Corruption & Ethics-selective Insurance&the Aicpcu

[SKIADVOCAT]

Based on your interest in ethics and the insurance industry, I share the facts, evidence and decision-making in the case copied below. If the actions and conduct of Selective management were not egregious enough, what followed with the ethics complaint filed with the AICPCU is even more outrageous. If you are interested, I will share the official correspondence received from the AICPCU (Drs. Troxel and Oakes) in response to my filing an ethics complaint against a CPCU member at Selective. For example, Dr. Oakes rejected the ethics complaint because I failed to indicate which article of the enforceable Code of Ethics was violated. Isn't that his job as Vice-President and Ethics Counsel?
Any comments, insights, requests for additonal information are welcomed.

Sincerely,

Michael Skiendzielewski
+++++++++++++++

Dear Sir/Ms:

I share the details, facts and issues of this claims investigation with you as industry professionals because the conduct of Selective executives was deliberate and deceitful and all (consumers and professionals alike) should be made aware of the decision-making and ethics of Selective management in the processing of this claim. Any comments, questions or insights would be welcome and greatly appreciated.

Thank you.................Michael Skiendzielewski





SELECTIVE INSURANCE COMPANY


DECEIT AND CORRUPTION IN A CLAIMS INVESTIGATION:
A CASE STUDY


CHAIRMAN, PRESIDENT AND CEO
GREGORY E. MURPHY
SPARTA, NJ



SENIOR EXECUTIVE VICE-PRESIDENT
JAMIE OCHILTREE III
SPARTA, NJ



"Selective Values" at http://www.selective.com

Integrity

Be honest and forthright. Act morally and ethically at all times. Don't compromise your principles. Do what's right.



Review the following correspondence and decide if Selective management is abiding by their "Selective Values"?. Eliot Spitzer, Attorney General, New York laments the loss of a "moral compass" in the insurance industry. Does Selective have one?


February 1, 2005



Mr. Eliot Spitzer
Attorney General
Office of the Attorney General
State of New York
The Capitol
Albany, NY 12224-0341
Phone (518) 474-7330
Fax (518) 402-2472



Re: Audit Committee James McLain, CPCU

Board of Directors Sr. Vice-President

Selective Insurance Company Claims Processing

Joan M. Lamm-Tennant, Ph.D. Selective Insurance




Dear Mr. Spitzer:


As the Attorney General of the State of New York, you are to be congratulated for the long-overdue focus and investigation of certain practices and procedures within the insurance industry. With each new day, there appear more instances of questionable decision-making by insurance executives while members of their Boards of Directors quietly go along with the decisions made by executive management. In a recent case, members of the Board of Directors of WorldCom were held personally liable for financial damages as a result of failure to properly monitor the actions of the company's management.

I believe that members of the Board of Directors are indeed responsible to closely monitor the actions and decisions of executive management and it is for this reason that I share the facts, issues and evidence in a particular claims investigation conducted by Selective Insurance Company. According to the Selective Insurance website:

The Audit Committee (the "Committee"?) is appointed by the Board of Directors ("the Board"?) of Selective Insurance Group, Inc. (the "Company"?) to assist the Board in fulfilling its oversight responsibilities. The purpose of the Committee is to monitor the integrity of the financial statements of the Company; the compliance by the Company with legal and regulatory requirements; the independence and qualifications of the Company's independent auditors; and the performance of the internal auditors and independent auditors.

Last month, January 7th marked the one year anniversary of an investigation by Selective Insurance Company at my residence relative to the collapse of a 9-foot retaining wall constructed by their insured, Artistic Concrete Solutions, New Jersey. To be more accurate, the investigation was initiated by Selective Insurance during a series of phone calls by this writer to their national call center in Mid-December 2003 shortly after the retaining wall collapsed on December 11, 2003. I was informed on at least two occasions that the insurance policy was no longer in force and that the insurance case folder would have to be pulled from the records. I subsequently contacted a Selective Claims supervisor who told me that Todd Souders, claims adjuster was assigned and that he would come to my residence relative to the claim.

The claim is concerned with the collapse of a retaining wall constructed by Artistic Concrete Designs in July-August 2002. The wall was constructed twice by Selective's insured and even then, there were problems evident with its design and structure. Serious problems developed in the Spring of 2003 and the deteriorating condition of the EP Henry retaining wall was documented by a company technician, as well as independent engineers that I retained as well as engineers retained by others involved in the project.

Despite repeated warnings and correspondence advising the insured about the retaining wall and several instances of mud pouring through the wall into the pool, your insured took no steps to reconstruct the wall or to ensure its safety since the Spring 2003. On December 11, 2003, the 9 foot retaining wall collapsed during a severe rainstorm, bringing down over 4 tons of Select Stone blocks onto a concrete pool deck. The $2,000 winter pool cover was ripped and 75 lb. blocks fell into the fiberglass pool. A portion of a $4000 aluminum fence was felled as well as the destruction of a portion of a $6500 landscape bill that was part of the pool project.

I was able to ascertain that Selective insured Artistic Concrete Designs during the construction of the wall; I filed a claim on their website and subsequently spoke with someone at the toll-free number about the status of the claim. I was informed that since the policy was no longer in force that research was involved and that the policy would have to be manually retrieved. I then spoke with a gentleman from Selective in the Pennsylvania region who told me that he would ensure that it was promptly assigned to an adjustor.

I was subsequently contacted by Todd Souders of Hellertown, PA. who made arrangements to come to my residence on 1/7/2004 to survey the damage. He did not interview me but did ask me whether or not I had the contract between myself and your insured. I informed him then that I would find it and then informed him the next day that he could secure that document from your insured. Mr. Souders sent correspondence to my residence, dated 1/8/2004, which I received on 1/9/2004.

My questions and concerns are related to the following:



(1) Since a company representative in your call center knew that the policy was not in force at the present, how come Mr. Souders did not know that prior to coming out to my residence?

(2) Are you aware of the fact that I took off from work in order to meet Mr. Souders at my residence and lost wages in the process?

(3) Is the length, objectivity, thoroughness and completeness of the 1-2 day Selective investigation into my claim in keeping with the Selective Values detailed on your website?

(4) Has Mr. Souders contacted and/or interviewed the insured, Mark Peditto?



Once again, my concerns are primarily concerned with the conduct of the investigation and its thoroughness and objectivity. How can such important and involved work be done in such a short period of time?



As a result of my complaint/conversation with Mr. Gregory Murphy, CEO, Selective Insurance Company, the investigation was reopened. I was subsequently interviewed via telephone by Mr. Souders who, during the course of the interview, paused on at least two occasions to tend to a faulty recording mechanism. Selective Insured, Mark Peditto, also informed me that he was interviewed similarly (including the fact of a faulty recorder). During January 2004, I spoke with, faxed and e-mailed correspondence, documentation, and evidence to Mr. James McLain, CPCU, Senior VP, Claims, Selective Insurance, who is Mr. Souder's supervisor. This information documented the fact that the wall was improperly constructed the first time, the insured then notified, taken down and constructed the second time, and the insured once again informed of significant deficits in the construction relative to drainage, Geo-grid, crushed stone, etc. The actual design and engineer specifications describing proper construction of an EP Henry retaining wall had been delivered to the insured at the time of the wall construction(s) and this too was delivered to Mr. McLain.



Finally, near the end of January 2004, I received a rejection letter similar to the first but the reasons given here were twofold:

(1) there was no policy in effect at the time of the wall collapse and (2) there was no information, evidence and/or notification that the wall was defective at the time it was constructed. The first reason is true and accurate while the second reason is blatantly false and deliberately made so by the actions of key executives at Selective Insurance Company. This writer also spoke with Jamie Ochiltree (Mr. McLain's superior) and Gregory Murphy (CEO) informing them of the evidence and information that existed which showed that the wall was constructed improperly and that several individuals were aware/made aware of that fact in the summer of 2002.



Thus the main concern is the fact that when the matter was reviewed and interviews conducted, important and relevant information was omitted which evidence clearly indicates that the insured was aware of the defects and problems at the time of the retaining wall construction.



The facts, correspondence and documents in this case were forwarded by this writer to the Audit Committee of the Board of Directors, which committee is chaired by Dr. Joan Lamm-Tennant. As outlined above, the Audit Committee has "oversight responsibilities" and one of its purposes is to ensure "compliance by the Company with legal and regulatory requirements." Despite repeated written and telephone requests for a response to the facts and evidence which indicate a corrupted and distorted claims investigation, I never received any correspondence from the Audit Committee or from the Executive management of Selective Insurance in response to my correspondence with the Audit Committee.



It is interesting to point out that a review of a Market Conduct Examination Report on the New Jersey Department of Insurance website indicates the following:



(1) Failure to Maintain Record of Pertinent Communications "" 2 Files in Error

N.J.A.C. 11:2-17.12© requires insurers to maintain records of all pertinent

communications relating to a claim. The records must identify the date of the communication

and the parties, and describe the substance of the communication. This is related to Standard

number five in the claims section of the NAIC Market Conduct handbook which specifies that

claim files (should be) accurately documented. On randomly selected PIP claim 01704809, the

Company was unable to locate the file. The examiners were unable to review this PIP claim; the

examiners could not reconstruct the settlement process on this file.



(2) Failure to Date Stamp Documentation - 5 Files in Error

N.J.A.C. 11:2-17.12(B) and N.J.A.C. 11:3-10.10 state that detailed documentation and/or

evidence shall be contained in each claim file in order to permit the Department to reconstruct

the Company's activities relative to claims settlement. This is related to Standard number five in

the claims section of the NAIC Market Conduct handbook which specifies that claim

files (should be) accurately documented. All papers in the file must be dated accurately by

the insurer. During a review of Selective's claims files, the examiners discovered five instances

where the Company failed to date stamp the receipt date of necessary claim forms contrary to the

above-referenced regulations.



(3) In the prior market conduct examination report which was adopted

November 18, 1998, the examiners cited Selective for failure to pay PIP claims timely and, as an

improper general business practice, failure to pay interest on overdue PIP payments. Although

the Company agreed in its response to the 1998 report and recommendations to improve its

timeliness in the payment of PIP claims and interest, the examiners found the same errors during

the current examination. Notably, failure to pay interest occurred as an improper general

business practice on both the prior and current examinations.




The citations described by examiners from the New Jersey Department of Insurance appear to indicate that there may be a persistent problem with record-keeping and documentation in a certain percentage of claimants' insurance files maintained by Selective Insurance Company. Once again, these deficits/inconsistencies appear to come under the purview of the Audit Committee of the Board of Directors. One wonders what, if any, impact this imperfect record-keeping had on the processing of the documents, evidence, etc. in the claims investigation by Selective in the collapse of the retaining wall.

I thank you for allowing me to share the issues and details of this claims investigation with you. Integrity and ethics in the insurance industry are concerns that impact on all Americans and we must continue to advocate for the highest standards across all business environments.


Sincerely,


Michael Skiendzielewski
516 Parkhollow Lane
Philadelphia, PA 19111
skiadvocat@msn.com