Inflated flood claim turns up at trial
Allstate contents list is news to owners
as posted at www.nola.com
By Rebecca Mowbray
May 20, 2007
Fishing poles and fancy furs weren't the issues at trial. Instead, Merryl and Robert Weiss had gone to court to fight the contention by their insurer, Allstate, that they were entitled to only a pittance under their homeowner policy because flooding, not wind, was largely responsible for the destruction of their home on Slidell's Treasure Isle.
But about a month before trial, Merryl Weiss realized there was something wrong with the payment for household contents that they had received on their obliterated Slidell home.
In making the claim under their taxpayer-subsidized National Flood Insurance policy, Weiss had given Allstate a handwritten list of belongings from the ground floor of the three-story house -- most of it rods, reels and other gear owned by her husband, a retired doctor who is a die-hard sport fisherman with a charter boat license. She valued the lost contents at $38,848.35.
But as documents were being flashed in front of her for identification, Weiss was shown a typed property-loss worksheet totaling $139,562. The inventory listed a formal living room, dining room, kitchen, living room/great room/game room, an office, a foyer, bathrooms, five bedrooms, a garage/shed, utility room, clothes, miscellaneous items and categories labeled "DVDs/VCRs/records" and "jewelry, furs, memorabilia, etc."
Weiss didn't generate the list, and never submitted a contents list for the upstairs rooms of the home to Allstate before the flood contents check was cut. Indeed, she said she doesn't own any furs. But Allstate submitted the bill to the National Flood Insurance program, which paid the policy's limit of $100,000 for contents after depreciation and a deductible were taken out.
"I never even claimed that we had any of this stuff," Weiss said in her deposition. "I did not write this, and I did not write this," she said, pointing to items on the list.
Mysterious paperwork
At last month's trial, the Weisses were awarded a $2.8 million judgment against Allstate for failing to properly adjust the claim, an award that the insurer is appealing. That settled, at least temporarily, a fight over wind versus flood damage. But the unanswered question was how the Weisses' contents claim got inflated by $100,714. No one seemed to have an explanation.
Not Mike Wells, the outside adjuster employed by Allstate to handle the claim. He testified that he had given the Weisses' handwritten list of fishing equipment to Allstate.
Not Mung Hatter, who worked for four months processing Allstate claims before landing her current job at Beau Rivage casino on the Mississippi coast. Hatter testified that she simply put the finishing touches on the claim using the numbers the company gave her before supervisors signed off on the settlement and it was mailed to the flood program for payment.
'Quality control measures'
On the fourth day of the trial at the federal courthouse on Camp Street, Paul Tracey, field operation's manager for Allstate's catastrophe unit, was asked point blank by Weiss attorney Richard Trahant how the contents figures grew.
"Do you have any idea how those numbers increased from $38,000 to $139,000?" Trahant asked.
Tracey said he could explain how the process works, and he hastened to say that Allstate handled claims honorably.
"We . . . have quality control measures under our policy, under our process, to ensure that the evaluations are being done correctly and accurately. The federal government also reinspects our work for the National Flood Insurance Program," Tracey said.
But that didn't explain the inflated and imaginative contents list. To counter the implication that there was something underhanded going on with the list, Allstate lawyer Judy Barrasso asked Tracey what was to prevent Allstate from dumping costs onto the flood policy so as to spare Allstate the expense of a settlement under the homeowner policy.
"In handling these claims, what's to stop Allstate from just putting all of somebody's claim as a flood loss instead of a wind loss?" Barrasso asked.
"Well, number one, we don't do that. . . . If there's damages from wind, we pay it under the wind; if there's damages from flood, we pay it under the flood," he responded.
Destroyed by tornado
The Weisses said they limited their contents claim under the flood policy to the ground floor of their house because storm surge estimates suggested that the upper two floors were above the water line. Based on early conversations with their adjuster and an engineer who visited the house in November 2005, they believed their house was destroyed by a tornado.
In trial testimony, Hatter said the inflated contents list named an Alabama contract worker as adjuster. The contract worker could not be found for the trial and efforts by The Times-Picayune to contact her were unsuccessful. Hatter said that after getting the list from the contract worker, she typed up the claim and circulated it for approvals from higher-ups at Allstate before sending it to the flood program for payment.
Hatter testified that Allstate had programs in place to monitor what lower-level contract workers were doing with computerized claims. In his testimony, Tracey affirmed that everything Hatter would have done went up the ladder and was approved by someone at Allstate before it was submitted by the government.
Didn't call Allstate
At deposition, Allstate attorney Meredith Cunningham asked Weiss why she didn't notice that they were being overpaid by the flood program and why they didn't say anything about it when they realized the discrepancy.
"When you received a check for $100,000 for the contents . . . did you ever ask anybody at Allstate why am I getting an extra, you know, tens of thousands dollars more than I intended to get on this coverage?" Cunningham asked.
Weiss said that in the barrage of paperwork after the storm, she didn't read everything in the envelope that came with the checks.
"I knew it would all come out in the end one way or another. I mean, why would I call Allstate and say, 'Wait, you gave me too much money here,' when I'm waiting on another… $600,000?" Weiss said. "I assumed that in the end, all of this would be evened out. I never asked for more than I thought we should have."
United Policyholders is a non-profit organization founded in 1991 and dedicated to educating the public on insurance issues and consumer rights. UP publishes educational materials and serves as a resource for individual and business policyholders and residents of communities with insurance problems. UP’s Amicus Project provides information to courts of law to support policyholders’ legal rights. UP unites policyholders and their advocates by sharing information. Write to UP at 110 Pacific Ave., PMB 262, San Francisco, CA. 94111, call us at (510) 763-9740, or visit our website at www.unitedpolicyholders.org.
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