The purpose of the flight was to conduct a rotorcraft/helicopter Certified Flight Instructor (CFI) check ride for the pilot-in-command (PIC). The check pilot was an FAA inspector with no previous flight time in this make and model; however, he had 1,816 hours total time with 78 hours helicopter time primarily in Bell 47 and 206 aircraft. The first part of the check flight was normal except when it was interrupted for police work. During the course of the check flight, the examiner chopped the power to simulate an emergency as the PIC was climbing through about 285 feet AGL at 42 knots. The PIC stated that he lowered the collective and the needles split. There was a loss of rotor RPM. He put the helicopter in a dive and rolled the throttle on in increments, but could not get the needles to marry. Subsequently, the helicopter struck the ground on the heel of the left skid, then rolled over. No preimpact malfunction/failure found. According to the 269C height/velocity diagram, the examiner chopped the power close to the minimum limits for speed/altitude.