Two Sonoma County men file lawsuit, urging state to protect fire survivors from unlicensed adjusters

April 22-- Apr. 22--Two Sonoma County men are suing the California Department of Insurance for allegedly allowing out-of-state insurance adjusters to work illegally in the state without proper registration, enabling unsupervised adjusters to dole out costly bad advice to wildfire survivors.

Plaintiffs Jeff Sengstack, who lost his Santa Rosa home in the October 2017 wildfires, and Jon Eisenberg, his friend and a Healdsburg attorney who volunteered in the firestorm's aftermath to help people with insurance questions, are asking a judge to order Insurance Commissioner Ricardo Lara to take a stronger stance toward these adjusters by more strictly regulating their activities.

They argue the state agency didn't properly investigate complaints that these unlicensed adjusters regularly misinformed people about their rights under California law. Adjusters wrongly told wildfire survivors they could not receive full replacement costs if they decide not to rebuild and gave incorrect deadlines for receiving benefits, according to their complaint, filed in November in San Francisco Superior Court.

"We're trying to say to the commissioner: Please do your job. You have reason to believe there are out-of-state adjusters coming after these conflagrations and they're giving bad advice," said the men's attorney, Neil Goteiner. "We ask you (the commissioner) to figure out whether or not this is happening and whether on a widespread basis homeowners are getting false information."

Officials with the California Department of Insurance defended the agency's efforts to supervise and regulate adjusters from outside the state. A department official said agency officers were on the ground monitoring activities in Sonoma County while the fires still burned. On Nov. 20, then-commissioner Dave Jones issued a formal notice to insurers, public adjusters and carriers to correct some of the inaccurate information about benefits required by state law.

"The Department of Insurance believes that petitioners' complaint and the lawsuit is an effort to manufacture a problem that does not exist, and we expect to prevail in court," Michael Soller, deputy insurance commissioner, said in an emailed statement.

"This is the only complaint we have ever received about somebody being named on the wrong list, and we took appropriate action."

The department tried to argue to a judge that the plaintiffs cannot sue the agency, but last month a San Francisco Superior Court judge rejected the petition and allowed Sengstack and Eisenberg to move forward with their claim, stating the "plaintiffs allege sufficient ultimate facts showing that the commissioner is acting arbitrarily and failing to perform his mandatory duty."

On Wednesday, Commissioner Ricardo Lara filed a petition with the 1st District Court of Appeal, arguing the court can't compel a state officer "to exercise his discretion in a particular manner," according to the 54-page document. That appeal is pending.

In the wake of a significant disaster like the 2017 wildfires that destroyed about 5,300 homes in Sonoma County, these so-called catastrophe adjusters come from across the country to help handle the large volume of claims from policyholders left with destroyed or damaged houses.

California and other states have provisions allowing these adjusters to enter the state and work under supervision of state licensed entities to assist with the workload.

Insurance companies must submit lists of these transient workers to the state under the regulations, intended to ensure they receive training and supervision about California laws.

California law gives policyholders greater protections and payouts than most other states -- and that's where the advice of an out-of-state adjuster can potentially cause people to lose out on significant benefits, like the decision where to rebuild.

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