PIE: Emphasizing Ethics in the Industry
In the insurance industry, adjusters frequently rely on engineering and other specialty firms to provide an opinion of the cause based on the facts in their claims from that expert’s understanding of the issues.
Following recent catastrophic losses, some insured have made claims against their insurer alleging that the engineering firms falsified reports and have in fact accused one carrier of ordering biased engineering reports. For example, following Hurricane Katrina in 2005, accusations in federal courts were made regarding gulf coast engineering firms altering their final reports following adjuster review. At least one of these cases led to a $13 million jury award against the insurer, a payout which is far greater than the cost of the original claim.
The appearance of similar unethical practices recently hit closer to our Colorado office, as well. A Denver firm specializing in compiling medical reports for the insurance industry was accused in May of altering many of their reports so the insured’s claim would not be covered or would have reduced coverage under their insurance policy.
The negative media attention being received by the insurance companies is causing damage to their clients as well as to their own professional reputations.
“Altering of reports on behalf of a client’s opinions is considered advocating for their client, which is in violation of most engineering board laws and rules. Engineers who alter reports on behalf of their clients’ opinions improperly in favor of their clients are unethically and illegally doing a disservice to the public,” says Matthew Blackmer, a professional engineer and Principal at Pie Consulting & Engineering in Arvada, Colorado.
This issue presents a catch-22 to the insurance industry. Adjusters want to ensure that they are allowing claims when they are in fact covered, but they also need a professional, trustworthy firm to consult with when necessary to aid in the determination of the causation to provide independent truthful analysis of the claims merits. PIE believes that by providing our clients the straightforward, honest answers based on the facts and information, clients will receive an unbiased, independent opinion.
PIE began its business with a strong emphasis on ethics. With the current controversy occurring within the industry, the company decided to re-emphasize its devotion to truthful answers and higher expectations. In May of 2007, PIE brought in an independent litigation and evaluation expert to give its employees an in-house training on the qualities and ethics PIE puts its faith in.
Steven Babitsky of SEAK, Inc., provided the day-long training. Babitsky, who has 20 years of experience as a personal injury trial attorney, emphasized the importance of truth, transparency, and ethics in reports.
According to Babitsky, as an expert, the engineer is responsible for providing honest, straightforward answers based on their education and experience. Babitsky stressed to the company that, as an engineer, it is vital to serve as an “advocate for [the engineer’s] opinion or truth, not an advocate for the client.”
“In fact, professional engineers must be advocates for the truth, whatever that may be. By being an advocate for the truth, professional engineers are following their responsibility for safeguarding life, health, and safety and welfare of the public,” says Blackmer.
The employees at PIE know the importance of serving as a reporter of the engineering facts necessary to provide a truthful opinion.
“Our word is all we have to give to our clients,” says Brad Stolz, a three-year PIE employee who received his engineering degree from the Colorado School of Mines.
Robert Howell, an independent adjuster with Engle Martin & Associates, Inc., believes that the firm used will often reflect on his reputation. “Insurance adjusters, particularly independent adjusters, are judged largely by the decisions we make. This includes vendor selection and the utilization of consultants of any kind, when necessary,” he says. “When we make a poor decision that causes us to end up with a biased or indefensible report or finding, it reflects directly on us in a negative way.”
Also emphasized at the workshop was the practice of transparency within the company. Babitsky stressed the importance of having complete and detailed files, such that the case can be clearly supported in the event that any conclusions are ever debated.
Stolz confirms the importance of transparency, which is of utmost importance within PIE’s policies. “Our conclusions are never drawn out of thin air, so the transparency of our file only helps to aid these conclusions if they are challenged,” he says.
In fact, the National Society of Professional Engineers (NSPE) Code of Ethics states that engineers are to “avoid deceptive acts” and to “conduct themselves honorably, responsibly, ethically, and lawfully so as to enhance the honor, reputation, and usefulness of the profession.” PIE’s engineers strongly believe in upholding this code to its fullest extent.
While the answers given by our engineers may not always be what the client was expecting, Mr. Babitsky noted that the truthfulness of PIE will, in fact, result in benefits to insurance companies and their clients.
“They’re getting the answers up front. It can save them a lot of money, rather than stringing the client along for years and racking up a huge bill. It will be a benefit for everyone involved,” he said. Considering that the legal profession is paid hourly, there is a undesirable consequence of claim work that is the continued hourly billing of experts and council in providing opinions that are contrived out of trying to minimize the loss to a client. That time would be better spent in quickly analyzing the claim, determining the facts, coming to an opinion, and expressing that to the client to aid them in their determination of the merits of the claim. The alternative to this is a costly, drawn-out procedure that can cost thousands of dollars in lawyers, experts, and court time preparation.
PIE, since its inception, has believed that sound engineering practices should serve as its guiding light. The engineers at PIE make a choice to maintain their ethical standards through providing the truth of the findings.
Blackmer sums up the collective belief of the company’s engineers: “as a practicing forensic engineer, my goal is to always be an advocate for the truth.”
Tags: Arvada Colorado, claim, Colorado School of Mines, ethics, hurricane, Hurricane Katrina, industry, insurance, katrina, Matthew Blackmer, National Society of Professional Engineers, Pie Consulting & Engineering