The Public Adjuster Who Owns the Restoration Company
Denise is a licensed Oregon public adjuster who owns 40% of Cascade Restoration LLC. After a pipe burst at a Medford dental office, she signs the insured, Dr. Patel, to a public adjuster contract calling for 10% of the net settlement. She recommends Cascade, which submits a $210,000 estimate; an independent contractor estimates $150,000. Cascade's owner offers Denise a $15,000 'marketing fee' for the referral. Denise also tells Dr. Patel, 'I'll handle everything-don't talk to the insurer's adjuster without me.' The insurer's adjuster learns of Denise's ownership interest and questions the estimate. Dr. Patel has not been told about the ownership interest, has not signed a conflict waiver, and is worried that challenging the estimate will delay his reopening. The public adjuster must identify the conflicts, decide what disclosures and consents are required, address the referral fee, and advise on communications with the insurer.
1. Identify the conflicts of interest and the disclosures Denise should have made before Dr. Patel signed.
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Denise has at least three conflicts: she owns 40% of the company she recommends; she is being offered a referral fee by that company; and her 10% contingent fee gives her an interest in a higher settlement. The 'don't talk to the adjuster' instruction also raises a consumer-protection issue if it isolates the client. Before Dr. Patel signed, Denise should have disclosed in writing her ownership interest, the potential referral fee, the right to choose any contractor, and the fact that she does not represent the contractor. She should have obtained written acknowledgment or a conflict waiver. The disclosure must be clear and conspicuous, not buried in the contract. Because the conflict was not disclosed, Denise should stop, correct the file in writing, and give Dr. Patel the chance to rescind or choose another contractor. If she cannot manage the conflict, she should withdraw.
2. May Denise accept the $15,000 marketing fee? Analyze under public adjuster ethics and Oregon law.
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No. A public adjuster may not accept compensation from a contractor for referring the insured's work. The payment creates a divided loyalty and an incentive to steer the claim to the affiliate or to inflate the scope. Even if Denise disclosed it, a secret or contingent referral fee from a vendor is the kind of kickback that violates public adjuster ethics and Oregon unfair trade practice law. Her compensation should come only from the insured under the written public adjuster contract. She should reject the $15,000 fee in writing, document the rejection, and ensure the contractor's invoice does not include it. If the $210,000 estimate was inflated to generate the fee or to increase her percentage, submitting it could also raise fraud concerns. The safe course is to require a scope-based estimate and independent bids.
3. How should Denise handle communications with the insurer and the dispute over the two estimates?
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Denise should communicate with the insurer as the insured's authorized representative, but she should not tell Dr. Patel that he cannot speak with his own insurer. The client has the right to communicate directly, and an isolation instruction can be an unfair practice. She should put the representation in writing to the adjuster, identify the conflict, and explain that the insured is free to consult others. On the estimate, she should obtain an independent scope, compare line items, and document why Cascade's $210,000 differs from the $150,000 estimate. She should not submit an inflated estimate or pressure the client to use Cascade. If Cascade does the work, Dr. Patel should sign a separate construction contract after disclosure and should be told about the delay risk. If the conflict cannot be resolved, Denise should offer to withdraw and account for any fee.