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Archive for the ‘Fraud’ Category

Were political considerations behind separate decisions by a state district judge to prohibit a contractor from seeking public records or a Second Circuit Court of Appeal judge to overturn a $20 million judgment against the Louisiana Department of Transportation and Development (DOTD)?

While definitive answers are difficult, there does seem to be sufficient reason to suspect that the lines between the judicial and administrative branches of government may have been blurred by the Second Circuit Chief Judge’s decision to negate the award to a contractor who a 12-person jury unanimously decided had been put out of business because he refused to acquiesce to attempts of bribery, extortion and conspiracy.

Judge Henry N. Brown, by assigning the case to himself and then writing the decision despite the fact his father had been a DOTD civil engineer for more than 40 years, may have placed federal funding for Louisiana highway projects in jeopardy.

And the RULING by 14th Judicial District Court Judge David A. Ritchie prohibiting Breaux Bridge contractor Billy Broussard from making legitimate public records requests of the Calcasieu Parish Police Jury or of the Calcasieu Parish Gravity Drainage District 8 would appear to be patently unconstitutional based solely on the state statute that gives any citizen of Louisiana the unfettered right to make public records requests of any public agency.

In Broussard’s case, he was contracted by Gravity Drainage District 8 to clean debris from Indian Bayou following Hurricane Rita in 2005. Work done by his company was to be paid by FEMA. Gravity Drainage District 8 instructed Broussard to also remove pre-storm debris from the bottom of the bayou, telling him that FEMA would pay for all his work.

FEMA, however, refused to pay for the pre-storm cleanup and Gravity Drainage District 8 subsequently refused to pony up. Broussard, represented then by attorney Jeff Landry, since elected Attorney General, filed a lien against the drainage district.

When Broussard lost his case before Judge Ritchie, he continued to pursue his claim and submitted this PUBLIC RECORDS REQUEST to the drainage district and to the police jury. Those efforts resulted in a heavy-handed LETTER from attorney Russell J. Stutes, Jr., which threatened Broussard with “jail time” if he persisted in his “harassment” of Calcasieu public officials.

And the injunction barring Broussard from future records requests, instead of being filed as a separate court document, was sought under the original lawsuit by Broussard, which presumably, if Stutes’s own letter is to be believed, was a final and thus, closed case. That tactic assured that Broussard would be brought before the original judge, i.e. Ritchie, who was already predisposed to rule against Broussard, no matter how valid a claim he had.

That was such a blatant maneuver that it left no lingering doubts that the cards were stacked against Broussard from the get-go. Everything was tied up in a neat little package, with a pretty bow attached. And Broussard was left holding a $2 million bag—and assessed court costs of $60,000 to boot.

In Jeff Mercer’s case, federal STATUTE U.S. Title 49 specifically prohibits discrimination against Disadvantaged Business Enterprises (DBE). It further requires that all states receiving federal funding for transportation projects must have a DBE program.

Mercer, a Mangham contractor, sued DOTD after claiming that DOTD withheld more than $11 million owed him after he rebuffed shakedown efforts from a DOTD inspector who demanded that Mercer “put some green” in his hand and that he could “make things difficult” for him.

Mercer suffers from epilepsy, which qualified him for protection from discrimination under Title 49.

His attorney, David Doughty of Rayville, feels that Brown should never have assigned the case to himself, nor should he have been the one to write the opinion. Needless to say, Doughty does not agree with the decision. He has filed an APPLICATION FOR REHEARING in the hope of having Brown removed from the case.

LouisianaVoice conducted a search this LIST OF CASES REVERSED BY 2ND CIRCUIT and the Mercer case was the only one of 57 reversals decided by a jury.

So it all boils down to a simple equation: how much justice can you afford?

When an average citizen like Broussard or Mercer goes up against the system, things can be overwhelming and they can get that way in a hurry.

Because the government, be it DOTD, represented by the Louisiana Attorney General’s office, or a local gravity drainage district, represented by the district attorney, has a decided advantage in terms of manpower and financial resources, giving the individual little realistic chance of prevailing.

In Broussard’s case, he did not. Mercer, at least, won at the trial court level, but the process can wear anyone down and that’s just what the state relied upon when it appealed.

With virtually unlimited resources (I worked for the Office of Risk Management for 20 years and I saw how an original $10,000 defense contract can balloon to $100,000 or more with few questions asked), the government can simply hunker down for the long haul while starving out the plaintiff with delays, interrogatories, requests for production, expert costs, court reporter costs, filing fees and attorney fees. Keeping the meter running on costs is the most effective defense going.

The same applies, of course, to attempts to fight large corporations in court. Huge legal staffs with virtually unlimited budgets and campaign contributions to judges at the right levels all too often make the pursuit of justice a futile chase.

And when you move from the civil to the criminal courts where low income defendants are represented by underfunded indigent defender boards, the contrast is even more profound—and tragic, hence a big reason for Louisiana’s high incarceration rate.

The idea of equal treatment in the eyes of the law is a myth and for those seeking remedies to wrongdoing before an impartial court, it is often a cruel joke.

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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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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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An updated variation of the infamous Mike Edmonson Amendment has made its way into the 2017 legislative session in an effort to help yet another public official scratch out a little more money from the public fisc.*

*fisc (fisk) noun: The public treasury of Rome.

It’s really amazing how these legislators can work so diligently on behalf of certain connected individuals while ignoring much larger problems facing the state.

As much as LouisianaVoice criticized Bobby Jindal during his eight years of misrule, it was the legislature that allowed him to do what he did. It was the legislature that brought about the state’s fiscal problems by refusing to stand up to his ill-advised “reforms,” and it’s the legislature that has steadfastly refused to address those problems with anything approaching realistic solutions.

But when there’s a chance to help one of their own: stand back, there’s work to be done.

Rep. Gary Carter (D-New Orleans) has introduced House Bill 207 aimed specifically at benefiting U.S. Sen. Bill Cassidy.

Louisiana, it seems, has this pesky little dual office holding/dual employment law that might otherwise prove a hindrance to Cassidy’s ability to moonlight by teaching at the LSU Health Science Center while serving in the U.S. Senate.

Carter wants to remedy and if you don’t think this bill was written specifically for Cassidy, here’s the particulars of the bill:

“To enact R.S. 42:66(E), relative to dual officeholding and dual employment; to allow a healthcare provider who is a member of the faculty or staff of a public higher education institution to also hold elective office in the government of the United States…”

The bill would provide an exception to the current law which prohibits “certain specific combinations of public office and employment, including a prohibition against a person holding at the same time an elective or appointive office or employment in state government and an elective office, appointive office, or employment in the U.S. government.”

We could be wrong, but it just seems to us that serving in the U.S. Senate is a full-time job that demands the full attention of whomever happens to be representing Louisiana in that august body.

It was just such an amendment in 2014 that helped prove the eventual undoing of Edmonson’s career and his political aspirations. The word was that Edmonson planned to seek the state’s second-highest office in 2015—and was considered a fairly viable candidate.

LouisianaVoice broke the story of State Sen. Neil Riser (R-Columbia) and his tacking an amendment onto an otherwise benign bill that would have given Edmonson between $50,000 and $100,000 per year in additional retirement income. Because of the resulting furor over that amendment, State Sen. Dan Claitor (R-Baton Rouge) successfully sued to block the increase in Baton Rouge district court.

A veteran political observer recently told us, “If you hadn’t broken that story, Mike Edmonson would be lieutenant governor today.” (We don’t know about that but at least he’d be better than what we now have in that office.)

Remember in the 2014 senatorial race between then-incumbent Mary Landrieu and challenger U.S. Rep. Cassidy when Landrieu claimed Cassidy was paid for time lecturing classes not supported by his time sheets?

Jason Berry, publisher of The American Zombie Web blog said that on no fewer than 21 occasions over a 30-month span, U.S. Rep. Cassidy billed LSU Health Science Center for work supposedly performed on the same days that Congress was in session and voting on major legislation and holding crucial committee hearings on energy and the Affordable Care Act.

“On at least 17 different occasions,” Berry wrote, “he (Cassidy) spent multiple hours in LSU-HSC’s clinics on the same days in which he also participated in committee hearings and roll call votes.”

Landrieu said at the time of the revelations that Cassidy, while claiming to serve the poor, was in fact, “serving himself an extra paycheck. That’s not right. It could be illegal and it looks very much like payroll fraud.”

The arrangement apparently also troubled then-Earl K. Long Hospital Business Manager William Livings who said in an email to Internal Medicine Department Head George Karam, “We are going to really have to spell out exactly what it is he does for us for his remuneration from us. Believe me, this scenario will be a very auditable item and I feel they will really hone in on this situation to make sure we are meeting all federal and state regulations.”

In addition to Cassidy’s salary, Berry said, LSU also paid for his medical malpractice insurance, his continuing education and his licensing fees, “expenses that can easily total in the thousands.”

And now Carter wants to make it all nice and legal—but only for Cassidy. All other state employees who would like to do a little double-dipping to supplement their income can just fuggedaboutit.

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Allstate Insurance only wants its good hands on your wallet.

State Farm isn’t such a good neighbor, after all—especially in your time of greatest need.

Farmers has seen a thing or two and has learned a thing or two—about low-balling claims.

Nationwide isn’t on anyone’s side, no matter what Peyton Manning says.

And lest one think that political grandstanding by some members of Louisiana’s congressional delegation is a viable substitute for effective representation and an avenue to disaster recovery…think again.

U.S. Rep. Garrett Graves, apparently hoping to bolster his 2019 gubernatorial campaign, has issued a series misleading, mistaken and inappropriate claims about the disbursement of recovery funds.

His claim that his House colleagues are questioning what the state did with $438 million in recovery funds was absurd because, simply put, the money had never actually been received.

And he knows it. The claim was grandstanding in its purest form and made only in the interest of political capital to be gained. Flood victims in his district would be far better served by a more positive use of his office.

Sometimes you have to wonder why, when these guys are elected, they can’t just do their damned job.

Of course U.S. Sen. John Kennedy, also said to be casting a solicitous eye toward the governor’s mansion, couldn’t help offering, as is his custom, yet another of his trite homilies when he described the governor’s handling of the flood recovery contract as a “Three Stooges-like performance.” http://www.theadvocate.com/louisiana_flood_2016/article_a41326a0-1326-11e7-8805-574e2f9c803c.html

And the contract to administer the anticipated $1.6 billion in federal recovery funds was a major embarrassment because of the involvement of attorney Larry Bankston in trying to disqualify the low bidder when his son was employed by a firm affiliated with one of the losing bidders. http://www.theadvocate.com/baton_rouge/news/politics/article_aae4b7aa-101f-11e7-924b-037340aec399.html

Edwards must feel as if he’s being pecked to death by a duck.

Greater good could be achieved for all by taking the higher ground to enlightenment (to borrow a phrase employed by The Cincinnati Enquirer in describing a debate between William Howard Taft and former Democratic Secretary of State Richard Olney in the 1904 presidential race between Theodore Roosevelt and Alton B. Parker) instead of acting like a bunch of kids in a schoolyard fight.

People have been suffering for eight months now and they want to get back into their homes. They don’t need cheap campaign rhetoric; they want real answers.

And to compound their frustration, they now know they cannot look to their insurers for relief, either, thanks to lessons learned from Hurricanes Katrina, Rita, Gustav and Ike. http://www.nola.com/environment/index.ssf/2017/03/thousands_to_receive_small_pay.html

Thanks to a tactic affectionately known as Delay, Deny, Defend, introduced to Allstate and State Farm by McKinsey and Co. just in time for Hurricane Katrina, policyholders learned that insurers would rather fight than pay up. For every claimant who stuck it out and won a big award from his insurer, hundreds did just what the companies anticipated: they caved in and took settlements of pennies on the dollar simply because they didn’t have the resources to fight back.

http://www.delaydenydefend.com/excerpt/

Less than a week following the devastation of Katrina, Nationwide, on September 4, 2005, instructed its claims adjusters that “if loss is caused by both flood and wind, there is no coverage,” according to Mississippi Gulf Coast U.S. Rep. Gene Taylor.

Nine days later, on September 13, Taylor said State Farm instructed its adjusters that “where wind acts concurrently with flooding to cause damage to the insured property, coverage for the loss exists only under flood coverage.”

On-site damage assessment by engineer Jerome Quintero of Rimkus Consulting Group, contracted by Allstate to handle claims, said there was “insufficient physical evidence to determine the proportion of wind versus storm surge that destroyed (a) structure.”

That was in June 2006. But on November 4, Quintero’s conclusion of “insufficient physical evidence” was altered to read “Storm surge and waves destroyed the residence” by Rimkus staff who never visited the site. Quintero’s name was signed to the revised report without his knowledge, Taylor said.

So, in just those three examples, we have Nationwide, State Farm and Allstate implicitly telling their adjusters to blame Hurricane Katrina’s damage on water alone, thereby passing an inflated $23 billion bill on to American taxpayers.

Did we say inflated? Well, yes. As if that were not enough, Allstate devised a clever way of enriching itself while passing the cost of those claims on to the taxpayer-funded National Flood Insurance Program (NFIP).

Documents obtained by LouisianaVoice show that Allstate, which had an arrangement with NFIP under which it paid Allstate for handling flood claims, took full advantage of that position to protect its own financial interests.

If Allstate found itself on the hook for wind damages, it would use one formula for paying claimants but if it determined the damages were caused by flooding, a second, separate formula was employed. The difference was eye-opening, to say the least.

The formulae varied, depending upon location and on whether or not Allstate deemed damage to be from wind or flooding.

In one location for which LouisianaVoice was provided documentation, for example, if damage was from wind, Allstate paid 83 cents per foot for removal and replacement of drywall (sheetrock). If it was determined to be flood damage, that same dry wall removal and replacement—paid for by American taxpayers—was $1.53 per foot, a difference of 70 cents per foot. Painting that drywall cost Allstate 35 cents per foot if the damaged was caused by wind but cost NFIP (taxpayers) 58 cents per foot if it was determined to be flood damage.

For an average 2,000-square-foot home, that is an extra cost of $1,747 that’s passed on to taxpayers for the drywall and an additional $1,148 for painting—a total overcharge of $2,895.

Assuming Allstate handled 20 percent of total claims for Katrina and Rita in Louisiana and Wilma in Florida, the company would have handled some 48,000 claims, costing the federal government as much as $645 million in inflated claims costs, including overhead and profit, which are also calculated into each claim.

In Ocean Springs, Mississippi, the costs of removal and replacement of drywall was 50 cents per foot for wind damage and $1.12 per foot for flood damage. Painting was 26 cents per foot for wind and 83 cents for flood.

To remove and replace electrical outlets, the cost difference was even starker. For wind damage, the cost was $45.62 but if the damage was caused by flooding, Allstate reported a cost of $219.27 to NFIP.

Kermith Sonnier of Oberlin, Louisiana, is a public claims adjuster and provides the source of much of the information cited here. Company adjusters work for insurance companies and their work is generally geared toward saving the company every dime they can by low-balling claims or by denying them outright.

A public claims adjuster is independent who works only for claimants and Sonnier has spent hundreds of thousands of dollars of his own money doing just that.

Sonnier, with 38 years’ experience, was once a company adjuster for Farmers Insurance—until he learned a thing or two about the company.

He enjoyed an impeccable reputation in the claims adjustment industry, having worked the Exxon-Valdez claim in 1989, which until the Deepwater Horizon disaster in the Gulf of Mexico in 2010, was the worst oil spill in history.

In 1994, he was hired by Pilot which was under contract to Farmers to work claims stemming from the Northridge earthquake in California that year. But beginning in 1996, he said, Farmers began pressuring him to lower his loss estimates. He refused because he saw no grounds to do so and Farmers terminated him in 1997 despite a spotless work record. It gave as its reasons that it was reducing its work force even though it continued to hire other adjusters.

He sued for wrongful termination and won a stunning $10 million judgment against Farmers.

http://slabbed.org/2010/11/15/adjusters-special-employees-not-contractors-farmers-lost-10-4-million-wrongful-termination-case-filed-by-you-wont-believe-who/

He, along with other experts in the field of insurance claims, will be working closely with LouisianaVoice in the coming weeks as we explore how those goods hands people, those good neighbors and those who purport to know a thing or two and who claim to be on your side will, when the chips are down, will do everything legally possible—and sometimes things not legal—to minimize or even deny your claim altogether.

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