Adjuster’s Lawsuit Accuses UPC of Altering Hurricane Damage Estimates

The practice of insurance companies revising independent adjusters’ damage reports may be as widespread in Louisiana as it is in Florida, according to adjusters and a plaintiffs’ attorney who has filed a lawsuit over it.

“They changed my estimate completely. I couldn’t believe it,” said Joseph Lahatte Jr., an independent claims adjuster who was hired by United Property & Casualty Insurance Co. to work a homeowners’ claim in south Louisiana after Hurricane Ida.

Lahatte’s initial estimate for a home in Cut Off, Louisiana, in the low-lying area south of New Orleans, showed $182,137 in damage, mostly from wind. With depreciation, the actual cash value was $178,551. That estimate, produced with the widely used Xactimate software, was submitted to UPC in September 2021. A few weeks later, UPC sent the homeowners another estimate, showing the damage was worth $35,830 after depreciation.

“I stopped working for UPC after that,” Lahatte told Insurance Journal last week.

Both estimates, on UPC letterhead, include Lahatte’s name. The one-page introductory wording is identical. “We completed an estimate of repair for covered damages to your property. Please note, depreciation may be applied to your estimate…,” the reports note.

Both of the Landrys’ estimates were provided to Insurance Journal by Kirk Guidry, a Baton Rouge attorney who represents the homeowners, Raymond and Tuyen Landry. The differing reports came to light after Lahatte, during his initial inspection, verbally told the Landrys that the home was almost a total loss and that his estimate would show that. When the Landrys received the final estimate from UPC, they were shocked and called Lahatte with questions, Guidry and Lahatte explained. Outraged, Lahatte printed his initial estimate and provided it to the family.

The family then asked a UPC representative about the huge discrepancy. “But all they (the UPC representative) said was, ‘How did you get the field adjusters’ report?'” said Guidry, who is with the Dué, Guidry, Piedrahita and Andrews law firm.

The homeowners filed a lawsuit against UPC in Lafourche Parish, Louisiana, charging that UPC’s final estimate was “unreasonably low and extremely unfair” and that United was not acting in good faith. UPC removed the case to federal court. The suit has been placed on hold, essentially, because St. Petersburg, Florida-based UPC has been deemed insolvent and is in liquidation.

The Landrys will likely see at least part of their claim paid by the Louisiana Insurance Guaranty Association.

United’s chairman and CEO, Dan Peed, declined to comment about the allegations.

Lahatte, a former lawyer, and other adjusters said that UPC has long had a reputation for undercutting field adjusters’ reports. A federal lawsuit was filed in Florida in 2022, charging that UPC had engaged in racketeering by routinely instructing its desk adjusters to reduce estimates, and text messages to adjusters reflected that. That suit was dismissed by a federal judge who found that state courts, by law, should handle insurance regulation issues. A Florida lawyer in the case has said that the plaintiffs are considering renewing the suit at the state level.

Adjusters have said that other insurers and claims adjusting firms hired by insurers have taken similar claims-cutting actions for years – in Louisiana, Florida and other states.

“We’ve seen the same thing from other companies,” said Mark Vinson, a Louisiana-based independent adjuster who works claims around the Southeast.

He and Ben Mandell, another independent adjuster, said that insurers and claims adjusting firms have sometimes changed the numbers on price lists for materials and labor. While all the needed work is shown on the final estimate, the costs have been drastically reduced, they said.

Vinson and Mandell were two of three adjusters who spoke out about the practice at the Florida Legislature in December, sparking a controversy that has been widely reported by the Florida news media. The adjusters said that some insurance carriers have repeatedly altered their estimates but left the field adjusters’ names on them, an action they and some Florida officials have said amounts to fraud.

Florida regulators have announced they are now investigating the alleged fraud. Vinson and Mandell said they had spoken with investigators from the Florida Department of Financial Services.

“My hope is that we’ll get some arrests,” Mandell said. “If Trump can be arrested, then someone in this business can be arrested, too,” he added, referring to the recent New York indictment and arrest of former U.S. President Donald Trump on business-fraud charges.

A bill now moving through the Florida Legislature would prohibit insurers from altering field adjusters’ reports without including a list of changes, who made the changes, and why. The Florida Senate’s Banking and Insurance Committee approved the Insurer Accountability Act last week by a vote of 8-0. It’s now in the Senate Fiscal Policy Committee.

One Florida insurance carrier has denied ever altering field adjusters’ reports. Others in the industry have said that insurers may choose to legitimately revise estimates due to policy exclusions, cause of damage, depreciation and other reasons.

Questions About Adjuster’s License

A few insurance industry advocates have also questioned the motives and the backgrounds of the independent adjusters who’ve made the allegations. And critics are likely to question Lahatte’s veracity and the legitimacy of his work on the Landry claim.

Records show that Lahatte, who lives in Metairie, had his Louisiana adjuster’s license revoked in 2016 for failing to disclose that he had a previous professional license suspended. The Louisiana Department of Insurance, in records provided to Insurance Journal, noted that Lahatte was suspended from the practice of law in 2003 over allegations of commingling and converting third-party funds.

His probationary status was revoked in 2006 for failure to comply with the terms of his probation, the LDI and Louisiana Bar documents show. In 2012, formal charges were filed, alleging that Lahatte had engaged in the unauthorized practice of law. In lieu of disciplinary proceedings by the Bar, Lahatte resigned his law license. The state Supreme Court agreed and permanently revoked his license.

“I didn’t reveal some things that I felt were not related to adjusting,” Lahatte said last week.

In 2019, Lahatte voluntarily surrendered his Mississippi adjuster’s license, records show.

When asked if he had worked the 2021 Landry claim without a Louisiana license, Lahatte said he had obtained an emergency license at that time. A Louisiana insurance department official and a records request, however, indicated that no other records regarding Lahatte’s license could be found since the 2016 revocation.

“It is still cancelled,” said a representative with the LDI’s producer licensing section.

Guidry, the attorney for the Louisiana homeowners, said he was unaware that Lahatte’s license had been revoked.

Lahatte, who was driving a school bus last week, said he hopes to have his Louisiana adjuster’s license reinstated at some point, and that he is now licensed in Florida. Florida DFS records show that Lahatte held a non-resident adjuster license from 2013 to 2019, and an emergency license from 2019 to 2020. The emergency license was renewed in 2022 and is still active.

A Canadian software company now has an app that its founder said would help prevent insurers from altering adjusters’ reports. RocketPlan would post adjusters’ reports in real time and would allow all interested parties to see them, along with insurance companies’ final estimates, explained Joe Tolzmann, CEO of the startup insurtech.

The app uses blockchain technology, making it almost impossible to hack or fabricate data and documents, he said. The app also can be connected to sensors showing moisture levels in water-damaged parts of buildings.

The trick, of course, would be to get carriers to use the software and to allow policyholders to access it.

“We’re negotiating deals with a couple of insurance carriers now,” Tolzmann said last month.

Top photo: Aiden Locobon, left, and Rogelio Paredes look through the remnants of their family’s home destroyed by Hurricane Ida, Sept. 4, 2021, in Dulac, Louisiana. Homes across south Louisiana were damaged by the storm. (AP Photo/John Locher, File)