DennisBeaverMay 05, 2012 (Original publish date) • By Dennis Beaver

Ask any doctor or lawyer to name that one teacher who had the most influence on their professional skills and competence, and you’ll likely hear “Father Time.” School provides the foundation, but the years we spend in our professions teach us the most — about health, sickness and human nature.

In real ways, both lawyers and physicians exist in sort of a Harry Potter world, where experience allows us to predict the future. We see where a patient or client is headed if their behavior doesn’t change. And, if we are to help, at times we must be judgmental.

Many do not listen, frustrating our desire to help. In a perverse way, we simply wait for the final event that we predicted.

With that preface, allow me to tell you about a client who we will call “The Kleen-Up Crew,” a family-run disaster restoration company whose repeated failures and refusal to follow our advice has this 20-employee firm on a collision course with bankruptcy.

Small stuff is the big stuff

After you report a fire, wind tearing off part of your roof, a flood or other form of significant water damage to your homeowner’s insurance claims service, an adjuster will most likely dispatch a damage restoration or disaster remediation service, as it is sometimes called. Well-known names in this field are Belfor, DKI, ServiceMaster and ServPro.

When the scope of work has preliminarily been determined, a supervisor should obtain signatures from the homeowner on both an emergency services agreement and what is referred to as a direction to pay and assignment of benefits clause.

This legally enforceable document instructs the insurance company to issue a check, not to the homeowner, but to the restoration contractor directly, or in both names. Without that assignment of benefits, the check will usually be payable and sent to the homeowner, creating a temptation for theft.

Documents should then be immediately faxed to the adjuster in order to obtain a time-received stamp, but email may be acceptable if receipt and acknowledgment is established. Some insurance companies permit work to be started without further input from the claims adjuster, while others require formal approval.

These are critical details, and thousands of dollars in services could be performed, with not so much as a thank you from a dishonest homeowner who cashes a check that does not have the restoration company’s name on it.

“These things commonly occur because paperwork can fall through the cracks, companies get busy and fall behind on the timely transmittal of the documentation,” Pete Consigli, a 35-year veteran of the restoration industry, tells You and the Law.

“It is really upsetting,” he adds. “Good work is performed by an excellent disaster-recovery company, only to see their money wind up in the hands of a dishonest customer.”

Consigli is viewed an authority in the area of restoration and damage repair. He lectures frequently both in the United States and abroad, holding the position of industry advisor for the Restoration Industry Association, based in Rockville, Md.

“While most homeowners are honest, the temptation to hang on to some of that money can be great, especially if there are other financial issues facing the family or their business,” he points out.

Uncaring employee + crooked customer = theft

In early October 2011, The Kleen-Up Crew was dispatched to handle water damage caused by a burst pipe at a small office-supply company. The job took four days, signatures on appropriate contracts and the assignment of benefits form were obtained, but Doris, the office manager, “forgot” to send these documents to the adjuster. It was not the first time, something the owners were aware of, yet they kept her in this critical position.

When by February, payment had not been received, she learned that the customer received and cashed the check months earlier. Worse yet, “we used the money for our payroll,” their customer stated, and promised to immediately begin sending a payment each week. But most of their checks bounced.

When we became involved, something strange instantly became apparent.

Doris wasn’t upset or angry about any of this. Her employer had been the victim of theft, and yet she wasn’t bothered. “I try to never get angry,” she told us. “I have sympathy for our customers, because people do get into financial trouble, and we all need to be understanding.”

“Need to be understanding! Your customer is a thief, and it doesn’t bother you? Doris, you are dangerous,” I replied, in a not terribly calm tone of voice.

Next time: We got the bill paid. So, how did we do it? We will tell you what you can legally say to a thief, next time.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.