J.D. Decker was a paratrooper in the U.S. Army Special Forces before working for a number of years in Los Angeles as an insurance fraud investigator. A Certified Fraud Examiner and Certified Insurance Claims Investigator, Decker currently manages an insurance company Special Investigative Unit (SIU) in California. Here he discusses the hiring of a professional investigator in the USA.

Hiring a Private Investigator CAN be as easy as looking in the phone book. Investigators are required by most individual states to be licensed, which means they've demonstrated knowledge of and adherence to minimum standards of professionalism and ethics as required by the state licensing bureau.  An investigator available for hire must also have a local license to operate a business in any given territory, which means that they will have to adhere to appropriate business practices as required by law. They might also advertise that they have insurance to cover losses to the client that might occur as a result of their activities. Overall, to the layperson without a working knowledge of the investigative field or community, this might seem like an adequate way to obtain investigative assistance.

But hiring an Investigator out of the phone book based on an advertisement is not the preferred method of any person or business that must hold itself out to the public as a premiere organization in its field. This applies particularly to insurance organizations who will base extremely important claim decisions on information obtained by their own Special Investigative Unit, or by an outside investigative vendor. Decisions to deny claims and/or void policies are of great impact to the insured customer or injured claimant. Lawsuits, extra-contractual damage awards, and punitive damages can result if these decisions are made in error, based on negligence or malice on the part of the insurer. When hiring expert investigators to gather claim information, negligence in choosing professional representatives can be as damaging as any bad-faith claim denial.

Insurance companies, as well as other industries commonly involved in litigation or fields of business saturated by legal precedent in the U.S., have to adhere to court interpretations and rulings which outline  the qualification of any expert used in the course of a claim investigation, and potentially later in court. Landmark court cases in the United States such as Daubert v. Merrill Dow Pharmaceuticals,  Kumho Tire v. Carmichael and the “Kelly/Frye formulation” have raised the standard for admitting expert evidence into court cases. Experts hired during the investigation of a claim, whose reports or opinions will be used in the insurance company’s coverage determination, must meet the court’s scrutiny to be allowed to bring their investigative results into evidence during any resulting trial. It becomes extremely important, therefore, that the insurance company hire only qualified experts to perform their investigative tasks. With the current legal climate in which challenges against either party’s expert is commonplace, it also becomes the insurer’s duty to not only research the investigator’s qualifications, but to evaluate and understand the investigator’s conclusion, the actions taken during the investigation, and the methodology employed by the investigator. 

Many insurance companies hire past performers whose reports they’ve come to be familiar with, or whose court testimony has produced satisfactory results. Other companies go a step farther and conduct license and background checks on firms and individuals to ensure that they are qualified and have conducted themselves competently and professionally in the past. Once that has been completed, it is beneficial to complete a thorough review of prior investigative assignments of a similar nature, reports, and court testimony to make sure that the investigator will effectively serve the needs of the insurance company. It still must be admitted that there are insurance companies out there who simply pick up the phone book to hire an investigator, without the knowledge that they are risking the court’s exclusion of that investigator’s findings if he or she is deemed unqualified in a subsequent trial. However, in the complex business, legal and political environment of the insurance industry, it would be a fatal mistake to present less than the most qualified group of investigators as representative of the insurance company.