"Letter of the Law"

CLM Magazine

Melissa Segel HeadshotPartner Melissa Segel and Jonathan Morgan, senior litigation specialist at Georgia Farm Bureau, authored an article discussing proper management of fraud investigations for the July 2019 issue of CLM Magazine.

In order for insurers and claims professionals to minimize risk while handling fraud investigations, it is essential to comply with statutory obligations. Many states enacted legislation requiring insurance companies to notify law enforcement if arson or fraud is suspected and cooperate in third-party governmental investigations of arson and fraud claims. 

Segel and Morgan advise insurers to follow the requirements of the respective state laws when releasing information to an authorized official. For example, Georgia requires an insurer to comply with requests for information from the insurance commissioner and the commissioner's agents, but does not specifically identify the appropriate law enforcement authorities to whom an insurer may release information, making the list of individuals very broad.

"[I]f there is a question as to the propriety of voluntarily releasing information to a particular public authority not listed in the statute, the insurer should err on the side of caution and not voluntarily release that information," Segel and Morgan explain.

Criminal and Civil Immunity

Most arson and fraud reporting statutes provide criminal and civil immunity for the insurer furnishing information requested by a public authority, but the statutes often require the information be shared in good faith without fraud or malice. These statutes can create a safe haven for insurers and their employees to cooperate with authorities, but the insurer should always take a proscribed view of its cooperation with the authorities to prevent the appearance of being a "state actor" and follow the applicable immunity statutes to the letter.

Avoiding Potential Exposure

"[I]t is critical to follow the letter of the law when reporting information to law enforcement agencies and to actually cite the statute in order to make it clear that the information is only being provided because cooperation is required," said Segel and Morgan.

The authors recommend using "just the facts" to avoid making allegations a law has been violated and allow law enforcement to draw its own conclusions. Otherwise, any allegations may be used to show there was intent to defame the party and the insurer intended to steer law enforcement to prosecute the suspect.

For the full article, please click here.


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