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Public Adjusters Should Not Violate Referral Fee Statutes and Regulations: The Pending Case Involving Scott Favre


Being a lawyer, I am subject to numerous rules and ethical regulations regarding our contracts and referral fees. In many states, public adjusters also have restrictions regarding how they may solicit cases and if they can pay referral fees. For example, Florida has the following statute prohibiting referral fees to those who are not licensed as public adjusters:

626.854(13) A public adjuster, public adjuster apprentice, or any person acting on behalf of a public adjuster or apprentice may not accept referrals of business from any person with whom the public adjuster conducts business if there is any form or manner of agreement to compensate the person, directly or indirectly, for referring business to the public adjuster. A public adjuster may not compensate any person, except for another public adjuster, directly or indirectly, for the principal purpose of referring business to the public adjuster.

I was thinking about this statute and these issues while reading case pleadings involving referral fees allegedly owed by a deceased Mississippi public insurance adjuster, Scott Favre. 1 I first met Scott following Hurricane Katrina when I spent considerable time litigating cases in Mississippi and Louisiana. I last saw Scott when he literally pulled me into a FEMA seminar he was giving to engineers in San Juan following Hurricane Michael. Scott Favre passed last year, but the fight over how to split up fee money is still being litigated in Mississippi.

One affidavit filed in that case is from a person that I do not believe is a licensed public adjuster, Jesse Haynes. The affidavit states, in part:

4. That I met Scott Favre (“Scott”), of Scott M. Favre Public Adjuster, LLC (“SMFPA”) in 2007 after several hurricanes, including Rita, hit the Gulf Coast.

5. That, after retiring from public education, I did some freelance communications, strategizing and business development consulting, including work with SMFPA. In 2017, Tai Chapman of the Tillis Group (Tai) and teamed up to jointly enter a commissioned-based agreement with SMFPA where we (and our liaisons such as Rolando and others) would do business development on behalf of SMFPA toward identifying and arranging informational meetings with prospective clients experiencing tropical storm related property damage. Our relationship with SMFPA continues to this day. I worked with the liaisons, including Rolando, to proffer agreements with SMFPA for 2.5 percent commission of SMFPA fees and $1,000 per introduction made, plus related subsistence costs.

Another affidavit by another person who does not appear to be a public adjuster stated in part:

ln an effort to remain neutral, my partner, Jessie Haynes, negotiated the terms with Rolando that were used in the written contract with SMFPA. We presented said contract to Mr. Favre for his consideration; however, the terms and conditions were all similar to others throughout Florida, Alabama and Texas. Rolando’s written contract with SMFPA was for referrals regarding potential clients with insured property damage claims in Puerto Rico. (A copy of Rolando’s contract is attached hereto.) The contract called for a $1,000 payment for each meeting Rolando setup with a potential client and SMFPA. If Rolando’s referral resulted in a public adjuster contract between SMFPA and the client, then Rolando would receive 2.5% fee of the public adjuster fee SMFPA received on the client’s insurance claim. Logistical costs such as travel, food, lodging were covered within the contract. Rolando’s fees would be paid by SMFPA directly to Rolando. Subsequently, the 2.5% contingency fee was a portion of the larger value paid by SMFPA to its subconsultants. These fees would be paid by SMFPA directly to Rolando Rodriguez.

One pleading stated the following:

SMFPA admits that Plaintiffs had a long-standing business relationship with SMFPA that included referring potential property insurance claims relating to Hurricane Irma impacting the State of Florida for which SMFPA would sometimes enter contingency public adjuster contracts with the insureds….

There are many pleadings in the case, but nobody seems to be disputing that some form of referral fee payments were contemplated, and this was the course of business for Florida losses as well.

While I might have missed something in all the numerous pleadings, nobody has cited to the presiding federal judge the issue of whether the payment of referral fees to non-licensed public adjusters is legal. No attorney has cited the Florida Statute, which I cited above. The Florida statute certainly makes these arrangements illegal for Florida losses.

For all I know, Scott Favre, his referring partners, and the lawyers were not aware of this statute. My bet is the lawyers and those living will learn about it after this blog post is published.

The point of this post is that public adjusters have to know the rules and regulations of each state in which they work. The contracts need to be compliant, and the business methods have to comply with the state where the loss occurred. There are consequences for non-compliance.

For example, Florida public adjusters who compensate any person, except another public adjuster, directly or indirectly, for the principal purpose of referring business may be subject to disciplinary action. Violations of the public adjuster code of ethics and regulations can result in fines of up to $10,000 per act.

In addition to other remedies, any person who acts improperly as a public adjuster may face penalties as outlined in Florida Statutes. This may apply to the other people in the Favre case who were soliciting for public adjusting work since those solicitation activities in Florida are acts of public adjusting or unlicensed practice of public adjusting.2

Public adjusters who violate Florida Statutes regarding their conduct are subject to fines of up to $20,000 for each violation. Further, The Florida Department of Financial Services, which regulates public adjusters, has the authority to impose administrative penalties, including fines and license suspension or revocation, for violations of public adjuster regulations. In severe cases of misconduct or repeated violations, public adjusters may face criminal charges in addition to administrative penalties.

These penalties are in place to protect policyholders and maintain the integrity of the public adjuster profession in Florida. The restrictions on referral fees are designed to prevent conflicts of interest and ensure that only licensed public adjusters are working solely in the best interests of policyholders. The ethical rules and statutes are designed to prevent policyholders from being influenced by those who are not licensed but have financial incentives to do so.

Thought For The Day

You alone are responsible for what you do, don’t do, or how you respond to what’s done to you.
—Darren Hardy


1 Estate of Rolando Rodriguez v. Scott M. Favre Public Adjuster, LLC, No. 1:21-cv-00125 (S.D. Miss.).
2 Fla. Code 69B-220.051 Conduct of Public Adjusters.
(3) Communications Concerning Public Adjuster Services.
(a) Solicitation. The solicitation of public adjusting business for compensation is deemed to be a material part of the business of public adjusting and, therefore, requires licensure as a public adjuster under the laws of Florida and the rules of the department, and shall be engaged in only by persons licensed by the department as public adjusters. Unlicensed persons shall not engage in such activity even under the supervision of a licensed public adjuster. The phrase “solicitation of public adjusting business” and similar phrases as used in this rule means, for compensation, initiating contact with any person, whether in person, by mail, by telephone, or otherwise, and therein seeking, causing, urging, advising, or attempting:
1. To have any person enter into any agreement engaging the services of a public adjuster in any capacity; or
2. To have any person subsequently speak or meet with a licensed public adjuster for the purpose of engaging the services of a public adjuster in any capacity or for the purpose of being advised by a public adjuster in any regard.