Many states have statutes which require those individuals investigating the origin and cause of fires to pass a written examination and to meet other requirements in order to be licensed and authorized to do business in the state. The same is true for professional engineers who determine the cause of fire from an engineering perspective. The statutes vary as to requirements in order to take the licensure exam, as well as with respect to the application of statutory exemptions.

While the licensing statutes generally have the laudable purpose of requiring consistency in the quality of investigations, they do not necessarily accomplish this purpose. First, in Illinois, for example, fire investigator licensing is grouped within detective act licensing, with the result that the testing for fire investigators has little to do with fire investigations. Second, a high degree of difficulty in format for the state exam may result in a low percentage passage rate - a good fire investigator with intuitive skills is not necessarily a good test taker. Finally, without application and approval for reciprocity (right to use license from one state in another state), independent investigators may have to test in each state.

Therefore, insurance companies desiring to work with highly talented independent fire investigators for use in very large and/or specialized losses may be hamstrung by licensure statutes. Furthermore, if the licensing requirements are not understood or heeded, a criminal or civil action can be lost as the result of court sanctions.

There may at times be an overlap in the areas of "expertise" of origin and cause investigators and professional engineers. This overlap must be reconciled with the prohibitions which may occur by statute, limiting the role of each to their expertise, or to otherwise face sanctions.

For example, the Illinois Department of Professional Regulation, which regulates private detective and professional engineering licensure, has recently indicated through its prosecution arm that it will strictly prohibit professional engineers from going beyond their expertise into areas of origin and cause investigators, and vice versa with respect to origin and cause investigators testifying as to engineering principles. However, although there are grey areas in subject matter which might overlap between the two professions, no specific guidance has been provided by the Illinois Department of Professional Regulation, or by the Illinois Courts.

This issue was highlighted in an Ohio court decision, which considered the issue of whether to allow professional engineers to testify as to the cause of a fire, in a subrogation action, where the engineers were not licensed private investigators.³ The plaintiff insurance company's two professional engineers sought to testify that the fire was caused by faulty electrical wire installation. The Appellate Court upheld the barring of one of the engineers because he was not a State of Ohio licensed professional engineer. However, the court reversed the trial court's barring of the second expert, who was a licensed professional engineer in Ohio.

In straining to do so, the Ohio court found that the expert could testify, reasoning that although he did not fall into the detective act insurance "employee" exemption, he also did not conduct a personal investigation of the fire scene, but rather relied upon the reports and observations of others in forming his opinion as to the cause. The court went on to warn that unless specifically exempted, professional engineers are required to have a private investigator's license to investigate the cause of fires. Perhaps in response to this opinion, the Ohio detective licensing statute has since been amended to exempt professional engineers retained by insurance companies.

In Tennessee, for example, the statute regulating private investigators exempts insurance companies duly licensed to do business in Tennessee, insurance agents licensed in Tennessee, and independent adjusters investigating matters pertaining to an insurance transaction.⁴ Further, the exempted investigator must be acting within the scope of his employment with respect to the investigation. Interestingly, Tennessee has no exemption for professional engineers under the private investigator statute.

The Ohio statute states that "public insurance adjusters" who are certified pursuant to the Ohio statute are exempted when investigating the cause of a fire with respect to insurance claims.⁵ Ohio also exempts professional engineers who are registered pursuant to the code.⁶

The Illinois Private Detective Act contains exemptions for insurance adjusters legally employed or under contract as adjusters who investigate matters directly connected to the adjustment of claims.⁷ The Illinois Detective Act also exempts the practice of professional engineering, as defined by the Illinois Code.⁸ Similarly, the Louisiana private investigator’s act also exempts from licensure requirements, licensed engineers who investigate the cause of fires.⁹

Under the Florida private investigators statute, insurance investigators and licensed adjusters are exempt from licensing requirements when providing services within the scope of their license.¹⁰ The Florida statute also exempts "any person who holds a professional license under the laws of this state when such person is providing services or expert advice in the profession . . . in which that person is so licensed."¹¹ Seemingly, professional engineers investigating the cause of a fire would be exempt from private investigator licensing requirements under this section. The engineering licensure statute must also be examined though.

Texas’ private investigators act similarly exempts from licensure requirements, registered professional engineers who do not install or service detection devices or conduct non-engineering investigations, while they are performing forensic engineering studies.¹²

An Illinois state Appellate Court decision in the (southern) 5th District of Illinois recently reversed the arson conviction of a criminal defendant because the prosecution's origin and cause expert witness was not a licensed private investigator in the state, and was therefore held not to be qualified to investigate the cause of the fire (People v. West¹³). The out of state (Indiana) independent investigator had credentials which apparently otherwise qualified him to testify. The court warned that experts who investigate fires in violation of the statute are guilty of a Class 4 felony, and may be the subject of contempt of court proceedings for continued violations.

Interestingly, the appellate briefs and the opinion in People v. West do not appear to specifically address the issue as to whether the prosecution's independent insurance investigator was exempted from licensure. The following exemption language was applicable at that time: "Insurance adjusters legally employed as such and who engage in no other investigative activities other than those connected with adjustment of claims against an insurance company by whom they are employed." (emphasis provided) This statutory exemption language has since been amended and clarified as follows: "legally employed or under contract" (emphasis provided). While no case law has yet interpreted this new exemption language, or otherwise discussed it relative to People v. West, it can be argued that the new exemption language would allow the opposite result under the factual circumstances in People v. West. In fact, the Illinois Department of Professional Regulation recently issued a verbal opinion through its prosecution arm consistent with this argument, as long as the origin and cause investigator does not testify in the domain of the professional engineer (same requirement for licensed detectives/investigators). However, this opinion is not binding on a trial court having a particular interest in following the spirit of People v. West. This insurance exemption issue might therefore still be considered to be unsettled in Illinois.

Another related issue in Illinois is whether the new exemption language is retroactive, and therefore applicable to pending cases involving fire investigations prior to the new language. The retroactivity argument, and a further argument that the new language simply clarifies the legislature's original intent to exempt independent investigators retained by insurance companies, are each compelling.

We also note with interest that in People v. West, the issue was not raised as to whether defendant's electrical expert was a licensed professional engineer in Illinois. Information received from the Illinois Department of Professional Regulation indicates he was not, but the issue was not preserved for appeal by the prosecution.

The West court nevertheless chose to state as follows: "We are not prohibiting witnesses from testifying...if...not engaged as 'private detectives' and simply were conducting tests within their field of expertise that may be used in trials. We see nothing to indicate that the legislature intended for all chemists...that do lab work on items...involved in fires, accidents, or injuries to real or personal property, to be licensed as private detectives before they would be allowed to examine, test, and testify about the design, structure, and composition of the items...The problem in the instant case is that the expert was actually practicing or conducting the primary investigation."

This may be true, but it should be noted that even though the court in West did not so state, professional engineers determining the cause of a fire are regulated by their own licensing act. The Illinois Professional Engineering Act has no exemption for out of state and/or unregistered professional engineers retained by insurance companies.¹⁴

It is also interesting to note that the Illinois Detective Act, incorporating the regulation of origin and cause investigation since at least 1972, was apparently not consistently enforced prior to People v. West.

Following the 1994 reversal of the arson conviction, the case was re-tried in 1995. At the second trial, the defendant was again convicted of arson.¹⁵ The defendant appealed his second conviction to the same 5^th District appellate court which had reversed his first guilty verdict. The defendant argued that crime scene photographs were erroneously admitted into evidence, and that the evidence did not support a finding of guilty. However, the second time around, the appellate court upheld the defendant’s conviction.

Notably, one appellate court Justice dissented from the majority’s decision. The dissenting justice opined that the second conviction should be reversed because the State failed to establish that the fire was intentionally set using gasoline as the incendiary agent, and failed to establish that the defendant set the fire. The dissenting Justice also lambasted the prosecution for the "inadequate investigative technique" exhibited by its origin and cause expert. In the second trial, the prosecution had presented an arson investigator from the Office of the Illinois State Fire Marshal as its origin and cause expert.

Most recently, the Illinois Supreme Court declined the defendant’s request to hear his case. It is not known whether the defendant will seek a writ of certiorari to the U.S. Supreme Court.

In recent civil cases in Ohio, Tennessee and New York, parties have objected to expert testimony on the origin and cause of fires where experts were not properly licensed investigators.¹⁶ While the courts in those cases permitted the testimony, they acknowledged that the experts were probably in violation of the licensure requirements.¹⁷

An Ohio appellate court recently upheld a trial court decision to permit an electrical expert to testify as to the cause of a fire, even though the expert was not licensed as a private detective in Ohio at the time of his investigation.¹⁸ In this case, the defendant retained an electrical expert at the time of the loss. The expert was at the scene to investigate the cause of the loss two days after the fire occurred. However, the expert did not become a licensed private investigator until approximately two years after the date of loss.

The Ohio appellate court noted that the private investigator statute "forbids the gathering of any evidence of the cause . . .

for a fire for use . . . in any legal, administrative or judicial proceeding by an unlicensed person." The appellate court found a way around the foregoing statutory provision which would seemingly bar an unlicensed expert. The court held that because the expert was retained for the company’s own investigation into the cause of the fire, with no apparent intention to secure evidence for a judicial proceeding, the expert did not gather evidence in violation of the statute.

An unlicensed expert was also permitted to testify in a Federal District case from Louisiana.¹⁹ In this case, the plaintiffs sought to bar the testimony of defendant’s origin and cause expert on the basis that the expert was not licensed in Louisiana as a private investigator. The District Court held that "a license is not a prerequisite to expert testimony under the Federal Rules." Rather, the court held that in federal court, state licensing requirements do not automatically bar an expert’s testimony, but whether the expert is licensed does weigh in on the issue of the weight to be given to the expert’s testimony.

Professional engineers must take a national examination to obtain reciprocity in more than one state. However, detective acts may vary in their reciprocity provisions.

The Illinois Detective Act, for example, has a provision for reciprocity (another state's license accepted in Illinois). It provides for "licensure...without examination, on payment of a required fee...if the requirements for the registration in the jurisdiction in which the application was licensed were...substantially equal..."²⁰

Louisiana and Ohio, for example, also have similar provisions. ²¹

Therefore, detective act reciprocity is a potential option in certain states. It would appear, however, that consideration by states of applications for reciprocity would be based upon subjective determinations which might take place over unknown time frames.

A compromise alternative might be the development by the states of partial detective act reciprocity, allowing for a limited number of investigations based upon submission of a certificate of licensure from another state. (Similar to pro hac vice licensing of attorneys who are already licensed in another state, on a case by case basis.)

The nature and applicability of licensure of origin and cause investigators and professional engineers varies from state to state. It is therefore important for the insurance industry to protect its interests accordingly:

1) Legal counsel should analyze licensure requirements applicable to origin and cause investigators and professional engineers for each state in which losses may occur before losses occur. Consider not only statutory law but also any case law interpreting it. Also gain a practical understanding as to the level of enforcement in each state. Understand:

a) Statutory definitions of origin and cause investigators and professional engineers, which define the scope of their permitted activity.

b) The nature and scope of any available statutory exemptions; and

c) Potential reciprocity available under statute.

2) Identify each governing body in each state that interprets and enforces the licensing statutes. Consider meeting with the governing body if possible to learn of trends in enforcement and non-enforcement. Consider gaining clarifying written opinions, if possible.

3) Make sure your investigation team, including your in-house adjusters and/or investigators, attorneys, independent origin and cause investigators and professional engineers all understand the intricacies (and vagaries) of the licensure requirements and exemptions in each state, preferably before there is a loss.

4) Consider coordinating the testing of reciprocity provisions in licensure statutes, so that investigators hired by insurance companies who are licensed in one state might possibly avoid similar or identical testing in another state. Also consider lobbying for partial reciprocity with respect to detective statutes.

ENDNOTES

3. Pennsylvania Lumbermens Insurance Corp. v. Landmark Electric, (Ohio) 1993 WL 541644 (Ohio App.2d 1993).

4. Tennessee Code Annotated 62-26-223 (4) (1998).

5. Ohio Revised Code Annotated 4749.01 (H)(4) (1998).

6. Ohio Revised Code Annotated 4749.01 (H)(11) (1998).

7. Illinois Revised Statutes 225 ILCS 446/30 (4) (1998).

8. Illinois Revised Statutes 225 ILCS 446/30 (11) (1998).

9. Louisiana Revised Statutes 37:3503 (1998).

10. Florida Statutes Sec. 493.6102(2) (1998).

11. Florida Statutes Sec. 493.6102(8) (1998).

12. Texas Revised Civil Statutes art. 4413(29bb)sec.(3)(a)(12) (1999).

13. People v. West (Illinois) 264 Ill.App.3d 176, 636 N.E.2d 1239 (5th Dist.1994);appeal denied, 642 N.E.2d 1300 (1994); app’l after remand, 691 N.E.2d 177 (5^th Dist. 1998) reh’g den’d (1998); app’l den’d 179 Ill.2d 614, 1998.

14. Illinois Revised Statutes, 225 ILCS 325/1-325/49 (1998) (inclusive).

15. People v. West, (Illinois), 294 Ill.App.3d 939, 691 N.E.2d 177, (5^th Dist. 1998), reh’g denied, and appeal denied 179 Ill.2d 614, 1998.

16. American States Insurance Co. v. Caputo, (Ohio),No. 72245 Lexis 489 (Ct. App. 1998)Doochin v. United States Fidelity & Guaranty Co. (Tennessee) 854 S.W.2d 109 (1993), Eagle Pet Service Co. v. Pacific Employers Insurance Co. (New York) 175 A.D.2d 471, 572 N.Y.S.2d 623 (1991).

17. American States Insurance Co. v. Caputo, (Ohio), No. 72245 Lexis 489 (Ct. App. 1998); Doochin v. United States Fidelity & Guaranty Co. (Tennessee) 854 S.W.2d 109 (1993), Eagle Pet Service Co. v. Pacific Employers Insurance Co. (New York) 175 A.D.2d 471, 572 N.Y.S.2d 623 (1991).

18. American States Insurance Co. v. Caputo, (Ohio), No. 72245 Lexis 489 (Ct. App. 1998).

19. Malbrough v. State Farm Fire and Casualty Co., (Louisiana), No. 95-3340 Lexis 14552 (U.S. Dist.E.D. La. 1996).

20. Illinois Revised Statutes 225 ILCS 446/100 (1998).

21. Louisiana Revised Statutes 37:3503 (1998); Ohio Revised Code Annotated 4749.12 (1998).