An Example of Why Insurance Companies Are So Skeptical

In my recent presentation on ethics at the California Association of Public Insurance Adjusters (CAPIA), the focus was on the cornerstone of integrity. I emphasized the importance of undertaking the right actions not just for their outcomes but because they are intrinsically honest and moral. This is vital for maintaining ethical and professional standards in our work. A critical point I raised was the tendency for individuals who engage in dishonest actions to rationalize their behavior. Some even argue that wrongdoings by insurance companies justify reciprocal unethical responses. To illustrate this point, I shared a slide quoting a maxim my mother often reiterated during my childhood: ‘Two wrongs never make a right.’ This simple yet profound wisdom underscores the essence of ethical conduct in our professional lives.

I was thinking about that while reading a bizarre Order to Show Cause involving a federal court case in Arkansas:1

…United Fire seeks sanctions due to allegations that 4 Star’s counsel and employees attempted to witness tamper by arranging for a witness to avoid being served with a trial subpoena in this matter.

…       

The Court is considering sanctions against Benjamin Doyle, Allen Satnes, Jonathan Kinder, and 4 Star. Courts have the power to sanction attorneys who appear before it (Mr. Doyle), parties (4 Star), and representatives of those parties (Mr. Satnes and Mr. Kinder)…

The Court is considering a range of sanctions. This range is from no sanctions up to the most severe sanction: dismissal of 4 Star’s complaint with prejudice. Included in that range is striking evidence or claims, imposing attorney’s fees and costs, a monetary fine or penalty, referral to the proper authorities for investigating any alleged crimes, using an adverse inference against 4 Star if this matter proceeds to trial, and the dismissal of 4 Star’s complaint with prejudice. … At the moment, Mr. Doyle is the only attorney who is subject to sanctions. If the Court decides any discipline against Mr. Doyle is warranted related to his bar admission in the Western District of Arkansas, that will be addressed at a separate time. If necessary, the Court will also refer any attorney misconduct matters to the relevant state bar associations.

Finally, the Court wishes to briefly address Mr. Doyle’s motion to withdraw. Mr. Doyle seeks leave to withdraw because United Fire has designated him a fact witness in this matter which creates a conflict of interest. Mr. Doyle also denies the allegations in the motion for sanctions. According to Mr. Doyle, a formal complaint against him has been filed with the Arkansas Committee on Professional Conduct, and he intends to address the allegations in that forum. The Court has ‘the power to deal with conduct of attorneys in litigation without delegating this responsibility to state disciplinary mechanisms.’… The Court’s power and responsibility in this matter is not affected by whether the Arkansas Committee will act. The Court will not grant the motion to withdraw at this time.

The insurance company’s motion for sanctions has an affidavit which should be read to fully understand the scenario of what was allegedly said to prevent a witness from appearing at a trial. It stated, in part:   

4. On October 27, 2023, I spoke with Smith by phone. Smith explained to me that an employee of 4 Star, Allen Satnes (‘Satnes’), paid him $2,100 in cash with the understanding that Smith would use the money to leave town with his family in an attempt to evade service of WDTC’s subpoena for trial. He also told me 4 Star’s current attorney, Benjamin D. Doyle (‘Doyle’), had contacted him and told Smith to leave town for a while to avoid service, and to not tell anyone where he was going. Smith said he had video recordings of his phone calls with both Satnes and Doyle wherein they discussed this arrangement.

5. On October 27, 2023, at 1:08 p.m., Smith texted me two videos that his wife recorded on her cell phone. The first video depicts a phone conversation between Smith and Doyle about paying Smith to evade service in this case. The second video depicts a phone conversation between Smith and Satnes about the same topic.

Part of the transcription, if true, is going to doom the contractor and its attorney:

BEN DOYLE: They didn’t do their job correctly. If so the only way they can get that evidence is through you, okay. And the only way you can be forced to testify is if you are served with a subpoena. They can’t serve you with a subpoena unless you’re in Fort Smith. So I don’t care where you go 4 Star’s gonna pay for it. Go to Kansas City, go gamble, you can go find a lake somewhere and go fishing. I don’t want you to tell me where you’re gonna go. I honestly don’t care but Jonathan wanted me to call you to assure you you’re not in trouble, you haven’t done anything wrong. There are no issues whatsoever. If you end up getting served with the subpoena then call Jonathan. But we’re trying to prevent you from testifying at trial.

JONATHAN KINDER: You’ll find the money in cash.

A hearing was held on the matter this week. The court has not made a ruling.   

In my recent presentation on ethics, I delved into the essence of professionalism, particularly emphasizing the significance of avoiding mistakes. A key point I discussed was the observation that insurance company adjusters and their attorneys often hastily label every error made by a public adjuster, contractor, or policyholder as an intentional act of fraud. This quick jump to accusations can be problematic.

Given the volume of misconduct cases, such as this notable instance from Arkansas, it’s perhaps understandable why such skepticism has become a default stance. It’s akin to police officers working in troubled neighborhoods, where distinguishing between law-abiding citizens and wrongdoers becomes a challenging task. However, it’s disheartening to report such occurrences. When such misconduct happens, it invariably casts a shadow over all policyholders, restoration contractors, and their advocates. It fuels a cycle of increased skepticism among insurance adjusters and their attorneys.

This heightened doubt affects the entire process, making it increasingly difficult to accord policyholders the benefit of the doubt regarding their integrity—a presumption they rightfully deserve. Such a climate of mistrust makes it challenging for honest individuals to navigate the system and receive fair treatment. It’s a reminder that one unprofessional and unethical act doesn’t just impact the immediate parties involved; it reverberates throughout the insurance industry, altering perceptions and complicating interactions for those who operate with integrity and professionalism.

Thought For The Day

It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.

—Warren Buffett

1 4 Star General Contracting v. United Fire & Cas. Co., No. 2:22-cv-02036 (W.D. Ark. Nov. 11, 2023).