DEPP: Guilty of Insurance Fraud

Once upon a time, the insurance company Dive Equipment Protection Plan (DEPP) was the darling of the dive community, insuring our cameras against flooding, our computers against loss overboard, and all our dive gear. But its claim-handling slowed, its payouts became lower, and its refusal to settle higher. We've written often about readers' issues in getting their claims settled, but this story may be coming to an end. The state of Kentucky, where DEPP is based, filed criminal charges last month against the company and its owners, Dixie and Deane Lehrmitt.

One of the people responsible for that action is Undercurrent subscriber Simon Marsh (Caterham, U.K), who has kept us informed of his whistle-blowing. Two years ago he filed a claim that never got paid, and the correspondence he got from DEPP was laughable, but Marsh didn't give up, and now his persistence is paying off. Here's his story:

"I suffered an equipment loss back in April 2011. I made a claim from Belize where I was working at the time. I didn't send the paperwork by courier, so DEPP claimed it 'didn't receive it'. I re-did the claim, got it notarized, and sent it by FedEx this time. Then the fun really started.

"DEPP does not offer a telephone number, so you have to email. I averaged three to four emails, each with a three-four week wait time, before I got a response. I felt like Dixie, the administrator [and co-owner of DEPP], led me on and just when I reached the right level of stress, she passed me on to Deane, the broker [her husband and DEPP co-owner], who is the 'voice of reason' and sends a lengthy email about how it's the consumer's fault why they are slow to pay. They appear to communicate with each other by email, and I was supposed to get the impression that he works for a different company (Innovative Programs Group), but as they are married, this is clearly crap, and they probably run this program from their home.

"I eventually got my $3,500 claim approved in October 2011. They did no investigation and asked for no proof. I thought this strange -- but then of course they had no intention of paying! Six months later, they no longer made any pretence of paying, and they did not respond to me. I intended to do what I could to get my money. I work as a cruise director on a liveaboard, so every week I told my story to the photographers who came on the boat. One guest worked as a private investigator, so he worked on my case for free. Another guest is in the insurance business and knows the Insurance Commissioner for Kentucky, where DEPP is based, and he promised to do what he could.

"With his advice, I put together a complaint against DEPP and the Lehrmitts, and submitted it online to the Kentucky Department of Insurance's Consumer Protection Division. I sent policy documentation, proof that the policy was effective, and coverage showing the items I was claiming for were covered. I also sent the claim documentation and a chronological summary of each relevant e-mail that passed between me and the Lehrmitts over a period of 18 months.

"The department promised a two-week turnaround in its cases, but it took more than six months. I twice spoke to Rodney Hugle, the case officer. He reported to me that the Lehrmitts (eventually) responded, and they claim that I am not eligible for the money because I did not replace the lost gear with exactly the same equipment as lost. (This despite the fact that emails clearly show they had approved the claim). As a result of my evidence, the Lehrmitts' response -- and that Hugle couldn't find any evidence that they are licensed to broker insurance -- Hugle has contacted his legal department. DEPP continued to solicit business from the diving community.

"In March, Hugle sent me a copy of a letter that he had sent to DEPP asking for more information. Across the bottom was a handwritten note stating, 'Claim is being paid in full, less deductible, via U.S. money order. A copy of money order will be sent to you so you can close your file, Signed Dixie Lehrmitt. "

"In mid-April, I received -- out of the blue -- a payment of most of my money. I was not sure it was from DEPP, as it was a third-party transfer, and that party had refused to confirm the name of the sender. I wrote to Dixie to confirm the name of the third party. On May 9, I received a long and wordy email from Dixie, explaining the rules of 'limit of insurance,' basically telling me I was mistaken in my understanding of how much I was owed . . . and then telling me DEPP was going to increase the amount it sent me! She also wrote that I would receive the final amount no later than May 14, so long as I agreed to the increase. Needless to say, I agreed! On May 19, she sent me an email that the payment had been sent, and requested confirmation when I received it. But as of early June, I still had not received my balance payment.

"Then on June 8, I received an email from a Michael Johnson, special investigator in the Insurance Department's insurance fraud investigation division, stating, 'As of today, I filed criminal charges against Dean and Dixie Lehrmitt. . . I need to know what is still owed to you so that I can petition the court for restitution on your behalf. I have been in contact with the Lehrmitts' attorney, and he has advised me that he will act as a third-party administrator to help settle the claims. The Lehrmitts are no longer allowed to work on your claims. '

"On June 11, I received the DEPP payment in full. The involvement of Hugle is the only reason I got my money. And the timing of the final payment, exactly three days after the email from Johnson, is no coincidence either. My advice is, if you do have an issue with a company that owes you money:

* Do not stop emailing or calling the company - do not give up. And keep records and a paper trail.

* Spread the word to everyone you meet so that other people in similar situations know what you're going through.

* Find out what state the company is based in, contact that state's insurance division or consumer affairs department, and make a complaint. It might help, it might not, but in my case, just look what happened."

* * *

In the matter of Kentucky v. DEPP, we contacted Kentucky's Department of Insurance and spokesperson Wesley Sirles gave us this statement: "Deane and Dixie Lehrmitt appeared in Jefferson County District in Kentucky on July 10. Both pled guilty to one count each of fraudulent insurance acts under $500. They were both sentenced to one year to serve in jail, but placed on probation for a period of two years. They were both ordered to pay a fine in the amount of $500 each to the Kentucky Department of Insurance, and ordered to pay restitution on all outstanding claims through a third-party administrator."

DEPP's website has been taken down, but apparently current DEPP customers are receiving e-mails that the company is officially closed, and that the new administrator will be contacting them soon. We'll update you when we find out who that person is, and how he or she is handling policy and claims payments.

-- Vanessa Richardson