Public Adjuster Charged With Insurance Fraud, Serves As Warning During Hurricane

As a potentially devastating category 3 hurricane nears the coast of Texas, another public insurance adjuster has been charged with insurance fraud.

Elvira Chandler was charged by a Travis County, Texas, grand jury this week with filing fraudulent insurance claims following a series of hail storms that hit the Rio Grande Valley. The 61-year-old was charge with first degree insurance fraud, a felony offense that carries a potential sentence of five years to life in prison and up to a $10,000 fine.

According to the indictment, Chandler submitted 14 claims to property insurers alleging hail damage that either didn’t exist or was not caused by hail.

According to Steve Badger, a partner with Zelle LLP’s Dallas office, the indictment isn’t surprising.

After the 2012 Hidalgo County hailstorms, estimates flooded in that bore no relation to what was actually damaged in the hailstorm or the actual cost to repair, he said.

“They threw in everything – windows, fences, AC units, trampolines and even bricks, said Badger. “This indictment shows that the Texas Department of Insurance (TDI) Fraud Unit considers the gross exaggeration of a damage estimate to be actionable insurance fraud.”

According to Badger, the indictment sends a strong message to contractors and public adjusters working Hurricane Harvey claims, reminding them “their estimates should include only real damage and the reasonable estimated cost to repair that damage.”

He added that any lawsuits arising out of Hurricane Harvey will be litigated under new legislation, HB 1774, passed earlier this by the Texas legislature.

Badger explained that under the new legislation, if a lawyer uses an inflated estimate in a pre-suit demand letter, that lawyer’s attorneys’ fees will be at risk at trial.

“Contractors and public adjusters would be well served to provide real estimates at the beginning of the claims process, to avoid forcing the lawyers to have to pay for a second and more accurate estimate to comply with pre-suit notice requirements,” Badger said. “Hopefully, with reasonable estimates being submitted during the claims process, more claims will be amicably resolved sooner rather than later.”

Recent cases against a hail attorney and roofing contractor reveal a crackdown on disaster-related fraud.

The improper solicitation of clients by attorneys and their case runners became a major problem after the 2012 Hidalgo County hail storms, Badger said.

“The recent indictment of attorney Kent Livesay on numerous counts of felony insurance fraud and barratry should temper the inevitable feeding frenzy to sign-up Hurricane Harvey clients,” he said.

Another case, a pending class action lawsuit against Lon Smith Roofing, is a warning to other roofing and storm restoration contractors who act as public adjusters illegally, Badger said.

“Texas law also prohibits contractors from taking assignments of benefits or powers of attorney. Doing either will subject contractors to criminal penalties for engaging in the unauthorized practice of public adjusting and the unauthorized practice of law,” Badger said. “Contractors should leave public adjusting to licensed public adjusters.”

Whether Hurricane Harvey will serve as a turning point in reducing rampant disaster fraud remains to be seen.

“Everyone has joked for five years that it will take a strong hurricane to bring an end to the Texas hail claims crisis, as all the hail lawyers, public adjusters and contractors will turn their attention back to wind claims,” Badger said. “Well, we have that hurricane now.”