Fraudulent Insurance Claim

by Guest » Tue Sep 28, 2010 10:19 pm
Guest

My apartment complex burned and the owner is filing for inflated damages while her negligence was part of the cause of the fire. I do not know which company insures the property, but would like to warn them before they settle the claim. Is there some way to find who insures the property? Or is there some agency that investigates fires that I should inform about the dangerous conditions which caused the fire?

Total Comments: 10

Posted: Tue Sep 28, 2010 11:13 pm Post Subject:

If you suspect arson you can contact the Fire Marshal in your area. In order to notify the owners insurance, you need to know who they are.

If the person accidentally caused the fire, it's covered. They would have needed to set the fire on purpose in order for it to be denied.

Posted: Wed Sep 29, 2010 12:03 am Post Subject:

In order to prove FRAUD, there has to be a showing of INTENT to profit or gain an advantage over the insurance company through false statements or circumstances. If the property owner deliberately set fire to the complex just to be able to collect on an insurance claim, that's an example of fraud.

If the owner accidentally set fire to the place, but is now trying to artificially increase the value of the claim, that, too, is likely to be insurance fraud.

If you suspect the possibility of fraud (perhaps you overheard the owner mention something like, "I'm going to get even with the insurance company," you can report it to your local district attorney's office (they all have a fraud division), and you can report it to your state's Dept of Insurance, because they also have investigators that work suspected frauds.

If your state's insurance code is like California's in this respect (probably is), any person making a report of possible insurance fraud, even if later determined to be untrue, is given immunity from civil action against them as long as their report was not made "maliciously" -- that is, with bad intent, trying to get the person "in trouble".

Posted: Wed Sep 29, 2010 12:05 pm Post Subject:

IMO, you can report it to the state dept. of insurance. I'm not sure of how the district attorney's office will handle this case. The doi investigators have a proven track record with such cases.

Posted: Wed Sep 29, 2010 02:41 pm Post Subject: Fraudulent Insurance Claim

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Max,

I was just wondering..??

If your comment...

If the owner accidentally set fire to the place, but is now trying to artificially increase the value of the claim, that, too, is likely to be insurance fraud.



...is true. Then couldn't the comment...

"" If the owner accidentally set fire to the place, but the _ Insurance Adjuster_ is now trying to artificially decrease the value of the claim, that, too, is likely to be Insurer fraud.""

...Also be true??

Posted: Wed Sep 29, 2010 06:00 pm Post Subject:

the _ Insurance Adjuster_ is now trying to artificially decrease the value of the claim, that, too, is likely to be Insurer fraud.



Technically speaking, NO.

There is no such thing as "insurer fraud", but there are "unfair claims practices" which are prohibited by law, and deliberately undervaluing a claim (especially when the intent is to force people to have to sue to recover anything) is a specifically described unfair act in most states' insurance codes.

Now, when you state "artificially decrease" a claim's value, on what basis are you making that assertion? That the adjuster just picked a lowball figure out of thin air, or that he calculated too much depreciation, or miscalculated the replacement cost? Or that he just doesn't like the insured's haircut?

An insurance company's adjuster is their representative, gets his paycheck from them, and is employed/contracted to protect their interests in view of a claim. Much the same way as an agent is in the process of filling out and submitting an application for insurance. Except that it is unlawful to compensate an adjuster on a commission basis based on the value of claims they settle (in such a scenario, the pay would increase as the payouts decreased -- too much opportunity for conflict of interest).

Adjusters are expected to authorize the payment of claims when the insurance company's liability is established. But sometimes what an insured believes they are entitled to and what an insurance company offers are as different as day and night. If the adjuster has done his job properly, the payment will be reasonable and properly documented. If a person disagrees, they can always ask for a second adjuster's opinion. Whichever one is higher, is the one the insurer will go by.

If you still aren't satisfied, then you can hire a "public" adjuster to represent your claim to the insurance company. They'll take about 10% of whatever settlement they obtain for you, so they have to be able to get you at least 11-12% more than the insurer originally offered for you to break even.

Posted: Thu Sep 30, 2010 12:25 pm Post Subject:

Max,

Technically speaking, NO.

There is no such thing as "insurer fraud", .... Snip....



You've got to be kidding. You can't be that naive.


Now, when you state "artificially decrease" a claim's value, on what basis are you making that assertion? That the adjuster just picked a lowball figure out of thin air, or that he calculated too much depreciation, or miscalculated the replacement cost? Or that he just doesn't like the insured's haircut?



Any & All of the above.

Posted: Fri Oct 01, 2010 12:01 pm Post Subject:

You've got to be kidding. You can't be that naive.



Naive about what? The question is one of legal TECHNICALITY. Try to sue an insurance company for FRAUD and the case will be tossed unless you can prove the elements of FRAUD: (1) a representation; (2) falsity of the representation; (3) materiality of the representation; (4) speaker’s knowledge of the falsity of the representation; (5) the speaker’s intent it should be relied upon; (6) the hearer’s ignorance of the falsity of the representation; (7) the hearer’s reliance on the representation; (8) the hearer’s right to rely on the representation; and (9) the hearer’s consequent and proximate injury caused by reliance on the representation.

This definition comes from a case in Montana, Taylor v. State Compensation Insurance Fund, 175 Mont. 432, 913 P.2d 1242 (1996) in which "Taylor" was the person alleged to have filed a fraudulent claim with the insurance company.

Insurance fraud is committed by persons against insurance companies in the pursuit of a claim.

Insurance companies do not commit fraud against insureds in the disposition of a claim, but they can be guilty of misrepresentation, unfair acts or practices described in the insurance code or statutes, or other crimes and offenses, such as breach of contract.

Insurance companies have been found to commit fraud in the sale of policies -- just ask InsInvestigator, Mark Colbert.

The whole principle of fraud hinges on INTENT -- intent to gain an advantage over another person. If an insurance company tucked a provision in the policy that said something like "We will pay only those claims for losses that occur between 1:00am and 1:10am" to the exclusion of all other claims, even that would not ne fraudulent. It just would not be to anyone's benefit to own that policy.

An insurer would be guilty of committing fraud if it collected premiums with no INTENT to pay any claims. In taking the actions he did against MetLife, Mark Colbert was able to demonstrate that MetLife's UL policies were designed to collapse and create a profit for the insurer to the disadvantage of the insureds. That was FRAUDULENT.

When an insurance company unfairly denies a claim, offers to pay less than what a reasonable person would expect in view of printed advertising or sales literature (the "You're in good hands" kind of stuff), or any of the dozen or more acts or practices defined by the NAIC that most states have adopted into their insurance codes, it is NOT guilty of committing insurance fraud, but it IS GUILTY OF committing an UNFAIR ACT OR PRACTICE.

To help you with understanding this, here's a link to the California Insurance Code, statute by statute. http://www.leginfo.ca.gov/.html/ins_table_of_contents.html

Unfair acts and practices, for the most part, are defined in Sections 790 to 790.15. Other unlawful acts on the part of insurers or their agents are described above and below that part of the Code. Nowhere will you find a section describing INSURER FRAUD.

But when you read any other section of the Code that discusses fraud, such as Chapter 12, "THE INSURANCE FRAUDS PREVENTION ACT" beginning at Section 1871, you will clearly see that insurance fraud is an act committed or attempted by a person AGAINST an insurance company.

That's the law, like it or not, and it is substantially similar in all states. To argue otherwise is naive.

Posted: Fri Oct 01, 2010 11:46 pm Post Subject: Fraudulent Insurance Claim

Max,

Thanks for the information. It was interesting reading. [and its obvious you have more access to information, and have a better understanding of Law than I.]

It seems we agree on the concept of "Insurance Fraud". Including the wording below.

"" When an insurance company unfairly denies a claim, offers to pay less than what a reasonable person would expect in view of printed advertising or sales literature (the "You're in good hands" kind of stuff), or any of the dozen or more acts or practices defined by the NAIC that most states have adopted into their insurance codes, it is NOT guilty of committing insurance fraud, but it IS GUILTY OF committing an UNFAIR ACT OR PRACTICE. ""

I never said they were committing insurance fraud... My comment was "Insurer Fraud".

You also mention... ""Nowhere will you find a section describing INSURER FRAUD""

With the above you imply that since the California Insurance Code does not describe Insurer fraud, that Insurer's can not be charged with fraud.

Using that logic then an auto repairer can not be charged with Fraud since Nowhere in the Auto Repair code will you find a section describing REPAIR FRAUD. Now I don't for a moment think a repairer can't be charged for Repairer Fraud any more than I think an Insurer can't be charged for insurer fraud.

JMT. FK,

§ 301.5. General provisions repair shop.
With regard to a repair shop, the following is considered unfair methods of competition and unfair or deceptive acts or practices:

(1) Making a statement, directly or indirectly, which the dealer or repair shop knows or should know to be untrue or misleading including but not limited to the following:

(i) That repairs are necessary or desirable or that repairs are not necessary or desirable when such is not, in fact, true.

(ii) That a vehicle is in a dangerous condition or use of the vehicle may produce harm to the customer or that a vehicle is not in a dangerous condition or use of the vehicle may not produce harm to the customer when such is not, in fact, true.

(iii) That repairs have been performed on a vehicle when such is not, in fact, true.

(2) Failing to record in writing and to provide a copy of the record to the customer, where possible, prior to commencing repairs on the vehicle of a customer:

(i) The name and address of the customer and a telephone number, if any, at which the customer can be reached.

(ii) The date and approximate time the vehicle of the customer was delivered for repairs.

(iii) The year, make and registration number of the vehicle of the customer.

(iv) The odometer reading on the vehicle of the customer.

(v) The specific repairs requested by the customer or, if there is no specific request, a brief description of the problems encountered by the customer with the vehicle.

(3) Charging a customer for repairs which were not authorized in writing or charging a customer a price for agreed-upon maintenance or repair services which price, including parts and labor, was not authorized in writing or displayed in a clear and conspicuous manner on the premises. If the repair shop is unable to obtain advance written authorization because the specific repairs or costs thereof are not known when the vehicle is delivered for repair, the customer shall be so informed and shall be afforded the opportunity to select one of the following options:

(i) No repairs may be performed until the customer is notified of the exact nature of the repairs to be performed and the total price to be charged, including parts and labor and the oral or written authorization of the customer to perform the repairs is obtained.

(ii) Repairs may be initiated, but, if repairs will exceed a price specified in advance by the customer, the oral or written authorization of the customer to proceed further shall be obtained.

(iii) Repair of the described problem may be authorized without limitation of price provided the customer is informed of the hourly labor rate prior to commencement of repairs.

(4) Failing to display in a clear and conspicuous manner on the premises where possible and failing to disclose to a customer prior to obtaining oral or written authorization for repairs:

(i) That the customer has the right upon request to have parts replaced returned to the customer at the completion of the service or to inspect the parts, where possible, if the parts are being returned to the manufacturer or some other person under the terms of the warranty or rebuilding arrangement.

(ii) Whether a part to be supplied is new, used, reconditioned or rebuilt.

(iii) The conditions under which the repair shop may impose daily or hourly storage charges for a vehicle and the amount of the charges.

(iv) The amount of a charge to a customer for an estimate or diagnosis.

(5) Failing to maintain the following written record when oral authorization is received for certain repairs:

(i) The date and time the authorization is received.

(ii) The identity of the employe receiving the oral authorization and the name of the person making the authorization.

(iii) A description of the exact authorization received.

(iv) If authorization is received over the telephone and the shop placed the call, the telephone number called.

(6) Failing to complete repairs on a motor vehicle within 24 hours of its delivery by the customer or within the time specified by the repair shop or dealer unless the customer is informed of and consents to the delay.

(7) Failing to remedy promptly, at no charge to the customer, a repair or maintenance service performed by it on the customer’s vehicle which was not performed in a skilled and workmanlike manner; provided that the customer promptly complains or brings the matter to the attention of the repair shop.

(8) Failing to provide a customer at the completion of repair or maintenance work, including warranty repair work, performed on the vehicle of the customer a dated, written invoice containing the following information:

(i) The name and address of the customer and repair shop.

(ii) The date the vehicle of the customer was delivered for service.

(iii) The year, make and registration number of the vehicle of the customer and the odometer reading of the vehicle at the time the repairs were completed.

(iv) An itemized list of the specific repair or maintenance services performed on the motor vehicle of the customer.

(v) A list of the parts supplied by name or number, the price charged for the parts and the total amount charged the customer for the parts.

(vi) If a part supplied was not new, a statement that the part was either used, reconditioned or rebuilt.

(vii) The labor charge for the repair work, setting forth the number of hours, the price charged for each hour and the total amount charged the customer for labor.

(viii) The total amount charged to the customer for parts and labor; provided, however, that the price information required by this subparagraph and subparagraphs (v) and (vii) need not be provided if the price charged to the customer for the repair or maintenance work is a single charge for the particular service which charge was included in a schedule of charges posted in a clear and conspicuous manner on the premises of the repair shop or otherwise disclosed to the customer at the time the vehicle was delivered for service or repair. No other charges are permitted by this paragraph unless they are clearly and conspicuously disclosed to the customer prior to the commencement of repairs.

(9) Charging a customer for repairs which have not actually been performed.

(10) Failing or refusing to provide a customer with an exact copy at no additional charge of a document in addition to those required by paragraphs (2) and (8) in which legal obligations are imposed on the customer.

(11) Using a vehicle of a customer for a purpose other than a test drive or delivery to the customer unless the express written authorization of the customer is obtained in advance.

§ 301.6. Interpretation.
No provision of this chapter or the application thereof will be interpreted to be inconsistent with the Board of Vehicles Act (63 P. S. § § 818.1—818.28), nor will this chapter limit another practice which may be considered unlawful under sections 1—9.2 of the Unfair Trade Practices and Consumer Protection Law (73 P. S. § § 201-1—201-9.2).

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Posted: Sun Oct 03, 2010 04:22 am Post Subject:

Nowhere in the Auto Repair code will you find a section describing REPAIR FRAUD



You are very probably correct -- but it has nothing to do with the discussion. I don't know exactly which Pennsylvania codes you are citing, but if it comes from something like California's Business and Professions Code (which includes the consumer protection laws relating to repair shops in California), that Code is separate from the Insurance Code. You generally won't find a discussion of "insurance fraud" outside the Insurance Code, but you might find a discussion of "fraud" in many other codes (like committing fraud in the application process for a repair shop license).

In the Insurance Code is where you will always find the definition/discussion of INSURANCE FRAUD (and sometimes also in the Penal Code, since fraud in general is a criminal offense). Under the Insurance Code it is possible for a repair shop to commit insurance fraud by submitting a false or fraudulent claim for work performed or not performed. Just Google "Joey Buttafuoco" and see the trouble he got himself into with undercover investigators from the Dept of Insurance for insurance fraud in connection with his auto body shop back in 2003 or 2004.

You can look at this recent press release from the CA Dept of Insurance about workers' compensation insurance fraud, where you will see words like "filing fraudulent claims" -- none of the fraudulent acts were committed by insurance companies.

http://www.insurance.ca.gov/0400-news/0100-press-releases/2010/release126-10.cfm

In order to have this discussion, we have to be talking about apples and apples, not apples and oranges. Insureds, claimants, and others attempting to obtain money FROM AN INSURANCE COMPANY can all commit insurance fraud. As I have previously stated, insurance companies do not commit "insurer fraud", they commit "unfair business/claims acts or practices".

Please follow this link to the CA Dept of Insurance to see how the CDI handles incidents involving insurance companies -- you will see that they don't talk about insurance fraud when they discuss the things for which they fined the insurance company $450,000 due to its (willful) mishandling of claims and another $55,000 for violating a prior "cease & desist" order issued for the same kinds of violations five years earlier and with a promise that those problems would not occur in the future . . . but they did . . . more than 600 violations found at random in less than 600 claims files. The words used were "gross misconduct."

http://www.insurance.ca.gov/0400-news/0100-press-releases/2010/release123-10.cfm

At that part of the CDI website, you can view all kinds of press releases going back to 2007 or 2008 about insurance fraud. And you can also click on the tab to go to the Fraud section of the website where you will find lots of additional information on the topic.

Posted: Sun Oct 03, 2010 04:46 am Post Subject:

the following is considered unfair methods of competition and unfair or deceptive acts or practices



Yes, this is what is true. However, it is still possible for the repair shop to commit "fraud". Not "repairer fraud" but insurance fraud, by submitting a false claim to an insurance company. Happens all the time.

If the acts and practices enumerated in the code sections you supplied and committed "with INTENT" to gain an advantage over another person, the intentional violation might be prosecutable for "fraud" under some other code. A criminal/civil action under the sections you cite would be made on the basis of unfair methods or competition, unfair business practices, unfair acts, etc., as I have stated, not some form of fraud.

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