(Co-written with Tina Zheng -- summer associate at White and Williams and second year student at Cornell Law School)

Try as we might, none of us are immune from making a mistake on the job. It matters not our effort nor how much experience we have. It is just, well, life. Mistakes vary in their severity. And that is likely tied to their consequences – both for the employee and employer. But one consequence for a mistake at work, that probably causes no worry for most, is to be found personally liable. In other words, to be sued for it.

Of course, there has long been an exception for doctors, lawyers, architects and a host of other professionals. Is it now time to add insurance adjusters to the list of those who could find themselves in the crosshairs of a plaintiff’s attorney for getting it wrong at the office? A review of case law over the past few years suggests that adjusters may sometimes need to lawyer up.

In some ways this is not at all surprising. Special rules have long applied to the relationship between insurance companies and their customers versus other businesses. Insurance contracts sometimes have unique ways to be interpreted, a fiduciary duty may be owed to the customer and statues may govern the relationship. That insurance company employees may be personally liable for a mishap on the job is another entry in the category of what can make insurance a different animal.

Here are a few recent examples where courts were willing to find an insurance adjuster potentially personally liable for handling of a claim. As these cases demonstrate, their rationales vary.

One recent decision, and worthy of special alarm, is Linron Properties v. Wausau Underwriters Insurance Co., No. 15-293 (N.D. Tex. June 16, 2015). Here a Texas federal court held that an adjuster could be personally liable for her wrongful conduct in handling a claim involving repairs from a storm. The court held that the adjuster’s actions – retaining an engineer and contractor who were known for arriving at findings that favored insurance companies, refusing to identify damage to the structure that was covered under the policy, and failing to respond to the insured’s inquiries regarding the status of the claim and payment -- were sufficient to support a claim against her, in her individual capacity, for violating the Texas Insurance Code.

The reason why Linron merits additional attention is that, before reaching its decision, the Texas federal court noted that some courts had recently begun to question the appropriateness of holding an adjuster individually liable for unfair settlement practices. These courts have gone in this direction because an adjuster “does not have settlement authority on behalf of [the insurance company]” and his or her “sole role is to assess the damage.” However, the Linron court was not prepared to join them. The court explained: “[W]hile the courts’ reasoning in these cases has some logical appeal, a closer examination of the precise language of [the Texas Insurance Code] and the role played by insurance adjusters in the claims handling process belies their conclusions.”

Even more recently the Eastern District of Pennsylvania handed down Kennedy v. Allstate, No. 15-2221 (E.D. Pa. July 8, 2015) where the court held that insureds stated a colorable claim for negligence against adjusters. The insureds argued that adjusters affirmatively misrepresented and concealed material facts from them to delay the resolution of their claims. The court held that “there is at least a possibility that . . . an insurance adjuster owes a duty of care to an insured that would be breached by failing to reasonably investigate an insured’s claims and making misrepresentations.” The court also held that claims against insurance adjusters, under the Uniform Trade Practices and Consumer Protection Law, are colorable under Pennsylvania law.

In New Jerusalem Rebirth & Restoration Ministries, Inc. v. Meyer, No. 1:11cv312 (W.D.N.C. July 6, 2012), a fire damaged the insured’s business. A policy provided for extra expense coverage to minimize the suspension of the insured business and to allow the continuation of business activities. The insured claimed that the adjuster rejected the suggested premises to use as a temporary location for the business and directed the insured to other premises that were either unavailable or unsuitable. The Western District Court of North Carolina held that, because North Carolina courts have not addressed whether insurance adjusters may be held individually liable for unfair and deceptive trade practices, “there is at least some possibility that plaintiff may recover.”

In Pohto v. Allstate Insurance Company, No. 6:10-02654 (D.S.C. July 7, 2011), the insured, injured in a motorcycle accident, claimed that the adjuster acted in bad faith and/or negligently handled his claim. The District Court of South Carolina held that the insured could possibly establish a cause of action against the adjuster, for bad faith and/or negligence, because, under South Carolina law, a company’s employees may be held individually liable for torts committed within the scope of their employment.

In McCarter v. Progressive Gulf Insurance Company, No. 11-2646 (E.D. La. Dec. 7, 2011), plaintiff was seriously injured in a car accident, resulting in cognitive impairments so severe that his neuropsychologist recommended that he “should not be put in any position of decision-making or judgment . . . due to the reduced executive function he is experiencing.” To handle plaintiff’s claims, the insurer assigned an adjuster, who had plaintiff sign a settlement. Plaintiff claimed that the adjuster fraudulently procured the release with the knowledge that plaintiff had impaired reasoning skills. The Eastern District of Louisiana held that an adjuster may be held individually liable to the insured, depending on the “relative education of the parties, the diligence of the claimant in seeking the facts, the actual or apparent authority of the adjuster, the content of his promises to the claimants, misrepresentation or fraud.”

However, it is not all doom and gloom for adjusters. Earlier this year the Eastern District of Virginia refused to hold an adjuster liable for breach of the implied covenant of good faith and fair dealing. In Evans v. GEICO Gen. Ins. Co., No. 3:14-CV-659 (E.D. Va. Jan. 9, 2015) the Court reasoned that because there was no contractual relationship between the insured and adjuster, the insured failed to state a cause of action. Furthermore, as an agent of the insurer, the adjuster cannot be held liable for any contract between the insured and insurer because the insurer is the disclosed principal.

Similarly, in Youngs v. Security Mutual Insurance Company, 3 Misc. 3d 244 (N.Y. Sup. Ct. 2004) the Supreme Court of Seneca County, New York did not hold an adjuster liable for gross negligence because the adjuster owed no independent duty to the insured. The only duty stemmed from an employment contract between the insurer and the adjuster—there was no contractual relationship between the insured and the adjuster.

As these cases, and others, demonstrate, the rationales used by courts, both to conclude that adjusters may be personally liable for their claims handling or not, vary widely.

Not all courts are willing to find an insurance adjuster potentially personally liable for their handling of a claim. And the adjusters’ conduct may need to be more than a simple error to justify personal liability. Nonetheless, there are certainly enough recent decisions, going against adjusters, to merit concern by them and their employers.