Engineering Reports For Sale?

engineering
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As a bright-eyed, somewhat confused college student years ago, I was bombarded with theories and theorems. I don’t remember most of them, but one, John Kenneth Gailbraith’s theory on countervailing power, always stuck with me. Gailbraith’s presentation expounded on an older theory that once a player in the economy becomes too powerful, another player may rise up to challenge that power. I think we are heading in that direction now in the resolution of legal disputes, and especially those involving engineers. Combining that theory with causal base – a term meaning a reason to gripe that I learned as a Naval intelligence officer studying insurgency – leads to a unique situation.

On its website, State Farm has boasted of a ruling which dismissed a fraud claim regarding the use of engineering reports. For those unfamiliar with the case and the engineering report issue, I recommend you visit Google. The entry of State Farm engineering reports will call forth a slew of article using inflammatory words like fraud, cooking the books and racketeering.

This issue of engineering reports involves State Farm’s use of suspect engineering reports to prove damage was caused by a peril not covered under its policy as opposed to a peril that would be covered. The whole sordid story leads one to question why State Farm would be boasting of this issue on its website, especially when the Wall Street Journal recently published the article, “Justice for Sale.”

Consider the following comment from that article:

(Judge) Lloyd Karmeier, the winner of a $9.3 million campaign for the Illinois Supreme Court in 2004, was supported by $350,000 in direct contributions from employees, lawyers and others directly involved with the insurer State Farm and/or its then pending appeal, and by an additional $1 million from larger groups of which State Farm was a member, or to which it contributed. Almost immediately upon taking the bench, he cast a vote ending proceedings on a $456 million claim against State Farm. A St. Louis Post-Dispatch editorial put it this way: ‘Although Mr. Karmeier is an intelligent and no doubt honest man, the manner of his election will cast doubt over every vote he casts in a business case.’

While the judge’s rulings may be suspect, so are one-sided engineering reports. The bogus engineering report issue will not go away. Last night, a deposition of a local engineer who works for insurers landed on my desk. It revealed a person with somewhat limited experience who testified that he does “250 structural fire damage claims per year (some years its more, some years its less) … over 100 structural damage investigations each year” and “30 roof collapses, and partial collapses” and “about 50 hail damage investigations per year.” Just think how much this engineer makes each year accommodating insurers.

That engineer has written many questionable reports for insurers which have truly damaged my clients giving them a tremendous causal base to complain. Frankly, I expect litigation against insurers and their engineers to be a continuing countervailing power issue. It has been stated insurers are spending millions on engineers to give them reports that save billions.

In the words of the “Justice for Sale” article, we will all continue to lose if the decisions continue to be made by the biggest donor, not the best case.

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