A state judge has ordered public insurance adjusters to stop negotiating claims between someone who was injured and another person's insurance company.
Such negotiations are the unlawful practice of law, 3rd District Judge John Rokich ruled Monday. Only attorneys should handle those cases, he said.The ruling is just another example of the Utah State Bar trying to take business from other professions if bar officials think Utah lawyers can make money doing the same business, said Brian Larson, attorney for the adjusters.
"Make no mistake about it, this is turf protection, plain and simple. And the public loses. That's unfortunate," he said.
The bar has already won a similar victory against credit collection agencies, he said. The bar could conceivably go after Realtors and accountants next.
"We're very pleased," said Utah State Bar attorney Greg Sanders. The bar decided to sue public adjusters because it has received several complaints from lawyers and the public.
"Some members of the public didn't think they got the service they should have gotten," he said.
The ruling could put a handful of adjusters out of work, Larson said. Several adjusters in Utah hung their own shingles and adjusted many of the claims they are now banned from doing.
"Their careers are over with," he said.
"That may be true, but they weren't supposed to be in the business in the first place," Sanders said.
Insurance adjusters can still work for insurance companies adjusting claims between an injured person and their own insurance company. The adjusters can also continue to adjust property-damage claims between a person and someone else's insurance company. They just can't do bodily injury claims. "That accounted for the bulk of the work among the public adjusters I know of," Larson said.
A 1986 law allowed public adjusters to adjust third-party bodily injury claims, Larson said. The law allowed Utahns to negotiate a claim against someone else's insurance company themselves or hire an attorney or public adjuster to do it.
Typically, the attorneys and the adjusters took about one-third of the insurance company's payment as their fee, Larson said.
Sanders disagreed with the adjusters' interpretation of the 1986 law. The law never gave public adjusters the power to adjust third-party injury claims, but they did it anyway, he said.In a ruling from the bench, Rokich sided with the bar's interpretation of the law. That came as no surprise. In a hearing several weeks ago, Rokich said he was inclined to agree with the bar.
The bar and the adjusters disagree on the ruling's impact.
An attorney might cost a person more money than an adjuster would if the person got a lawyer who wants to promptly put the case into court, Larson said. Typical contracts between lawyers and clients require clients to pay all court costs.
The ruling may stem the stream of complaints about public adjusters, Sanders countered. He has received at least 10 complaints since taking the case, he said.
The bar will take legal action against adjusters who ignore Rokich's injunction, Sanders said.
But the public adjusters may appeal that injunction to the Utah Supreme Court, Larson said.