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Did Allstate Mislead the Government?

 


 

 

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Merryl and Bob Weiss describe the destruction to their home after Hurricane Katrina, and why they decided to sue their insurer, Allstate.

 

 

 

 

 

Did Allstate Insurance get out of paying a wind claim by charging off damages to the flood insurance program?

 

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Merryl and Robert Weiss owned a $600,000 three-story home on Lake Pontchartrain in Slidell, Louisiana, northeast of New Orleans..The eye of Hurricane Katrina went right over Slidell, and after it passed through, all that remained of the Weiss’ home was the foundation.


Allstate sent Jim Neva, a surveyor and engineer to inspect the property in November 2005.  He told the Weisses that the house had been hit by a tornado before it was washed away by the flood surge.

 

When the Weisses finally received a copy of their Allstate engineering report in February 2006, it said nothing about a tornado. "The extent of damage due to wind could not be determined," the revised report read. "The complete destruction and removal of debris was consistent with damages due to storm surge."

 

The National Flood Insurance Program paid the Weisses $350,000-the $250,000 maximum on their house and the $100,000 limit on their contents. In addition to federal flood insurance, Robert Weiss had an Allstate homeowner policy with limits of $343,000 for the dwelling and $240,100 for personal property; but Allstate only paid the Weisses $29,483 for structural damage plus $14,787 for additional living expenses. The Weisses say the total they received - $394,270 - wouldn't rebuild their home.

 

 

TAKING ALLSTATE TO COURT

 

The Weisses took Allstate to court in April of 2007, arguing that the flood insurance covered only losses on the ground floor. They contended that Allstate should cover the costs of replacing the upper two stories, which were damaged by wind.


One of Allstate's witnesses in the case was Craig Rogers of Rimkus Consulting Group, who wrote the final "revised" engineering report on the Weisses' home. Rogers said he didn't personally inspect the property until after he wrote the report, but instead based his conclusions in part on evidence gathered by other Rimkus engineers-a practice he described as common.

 

 

DOCTORING REPORTS

The Weisses’ lawyer, Johnny Denenea, used the “track changes” function of Word software on the Rimkus reports from claims filed in Mississippi. (Check them out here: Rimkus document #1, Rimkus Document #2.)  It revealed that conclusions supporting wind damage were changed to flood in the home office.

 

It revealed that conclusions supporting wind damage were changed to flood in the home office. Denenea says that, “one or two of the changes may be expected, but in each case that has been litigated involving Rimkus, the conclusions were universally changed from wind to flood.  In not one case has there been a report that shows the report was changed from flood to wind.”  In Denenea’s view, this supports the notion of a conspiracy to defraud the government.

 

Denenea says there are other examples of “false information” submitted by Allstate to the NFIP in the Weisses’ case.  He cites forms that contain a reference to exterior and interior waterlines on the Weisses’ house, and a phrase reading “damage was extensive throughout the home.”  The field adjuster, Mike Wells, denied under oath that he wrote this narrative report, noting that since there was no house there to inspect, there were no water lines, and no interior damage, to document.

 

Denenea also submitted evidence that he said showed the company fabricated the list of personal property damages, inflating the expenses billed to the NFIP. Merryl Weiss submitted a handwritten list of personal property the couple lost from the first floor of their home.  It was mostly fishing equipment, and totaled $38,848.25.  During trial depositions, the Weisses discovered that Allstate had submitted a list to the government that included furs, jewelry, and furniture valued at more than $139,000.  Fishing rods were not on the list.

 

During testimony, field adjuster Mike Wells confirmed that the documentation sent to the NFIP did not match what the Weisses submitted. Denenea says he believes the process of falsely maximizing flood claims was encouraged by Allstate supervisors. To back up his claim, he points to the testimony of Allstate office adjuster, Mung Hatter. She said that all adjusters’ reports are maintained in a computer database and reviewed by managers Denenea believes insurers maximize content lists to take advantage of the highest bracket of the NFIP’s fee structure.

 

In describing what he sees as damning evidence of false information and fabricated data in the Weiss case, Denenea told the Times-Picayune, “When Allstate pays a claim under a flood policy, they are using the checkbook of the United States Treasury.  When they pay a claim under their homeowners policy, they are using the Allstate checkbook.  For every dollar paid out of the federal treasury under flood, Allstate takes a credit and keeps a dollar.  Essentially Allstate is profiting at the expense of the American taxpayer.”
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Did Allstate dupe the U.S. government?

 

 

 

HAVE A LOOK AT THE DOCUMENTS AND TELL US WHAT YOU THINK.

 

HOW WOULD YOU RULE IN THE WEISS CASE?

 

 

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RULING IN THE WEISS CASE

 

On April 16, 2007, the Judge ruled in the Weiss case that Allstate must pay the couple more than $2.8 million in damages, including a $1.5 million bad faith penalty for the company's failure to pay the claim quickly enough -- significantly more than the plantiffs' attorneys had suggested.

 

Allstate said it would appeal the decision, but financially that may be of no consequence. Judge Sarah Vance allowed the jury to reduce the company's payout under the homeowners' policy by the amounts Weiss had already received from his flood coverage.

 

 

 

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Insurance Information Institute President Bob Hartwig defends the insurance companies.

 

 

 

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Lawyer Johnny Denenea and Merryl Weiss say that Allstate submitted a fabricated list of the contents of their home to the federal flood insurance program.

 

 

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Lawyer Johnny Denenea says that Allstate submitted fabricated waterlines to the federal flood insurance program.

 

 

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Lawyer Johnny Denenea shows how Rimkus Consulting Group changed field adjuster's engineering reports to say that damages to homes were caused by flood and not wind.

 

 

 

 

 






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DEFINITIONS

 

NFIP - The National Flood Insurance Program.  The federal program that guarantees homeowners are covered for flood losses.


FEMA - The Federal Emergency Management Agency.  Administers the NFIP.


WYO - Write Your Own insurance:  FEMA's name for outsourced flood insurance policies. FEMA contracts with existing insurance companies to sell, adjust, and settle flood claims.