(*Chip Merlin’s NoteSandy Burnette is a prominent insurance defense attorney with exceptional experience in cases where insurance fraud or arson are suspected. I have known Sandy for 27 years. As you can see from his rhetoric, he is a fierce defender for those engaged in the fight against insurance fraud. Keeping with my Fair and Balanced blog, I invited Sandy to compose a guest post reflecting his views and experience.)

Well, seeing my name mentioned in your recent blog on insurance fraud was certainly enough to capture my attention, but the content of your remarks compels me to respond. Nobody who knows the two of us will be surprised to see we disagree, but in this instance you are simply wrong, Chip.

Let’s start with your analogy to 17th century witch-hunts. Suggesting that the investigation of suspected fraud by insurance companies is a “witch-hunt” is, to me, almost laughable. I realize your knowledge and experience with fraud investigators is limited to taking their depositions and challenging their findings, so I could hardly expect you to be objective about the individuals you make a living opposing, but your assessment of their abilities and their motivations is more than wrong, it is entirely unfounded.

The SIU investigators, private investigators and law enforcement investigators I have worked with for over 30 years are, with rare exception, among the finest, most ethical and most dedicated professionals I have ever met. (You might want to compare the number of fraud investigators implicated in corruption/dishonesty last year with the number of attorneys implicated in corruption/dishonesty. The numbers run about 100 to 1 for corrupt lawyers!) They work long hours under difficult—and sometimes dangerous—conditions to uncover the truth. When they do, their findings are challenged by the criminals they expose (and their lawyers) as being “biased”, “slanted”, ‘improper”, “incomplete” and even “untruthful.” When they testify in court, they will be called everything but an honest child. But for nearly all of them (Yes, there are always some bad apples in every barrel) they do it because they believe in their work and because they want to expose fraud in the interests of all of society. They don’t do it for the money, Chip. You have secretaries making more money than some of the fraud investigators I know. They don’t do it because they have some perverse interest in making false accusations to ruin the lives of innocent people, either. Most of them have more principle than the clergy I have met. They do it because they feel their work has a purpose and a value—to all of us. Ask yourself if what we have recently seen from the likes of Enron and Bernie Madoff suggests the uncovering of fraud is a worthwhile mission. I know how I feel about that.

When you call for “unshakable proof” of insurance fraud, are you suggesting some heightened standard of proof to uncover fraud? (Isn’t true proof “unshakable” by definition? I mean, is there such a thing as “shakable” proof?) Is there some social purpose in affording such protection to those who perpetrate insurance fraud? Should we give them greater protection than murderers and rapists, as if they merit some type of special protection? I would hope not!

Nobody wants to see an innocent person wrongly accused. Believe it or not, some of the people who feel most strongly about that are the same people you accuse of engaging in a “witch-hunt”. I have worked with many investigators who have gone out of their way to look for evidence which casts doubt on the suspicions of fraud, to pursue truth rather than seek evidence to support an accusation. But the sad truth is that insurance fraud in this country is not some “rare occurrence of fraud to justify an open season on policyholders” as you suggest, but is an epidemic of staggering proportions. When a national survey just a few years ago revealed that over 50% of the people in this country—the majority, for God’s sake!–think it is “okay” to pad an insurance claim to get back your deductible or recover some of the premium that has been paid “all these years,” we have a moral crisis on our hands. And after handling perhaps 5,000 fraud cases in my career, I can offer some first-hand testimony that the problem is real and the prevalence is rampant. Just from my own cases, I have proved fraud committed by persons from every walk of life—including CEOs, legislators, judges, clergy, accountants, lawyers, entertainers and professional athletes. Not to mention insurance contractors, adjusters and public adjusters in numbers which leave me shaking my head. Chip, insurance fraud is no “rare occurrence” in this country, it is a true epidemic.

When you say that “If all you concentrate upon in life is uncovering fraud, you may start seeing signs of it everywhere,” I beg to differ. When we go to a doctor, we want a specialist. When policyholders come to your firm, they want somebody who only concentrates upon your type of practice. (You wouldn’t want your law firm described as a place where “all they concentrate upon in life is uncovering bad faith, so that they see signs of it everywhere!”) And when insurance fraud is being investigated, I sure don’t want somebody doing it on a part-time basis, do you?

Your reference to the recent scientific developments in fire investigation and the suggestion “many innocent people were accused of arson” is a popular refrain in recent years, but it lacks any statistical basis in fact. Issues such as concrete spalling, depth of char analysis and flashover have certainly changed the way we look at a fire and the basis for determining the cause of a fire. But there were only a small number of cases where those issues were the determining basis for concluding a fire was arson. In almost all of the arson cases prosecuted over the past 50 years, they were only one small part of the proof. Those “bad cases” have drawn a lot of attention and deservedly so for the individuals wrongfully convicted. (Perhaps you saw me on CNN’s “Anderson Cooper 360” last year discussing this very point.) But to suggest there was some widespread misapplication of fire science so that hundreds or thousands of innocent people were wrongfully convicted of arson is just wrong, way wrong. There is absolutely no evidence of that on such a scale.

Chip, we all run the risk of developing “tunnel vision” from the work we do. I’m sure you and many others who visit your website feel that way about me. But after reading your blog, I have to tell you I fear you may have developed that affliction yourself when it comes to this issue. Insurance fraud is a threat to all of us. It drives up indemnity payments on claims, it causes tens of millions of dollars to be spent trying to uncover it, and in the end it hurts everybody when they go to pay their insurance premiums. And lest we forget, it is both legally and morally wrong. Rather than disparaging insurance fraud investigation, we should all be promoting and supporting it. I’ve spent my life doing just that and I plan to continue to do so. I would welcome your assistance, my friend.

Sandy Burnette