2022 Top Stories Include Busy Lawyers, Crooked Doctors and Shifty Adjusters

News articles about public adjusters suspected of gaming the system and professionals accused of outright fraud were among the top stories for Claims Journal readers in 2022.

Readers also showed keen interest in repair shop practices that drive up the cost of auto claims, the increasing involvement of attorneys in insurance claims and the emerging maritime risk of fire caused by lithium-ion batteries.

Here are the CJ’s top ten stories for the year:

In January, federal prosecutors charged 13 people, including a New York City police office, an attorney and four physicians in a scheme that allegedly defrauded auto insurers out of $100 million. A self-described management consultant named Bradley Pierre is accused of using an unidentified relative’s law office to direct a scheme where physicians performed unnecessary medical procedures to defraud auto insurers. Bradley was accused of bribing 911 operators and hospital employees to obtain confidential information about motor vehicle accident victims in order to steer patients to corrupt doctors. The accused are free on bond awaiting a trial that has not yet been scheduled, according to federal court records.

A growing number of vehicles equipped with advanced driver assistance systems is creating new opportunities for repair shops to drive up claim costs by overcharging for calibrating the devices. CCC Intelligent Solutions reported in April that the line-item charge for calibrating ADAS devices at a car dealer’s shop ranged from $46 for transporting the vehicle to the dealership to $12,058 for a “dealer sublet and calibration.” CCC’s analysis showed similar wide ranges for each of the line-item entry involving safety devices.

A Houston-based law firm that boasted about filing more than 1,600 hurricane-damage lawsuits over the course of four days is facing sanctions by federal judges who discovered sloppy filings. Two federal judges with the US District for Western Louisiana say they found duplicate lawsuits and complaints among numerous the errors in cases filed by McClenny Moseley & Associates. Judge James D. Cain. Jr. promised in October to fine the law firm $200 for each baseless lawsuit he finds.

The Claims Journal reported in April that Safelite AutoGlass has hired lobbyists at statehouses across the country as it seeks legislation ensure that the sensors and cameras used for advanced driver assistance systems are properly recalibrated after replacement or repair. Satelite, which runs a national chain of repair shops, has persuaded state lawmakers in Utah and Arizona to pass laws, but it is running into opposition by the Auto Glass Safety Council, which represents independent glass repair shops.

Sedgwick released a report in April that said attorneys were involved in about 55% of litigated auto claims on the day the claim first opened or before, up from 43% in 2017. Lawyers drive up claims costs. Milliman reported that for commercial auto, the average cost to resolve a claim with an attorney was 34 times higher than the cost to resolve claims with no lawyer involved.

Smoke damage claims are attracting growing attention by both insurers and public adjusters. In July, Mercury issued a press release about a public adjuster that was walking door to door in Los Angeles neighborhoods to sign up homeowners to file smoke-damage claims that the insurer said are specious. In the meantime, an advocacy group called Consumer Watchdog accused insurers of using “illegal coverage limitations” to deny claims for smoke damage caused by numerous California wildfires.

Fire is also a growing peril for shipping, as the Claims Journal reported on September. Allianz Global Corporate & Specialty issued a bulletin that warned that ever-larger vehicles combined with the growing hazard of lithium-ion batteries are causing “astronomical” losses for insurers. Fire/explosion was the most expensive cause of loss for marine claims in 2021, accounting for 18% of $9.2 billion in total losses, according to an analysis of 240,000 marine insurance claims over the past five years.

Insurers are increasingly likely to challenge appraisal awards that they believe are tainted by appraisers who are not disinterested or impartial as required by most insurance contracts, the Claims Journal reported in April. Brotherhood Mutual has filed a lawsuit that accuses appraisal umpire Mark Weeks of colluding with appraiser Raymond Choate to make misrepresentations that inflated the value of a claim by the First Baptist Church in Odessa, Texas.

Regulators in both Texas and Louisiana have cited a public adjusting firm operated by Andrew Joseph Mitchell for pocketing money that belonged to insurance claimants. In October, the Texas Department of Insurance filed an amended complaint that said Mitchell took a total of $7.9 million from 14 customers, including several churches. The department has asked the State Office of Administrative Hearings to order Mitchell to make restitution, but SOAH has not yet ruled on the case. In a separate matter, the Louisiana Department of Insurance revoked the license of Mitchell’s firm, Mitchell Adjusting International, for allegedly cashing $267,000 in checks that were intended for policyholders.

Stepped-up enforcement of the Medicare Secondary Payer Act is forcing claims managers to pay attention when settling any claims that involve bodily injuries. The Centers for Medicare and Medicaid Services in March finalized rules that will establish civil monetary penalties of more than $1,000 per day against organizations that fail to report settlements with Medicare beneficiaries that set aside money for future medical care.