The Insured Signs the Proof of Loss not the Public Adjuster--Beware! Fraud by Public Adjuster Imputed to Insured.

• Author: Zalma, Barry

People who are busy with their lives hire a public insurance adjuster to assist them with a property claim. Most trust the public adjuster as a professional. Even when, as did one of the parties in Chubb & Son Inc. et al. v. Pio Consoli et al., Defendants, and Melvin Steinberg et al., 283 A.D.2d 297, 726 N.Y.S.2d 398 (N. Y. App. Div May 22, 2001), the insured knew that the claim was inflated and took the money found a New York court required the money be returned to the insurer.

Although I usually blog about new cases, this one from 2001 caught my attention and needed to be passed on to all my readers.

The Criminal Public Adjuster and Criminal Company Adjuster

After the conviction of Seymour B. Berson, a public adjuster, in Federal court on charges of mail and tax fraud in connection with a scheme in which he would fraudulently inflate insurance claims to increase his fee, ordinarily a percentage of the payment received by the insured, one of his clients attempted to recover from the insurer victim of Berson's fraud. As part of this fraud, Berson had an arrangement with Nicholas Addesa, a former claim representative of plaintiff-appellant Chubb & Son Inc., an insurance company that controls Sea Insurance Company of America and Vigilant Insurance Company (collectively Chubb), by which Berson would pay Addesa to approve fraudulent claims. Addesa was convicted of defrauding Chubb.

THE CRIMINAL ACTIVITY

On July 27, 1988, the Steinbergs signed two sworn statements in proof of loss prepared by Berson, claiming a total of $148,564.25 in losses due to a fire at their house on June 13, 1988. On July 29, 1988, Chubb issued two checks totaling $148,314.25 to the Steinbergs, which checks they endorsed and deposited into their joint bank account. On February 3, 1988, the Steins also signed two sworn statements in proof of loss prepared by Berson, claiming losses due to damage from a broken water pipe, in the total amount of $46,086.48. In addition, on August 4, 1988, the Steins signed a sworn statement in proof of loss, claiming damages from a windstorm in the amount of $20,925. Chubb issued two checks totaling $46,086.48, on February 26, 1988, and a check for $20,925, on August 12, 1988, which checks the Steins endorsed and deposited into their joint bank account.

Melvin and Marsha Steinberg (the Steinbergs) and Sidney and Elsie Stein (the Steins) held homeowner insurance policies issued by Chubb, and hired Berson, who worked through Jack DuBoff...