This is a copy of one of my stories from 1998. It was originally published in the John Cooke Fraud Report. I have been requested to re-publish this story on the web
The following story is fictitious. It is however, based on a true story—one which covers a period of time and provides a seldom seen view of our industry.
Louis Petty was the proud owner of a 1995 Pontiac TransAm, equipped with a factory installed V.A.T.S. (Vehicle Anti-Theft System). The installed system module required the correct ignition key resistance to supply fuel and enable the starter. The resistor on the key, commonly known as a “computer chip” is one of only 14 different combinations used on this particular system.
One summer afternoon after leaving work, Petty decided to do some socializing and drove over to the local bar and meet some of his friends for a game of darts. He remained at the bar for about three hours, and then left for home. He parked his prized TransAm on the street in front of the house and as was his usual habit, made sure the doors were locked and the car was secure. He watched the eleven O’clock news, and then went to sleep.
The morning light heralded the beginning of a radical change of life.
Things started out pretty routinely. Petty woke up, took a shower, got dressed for work, walked out his front door, and was shocked to find his TransAm missing! Strange thoughts entered his mind. Was he absolutely certain he parked it in the usual thought? Could it have been towed for some parking violation? Panicking, he called the police.
When the officer arrived, he started asking Petty a series of questions. Are you sure you parked your car here? Do you have any enemies? Does anyone else have keys?
The questions seemed to go on and on, until Petty began to sense he was the suspect rather than the victim. After about a half-hour, the officer ceased his rapid-fire inquisition and completed the stolen vehicle report.
Petty was in shock, though thankful that his TransAm had full insurance coverage, trusting his insurance carrier to take care of everything. He called his insurance agent to report the theft, answered a few necessary questions and inquired about the procedure to obtain a rental car and the time before he would get a replacement vehicle.
Five days later, Petty received a very confusing form from the insurance company, inquiring about non-permissive use. He was to answer all questions, have the completed form notarized and return it via US mail to the insurance company. The procedure was beginning to cause him some twinges of anxiety.
Ob ¡°T¡± plus ¨Cseven¡± (one week after the theft of the vehicle), Petty received a message on his answering-machine from the police, stating his TransAm had been found, and he was instructed to call a detective Smith for further information.
The message was encouraging. Petty was happy because he loved his TransAm, and he had presumed the car had minimal damage and was certain he would soon be driving it again. The rental car was not as much fun to drive as the TransAm, and Petty was anxious to slip back into the driver¡¯s seat of his prized vehicle.
Upon calling Detective Smith the next morning, Petty was told that he must come down to the police station for questioning. He took off work, figuring that the questioning was a common procedure. He also hoped that the officer would provide details about who stole the TransAm. Upon arrival to the police station, Petty asked for a detective Smith.
The detective initially seemed very nice. He was polite and offered Petty a cup of coffee. They proceeded to a small room where they could talk about the case.
Petty¡¯s hopes of getting the TransAm were dashed. The detective advised that the car had been found on the other side of the city. He continued to say that all that was left of the TransAm was a burned hulk.
Then came a barrage of questions.
Mr. Petty, do you know who might have stolen your car?
Do you know why it was found where it was?
Do you know that your vehicle is factory equipped with an anti-theft system and can¡¯t be stolen without a proper key?
Do you know who might have burned your car?
The questions were getting more intense. The detective asked for proof of Petty¡¯s whereabouts at the time of the theft¡ªand if anybody could vouch for his whereabouts during that time frame.
After four hours of intense questioning, Petty felt like a beaten puppy dog. The detective did not want to hear what petty had to say. Even though he had no criminal record, not even so much as a parking ticket, Petty received the treatment usually reserved for a tried and convicted car thief. At one point during the interview, the Detective threatened to physically harm Petty if he didn¡¯t tell him what he wanted to hear.
Petty was frightened by the ordeal. However, since he had never previously been involved in an auto theft claim, he assumed that perhaps the intense questioning was standard procedure in such cases. He was thankful when the Detective finally finished the questioning, figuring the unpleasantness was over. Next, he thought, the insurance company would pay the claim and that would be the end of the matter.
The insurance company demanded that Petty produce all sets of keys to the TransAm. Cooperating fully, he dropped them off at the insurance company¡¯s main office.
A couple of weeks after the initial police interview, the insurance company requested an Examination under oath. Petty, knowing that he was without any guilt in the matter, immediately agreed. The arrangements were made, but by this time Petty thought it was best to hire an attorney because the police had been using words like ¡±fraud¡± and ¡°arson.¡±
Petty¡¯s uneasiness and anxiety were increasing. Those present at the EUO included a court reporter, a representative from the insurance company, the insurance company¡¯s council, Petty and his attorney.
After supplying his name, address and other identifying information, Petty found the questions resembling those asked by Detective Smith. Questions dealt with Petty¡¯s financial situation: was it a fact that he had only worked for his present employer for two months; did he owe money to someone or did he have a gambling or drug problem; could he produce three years of his tax records and all banking information. Stating that his only outstanding bills were his car payment, his rent and his utilities, Petty truthfully indicated that he had made decent money at his job and could easily afford to pay his bills. Once again, there were questions about where he was when the car was stolen.
The badgering continued. Petty was informed that the insurance company could prove that he was involved in the reported theft of his vehicle. He was told that the car was not really stolen at all and that this entire claim was intended to relieve him of his car payments. The attorney for the insurance company told him that they had ¡°more than enough proof¡± against him. The insurance representative kept repeating, ¡°Is there something you want to tell us?¡±
Petty was also told that there was an anonymous phone call stating that the claim was fraud. He was certain that the statement was intended to get him to confess-to a crime he did not commit.
He had asked if anyone had used his car prior to the reported theft. He admitted that he had loaned the TransAm to his ex-girl friend on occasions, but she had always given back the second set of keys.
When the EUO was finished, Petty was told he would hear the results in a week or so and the insurance adjuster handling the claim would prepare the settlement.
In a week Petty did indeed receive a letter from the insurance company. The letter stated that the claim was being denied based on misrepresentation. The insurer claimed to have experts who could prove the TransAm could not have been stolen because of the V.A.T.S. The insurance company¡¯s experts further claimed likely insured involvement, for the purpose of financial gain.
Petty was devastated, and retained another attorney. Somehow he had gone from being the victim of a car theft to an accused arsonist and thief.
His new attorney, Arnie Citizen, sent interrogatories to the insurance company asking about policy matters. Progress was slow, and Petty became increasingly frustrated. He did some checking of his own and was dismayed to learn that most denials are rarely changed.
He contacted his credit union to freeze the car payments until the case was resolved. Luckily they acquiesced. In the interim, the police did not pursue criminal charges.
Petty¡¯s employer let him go because of a question of honesty, arising out of the insurance company¡¯s accusations. He felt his life had been ruined.
Jobless, he did what he could to wile away the hours. Firing up the PC and searching the Internet for useful information, he found an expert on the subject of auto theft: one who occasionally did Plaintiff work if the situation demanded it.
Petty contacted the expert and arranged a three-way meeting with the new attorney, Citizen. When Citizen, (who knew nothing about auto theft except what he¡¯d seen on TV) spoke to the expert, he quickly learned that the case might indeed be a winner. Given the new information, he proceeded accordingly and launched a counter attack against the insurer.
Citizen sent all the needed information on the case to the expert. The package included all the insurance company¡¯s evidence as well as statements from the insurer¡¯s experts professing that the V.A.T.S.-equipped TransAm could not be stolen.
The case, at ¡°T-plus one- year¡±, deeply affected Petty both emotionally and financially. He found it very difficult to hold a job or even to sleep.
The insurance company had three outside experts accusing Petty of faking the theft of his vehicle and setting fire to it. All the evidence was circumstantial; there was no hard fact.
One of the defense experts, Joe Smart, had been to court many times on behalf of insurance companies. He was known to rarely find in favor of an insured, and he gave countless seminars to insurance company personnel on the subject of auto theft. Smart called himself a forensic Examiner.
Petty¡¯s (hot off the internet) expert, John Bright, had been involved in the repair of over 10,000 theft-recovered vehicles, and he was ready to go head-to-head with the insurance experts.
After reviewing the statements and evidence used by the insurer to deny the claim, Bright prepared questions relating to the theft of the TransAm. With the tides beginning to turn, the Plaintiff side called for a deposition of the insurance company¡¯s experts.
Bright also had a background in consulting for insurance companies; in fact, such consulting comprised a high percentage of his work. Bright determined that Smart¡¯s statements were based on theory¡ªnot fact. Bright believed that anyone could easily steal the V.A.T.S.-equipped TransAm.
Citizen traveled to the expert¡¯s location for the deposition of the defense witnesses. Another of the three defense experts, Fred Goodguy, possessed countless credentials from auto theft seminars he had given or taken.
Citizen posed key questions to the insurance carrier¡¯s experts:
¡°How can the ignition lock cylinder be removed from this style vehicle to steal it?¡± Smart responded, ¡°With a slide hammer or tool of the same type.¡± Bright was confidant, should this case come to trial, that he could easily disprove this statement on video. In fact, in the case of the TransAm, he could clearly show that it was impossible to remove the lock cylinder this way.
¡°Could the proper ignition key easily be obtained from a third party without the owner¡¯s knowledge?¡± Smart¡¯s answer was, ¡°It is virtually impossible.¡± Bright told Citizen that he could conclusively disprove this statement.
¡°Can the V.A.T.S. be bypassed with no obvious indications?¡± Goodguy responded, ¡°No.¡± Once again, Bright assured Petty¡¯s attorney that it could clearly be shown¡ªon video¡ªthat the V.A.T.S. could easily be bypassed with absolutely no trail of forensic evidence.
The third insurance company expert, Alvin Nicely, was asked, ¡°If the V.A.T.S. system failed, could the vehicle be started with merely a defeated steering column?¡± Nicely answered, ¡°NO.¡± Bright had information straight from a diagnostic repair manual, showing that if the system failed, the vehicle could be started without the proper resistor key.
The basis of the claim denial included the results of a ¡°cause and origin¡± of the vehicle fire. The three company experts determined the fire had been set in the interior of the vehicle. When Citizen questioned what type of testing was performed to determine the accelerant used¡ªand how the origin of the fire was determined¡ªthe insurance company¡¯s experts were found to admit that no actual testing was done and they had based their findings solely on opinion.
And so it continued. Nicely claimed he could tell the last key used to start the vehicle. Bright, however, assured Citizen that this was not true because there was nothing left of the steering column to serve as evidence to determine if the locking mechanisms were defeated. All the plastic and white metal had been melted from the steering column.
The company¡¯s experts testified that the TransAm¡¯s factory anti-theft system could not be defeated. Bright insisted he could prove that it could.
And so it went. As Petty¡¯s attorney was preparing the case for trial, he found that Bright could counter¡ªwith fact¡ªalmost every statement made by the defense.
In response to the claim that a key could not be easily obtained, Bright supplied the proper key type¡ªwith the proper resistor¡ªfrom a thousand miles away, after not having to show proof of ownership.
In response to the statement that the V.A.T.S. could not malfunction and still start, Bright countered that this statement was false and supported his opinion with diagnostic trouble-shooting from a repair manual.
But then came the real face-washing. The insurance company¡¯s experts said they could prove that the TransAm¡¯s anti-theft system could not be defeated, and claimed to have the melted V.A.T.S. module as evidence-presenting it to all to examine. And Bright examined it¡
What the carrier¡¯s experts were claiming was the undefeated V.A.T.S. module was, in reality, the air bag module. Yet three ¡°experts¡± insisted it was something other than it was. Oops¡
The case was close to trial, and Petty was looking forward to the day that all this would be behind him. His lawyer, Citizen, felt pretty confident too, but still he was cautious.
The matter was three months from trial when the insurance company reevaluated its position and made an offer to settle. They were perhaps seeing their ¡°experts¡± in a different light¡ªone cast by an attorney who knew the correct questions to ask (with the prompting of a perhaps ¡°Brighter¡± expert). The tides had definitely changed.
With the shoe firmly on the other foot, Petty and his team held out. After a year of accusations and intense warfare, Petty wanted his name cleared once and for all. Bright assisted with the production of one more piece of ¡°evidence.¡± By carefully reviewing a video taken by Petty¡¯s attorney, Bright found a very important piece of evidence still left in the TransAm: The steering column locking mechanisms had been clearly defeated. Visual proof.
The insurance company was faced with an ugly prospect. Not only did they owe Petty a theft settlement, they wisely recognized their position (and the potential for a bad faith action) should the matter proceed to court. They made another offer. A large offer. A very, very large offer.
Petty was tired. He was ready to get on with his life. He was ready to quit the Prozac, buy a new car and sleep soundly for the first time in more than a year. He took the very, very large offer, and agreed to not divulge the amount of the settlement.
Attorney Citizen was happy; his one-third cut was a handsome amount, indeed. Bright was happy; he had assisted in setting the record straight by helping a young man who had been wrongly accused and shamelessly treated. And Petty, holding a pass book to a fat bank account containing enough money for many a year, was¡ªfor the most part¡ªalso happy.
The part that scared Petty the most was how close he was to having his entire life destroyed because three ¡°100 percent defense experts¡± were hell-bent on adding yet another notch to their belt buckles. He still wonders how many people were denied payment or even sent to jail because the insurance companies use certain outside sources who know far less about auto theft than they profess to know.
It took another year to figure out what actually occurred the night when the TransAm was stolen. Petty¡¯s ex-girlfriend and her present boyfriend were involved in the theft of the TransAm. She was the mystery ¡°informant.¡± Her actions alone, however, would not have been strong enough to get Petty convicted of a crime he did not commit. It took a team of three experts, probably with visions of plenty of future cases in their eyes, to almost ruin an innocent man¡¯s life.
From the author: I repeat. This story is fictitious. But it is based upon truth and similar situations, which are playing out in the US each and every day.
Know you experts. An expert who accepts any and all cases on behalf of the insurer may not be an expert at all. Has the expert been impartial? Has he ever represented Plaintiffs or criminal defense? If not, you may have a problem.
This article was published in The John Cooke Fraud Report in the September/October 1998 edition.
I gladly work for anyone that wants the truth. I do not twist facts and I am not paid for my opinion. I gladly work for insurers and cannot oppose my client companies due to ethical reasons. I do however, take on cases against non-client insurance companies when their expert is incorrect in his/hers conclusion.