TO LOOK FOR IN SIU
Presented and Prepared By:
Suite 202 Weston,
Insurance Fraud Management Conference
February 13-16, 2000
To Look For In SIU Counsel
it be in-house or outside counsel, certain qualities are essential to
the selection of an effective SIU attorney. You should, therefore, recognize
that these qualities exist and look for them in any prospective counsel
servicing fraud-related work.
Trend Toward SIU Specialization
creation of formal Special Investigation Units is a recent occurrence.
Statutes mandating SIU departments have existed for only a few decades.
Attorneys servicing insurance companies’ Special Investigation Units are
likewise a recent development.
outside counsel have serviced a broad array of legal needs for their insurance
clientele. Within the insurance defense field, a firm or attorney often
handled matters that included general liability, coverage, product liability
and subrogation, among others. On occasion, an attorney might handle
a smattering of SIU cases to supplement his or her general insurance defense
practice. Over the years, the field of insurance defense has become more
specialized. So, too, has SIU litigation. Not only have individual
attorneys developed practices that specialize in SIU litigation, but now
there are firms dedicated exclusively to servicing insurance companies’
Special Investigation Units.
some strides have been made, often in-house legal departments have not
kept pace with this trend toward SIU specialization. Although there has
been an increase in the amount of SIU work being channeled to insurers’
in-house legal departments, it is rare that in-house counsel handling
these matters dedicate their practice exclusively to SIU cases. Frequently,
in-house counsel have a number of responsibilities and areas of practice.
In-house counsel often are required to handle caseloads involving several
areas of the law, such as general liability, coverage, appeals and compliance.
In-house legal departments have not yet developed the heightened level
of specialization in insurance fraud litigation found in outside law firms.
One reason for this lack of specialization may be that in-house legal
departments are servicing a single client. There may not be enough volume
of work from a given insurance carrier’s Special Investigation Unit to
keep an in-house attorney busy. As a result, the in-house attorney is
required to handle a variety of files involving different subjects. Some
carriers have made efforts to develop an in-house legal staff that specializes
in the area of fraud work; however, these efforts are a recent occurrence
and the level of specialization is still evolving.
SIU Work be Handled by a Generalist or a Specialist?
a consumer of legal services, each insurance carrier and Special Investigation
Unit must ask how its legal interests will best be served. Will the use
a generalist (whether in-house or outside counsel) in the area of SIU-related
cases further its interests? The answer is usually no. People are rarely
good at everything. Baseball players do not play every position. Likewise,
the qualities that make an attorney exceptional in one area of the law
may make him or her ill-suited for another area. As an example, the qualities
that make a good general liability counsel typically will not assist an
attorney working on SIU-related matters. The central issue in most general
liability automobile cases is the value of the claim. Most such cases
are resolved by settlement. The proceedings usually do not involve issues
as inflammatory as fraud. The aim during investigation and litigation
of general liability matters, therefore, is to reduce the value of the
claimed injury or injuries. The qualities needed by attorneys handling
general liability cases (such as being a skilled mediator or negotiator)
are not necessarily useful or desirable in insurance fraud litigation.
cases, by contrast, involve allegations of unethical and/or criminal conduct.
SIU litigation involves an individual or individuals attempting to defraud
an insurer. These cases are far more often tried than settled. The parties
do not try to bridge their differences by an accommodation or settlement.
Companies generally are unwilling to negotiate a settlement with an adversary
participating in fraud. Accordingly, an effective SIU counsel requires
a specialized skill set different from those possessed by an attorney
handling automobile liability cases.
Specialization leads to a number of positive results. First, an
attorney that specializes in the area of SIU litigation has a greater
working knowledge of the law and statutes relating to such cases. Second,
and perhaps more importantly, SIU counsel has a greater understanding
of the fact patterns involved in fraudulent schemes, thus making it easier
to identify and assemble evidence of fraud. SIU counsel also has a stronger
grasp of the quantum of evidence necessary to make a determination concerning
coverage, and to defend that position at trial. Conversely, it is all
too common that attorneys who are unfamiliar with SIU cases put forth
a timid defense. Unfamiliarity with a given subject matter often breeds
hesitation and reluctance in an attorney, which has a number of detrimental
side effects to you as a client. Inexperienced counsel often are willing
to advise their clients to pay claims that a more experienced attorney
would recognize as warranting denial. In addition, less experienced counsel
often recommend pursuing various avenues of fact gathering that are either
unnecessary or unproductive. Further, counsel not specializing in this
area often provide legal advice that is wanting. Such counsel will fail
to make a clear and decisive recommendation to the SIU; rather, they will
"hem and haw". This sort of "advice" does not provide
the client, the SIU, with the appropriate legal guidance to make a decision
regarding a given claim.
Counsel that does not specialize in this area is likely to be unfamiliar
with the viewpoints of the judiciary regarding fraud-related matters.
Often, the fact finder in SIU cases is a judge, not a jury. It is essential
to have knowledge of the judge
hearing your case. Because he or she may be the fact finder, his or her
outlook, biases and sympathies are critical to understanding how your
defense will play at trial. While a generalist may have tried a number
of liability cases in front of a particular judge, such matters provide
little insight to a judge’s view on such issues as bad faith and a fraud
defense. The only way this information is derived is by trying fraud-related
cases in front of that particular judge. Working knowledge of a judge’s
predisposition to insurance fraud cases is invaluable to you as a client.
Finally, attorneys that practice
SIU law on only a part-time basis usually are unfamiliar with the “players”
involved. It is essential for your investigators to know the lawyers,
medical providers and insureds/claimants involved in fraudulent schemes
in your jurisdiction. So, too, it is helpful that your legal counsel
have this knowledge. Quite frequently, counsel that specializes in the
area of fraud-related cases can bring to the attention of his client a
“player” that he has seen in other matters with other clients.
We strongly recommend that whoever you use as legal counsel be
a specialist in handling SIU cases. You potentially injure your investigation
and the fruits that may be derived from it by entrusting your case to
an attorney who is not an expert in the SIU field. Conversely, your investigation,
and the information that it can develop, when aided by legal counsel proficient
in this field typically is far more productive and useful.
to Determine an Attorney’s Level of Specialization
How do you find out if an attorney, law firm or in-house counsel
has experience in SIU work? Ask them. You are the client and it is necessary
for you to have confidence in the counsel you select.
You will want to have the following questions answered:
Have you worked on SIU
cases in the past?
What types of fraud-related
cases have you worked on (property, casualty, ring activities, etc.)?
Have you conducted Examinations
Have you tried any cases?
Of the cases you have
tried, were you primary counsel?
If not, for how many
trials have you served as primary counsel?
Of the cases you have tried, how many involved SIU cases?
How many SIU cases have
you tried to verdict?
What is your success rate on the SIU cases that you have
tried to verdict? (Attorneys typically keep track of their success at
trial. If an attorney has no idea of his rate of success at trial,
this should raise a red flag.)
What defenses have you
typically interposed for your SIU clients?
What practice areas are you currently servicing? (If
your counsel is also preparing wills and performing real estate closings,
he or she probably is not a specialist in the area of SIU litigation.)
Request a roster of
What organizations within
the insurance fraud industry are you a member of?
Have you spoken or written
on any topics related to insurance fraud litigation?
Makeup of Legal Counsel
As important as selecting a specialist is retaining legal counsel
with the proper psychological outlook for SIU related matters. SIU counsel
must be aggressive, proactive and persistent. SIU cases involve criminal
conduct. The target of an investigation rarely confesses to his criminal
activities. The investigation and defense of an SIU case cannot be premised
upon the hope of eliciting a confession. Rather, the SIU, together with
its counsel, must doggedly pursue the evidence of fraud. The environment
in which these investigations are conducted often is hostile. Counsel
must be able to stand up to belligerence and confrontation with the other
side. Further, by their nature, these cases involve constant stonewalling
by the insured, the claimant and their attorneys. Legal counsel must
be able to relentlessly pursue the trail of evidence within the boundaries
of the law. It does not serve your interests to have counsel that wilts
under the pressure of confrontation or is willing to accept the stonewalling
tactics employed by your adversary.
It also is essential that your SIU counsel maintain a level of
flexibility. Your attorney must be experienced and mature enough to recognize
that all investigations differ. The aim of a given investigation is to
gather information necessary to make a coverage decision. Sometimes,
such information may be garnered more effectively with honey than with
vinegar. Accordingly, counsel must be flexible enough to employ different
tactics in differing situations to effectively gather information.
Must Act Responsibly and Within the Bounds of the Law
SIU litigation involves issues that, if handled incorrectly, can
expose the insurer to bad faith damages and unwanted publicity. It is
essential that your counsel operate within the appropriate boundaries
of the law. As noted above, the atmosphere during such litigation can
become quite combative. It is critical that your counsel be capable of
operating effectively in such an environment. It is equally important
that counsel does not go “over the top” and undertake any inappropriate
actions on your behalf. We recommend that you watch your counsel in action
to determine if his or her “style” and conduct comports with the philosophies
and goals of your company. You may wish to attend an examination under
oath or trial conducted by your counsel to satisfy yourself that he or
she is comporting himself or herself in an appropriate manner. Overzealousness
by your attorneys can be just as dangerous as passivity. Further, improper
tactics employed by counsel, as your representative, can have dire consequences,
including unwanted publicity or legal damages.
Smarts vs. Street Smarts
The body of law surrounding issues related to SIU cases is expanding
on a daily basis. Important decisions are changing the legal precedents
governing insurance fraud cases. It is imperative that your counsel
be current on the expanding and ever changing law that relates to SIU
That being said, the body of law employed in SIU litigation is
not rocket science. It is critical that your counsel have an understanding
not only of the case law, but also that he or she possess the street smarts
and savvy to assist the insurer during an investigation. The facts usually
dictate the success of a case. Your attorney must have the street smarts
to recognize a fraudulent scheme and to know how and where to gather the
evidence necessary to defend the case at trial.
Street smarts are something you either have or you don’t. They
are not taught in law schools or gained by handling a few SIU cases.
They are what makes an SIU investigator effective, and also can greatly
assist the SIU counsel who possesses them. We recommend that you size
up your counsel to determine if he or she has the type of common sense
and street smarts to recognize fraud.
As the client, you should demand a level of service that is exceptional.
It is important that your counsel answer your questions and fulfill your
legal needs in a complete and timely manner. There are a number of reasons
why it is vital to have legal counsel that is highly responsive. Fraud
investigations are often a race against time. Over time, evidence can
be lost or destroyed and witnesses’ memories can fade. It is essential
that counsel jump into an investigation upon receipt of the assignment.
Attorneys that take weeks or months to acknowledge a file and schedule
an Examination Under Oath are not serving your interests. This wasted
time imperils your investigation. Further, the longer an investigation
drags on, the greater the risk that the insurer will be seen as engaging
in unnecessary delay, unfair claims handling practices or bad faith.
Your counsel’s actions should not contribute to these potential pitfalls.
The nature of SIU investigations demands quick action and prompt responses
from legal counsel. Make sure the attorneys you retain maintain the level
of communication and timely action that is essential in these cases.
yourself that the attorney you are entrusting your investigations to is
qualified and is capable of protecting your interests. Recognize that
an error in the selection of counsel may have dire consequences. Proper
selection of SIU counsel will ensure the following benefits:
Your case will be handled cost-effectively and productively;
Recommendations to accept or deny liability will be forthcoming
The insurer will enjoy increased opportunities to deter future
criminal activity due to efficient and effective case management;
The insurer will minimize its risk of exposure to extra-contractual
liability and/or unwanted publicity due to the improper handling
of a file. Accordingly, the utmost care should be
taken in selecting counsel to ensure the specialized needs of the SIU
will be met.