. My desire is to create…a CAO because of how much work we do within our office.”

Edmonson then offered to address any questions commission members had. One of those, from Jared Caruso-Riecke, was about any additions funding necessary for the position. Edmonson assured Riecke there would be “no new funds. It was not my intention to even ask for that,” he said.

This is where things got dicey.

Commission member Eulis Simien seconded the motion for approval of the position “with the understanding that we are accepting the motion to create a position not relative to any particular person. Whatever appointment would be based on being after the position is created.”

Yet, only moments before, Edmonson had specifically committed the position to Starnes in a statement that apparently every single member of the commission managed to miss. Asked by Riecke about the duties of the position and whether they were “created somewhat by the board that you have now, Edmonson responded, “Correct. Jason Starnes will come in this position and assume the duties and oversight.”

To hear that commitment, go HERE and scroll to the 2:27 mark in his testimony.

Then, no sooner had Starnes been officially named to the new position than he was rewarded with a $25,000 increase that prompted former member Lloyd Grafton (he ultimately resigned from the commission after questioning its overall integrity) to challenge the pay increase because of the promise by Edmonson that no additional funds would be incurred—another tidbit missed by everyone but Grafton.

When a formal complaint was lodged over the transfer of a classified member of the State Police Service being transferred to an unclassified position outside the State Police Service (as with the Starnes assignment), a violation of Rule 14.3g, contract attorney Taylor Townsend (initially hired to investigate campaign contributions by members of the Louisiana State Troopers Association but whose duties were apparently expanded to that of general counsel) said that Starnes was not officially appointed to the undersecretary position. Townsend confirmed that only the governor, and not Edmonson, had the authority to fill the position of deputy superintendent.

When Townsend further explained that the commission’s August approval of the CAO position had rendered the investigation of the complaint moot, Riecke moved to go into executive session.

LouisianaVoice protested that an executive session on that matter was illegal because it was not to discuss pending litigation or an employee’s character but Townsend said the closed door session was to discuss personnel matters.

Louisiana’s Open Meetings Law (R.S. 42:16-17) provides that a public body may go into executive session if two-thirds of the members present vote to go into executive session. In executive session, public officials may only discuss a) the character, professional competence or physical or mental health of a person (unless the person is being considered for an appointment), b) strategy or negotiations regarding collective bargaining or future or current litigation, c) security personnel, plans or devices, d) investigative proceedings regarding alleged misconduct or e) an extraordinary emergency.

Because the discussion was not about the character, professional competence or physical or mental health of Starnes, nor was it about hiring him specifically, but instead was about whether or not the creation of the position itself was legal, LouisianaVoice maintained at the time and continues to hold that the executive session was illegal, Townsend’s professional legal opinion notwithstanding.

Predictably, upon emerging from the 25-minute closed-door confab, Riecke made the motion that no further action be taken on the investigation of the complaint.

Townsend, of course, the same attorney who recommended no action be taken on the LSTA campaign contributions matter. He also never submitted any report to the commission to support his recommendation.

Finally reacting to the constant prodding of retired State Trooper Leon “Bucky” Millet of Lake Arthur, the commission last Thursday decided to request that all of Townsend’s papers generated by his “investigation” be forwarded to the commission since his contract stipulates that all his findings would become the property of the commission.

But that was not the only voice of concern emerging from Thursday’s otherwise tranquil meeting.

It now seems that Simien is also now concerned over Edmonson’s apparent misleading statements to the commission last August regarding the Starnes appointment. Go HERE and scroll to the 2:07 mark to hear his comments.

All this because Derbonne had the temerity to do her job land point out to Edmonson that he had incorrectly and improperly designated Starnes as a lieutenant colonel on the State Police Web page.

We can somewhat understand why, given the political nature of LSP and the players involved, why Derbonne became the sacrificial lamb. She was the easiest to set up, the most vulnerable, and best of all, expendable, both in terms of the ease of getting rid of her and replacing her.

What we fail to understand is why two members of the commission then, with their own money, retained the services of a private investigator to follow her. This was apparently done, LouisianaVoice has learned, in an effort to determine who within LSP might be leaking information to her.

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Teddy Roosevelt’s spinning, Simon Cameron’s grinning and special interests just keep winning in Louisiana Legislature

Posted in Business, Campaign Contributions, Corruption, Elections, Exemptions, Incentives, Finances, Governor's Office, Legislature, Legislators, Lobbyist, Media, Politicians on May 10, 2017| 12 Comments »

More than a century ago, in 1912, Theodore Roosevelt, after a break with his friend and successor to the presidency, sought a then-unprecedented third term after a four-year absence from the political arena. In the process, he challenged Republican William Howard Taft’s re-election. Both men would ultimately lose to Woodrow Wilson.

But it was something that Roosevelt said in seeking to wrest the Republican nomination from Taft before breaking away to form the short-lived Bull Moose Party that resonates as clearly today as it did 105 years ago.

Doris Kearns Goodwin’s 750-page book The Bully Pulpit: Theodore Roosevelt, William Howard Taft, and the Gold Age of Journalism is a great read and was a Pulitzer Prize-winning book that chronicles the close friendship between the two men, the exposés of several top magazine writers of the day, and the eventual split between Roosevelt and Taft.

Roosevelt who earned the title of trustbuster during his seven years in office (he succeeded William McKinley, who was assassinated in his first year in office), took on the meat packing industry, big oil, the railroads, and Wall Street banks in an effort to stem what he considered an alarming trend toward consolidation, mergers and monopolistic practices. He railed against the grossly unsanitary meat packing plants as exposed in Upton Sinclair’s novel, The Jungle, and he championed the economic plight of the working poor.

He also opposed child labor and fought for an eight-hour work day for women, for women’s right to vote, for worker protection, and for worker retirement benefits—ideas considered radical in his day but accepted today as the norm.

In 1912, he continued his onslaught, Kearns-Goodwin wrote, again taking on the special interests when while acknowledging that “every special interest is entitled to justice,” he said “not one is entitled to a vote in Congress, to a voice on the bench, or to representation in any public office.”

He advocated driving the “special interests out of politics” by enacting laws to forbid corporations from directly funding political objectives.

Does any of this sound vaguely familiar? Does it sound as though he might have opposed the U.S. Supreme Court’s 2010 Citizens United decision?

Fast forward to 2017 and the State Capitol in Baton Rouge.

Baton Rouge Advocate reporter Tyler Bridges did a masterful job in a Wednesday STORY that illustrated just how the tail wags the dog when it comes down to attempts to come up with a revenue plan that makes sense when the interests of big business and industry are pitted against those of the citizens of this state.

In his story, Bridges reported how the Republican-dominated legislature was so overtly beholden to the Louisiana Association of Business and Industry (LABI) that even one of its own, Republican State Rep. Kenny Havard of St. Francisville, was appalled and embarrassed—and said so.

Please understand that I am in no way defending or condemning the tax plan put forth by Gov. John Bel Edwards but suffice it to say the business-oriented mindset of lawmakers were going to see to it that nothing that cost business a red nickel was going to pass even if it meant Louisiana households were going to be saddled with higher taxes—and because of the actions of the House Ways and Means Committee, they now will be.

Bridges did one of the best jobs ever in revealing how legislators simply lack the courage, principles, integrity, honesty and, yes, the stones, to turn their backs on campaign contributions and other perks in order to do the right thing.

Too weak-willed to resist the temptation when the think no one is looking, they would rather accept campaign contributions and expensive dinners than to say, “No thanks, I would rather look out for the interests of my constituents.”

Those campaign contributions come from various corporate entities and from corporate officers of countless corporations from both within and outside the state and they are poured into the campaigns of lawmakers for one reason: to buy votes. To claim otherwise would be to be disingenuous, deceptive, and hypocritical.

And just to make sure they get the message, hordes of lobbyists descend on the Capitol like so many swarms of locusts every spring. They are there to remind representatives and senators, lest they have momentary memory lapses, how to vote on any number of bills where there might be a conflict between responsible legislation and the status quo of political favoritism. That’s why on any given night during the legislative session, you can find lawmakers dining at Baton Rouge’s finest restaurants, courtesy of the hundreds of lobbyists who, in turn, feast on the carcasses of bloated legislators. If not restaurant fare, there are always the crawfish boils in the parking lot of the Pentagon Barracks across the street from the Capitol.

The committee not only rejected Edwards’ tax plan but also that of a special blue-ribbon that examined the state’s tax code last year and made recommendations based on its findings.

Bridges quoted Havard, who said, ““If we don’t have the courage to do it now, for God’s sakes… let’s just keep what we’ve been doing for the past 20 years. Isn’t that the definition of insanity—keep doing the same thing over and over and expecting different results? We’re not going to get different results. The only mistake I made was thinking you could make change … The whole system is set up against change.”

So now, Louisiana businesses and industries will continue to enjoy the same tax breaks, exemptions and credits perpetuated for years and ramped up by Bobby Jindal. Meanwhile, the burden, as always, will fall onto the backs of middle class Louisianans.

And the legislature will continue its annual struggle with the budget and the state will keep right on lurching down the road trying to contend with midyear cutbacks as revenue shortfalls continue and roads and bridges and physical facilities at colleges and universities fall farther and farther behind on desperately needed maintenance and as governmental services to the developmentally disadvantaged and the mentally ill continue to be cut—all so business and industry may never be called upon to help shoulder its share of the burden—and so the legislative perks may continue unabated.

Abraham Lincoln’s Secretary of War Simon Cameron would love Louisiana politics. It was Cameron who said, “An honest politician is one who, when bought, stays bought.”

Well, you can rest easy tonight in the knowledge that, by that measure, we have one of the most honest legislatures in the nation. They stayed bought and they will continue to reap campaign contributions and they will continue to shove expensive food and liquor down their gullets, courtesy of the special interests, namely LABI and its members.

Voting in favor of the bill by Rep. Rob Shadoin, R-Ruston, were Reps. Chris Broadwater, R-Hammond; Joseph Bouie, D-New Orleans; Jimmy Harris, D-New Orleans; Robert Johnson, D-Marksville; Marcus Hunter, D-Monroe; Ted James, D-Baton Rouge; and Major Thibaut, D-New Roads.

And, oh, in the interest of full disclosure, here are the names of those who killed Shadoin’s bill in order to keep corporate taxes down and your taxes high (and to allow themselves to continue receiving corporate campaign funds and to keep eating at Ruth’s Chris and Sullivan’s Restaurants, compliments of the lobbyist at the end of the table) were:

  • Alan Seabaugh, R-Shreveport (seabaugha@legis.la.gov);
  • Barry Ivey, R-Central (iveyb@legis.la.gov);
  • John “Jay” Morris, R-Monroe (morrisjc@legis.la.gov);
  • Jim Morris, R-Oil City (larep001@legis.la.gov);
  • Dodie Horton, R-Haughton (hortond@legis.la.gov);
  • Paula Davis, R-Baton Rouge davisp@legis.la.gov);
  • Clay Schexnayder, R-Gonzalez (schexnayderc@legis.la.gov);
  • Phillip DeVillier, R-Eunice (devillierp@legis.la.gov);
  • Stephen Dwight, R-Lake Charles (dwights@legis.la.gov);
  • Mike Huval, R-Breaux Bridge (huvalm@legis.la.gov);
  • Julie Stokes, R-Kenner, candidate for State Treasurer (stokesj@legis.la.gov).

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FEMA, politics and insurance form unholy alliance as storms cost policyholders, US taxpayers $10 billion in padded costs

Posted in Business, Congress, Corruption, Ethics, Fraud, Legislature, Legislators, Politicians, Taxes, Waste on May 4, 2017| 9 Comments »

To get past those cute but misleading TV ads, and arrive at a better understanding of just how the insurance industry really works, you need to understand first, that insurance companies are in the business to make money for their stockholders.

That’s it. There is no second. The policyholder is never taken into consideration when there is a claim. The mindset for the insurance company, no matter what name or logo is on its letterhead, is driven by one overriding question: How can we get out of this obligation with the least cost to shareholders?

It matters not one whit whether it is life, property & casualty, auto, or health insurance. The company’s very purpose for existing is not to see that policyholders are made whole but how the payout on claims may be minimized so as to inflict the least monetary damage to the company’s bottom line.

Do you think that life insurance claim that was slow paying off was simply to investigate whether or not the beneficiary had a part in the insured’s death? While that may be a part of it, particularly in cases of suspicious circumstances (such as falling off a cliff during a hike in Bryce Canyon), there may well be other factors involved, such as delaying payment as long as possible in order to accrue as much return on the investment of premiums as possible.

You didn’t really think the companies just leave that money lying around waiting for the insured to die, did you? No, it’s invested heavily in all sorts of things in order to earn money for the company.  https://www.paxforpeace.nl/stay-informed/news/insurers-invest-nearly-7-billion-in-controversial-arms-trade

And it’s your money they do it with.

Did you ever wonder why your auto insurance company would suggest a particular body shop for repairs to your car after an accident? Why not the body shop of the dealer from whom the car was purchased? It could be—and often is—because the recommended body shop uses what is called “after-market” parts for repairs. That means the parts are generally inferior to those of the dealership’s original parts and can diminish the resale value of your vehicle. Did you ever notice that after repairs at some of those shops, the quarter panel replacement no longer fits flush with the original undamaged part of your car? Or you have air leaks (or worse, water leaks) around the replacement door that weren’t there before? That would be the likely result of after-market parts. http://www.repairerdrivennews.com/2015/02/12/anderson-cooper-360-piece-attacks-insurers-for-steering-parts-video/

You’re not happy, but your insurance company is ecstatic. https://louisianavoice.com/2014/05/08/insurers-auto-repair-tactics-only-part-of-problem-jindal-old-firm-mckinsey-co-coached-katrina-on-claims-delays-denials/

And who hasn’t experienced battles with health insurance companies that refused to cover a certain type of treatment because it’s considered “experimental.” Now, because of changes in the Office of Group Benefits instituted by the Jindal administration, state retirees who move out of state may find themselves no longer covered because their physicians are “out of network,” meaning they are non-participants in OGB’s coverage plan. Sorry, we don’t have any doctors in Arkansas or Mississippi who are part of the plan. https://louisianavoice.com/2014/08/25/louisianavoice-learns-of-jindal-plan-to-force-state-retirees-out-of-ogb-by-raising-members-premiums-cutting-benefits/

But by far, the most subtle method of claim manipulation is in the property & casualty field, namely your homeowners and flood insurance programs.

As we wrote in April, insurers will prepare repair estimates at two costs, depending on whether the damage to a home was caused by wind or flood. Repair estimates generally run much less on wind damage claims than for floods—even though the same material is used on each claim.

That is because the companies themselves are on the hook for any wind damage while flood damage, if covered at all, is the responsibility of the National Flood Insurance Program (NFIP), claims for which are paid by the federal government, i.e. taxpayers.

But that’s not to say Allstate is averse to handling flood claims. Quite the contrary. Allstate, in fact, has had an arrangement with NFIP under which NFIP Allstate is paid for handling flood claims.

Accordingly, if Allstate found itself on the hook for wind damages, it would use a lower formula for paying claimants but if it determined the damages were caused by flooding, a second, more expensive separate formula would be employed.

In one example we found, damage was determined to be from wind and Allstate paid 83 cents per square foot for removal and replacement of drywall (sheetrock). In another claim from the same storm and in the same part of the state, it was determined to be flood damage and that same dry wall removal and replacement—paid for by American taxpayers—was $1.53 per square foot, a difference of 70 cents per square foot. Painting that drywall cost Allstate 35 cents per square foot for the wind-damage claim but cost NFIP (taxpayers) 58 cents per square foot for the flood damage claim.

That was not an anomaly. In comparing two 2011 claims from Tropical Storm Lee in southwest Louisiana, LouisianaVoice found that damage to one home was determined to be from wind. The cost of removing and replacing drywall (sheetrock) was estimated at $1.75 per square foot and painting of the drywall was estimated at 55 cents per square foot. That, of course was the cost to the insurance company, in this case, Colonial.

A second claim only a few miles away, also the result of Lee, was also for a home covered by Colonial. In this case, the damaged was determined to be the result of flooding, so the claim now belonged to NFIP. The estimate to remove and repair drywall for this home was $2.47 per square foot and the cost of painting that same drywall was estimated at 87 cents per square foot.

Assuming an area of 1000 square feet, you’re looking at a cost differential of $720 for removal and replacement of the drywall and a difference of $320 for painting, or an overall cost increase of $1,040 for repairs to a flood-damaged home compared to the wind-damaged structure.

By the time, other costs are factored in—costs for such things as replacing and painting molding, baseboards, doors and door frames, replacing electrical outlets and door hardware, removing and replacing windows and window trim, painting window frames, replacement of carpeting and/or wood flooring, the difference between a wind and a flood claim can be enormous.

And that doesn’t even include one other factor that goes into all estimates—overhead and profit (O&P) for the contractor. There has to be a profit for the contractor. That’s understandable; no one would expect him to repair your house for nothing.

But like the repairs themselves, the percentage of overhead and profit has a wide variance, depending on whether or not the damage is determined to be from wind or flooding.

LouisianaVoice has obtained three boxes of claims documents that not only reflect damning evidence of NFIP gouging on the costs of specific repairs, but in the allowance for contractor O&P, as well.

Built-in allowances for O&P for wind claims paid by the individual companies range around 20-29 percent. But for flood claims, paid by the American taxpayer through the NFIP, that O&P can range from 48 to 51 percent, according to documents in our possession.

For example, going back to 2005, O&P for one wind-damage claim was estimated at 28 percent for a Mississippi wind claim from 2005’s Hurricane Katrina. But flood damage from the same hurricane resulted in contractor O&P of 51 percent. Both estimates were done by Allstate.

Wind damage from Hurricane Ida in Texas in 2009 resulted in a claim in which contractor O&P was 29 percent, according to Allstate damage estimates. But when damage from that same storm was determined to be from flooding, the contractor O&P shot up quickly, to 49 percent, Allstate documents show.

But Allstate and Colonial were not the only practitioners of such claim manipulation—not by a long shot. Here’s a story about how the game was played in the same manner by STATE FARM.

Project these tactics over a large, densely-populated area like that destroyed by Hurricane Katrina in Louisiana and the Mississippi Gulf Coast, and at least one estimate of the increased cost from “padding” both specific damages and contractor overhead and profit has taxpayers in the two states being ripped off to the tune of approximately $10 billion.

And while strict insurance fraud laws are on the books that could result in a prison sentence if you so much as included a non-existent flat screen television on your claim, there apparently is no one minding the store to guard against raping the taxpayer-funded NFIP.

And as long as the insurance companies continue to pour money into the campaign coffers of members of Congress, state legislators and regulators, you can be sure there will never be.

Perfect.

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