Tuesday, April 11, 2006

Engineering Reports Unfavorable to Insurance Industry Altered and Destroyed

The Biloxi Sun Herald has two new stories today on the alleged alteration and destruction of Hurricane Katrina-related engineering reports and other evidence that was unfavorable to the insurance industry on the wind vs. water question. An earlier post on this topic may be found here.

In "Engineer: Reports Altered, Name Forged
'They took out whole exhibits'
", Anita Lee reports:
Professional engineer James K. "Ken" Overstreet said his assessments of property damaged by Hurricane Katrina were altered without his permission and, in several cases, his signature was forged on documents insurance companies used to minimize or deny policyholder claims.

Overstreet worked as a contractor for S&B Infrastructure. In turn, S&B contracted with Rimkus Consulting Group Inc. to supply damage assessments to insurance companies. S&B, he said, parroted orders from Rimkus.

"If they could get by with changing the wind to surge, they would do it," said Overstreet, who has talked with the state Attorney General's Office in connection with a Hurricane Katrina insurance-fraud investigation. "If you had affidavits in there where people saw houses blowing down, sometimes they'd just take those out entirely. They took out whole exhibits."

The Sun Herald obtained copies of altered reports from the Merlin Law Group, which has subpoenaed the records for several lawsuits filed in Harrison County against Houston-based Rimkus, Rimkus employees managing Hurricane Katrina work, State Farm Fire & Casualty Co., Clarendon National Insurance Co. and the company adjusting Clarendon claims, CIG Group Inc.

Because of state Attorney General Jim Hood's ongoing investigation, representatives of S&B and State Farm said the companies will not comment on the allegations.

. . .

Overstreet said the engineering firms changed his reports without consulting him, even removing his references to tornadoes when he found evidence of them.

. . .

Overstreet said his signature was forged on the altered reports.

"I don't think there was any restriction on the extent to which they could change the report," Overstreet said. " I was told we didn't have any control over how the reports got changed. It was like it was almost none of my business how they got changed."

Overstreet said he saw a pattern to the damage investigations: when winds and surge battered property, blame the surge.

. . .

Overstreet completed a report on [homeowner James "Bud" Ray's] property in December. He concluded: "The home had been destroyed by a combination of wind gusts, tornadoes and wind-driven storm surge."

He added: "Due to the high incidence of snapped and uprooted trees, and according to eyewitness accounts, winds much higher than those considered to be "sustained" likely contributed to the structural damage to Mr. Ray's house."

A second Rimkus report in February omitted Overstreet's conclusions and instead said, "The storm surge associated with Hurricane Katrina destroyed the portion of the residence above the concrete foundation slab."

Ray had collected sworn eyewitness accounts of the devastation.

Overstreet's report included the eyewitness accounts and a map showing where each lived, along with a photo of Ray and one of the eyewitnesses. Those items were not included in the February report. Overstreet said his name was forged on the report as a consultant, with another engineer's signature and seal affixed.

Meanwhile, Ray spent $15,000 of his own savings on weather, engineering and other professional reports to buttress his claim that wind tore up his waterfront home before the water arrived. He kept CGI representatives abreast of his expert information, eventually securing $500,000 on a policy valued at more than $900,000.

In a related story titled Lott's lawyer: State Farm is destroying fraud evidence, Michael Kunzelman reports:
Zach Scruggs, one of [U.S. Sen. Trent] Lott's attorneys, says Lott has a "good faith belief" that several State Farm employees in Biloxi are destroying engineering reports that gave conflicting conclusions about whether wind or water was responsible for storm damage.

. . .

In an interview Monday, Scruggs said corporate "whistle-blowers" who are cooperating with Lott's attorneys have provided evidence that State Farm employees are destroying or moving those "initial favorable" engineering reports.

"We believe that this is a systematic practice," said Scruggs, who is Lott's nephew by marriage.

Mississippi Attorney General Jim Hood also says he is investigating allegations that State Farm manipulated engineering reports to deny claims after the Aug. 29 hurricane.

A judge ordered State Farm to turn over copies of its Katrina engineering reports to Hood's office. The judge also ordered Hood's office to set up a "Chinese wall" that would keep the documents out of the hands of lawyers with civil cases against State Farm.

. . .

Scruggs is asking a federal judge to order State Farm to turn over Lott's entire case file as well as records for other policyholders' claims.

This is surely not the last we will hear about this dirty business. Stay tuned.


Blogger David Caruso said...

Like A Good Neighbor my ass!

I noticed this posting contains a veeeeery subtle Trey reference.


1:41 AM, April 12, 2006  

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