Uncovering the Truth About EUOs:
Dispelling Misunderstandings and Misuse.
The Examination Under Oath (EUO) is often misunderstood, with many associating it solely with fraud prevention. However, the true purpose of the EUO was clarified over a century ago in the 1884 U.S. Supreme Court case Claflin v. Commonwealth Insurance Company.
This landmark case defined the EUO’s objective clearly:
“To enable the company to possess itself of all knowledge and information, enable it to decide upon its obligation, and protect it against false claims.”
Let’s break this down to understand what the EUO is truly meant to accomplish and how it applies today
EUOs: Beyond Fraud Prevention
While fraud prevention is a component of the EUO process, it is not its primary purpose. Many claims professionals mistakenly equate EUOs solely with fraud detection. This misconception often leads to unnecessary delays or missed opportunities to use the EUO effectively.
The Supreme Court decision emphasizes three key purposes of the EUO:
- Gathering Knowledge and Information: The EUO ensures the company obtains the facts needed to evaluate the claim.
- Deciding Upon Obligations: It provides the documentation necessary to determine whether the insurer is obligated to pay the claim.
- Protecting Against False Claims: As a secondary purpose, the EUO acts as a safeguard against fraudulent claims.
When to Consider an EUO
Determining whether to conduct an EUO begins with one critical question:
“Do we have all the information and documentation needed to decide upon our obligation?”
If the answer is no, an EUO should be considered. Here’s when it’s most relevant:
- Missing Information: If the necessary facts or documents to make a claims decision are unavailable.
- Apparent Fraud: If existing information doesn’t add up or suggests possible fraudulent activity.
- Clarifying Discrepancies: When inconsistencies arise that require further explanation from the insured.
Conducting an EUO is a multi-step process:
- Consideration: Assess whether an EUO is needed to gather information or resolve discrepancies.
- Apparent Fraud: If existing information doesn’t add up or suggests possible fraudulent activity.
- Clarifying Discrepancies: When inconsistencies arise that require further explanation from the insured.
139 Years of Legal Consistency
The principles outlined in Claflin v. Commonwealth remain the foundation of EUO practices. This case has been cited repeatedly in legal decisions for over 139 years, underscoring its enduring significance.
The true purpose of the EUO is simple: to equip the insurer with the knowledge and documentation required to fulfill its obligations, while also protecting against fraudulent claims.
Conclusion
The Examination Under Oath is more than a fraud detection tool. It is a vital part of the claims process, providing clarity, ensuring fairness, and enabling informed decisions.
By returning to the core purpose defined in 1884, claims professionals can use the EUO to its fullest potential. Ready to learn more about how to make EUOs an integral part of your claims process? Join us for an in-depth training session to master this essential tool.
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- Purpose: It's not just a fraud fighting tool.
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Danny Vazquez
Danny Vazquez is the National EUO, LLC CEO.
Danny is a central leader on Claims, Investigations and EUOs in the insurance and legal industries.
As CEO, Danny took the knowledge and insights gained throughout his 25 plus years legal career to establish National EUO as the Nation's leading company on EUO services and EUO training.
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