Insurance Dept. Can't Shake Allegations It Turned a Blind Eye to Unlicensed Adjusters After Wildfires
Still-smoldering remains of the Journey's End Mobile Home Park from the 2017 Tubbs Fire in Santa Rosa, California. The undamaged Kaiser Permanente Santa Rosa Medical Center stands in the background. (Photo: Wikimedia Commons)
A survivor of the 2017 Tubbs Fire and a Healdsburg lawyer who advocates for wildfire victims have won a ruling from a judge in San Francisco allowing them to move forward with a lawsuit against the California Department of Insurance, claiming it allowed unlicensed out-of-state insurance adjusters to work illegally in the state in the wake of recent wildfires.
Santa Rosa homeowner Jeff Sengstack and Sonoma County attorney Jon Eisenberg, both represented by Farella Braun + Martel, claim that former Insurance Commissioner Dave Jones violated state law in 2018 by refusing to hold a legally required hearing on their complaints that thousands of out-of-state adjusters weren't properly licensed or supervised while working in the state. According to their complaint, insurance companies brought in thousands of independent contractors to process claims in the wake of recent wildfires. The complaint claims that the insurance companies couldn't provide the type of supervision to contractors required for them to operate under the insurer's own license.
In a ruling handed down March 29, San Francisco Superior Judge Ethan Schulman said that the insurance commissioner has a mandatory duty in such cases to investigate the complaint and "notify the complainant of the final action taken on their complaint."
“The fact that contractors may be subject, at least on paper, to nominal supervision by licensed California adjusters is no answer to this problem," Schulman wrote. "Plaintiffs allege sufficient facts from which the interference can be drawn that the commissioner has reason here to believe that an unfair practice is occurring.”
The Department of Insurance didn't immediately respond to a message seeking comment on the decision Monday.
In a phone interview, Eisenberg said Monday that the lawsuit is aimed at getting the state to address the problem of having untrained, unlicensed adjusters who don't have experience with California policies working unsupervised in the state. That, he says, has led to fire victims receiving "misinformation" about their insurance policies
"It’s an endemic problem," said Eisenberg, who lost his own home in the 1991 Oakland fire. He estimates that he has informally advised three or four dozen homeowners in the way of the 2017 fires. "I’m not looking at any specific misconduct by any specific adjuster, although there’s plenty of that to go around," he said.
Eisenberg said that he's open to mediation in the case. He said he hopes to reach a settlement with current Insurance Commissioner Ricardo Lara to make sure adjusters are either properly licensed or properly supervised, rather than litigating the case to completion.
"How many homes are going to burn before I get a final judgment in this case?" Eisenberg asked rhetorically. "At this point in California, we can pretty much guarantee this is going to happen every year. I’m looking for a solution to a problem. I’m not looking to vanquish the enemy in litigation."
Farella Braun + Martel's Neil Goteiner, who represents Sengstack and Eisenberg, said that he would urge the commission to "do what it's supposed to do" and investigate the complaint and hold a hearing. "I’m fine with litigating it if they don’t want to do what’s reasonable," Goteiner said.
