SIU Today Summer 2022 - 17

Law Update
By Eric Moch, Partner, HeplerBroom, LLC - Chicago, IL
Washington State Insurance Fraud
Prosecution Highlights Growing Trend of
Fraudulent Claims on Personal Articles Policies
Some people work their entire lives hoping to reward
themselves with the purchase of a " status " watch like a Rolex
Submariner one day. Losing such a watch, with its average
$15,000 retail price, must be heartbreaking. So, when is the
discovery of a lost Rolex Submariner at a resale jewelry store
actually bad news for the owner of the watch? When the owner
sold it to the resale shop himself after reporting it lost to his
insurance company in an act of insurance fraud. One man's
recent induction into the King County, Washington criminal
justice system for lying about losing his watch provides a good
example of a growing trend of fraudulent personal articles
policies, especially suspicious claims of stolen jewelry.
STATE OF WASHINGTON V. CHRISTOPHER
MICHAEL MICHALKE, 21-1-01159-7 SEA.
Christopher Michalke of Seattle, Washington purchased a Valuable
Personal Property insurance policy from USAA in 2019. He did
so to insure the Rolex Submariner he purchased for $14,753 in
2018. In August 2020, Michalke claimed he lost the watch while
wakeboarding on Lake Washington, and he presented a claim for
the replacement value of the watch to USAA.
USAA investigated the claim. An astute investigator determined
that, far from being lost to the depths of Lake Washington, the
watch found its way to Bellevue Rare Coins. What may otherwise
have qualified as wonderful news for Michalke soon turned into
very bad news for him, when USAA determined that Michalke
sold the watch to the shop for $8,750 on August 20, 2020, just 21
days after he claimed he lost the watch.
USAA denied the claim and referred it to the Washington Office
of the Insurance Commissioner, which charged Michalke with
multiple counts of submitting a false insurance claim. Although the
state charged him with three counts, on February 24, 2022, Michalke
pled guilty to one count of presenting a false claim and was ordered
to pay $500 in restitution. In the end, despite once owning a valuable
" status " watch, Michalke ended up saddled with a very different sort
of status. In 2021, he also filed for Chapter 13 bankruptcy.
PERSONAL ARTICLES POLICIES: HOW TO
INVESTIGATE SUSPICIOUS CLAIMS
If you believe you are seeing an uptick in suspicious lost and stolen
jewelry claims of late, you are not alone. Most insurers who write
these policies in large metropolitan areas are, too. Claims in which
the details surrounding a policy holder's ownership of valuables,
the facts of loss and the policy holder's activities around the time
of the loss do not quite add up have become increasingly common
since the pandemic began. Motives to fabricate such claims include
lost income due to layoffs and downturns in production and
inflation-driven price increases.
How does one investigate a suspicious jewelry claim under a
personal articles policy? Fortunately, we have seen similar spikes
in suspicious claims in other areas in recent history, such as fire and
burglary during the Great Recession, and the same investigative
principles can apply.
The foundational investigative step in any claim is a clear
understanding of the facts of loss, as related by the policy
holder, ideally in a recorded statement of good audio quality.
This is the narrative against which claims representatives
judge all future scrutiny of claim investigation evidence. An
investigator must note any departure from this narrative, and
if she cannot resolve the discrepancies innocently in favor of
coverage, then it may be time to request that the policy holder
appear for an examination under oath.
The policy holder's narrative in an armed robbery, for instance, is
especially critical. The truth only happens one way, and although
trauma can impact a crime victim's ability to recall traumatic events,
it is suspicious when a supposed crime victim who demonstrates no
memory issues at all nevertheless tells materially disparate stories
about how the armed robbery occurred. There would seem to be
no innocent explanation for why a policy holder might volunteer
that a lone offender pointed a chrome snub-nosed revolver at his
face at one point in the claim investigation but later testify at an
examination under oath just weeks later that two assailants pointed
SUMMER 2022 | SIU TODAY 17
SIU Today Summer 2022

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