Condo adjuster admits prior fraud charge

By JANE MUSGRAVE

Palm Beach Post Staff Writer

Friday, August 24, 2007

WEST PALM BEACH - A Jupiter man who helped QBE Insurance determine that a Boca Raton condominium deserved nothing for the millions in damage residents claim it sustained in Hurricane Wilma admitted in federal court Thursday that he had been charged with insurance fraud and lied to state regulators about it.John Wareham, who was hired to inspect the damage at Chalfonte Condominiums in the wake of the October 2005 storm, said he didn’t intentionally lie on his state application to become an insurance adjuster.

“It was 20 years ago,” the 47-year-old said of his 1987 plea of no contest to a charge of insurance fraud. “I was a child back then.”

At age 27, he said, he simply did what his lawyer told him to do. His lawyer said he should take a plea on a charge that he lied to Allstate Insurance about the value of a Mercedes-Benz that had been stolen. So, Wareham testified, he did.

“I honestly didn’t know what the plea was,” he said.

Wareham’s surprise testimony came on the third day of a trial in which residents of the oceanfront condominium are trying to persuade an eight-person jury that insurance giant QBE should pay them roughly $13 million for the repairs they made after Wilma’s 100 mph-plus winds blew out windows and sliding glass doors at the twin 21-story towers.

QBE claims the condominium sustained about $400,000 in losses - far less than its $1.3 million deductible.

Under questioning from condominium attorney Daniel Rosenbaum, Wareham reluctantly admitted that he erred when he last year told insurance regulators that he had never pleaded guilty or no contest to a felony.

“I guess there was an error on my part,” he said. The answer on the application “should have been yes instead of no. But we’re all humans. We all make mistakes.”

QBE attorneys sought to prevent Rosenbaum from questioning Wareham about his criminal past. Such testimony could prejudice the jury and cause a mistrial, they told U.S. District Court Judge Donald Middlebrooks.

However, once on the stand, Wareham volunteered information about his arrest.

Looking at charging documents filed in 1987 by Broward County State Attorney Michael Satz, Wareham said there is no way he paid $7,400 for a Mercedes-Benz and then tried to get Allstate to pay him $21,000 for it after it was stolen, as prosecutors claimed.

“That’s ridiculous,” he said of the car he had shipped from Germany. “Where are you buying a Mercedes-Benz for $7,400?”

While prosecutors said he inflated the car’s value by claiming the 1973 model was manufactured in 1978, Wareham said he registered the car according to the paperwork he received when he picked it up at the port in Jacksonville. He was placed on 18 months probation.

Reached later, officials at the Florida Department of Financial Services, which licenses insurance adjusters, said they don’t understand why they didn’t discover Wareham’s Broward County arrest as part of a criminal background check they did when he applied for a license last year. Officials did discover he had been arrested on a weapons possession charge in Yonkers, N.Y. in 1980.

Because the arrest was so long ago and he completed five years of probation, they approved his application.

Rosenbaum said they may have missed the Broward arrest because a few numbers in Wareham’s social security number were transposed.

State officials also wondered why Wareham was working as an adjuster in 2005 when he didn’t get his license until May 2006.

Wareham is an independent adjuster who was working for Interloss, which was hired to adjust claims for QBE.

The trial, one of nearly two dozen in South Florida facing the biggest insurer of condominiums in the state, is expected to wrap up after Labor Day.

In the fall of 2003, one of the largest recorded wildfires in California’s history destroyed over 2,200 houses and killed fifteen people. Soon after, many who’d lost their homes had a rude awakening: their insurance did not nearly cover their losses as expected.

The insurance industry, which claims to cover “more property, more lives, more liability-related risks than any time at history,” is busy fighting allegations that customers are receiving smaller payouts than what they were promised. This week, nOW collaborates with Bloomberg Markets magazine to investigate tactics some insurance companies may be using to reduce, avoid, or stall homeowners’ claims in an effort to boost their own earnings.

“The insurance industry…is purposely misleading customers,” California Lieutenant Governor and former Insurance Commissioner John Garamendi tells nOW. “The first commandment of the insurance industry is, ‘Thou shalt pay as little, as late, as possible.’…You go to financial heaven if you can carry out that commandment.”

The insurance industry is enjoying record-breaking profits, but who’s paying the price? Follow this link to watch this facsinating PBS video investigation on insurance industry tactics. It’s a real eye opener.

http://www.pbs.org/now/shows/333/index.html

Not according to Florida’s Chief Financial Officer, Alex Sink, who is the head of The Florida Department of Financial Services (formerly known as the Department of Insurance).

Sink says in a letter to Governor Charlie Crist, “Over the last few weeks, my staff and I have taken a comprehensive, objective look at what might happen when No-Fault sunsets. We have met with stakeholders representing all facets of the issue, including auto insurers, health insurers, medical providers, lawyers, my own Division of Insurance Fraud investigators and heard from citizens from all over Florida. Our work led us to create a hypothetical scenario of a post-No-Fault auto accident involving two cars and two drivers. This scenario, which you will find attached, highlights significant policy issues that I believe we must consider as October 1 approaches.”

To read the rest of this letter to the Governor, visit http://www.fldfs.com/PressOffice/Newsletter/2007/072007/PIPLetter.pdf

We encourage you to write to your elected officials and ask them to reconsider allowing Florida’s Mandatory PIP law to lapse or “sunset”. To find your legislative representatives, visit: http://www.myfloridahouse.gov/sections/Representatives/myrepresentative.aspx

This article about insurance company tactics is disturbing, at best. I encourage everyone to read it and pass it along.

http://quote.bloomberg.com/news/marketsmag/mm_0907_story1.html

BY DANIEL HAYS NU Online News Service, Aug. 14, 2:44 p.m. EDT

The Florida Office of Insurance Regulation announced it has denied the rate requests of three home insurers, saying they had not substantially lowered rates as required by the state’s recently revised insurance law. Under the changes enacted in January, primary insurers are able to secure reinsurance at discount rates from the Florida Hurricane Catastrophe Fund and the savings are to be passed on to policyholders. The insurers involved are: - First Floridian Auto and Home, which offered an 8.3 percent cut for its 91,295 customers. The company recently changed its name to Travelers of Florida. - Cyprus Property and Casualty, which proposed a 5.4 percent rate cut for its 63,129 policyholders. - Travelers Indemnity Company of America, calling for an 8.3 percent rate reduction for 4,596 insureds. Reacting to the state’s action, Nancy Baily, president and chief executive officer of Travelers of Florida, said, “We believe that our rate filing was consistent with Florida law. We look forward to working with the Office of Insurance Regulation to address all of their concerns regarding this matter.” Insurance Commissioner Kevin McCarty said that Governor Charlie Crist and the Legislature by enacting the legal changes during the special session in January had made “some courageous decisions,” and “we will not allow companies to file incomplete or inadequate rate reductions affecting the policyholders of this state.” The office said it has sent notices of intent to deny the rate filings because the reduced rates filed did not adequately reflect all of the savings realized when the state offered less expensive reinsurance to companies last spring. “House Bill 1A made $12 billion of less expensive reinsurance available from the state, and the law requires the insurance companies to pass along that savings to their policyholders in the form of lower rates,” said Mr. McCarty. It is “not to be invested in extra, duplicative reinsurance contracts or profit margins.” Companies have until Sept. 30 to submit their final reduced rate filings mandated by the law, and the office will continue to review each one to ensure they are complete and reflect the policyholder savings ordered by the Legislature, Mr. McCarty promised. His action is the latest in a series of rejections of Florida insurers’ rate filings, some of which are under appeal. Companies have said they made purchases of reinsurance before the legislation went through and were locked into contracts with private reinsurers. Mr. McCarty’s office has also issued subpoenas for State Farm Florida Insurance Company, State Farm Florida Fire and Casualty Insurance Company, and State Farm Mutual Automobile Insurance Company to appear and answer questions about their business practices. The hearings slated to take place at the state capitol in Tallahassee were postponed last week after the office said the companies had failed to provide all of the information requested in the subpoenas they were issued. Hearings were postponed, the commissioner said, until the requested information is provided in its entirety. Mr. McCarty’s office noted that he has the authority to hold a public hearing to question a company about their filing pursuant to Florida law. The schedule of upcoming public rate hearings and the television schedule to see them are located on the office’s Web site at http://www.floir.com/pcfr/RateHearings.htm.

At the recent annual meeting of the membership of the Florida Association of Public Insurance Adjusters held at the South Seas Resort on Captiva Island this month, Nancy Dominguez was asked to serve as a member of the Board of Directors. By a majority vote, Ms. Dominguez was awarded the honor to serve as a leader in the public insurance adjusting industry for the State of Florida. It was discussed that this year will be one of the more difficult times for the public insurance adjusting profession in Florida due to the strength and will of the insurance lobby. Insurance company strategists consider attorneys and public insurance adjusters who help the general public obtain what is rightfully due to them, a threat. If they are able to quash the ability of the general public to seek knowledgable and professional representation when they are attempting to seek reimbursement for their most important investments (home, business, etc.) - insurance companies will have an unfair advantage over the insuring public. As a result, this year FAPIA along with the insuring public, will have to work harder than ever to protect the right to seek representation and counsel.

• Can you imagine if you weren’t allowed to ask a professional for advice on an important insurance claim, if you needed it?
• What if the law were such that those professionals could no longer make a living helping the general public because lawmakers and the insurance lobby make it so that it was not cost effective for anyone to handle daily claims?
• Imagine yourself up against an insurance company without anywhere to turn for advice except the insurance company’s own adjuster.

If the insuring public does not stand up and let their lawmakers know that this is not acceptable, that’s exactly what is going to happen in Florida.

It seems that lawmakers have gone from one extreme to the other. After August of 2004, when hurricane Charley hit the shores of Punta Gorda, Florida and caused over 50 billion in damages, the Department of Financial Services (DFS) relaxed the requirements for persons to become licensed public insurance adjusters, in Florida. This was a terrible mistake, because people who had absolutely no experience decided that this was a quick and easy way to make money. Many of those people did not have the public interest in mind. As a result the industry’s reputation took a tremendous downfall as consumers began to complain about unscrupulous activity.

This is the perfect example of why it is so important for consumers to do some research when hiring a professional to help. When you need a financial advisor, you don’t choose a person who got their license online and never received any formal training or education. Not taking the time to choose a qualified public insurance adjuster for your residential or commercial claim is tantamount to flipping a coin to decide who will perform complicated surgery on you. It’s just not done that way. Adjusters who are members of the Florida Association of Public Insurance Adjusters subscribe to a stringent code of ethics and are required to take continuing education courses specifically designed to train them to be professionals. FAPIA is also in the process of designing public adjusting certification testing for it’s members that will set all those who pass it apart from the herd of inexperienced individuals out there who are currently calling themselves adjusters.

Make sure when you need the help and advice of a qualified public insurance adjuster in the state of Florida, you choose a FAPIA member first.