What is the extent of the reach of the Consumer Protection Act (CPA) and the liability exposure of individual professionals? Historically there has been a separation between agents of an organization and the company which holds the contractual relationship with their customer. In contested insurance claims it is common for companies related to the claim to be brought in as witnesses and/or claimants. Keodalah v. Allstate Insurance Co. is a case from 2018 that broadens the parties that could be called into account, at least in Washington state, to individuals involved with the claim.

​Working in the property restoration for over a decade, it is difficult to argue that the line(s) between carrier and service providers can often be blurry. When a restoration company is sent to an insured in need as a preferred vendor, in the eyes of most homeowners they are a representative of the carrier. How often have you arrived at a loss to be greeted by the homeowner, “Oh, you are from [insert carrier name]?” How many times have you had to clarify that you work with said carrier but you are an independent contractor? If this relationship is unclear in the mind of the consumer it could be a potential area of exposure. 

​With the rapid rise and prevalence of Third Party Administrators (TPAs) enforcing carrier requirements, many restoration providers believe the definition of “independent contractor” is even blurrier. When the carrier sets the guidelines of claims response, standardizes estimating parameters and reserves the right to interpret the nuances of the claim, it is hard to argue that there is much independence for providers that want to continue to work with the volume being funneled through these systems. Furthermore, in cases where the contractor is being called upon to provide information, documentation and opinions related to cause, source, extent and/or duration the contractor may be crossing into the gray areas between duties. 

​Writing for Restoration & Remediation, former adjuster Peter Crosa comments, “It is within this scenario that the restoration contractor walks the proverbial ‘tight rope’. Performing satisfactory work for a property owner to make sure you get paid while providing a scope deemed fair and acceptable to the adjuster and the insurance company hoping that they’ll call you again on future losses.” As such, if the Keodalah ruling gains prominence within the application of the good faith requirements of the CPA, it may not be so far-fetched to see this extending to restoration companies as well as other professionals involved in the claims process.

The Consumer Protection Act sounds self-explanatory in its purpose of protecting consumers. In the Keodalah ruling, Washington State has extended the responsible parties in the processing of an insurance claim. With regards to making a case under the CPA the Supreme Court ruled in Hangman Ridge Training Stables, Inc., v. Safeco Title Insurance Co. that, “A plaintiff must show:

1. an unfair or deceptive act or practice
   
2. that act or practice occurs in trade or commerce
   
3. a public interest impact
   
4. injury to the plaintiff in his or her business or property
   
5. and a causal link between the unfair or deceptive act and the injury.”

Keodalah v. Allstate Insurance Co. (No. 75731-8-1)

The basics of the case, which should be reviewed with the caveat that we only have those details released by the court. Moun Keodalah was struck by a motorcycle at an intersection which ended in fatality for the motorcyclist. The motorcyclist was uninsured and Keodalah made an Uninsured Motorist (UIM) claim with his carrier Allstate Insurance. “The Seattle Police Department (SPD) investigated the collision. The SPD determined the motorcyclist was traveling between 70 and 74 m.p.h. in a 30 m.p.h. zone. SPD reviewed Keodalah's cell phone records. They showed that Keodalah was not using his cell phone at the time of the collision.”  

The available UIM coverage was $25,000 and Allstate responded that Keodalah was 70% responsible so their initial offer was $1,600. (As an aside, quick math brings 70% of $25,000 to $17,500) We don’t know how Allstate came to that initial conclusion but upon rebuff by the insured the amount was raised to $5,000 without any further explanation. One can begin to see how a jury of peers, each with their own perspectives and experiences with insurance, might view this approach as “low-balling”.

Allstate held to their stance that Keodalah was 70% at fault even thought this claims was contradiction to the SPD determination, witness accounts, phone records review and a third party reconstruction investigation (hired by Allstate) from Traffic Collision Analysis, Inc (TCA). Before trial Allstate raised their offering to $15,000 which Keodalah refused and the case continued to jury trial.

What is unique about the Keodalah ruling is that the Allstate CR 30(b)(6) representative Tracey Smith was named personally in follow up suits. These suits called upon Washington Insurance Fair Conduct Act (IFCA) violations, insurance bad faith and Consumer Protection Act (CPA) violations. From law practitioners that I have spoken to on this case, we have not yet confirmed whether Tracey Smith was the handling adjuster but court documents seem to point to her acting in that capacity. According to lawyer Keith M. Ligouri, “The decision substantially broadens the scope of the threats available to claimants’ counsel when it comes to bad faith. The holding arguably expands exposure beyond the primary adjuster to any employee involved in the adjustment process.” 
​ 
Keodalah is unique in that Washington State is now the only state which allows individual company representatives to be sued while operating as agents of their company with regards to insurance claims. Responsibility, under the Consumer Protection Action, to the insured does not require a direct contractual relationship. Keodalah potentially opens a “Pandora’s Box” as argued by an Amicus Curiae Brief of Washington Defense Trial Lawyers (No. 95867-0). This brief notes that already two cases have already extended the implications of the Keodalah ruling to lawyers representing insurance carriers.

The Consumer Protection Act prohibits, “Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.” (RCW 19.86.020) With regards to the information available through Keodalah it appears that either the adjuster was responsible for instigating a lie or was an agent of the company supporting a false narrative. Regardless of where the false information and resulting policy dispute originated from, as an agent of the company, the adjuster Tracey Smith was deemed to be culpable.
​
Insurance adjusters, whether captive or independent, appear to have the most direct exposure in the state of Washington. Review documents note, “The Court of Appeals reversed the superior court and reinstated Plaintiffs’ bad faith and CPA claims against Smith. The court held that RCW 48.01.030 imposes a duty of good faith upon adjusters individually and that the duty is actionable in tort and under the CPA.”  As will be discussed below, interpretation of CPA through the Keodalah ruling has already been extended to carrier counsel.

While insurance fraud is real and has consequences that ripple through organizations as well as to end line users in the form of policy rate implications, good faith is also a key ingredient in the claims process. Consumers are expected to act with integrity as are carriers, their agents and those associated with the claim. The 2018 ruling by the Supreme Court of Washington State in Keodalah v. Allstate, which is currently under review, should be something all individuals operating within the umbrella of insurance claims are paying attention to. It’s no surprise that an consumer would take legal action against a company in the event of a dispute, but it is historic that the individual agent was named. Keep an eye on this case. 

The insurance claims estimating world can feel like a wandering in the dessert for restoration professionals. The frustration with the guidelines of program work and having to be reviewed by third party administrators (TPAs) can bring mitigation and construction estimators to a point where they feel lost and leaderless. Anyone who manages projects within the insurance claims industry must familiarize themselves with reading and writing Xactimate estimates. For those just beginning their journey in estimating insurance claims, you will find our Three R’s of Mastering Xactimate for Beginners to be a helpful baseline for success. The cloud of mystery that surrounds the stone tablets of this industry standard may scare and confuse many, but with the help of these ten commandments for Xactimate mastery you may find that you can achieve success. 

Thou shalt sketch accurately. Regardless of the tools that you use, make sure that you get your sketch right. An accurate sketch is the key to creating a solid Xactimate estimate. Sketching from the site is one of the best ways to ensure you get odd corners and turns in a unique layout accurate as well as capture all of your line items. Second best is utilizing sketching programs or a good graph notebook. If you are new to sketching for construction estimates, property restoration or Xactimate, check out this video on the foundations of a good diagram. 

​Thou cannot take too many photos. For those who started in the industry when we had to print photos or save them on 3.5 in floppy disks, there may be some hesitation to take too many photos. With modern digital technology this is no longer true. The more photos that you take the better. Always take photos of the front of loss, source, shots from all corners of affected rooms, affected materials, equipment and any unique components of the claim. Learn what carriers and adjusters are looking for as it is a terrible waste of time to have to run back out to a project just for one shot to justify a key line item.

​Thou shalt label they photos descriptively. Common descriptions should include the room name and what is being represented with the photograph such as “Kitchen floor damage” or “Living room ceiling affected”. Carriers are often requesting that photos be uploaded in relationship to the sequence of rooms in the sketch, this can be easily done by dragging photos into the rooms when uploading into Xactimate.  

Thou shalt utilize thy F9 notes. F9 notes can be used for formatting but breaking up large sections of line items into categories that make the estimate easier to read for reviewers, adjusters and your production teams. F9 notes can be used to describe how a line item is being utilized, for example DRY LF may have an F9 note of “Repair flood cuts for common wall to bathroom” especially if there is another drywall line item in the room that may be for the ceiling or separate section of wall. If you ever utilized a labor (LAB) line item you must understand that it is going to be questioned and should have an ample F9 note, photographic support for the scope being requested and best to have the designation as “approved by adjuster,” assuming that you have already discussed it with them. Communication is key, utilize this simple function. 

Thou shalt document your initial findings. Whether it’s a 12 hour update for a mitigation claim or a loss narrative for a repairs claim, you need to communicate the conditions you have found once you have completed your inspection. For mitigation projects you are communicating the site conditions, source and drying plan. For repairs projects you are confirming the site conditions and outlining the scope of work that you are estimating for. Samples of what should be covered in the twelve hour update as well as the loss narrative for Xactanalysis include:

Thou shalt update thy adjuster in real time and document consistently. One of the keys to success for any organization or project management system is communication. A key principle for communication in the insurance claim industry is no surprises. Utilize email, text, phone calls and third-party programs such as Xactanalysis to communicate consistently and clearly with all parties. While some adjusters may have you wait until the end of a claim to compose all of your supplements and changes, you want to make sure that you aren’t waiting until then to communicate and acquire some form of written approval. You want to build relationships with adjusters and claims administrators and communication is a means to making their job easier by not surprising them with alterations to the plans previously agreed to.  

​Thou shalt learn thy carriers guidelines. While it is impossible to remember all of them unless you are able to specialize with specific carriers, it is important to know the key rejection line items. Pay attention to what you are getting rejected for. Try to not repeat the same mistakes with the same carriers. Every carrier has their general rules as well as their idiosyncrasies. For example one carrier will want contents as CON LAB and another will want to see it as CON ROOM. It should only take one rejection for you to understand and remember which carrier prefers the line item one way or the other.

​you do not want to be constantly frustrated by rejections you must quickly learn which line items will get rejected by reviewers or will require adjuster approval. When working with third party administrators (TPAs) you will have to work through layers of review and approvals based upon insurance carrier guidelines. If you have a scope of work that falls outside of the norm you will need to get in communication with the adjuster to discuss how they would like that scope of work broken down. A scope and line items that may not pass through the normal review process can be overridden if there is ample explanation through F9 notes, photos and the designation that this has been “approved by adjuster”. 

​Thou shalt know thy line items – thou shalt understand thy line item descriptions. When you start writing estimates in Xactimate you need to take some time to familiarize yourself with what is and isn’t in a line item. As a general rule, most carriers do not want you to utilize labor (LAB) line items as in theory everything that needs to be done should be covered in a line item scope of work. For those items that are out of the ordinary you need to ensure that there isn’t an Xactimate line item that covers the work you are requesting labor for. Also, ensure that you aren’t duplicating a scope of work that is already covered in the line item while also ensuring that you aren’t cutting yourself short by missing items that are omitted from the line item description. 

​Thou shalt learn to master the tri-fecta of service, expedience and accuracy. Restoration creates the challenge of getting in and getting out expediently while providing a quality service and communicating with multiple parties. When the scope of work falls outside of the timeline requirements be sure to communicate and update frequently. Restoration professionals have to be skilled in the construction and mitigation trades, must be able to provide a high level of customer service which is grounded in communication and are required to be technologically proficient to utilize the industry tools. 

​When Moses came down from Mount Sinai with the two stone tablets, there were questions and fear, but there were also some clear directives. Xactimate and program guidelines generate similar emotions but one cannot argue that there are keys to success when working with the estimating software. You can argue all you want about who gave the directives, who is interpreting the guidelines and whether the system is fair, but you also had better apply your energy to learning Xatimate’s keys to success. If you are just starting out in your estimating journey, you may find our Three R’s of Mastering Xactimate for Beginners to be helpful. Insurance claims are subject to some level of interpretation so mastering the tools of the trade is essential to achieving success with the process. 

​If you work with insurance claims you will want to familiarize yourself with writing and reading Xactimate estimates. This is true whether you are an adjuster or a restoration professional. Xactimate has become the standard for the majority of insurance carriers and third-party administrators (TPAs).

​If you are new to Xactimate we have three tips that will help you master the best practices for this estimating platform. 

​You must learn from rejection. You are going to get rejected, it’s part of the process. Pay attention to what you are getting rejected for. Try to not repeat the same mistakes with the same carriers. Every carrier has their general rules as well as their idiosyncrasies. For example one carrier will want contents as CON LAB and another will want to see it as CON ROOM. It should only take one rejection for you to understand and remember which carrier prefers the line item one way or the other. 

​You must learn from repetition. Xactimate is designed for the straight forward losses. While we may disagree on the percentage of claims that are “typical”, there are going to be losses that break with the norm. For the majority of your losses, once you have a loss format that has been accepted you can either create a macro or just cut and paste that format. In my opinion macros can be more work than they are worth but there are plenty of Youtube videos on how to construct these. Memorize the codes and line items that you utilize most frequently and utilize prior approved estimates as standards for future claims.  

You must learn from relationships. Get to know your local adjusters. For those losses that break from the normal, in and out claim, make contact early and often with your local adjusters. You will learn what they see as simple approvals and what their idiosyncrasies are for the carrier they work for. Once you know the adjuster, make their job easier. Don’t contact them for every little change but rather have your items in order so that you can discuss the claim and make a reasonable request that serves the client as well as meets the guidelines of the carrier.  

It is helpful to have a consultant or mentor, whether this is an internal resource or someone you pursue from outside your company. There are helpful Youtube videos, independent training programs as well as courses that you can take. (If you are learning to sketch in Xactimate you may find this video helpful) Don’t let fear prevent you from reaching out to someone through email, LinkedIn or for coffee. For most professionals in the industry mastery has come through trial and error. If you want to survive and succeed in the insurance property claims industry, you must learn from rejection, repetition and relationships. 

Contact us for coaching and consultation with estimating, project management and process improvement. ​

Non profit organizations have as much to lose when business is interrupted as for profit businesses do and in many cases more to lose. Maintaining business continuity involves having the right knowledge base to understand risks and prepare your team to prevent those items that can be avoided as well as prevail in the event that something negative occurs that impacts the operational flow. A non profit can face losing membership, clientele and support, which can include grant dollars, funding sources, leased space, momentum and core team members in the event that business as usual is no longer feasible due to a disaster event such as water or fire damages.

While no entity can be prepared for everything, even in a non profit or mission based organization it is important to spend some administrative time to think through the potential risk exposure for your organization (read more on risk assessment and creative solutions HERE). A non profit may not have profits at stake which would be a critical concern for a traditional business, because of the nature of the work at the organization there may be even more at risk in these types of operations. Business continuity includes mission momentum, funding, community progress and team cohesion. People and organizations often don't have spare time so disaster preparation becomes an item that can be put off, unfortunately until an event happens that forces the parties involved to retroactively wish that they have made it a priority. 

Prevention is another agenda item that seems too time intensive to be of value in expending limited resources. Often many disasters could have been prevented by simple exploration of basic functions, risk assessments and changes to process improvements. An organization should leverage their resources to assist them in protecting their operational continuity, as noted in a prior article and presentation for property owners (see HERE on insurance claims education), make your insurance agent work for their money in reviewing your policy and assisting with risk management. If you have resources in your leadership, executive boards and even your volunteer base, include time for input as well as assistance in protecting your organization. 

The time and resources spent on education, risk assessment and prevention may not show up on the balance sheet, but when you consider what your organization does on a day to day basis for the benefit of the community, business continuity for your operation means more than just saving dollars. Consider what is at stake if your mission were to lose momentum, especially due to something that may have been preventable, and budget in time to invest in preparation and prevention so that you can continue to prevail. If you would like to discuss further how we can assist, we would love to help boost the knowledge of your team so that we can collaborate in prevention - and should the worst occur, we are here to assist with response. We have had the great privilege of helping churches, non profit organizations, educational facilities and mission based entities protect and restore their businesses following water, fire and other related disasters.