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Zalma on Insurance

Zalma on Insurance

By Barry Zalma

Presentation of insurance issues relating to claims handling, insurance coverage, interpretation of insurance policy coverages, insurance fraud, and investigation.
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Resons for Work to Achieve Early Settlement of Construction Defect Suits

Zalma on InsuranceJul 08, 2020

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17:28
Passover Begins on April 22, 2024

Passover Begins on April 22, 2024

“The Passover Seder For Americans”s”

My family will, starting on April 22, 2024 will tell the story of the Passover using the book my wife and I wrote for our family.

I have published the book on Amazon for the smallest price they would print and ship the book for so you can afford to get enough for your family to run a Seder in English.

For more than 3,000 years Jewish fathers have told the story of the Exodus of the enslaved Jews from Egypt. Telling the story has been required of all Jewish fathers. Americans, who have lived in North America for more than 300 years have become Americans and many have lost the ability to read, write and understand the Hebrew language in which the story of Passover was first told in the Torah.

Passover is one of the many holidays Jewish People celebrate to help them remember the importance of G_d in their lives. We see the animals, the oceans, the rivers, the mountains, the rain, sun, the planets, the stars, and the people and wonder how did all these wonderful things come into being. Jews believe the force we call G_d created the entire universe and everything in it. Jews feel G_d is all seeing and knowing and although we can’t see Him, He is everywhere and in everyone.We understand that when G_d began to create the world there was nothing and that time, as we know it, had no meaning. G_d created all.

Because of the creation we are able to track time and celebrate Passover every year at the same time. We do so based on the lunar calendar used by our ancestors not the Julian calendar modern people use. As a result, we feel G_d gave people a conscience hoping it would help us decide right from wrong, to do our best to make good choices, to try to help others, not hurt others and to try to make right the wrongs we have done to others. The rituals that make up the Jewish holidays help remind us how thankful we are for how much we have accomplished with G_d ’s help and how grateful we are to G_d for everything we have and everything we are.

Thea and Barry Zalma have created this English only Seder that works for their family and will allow you and your families to tell the story of the Exodus painlessly and with the joy and celebration it deserves so that no member of our family forgets what G_d did for us when He took us out of slavery in Egypt and led us to a promised land.

If you are not Jewish and interested in why Jesus celebrated the Passover at the “Last Supper” with his disciples this show to you what he and the disciples were celebrating.

The books are available for only $5.95.

Available as a Kindle Book  Available as a Paperback

(c) 2023 Barry Zalma & Thea Zalma

Barry Zalma, Esq., CFE  is available at http://www.zalma.com and zalma@zalma.com

Mar 25, 202404:06
Zalma's Insurance Fraud Letter - February 15, 2024

Zalma's Insurance Fraud Letter - February 15, 2024

ZIFL Volume 28, Issue 4 The Source for the Insurance Fraud Professional Subscribe here: Zalma’s Insurance Fraud Letter (ZIFL) continues its 28th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma.  It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ The current issue can be read in full at http://zalma.com/blog/wp-content/uploads/2024/02/ZIFL-02-15-2024.pdf and includes the following articles: Do the Crime, Serve the Time Chutzpah: After Pleading Guilty Fraudster Tried to Reduce his Sentence by an Appeal After pleading guilty, Armando Valdes appealed his 60-month sentence for health care fraud, in violation of 18 U.S.C. § 1347. Valdes’s conviction and sentence arose out of his scheme to submit millions of dollars in fraudulent medical claims to United Healthcare and Blue Cross Blue Shield for intravenous infusions of Infliximab, an expensive immunosuppressive drug. These infusions, purportedly given to patients at Valdes’s medical clinic, Gasiel Medical Services (“Gasiel”), were either not provided or were medically unnecessary. Read the full article in Adobe pdf format at http://zalma.com/blog/wp-content/uploads/2024/02/ZIFL-02-15-2024.pdf More McClenny Moseley & Associates Issues This is ZIFL’s twenty fourth installment of the saga of McClenny, Moseley & Associates and its problems with the federal courts in the State of Louisiana and what appears to be an effort to profit from what some Magistrate and District judges indicate may be criminal conduct to profit from insurance claims relating to hurricane damage to the public of the state of Louisiana. Read the full article in Adobe pdf format at http://zalma.com/blog/wp- California Insurance Commissioner Lara Issues Consumer Fraud Alert As Flood Recovery Begins In San Diego County Following the recent flooding in San Diego which damaged and destroyed hundreds of homes, businesses, and vehicles, Insurance Commissioner Ricardo Lara put the Department of Insurance on alert for potential fraud and illegal actions targeting flood victims. Read the full article in Adobe pdf format at http://zalma.com/blog/wp-content/uploads/2024/02/ZIFL-02-15-2024.pdf Health Insurance Fraud Convictions Guilty in Arkansas Shaona Mizell, 52, of Paragould, Arkansas. in Pulaski County Circuit Court on January 23, Mizell pleaded guilty to Medicaid Fraud, a class A misdemeanor. Read the full article in Adobe pdf format at http://zalma.com/blog/wp-content/uploads/2024/02/ZIFL-02-15-2024.pdf Arson and Restitution CONVICTED ARSONIST MUST PAY RESTITUTION A fire at a residential property destroyed several structures and made nearly all of the owner’s personal property unsalvageable. Insurance Fraud Attempt Defeated THE HAWAIIAN, ATTEMPTED FRAUD DEFEATED BY A THOROUGH INVESTIGATION The following is a fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. Read the full article in Adobe pdf format at http://zalma.com/blog/wp-content/uploads/2024/02/ZIFL-02-15-2024.pdf Barry Zalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com  https://www.newsbreak.com/@c/1653419?s=01 Go to X @bzalma; Read the full article in Adobe pdf format at http://zalma.com/blog/wp-content/uploads/2024/02/ZIFL-02-15-2024.pdf


Feb 15, 202411:57
Insurance Fraud Attempt Defeated

Insurance Fraud Attempt Defeated

The Hawaiian The following is a fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. Post 4734 The insured was a contractor in Honolulu. He made an excellent living cheating his customers. The insured’s most lucrative scheme was an electronic vermin killer. It consisted of a long wire and a transformer. The contractor strung the wire around a house and plugged it in a wall. The device, charged with low voltage from the transformer, allegedly repelled vermin. The insured guaranteed that all roaches, flying insects and rodents could not pass the charge in the wire. When it didn’t work and a customer called to complain the insured would ignore the complaints. Since the tropical Hawaiian climate is a prime breeding ground for insects, the insured had no lack of customers. He bought a Ferrari sports car with the profits. After gaining her confidence the adjuster confronted the secretary with the result of his investigation. He told her he knew that the appraisals were not done by the jeweler. He showed her where he had discovered that the typewriter used to type the description of the items of jewelry was different from the typewriter used to type the name of the appraiser. He told her that he liked her and would be very sorry if she was involved in aiding her boss in committing a crime. She began to cry. When he calmed her down, she confessed that she had typed in all of the descriptions and the values of the jewelry. Her boss, the insured, took the print ball out of the IBM Selectric typewriter and smashed it under his shoe. If asked, she was to say that his children broke the typewriter while playing with it. The adjuster thanked her, paid for lunch and suggested she get a new job. He told her he would do what he could to keep her out of criminal problems. He then got permission from his client, the insurer, to deny the claim. He wrote a simple brief, letter to the insured stating as follows: “Your claim is denied because it was presented by you with the knowledge that it was false and fraudulent.” He said nothing more. The adjuster, as required by law, reported his findings to the local police agency and to the U.S. Postal Inspectors. Both promised to complete a prompt criminal investigation and prosecute the insured for insurance fraud. The adjuster waited, patiently, for five years. Every twelve months he would ask the police concerning their investigation. He would always receive the same response “We’re working on it.” Five years elapsed since his conviction. He is still making a living as a contractor in Hawaii defrauding his customers. He paid when the probation officer caught him what he told the probation officer he could afford. In five years the insured paid, on the restitution order that is a condition of his probation, a total of $250.00. His probation is over. The crime did not succeed. He did not collect $500,000. The insurance company did not succeed. It paid out over $10,000 to its investigators which it will never recover and the ordered restitution was never paid. Adapted from my book "Insurance Fraud Costs Everyone" available at Available as a Kindle Book and Available as a Paperback from Amazon.com https://www.amazon.com/Candy-Abel-Murder-Insurance-Money/dp/1976823757/ref=sr_1_1?s=books&ie=UTF8&qid=1517924833&sr=1-1&keywords=%22candy+and+abel%22. Read the full article at https://zalma.com/blog (c) 2024 Barry Zalma & ClaimSchool, Inc. Go to X @bzalma; Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;  Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.


Feb 14, 202415:10
Agent's Statement Binds Insurer

Agent's Statement Binds Insurer

It is not Bad Faith Only to Deny a Claim Post 4734 The California Court of Appeals dealt with a claim by Wynzell Lynn, Jr. in a breach of insurance contract case against defendants are AAA Life Insurance Company and its agent, Craigory Webb. Plaintiff appealed from a final judgment of dismissal that was entered after the trial court struck certain causes of action in plaintiff's operative complaint and sustained the defendants' demurrer as to other causes of action, without leave to amend. In Wynzell Lynn, Jr. v. AAA Life Insurance Company et al., F085402, California Court of Appeals, Fifth District (February 9, 2024) explained in a lengthy opinion why the trial court erred. FACTUAL BACKGROUND Plaintiff purchased from defendant AAA Life Insurance Company (AAA) a life insurance policy for himself, along with a child term rider (rider) providing up to $10,000 in coverage per insured child. According to the First Amended Complaint (FAC) plaintiff understood from his prepurchase conversations with Webb that the rider would cover all of the children in plaintiff's household. When plaintiff first contacted Webb within their household were four children under the age of 19. Webb, as the agent for the insurer, stated, "'the rider covers all your children for $7.00." The three-page rider contained the following relevant provisions. The rider "provides term life insurance coverage for each Insured Child." An Eligible Child must be dependent upon the Insured for support and living within the Insured's household or attending an educational institution as a full-time or part-time student. In November 2020, about seven months after plaintiff's policy became effective, tragically, Bowen was fatally shot. On the date of his death, Bowen was 17 years old, unmarried, financially dependent on plaintiff, and living in plaintiff's household. DISCUSSION Breach of Contract (Express Contract Theory) To the extent the rider can reasonably be interpreted to provide coverage for a child with a relationship to the insured akin to Bowen's relationship with plaintiff, the FAC properly pleads the element of breach-the only element the trial court found missing. In addition, in Shade Foods, Inc. v. Innovative Products Sales &Marketing, Inc. (2000) 78 Cal.App.4th 847 (Shade Foods) the Court of Appeals held that an insurance carrier is "bound by its agent's interpretation of coverage under the policy," and an agent's authority to bind the principal "unquestionably extends to giving ambiguous contract provisions an interpretation that the insurer itself might reasonably adopt." As a result, the court concluded, the insurer was "bound by its agent's interpretation of the contract." Breach of the Covenant of Good Faith and Fair Dealing Negligence Accordingly, it concluded the FAC alleges adequate facts to show a special duty of care, breach of that duty, causation, and damages. ZALMA OPINION This case, over a $10,000 dispute, went through a claim denial, a demurrer dismissing the entire action, an appeal, a reversal of the breach of contract claim, and a return to the trial court to allow amendment of a statutory breach claim, if possible, and trial on the breach of contract case. No bad faith because it took the court to find a statute making a person "held out as a son" to be a son even if there is no physical, natural relationship nor a relationship by adoption. This is a case where the concept of "millions for defense and not a dime for tribute" requires reconsideration, mediation and settlement. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 gO to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.


Feb 14, 202412:32
No Duty to Defend No Possible Duty to Indemnify

No Duty to Defend No Possible Duty to Indemnify

Legal Conclusions are Not Allegations of Fact Post 4734 Zox LLC ("Zox") appealed the district court's grant of summary judgment in favor of West American Insurance Company. The district court held that West American had no duty to defend or indemnify Zox in an underlying trademark dispute between Zox and a group of entrepreneurs known as the "Zox Brothers" ("the Zox Litigation"). Zox contends the district court erred because the Zox Brothers sought damages for three potentially covered claims: (1) malicious prosecution; (2) disparagement; and (3) use of an "advertising idea." In ZOX LLC, a California Limited Liability Company, v.  West American Insurance Company; et al., No. 23-55125, United States Court of Appeals, Ninth Circuit (February 9, 2024) the Ninth Circuit resolved the dispute. ANALYSIS Under California law, a liability insurer owes a broad duty to defend its insured against claims that potentially seek damages within the coverage of the policy. Coverage turns not on the technical legal cause of action pleaded by the third party but on the facts alleged. While the duty to defend is broad, an insurer will not be compelled to defend its insured when the potential for liability is tenuous and farfetched. To determine whether the duty to defend was triggered, the Ninth Circuit was compelled to compare the allegations in the Zox Brothers' pleadings ("the Pleadings") with the terms of West American's Insurance Policy ("the Policy"). Malicious Prosecution To plead a malicious prosecution claim, the Zox Brothers must plead facts to prove that an underlying action was initiated or maintained (i) by, or at the direction of, [Zox] and pursued to a legal termination in favor of the Zox Brothers; (ii) without probable cause; and (iii) with malice. The Zox Brothers did not plead facts, nor provide extrinsic evidence, to satisfy any of the requisite elements of a malicious prosecution claim. The Pleadings did not trigger coverage for malicious prosecution. Disparagement To plead a disparagement claim, the Zox Brothers must plead facts to show a false or misleading statement that (1) specifically refers to the Zox Brothers' product or business and (2) clearly derogates that product or business. The Ninth Circuit was required to look past labels and at the facts alleged. Zox was unable to cite a single factual pleading in support of a disparagement claim. Appropriation of Advertising Ideas Where there is a duty to defend, there may be a duty to indemnify; but where there is no duty to defend, there cannot be a duty to indemnify. ZALMA OPINION The Ninth Circuit applied the clear and unambiguous language of the policy to the "facts" alleged; found that the allegations were mostly speculative or based on legal conclusions, failure to allege facts to support the three claims failed and, therefore, the Ninth Circuit had no choice but to affirm the summary judgment find no duty to defend nor a duty to indemnify. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com  https://www.newsbreak.com/@c/1653419?s=01 Go to X @bzalma; Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;  Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.


Feb 14, 202407:00
Ambiguous Exclusion Unenforceable

Ambiguous Exclusion Unenforceable

Unrepaid, Unrecoverable, or Outstanding Credit Exclusion Unrepaid, Unrecoverable, or Outstanding Credit Exclusion Unenforceable Post 4731 Huntington National Bank ("Huntington") sued AIG Specialty Insurance Company and National Union Fire Insurance Company of Pittsburgh, Pennsylvania (together, "AIG") alleging breach of contract and bad faith stemming from AIG's denial of insurance coverage for Huntington's settlement of a bankruptcy fraudulent transfer proceeding brought by the trustee of a bankrupt company. In granting summary judgment for AIG, the district court held that: In Huntington National Bank v. AIG Specialty Insurance Co., et al., No. 23-3039, United States Court of Appeals, Sixth Circuit (February 1, 2024) the Sixth Circuit resolved the dispute. FACTS AIG issued to Huntington a bankers professional liability insurance (BPL) policy for that provided coverage up to $15 million, after a $10 million retention. Any liability exceeding the primary policy was covered by an excess policy issued by National Union for the same coverage period, which provided $10 million in excess coverage. The parties do not dispute that these policies apply to Huntington's claim. Following the FBI raid, creditors of Cyberco and Teleservices, both entirely fraudulent companies, discovered that the companies were bankrupt. The trustees of Cyberco and Teleservices filed adversary proceedings against Huntington, claiming that Huntington put its desire to be repaid ahead of its concerns that Watson was committing fraud and, by doing so, perpetuated the Ponzi scheme to its benefit and other lenders' detriment. The bankruptcy proceedings were long and complex, including two trials and multiple opinions.  Huntington argued it was not liable for any repayments before April 30, 2004, and that its liability was thus limited to the $12,821,897.07 in loan repayments for which the Sixth Circuit had already found Huntington liable. THE INSURANCE CLAIM Throughout the bankruptcy litigation, Huntington sent AIG several requests for coverage. AIG disclaimed coverage, acknowledging that there was "potential coverage" under the policy because the Wrongful Acts alleged arose from Huntington's performance of banking services to Cyberco, but citing  exclusions. AIG refused Huntington's claims. Huntington subsequently sued AIG. AIG also moved for summary judgment, asserting that Huntington's settlement payment was not a "Loss" under the policy and, even if it was, Endorsements 5, 7, and 10 precluded coverage. The district court granted AIG's motion for summary judgment. ANALYSIS The Sixth Circuit reversed the district court's grant of summary judgment for AIG on the insurability of Huntington's claim under Ohio law and the exclusion of Huntington's claim under Endorsement 7. ZALMA OPINION Bankruptcy litigation, banking, and fraud upon a bank by a Ponzi schemer who, when caught by the FBI committed suicide, was sued by creditors of the Ponzi scheme because the bank had its loan repaid and they did not. After lengthy litigation the bank settled the bankruptcy suits only to have its insurer refuse to pay based upon an exclusion that was not sufficiently clear to be enforced. AIG will need to pay its limits to its insured and the excess - that followed form with AIG - will probably find it must pay its limits as well. The Sixth Circuit read the full policy and interpreted it in line with Ohio law as should AIG before it rejected coverage. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

Feb 14, 202407:51
Ambiguous Exclusion Unenforceable

Ambiguous Exclusion Unenforceable

Unrepaid, Unrecoverable, or Outstanding Credit Exclusion Unenforceable Post 4731 Huntington National Bank ("Huntington") sued AIG Specialty Insurance Company and National Union Fire Insurance Company of Pittsburgh, Pennsylvania (together, "AIG") alleging breach of contract and bad faith stemming from AIG's denial of insurance coverage for Huntington's settlement of a bankruptcy fraudulent transfer proceeding brought by the trustee of a bankrupt company. In granting summary judgment for AIG, the district court held that: In Huntington National Bank v. AIG Specialty Insurance Co., et al., No. 23-3039, United States Court of Appeals, Sixth Circuit (February 1, 2024) the Sixth Circuit resolved the dispute. FACTS AIG issued to Huntington a bankers professional liability insurance (BPL) policy for that provided coverage up to $15 million, after a $10 million retention. Any liability exceeding the primary policy was covered by an excess policy issued by National Union for the same coverage period, which provided $10 million in excess coverage. The parties do not dispute that these policies apply to Huntington's claim. Following the FBI raid, creditors of Cyberco and Teleservices, both entirely fraudulent companies, discovered that the companies were bankrupt. The trustees of Cyberco and Teleservices filed adversary proceedings against Huntington, claiming that Huntington put its desire to be repaid ahead of its concerns that Watson was committing fraud and, by doing so, perpetuated the Ponzi scheme to its benefit and other lenders' detriment. The bankruptcy proceedings were long and complex, including two trials and multiple opinions.  Huntington argued it was not liable for any repayments before April 30, 2004, and that its liability was thus limited to the $12,821,897.07 in loan repayments for which the Sixth Circuit had already found Huntington liable. THE INSURANCE CLAIM Throughout the bankruptcy litigation, Huntington sent AIG several requests for coverage. AIG disclaimed coverage, acknowledging that there was "potential coverage" under the policy because the Wrongful Acts alleged arose from Huntington's performance of banking services to Cyberco, but citing  exclusions. AIG refused Huntington's claims. Huntington subsequently sued AIG. AIG also moved for summary judgment, asserting that Huntington's settlement payment was not a "Loss" under the policy and, even if it was, Endorsements 5, 7, and 10 precluded coverage. The district court granted AIG's motion for summary judgment. ANALYSIS Under Ohio law, an insurance policy is a contract between the insurer and the insured. It is "well-settled" in Ohio law that, where provisions of a contract of insurance are reasonably susceptible of more than one interpretation, they will be construed strictly against the insurer and liberally in favor of the insured. Under the insurance policy, the definition of "Loss" excludes "civil or criminal fines or penalties imposed by law, punitive or exemplary damages . . . or matters that may be deemed uninsurable under the law pursuant to which this policy shall be construed." Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.


Feb 09, 202413:27
Do the Crime, Serve the Time

Do the Crime, Serve the Time

Chutzpah: After Pleading Guilty Fraudster Tried to Reduce his Sentence by an Appeal Post 473o


Feb 09, 202411:09
Serious Injury Does Not Change Policy Wording

Serious Injury Does Not Change Policy Wording

UIM Policy Reduced Limit Reduced by Amount Paid by Other Insurers In an interpleader action involving the insurance coverage for survivors of a tragic auto accident. De Smet Insurance Company of South Dakota (De Smet) proposed distribution of the available insurance funds that had been paid into the Court. Go to X @bzalma; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.


Feb 09, 202409:06
Appraisal Pointless if Coverage Not Provided

Appraisal Pointless if Coverage Not Provided

If Policy Says Building Coverage is "Not Provided" There Can be no Claim Post 4728 Plaintiff Kota Me Patates LLC (“KMP”) filed a motion to compel appraisal to abate this insurance coverage dispute. Defendant Nationwide Mutual Fire Insurance Company responded with a separate motion for summary judgment asserting that the policy does not cover KMP's claimed losses. In Kota Me Patates LLC v. Nationwide Mutual Fire Insurance Company, No. 4:23-cv-01573, United States District Court, S.D. Texas, Houston Division (December 21, 2023) the USDC's magistrate judge recommended a resolution of the disputes. BACKGROUND KMP had a business insurance policy with Nationwide (the “Policy”), effective from January 1, 2020 to January 1, 2021. The Policy states that it “includes Buildings ..., Business Personal Property ..., or both, depending on whether a Limit of Insurance is shown in the Declarations for that type of property.” (emphasis added). The referenced Declarations page explicitly states that coverage for KMP's building is “NOT PROVIDED[.]” On January 24, 2022, a year after expiration of the policy a representative from the office of KMP's attorney contacted Nationwide to report a claim for structural damage to KMP's property. The damage allegedly resulted from a plant explosion two years earlier, on January 24, 2020. KMP sued Nationwide in Texas state court. Nationwide removed the suit to the USDC. In the meantime, Nationwide contacted KMP's counsel to obtain more information about KMP's claim. Eventually, KMP's attorney sent a formal notice of claim, stating that KMP intended to invoke the Policy's appraisal provision. Nationwide requested more information, including an opportunity to inspect the asserted damage and a sworn proof of loss. KMP failed to provide the information that Nationwide requested. Nationwide therefore denied coverage for the loss, noting that KMP failed to provide a description of how, when and where the loss or damage occurred, did not provide prompt notice of the loss or damage, and failed to submit a signed, sworn proof of loss as requested. Despite filing the suit months earlier, KMP's attorney finally sent Nationwide a demand letter on October 2, 2022. The letter included an estimate of $92,508.92 to repair KMP's structure. KMP then filed a motion to compel appraisal and abate the suit. Nationwide instead filed a motion for summary judgment. ANALYSIS Nationwide sought summary judgment on KMP's breach of contract claim on multiple grounds, including that the Policy does not cover KMP's claim for damages to its building. Given the clear Policy language, the Court had no need to address Nationwide's alternative contentions. The Policy provides zero coverage for any damage to the building. Because Nationwide did not breach the Policy by denying coverage, it is entitled to summary judgment on KMP's breach-of-contract claim. ZALMA OPINION The KMP claim was incompetent on many bases, not the least of which was a claim for damage to a building that the policy explicitly said in bold print that building coverage was "NOT PROVIDED." Add to that a two year late report, no compliance with policy conditions, and a spurious argument for tort damages and the Magistrate apparently had no choice but to recommend granting Nationwide's motion and sending KMP and its counsel home with a total loss. Counsel for KMP apparently failed to read the Declarations page of the policy. A total waste of time for the litigants and the court. (c) 2024 Barry Zalma & ClaimSchool, Inc. Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.


Feb 09, 202408:18
A Incomplete Aircraft is Still an Aircraft

A Incomplete Aircraft is Still an Aircraft

Injured by an Aircraft Fuselage Arose Out of Ownership of Aircraft Post 4727 A woman was severely injured while moving an inoperable airplane. She now seeks to recover from her husband's homeowner's insurance policy. The insurance policy excludes injuries "arising out of" the ownership, maintenance, use, loading or unloading of an aircraft. The policy further defines "aircraft" as "any conveyance used or designed for flight." In Lisa Thompson v. United Services Automobile Association and Matthew Mrzena, No. S-18462, Supreme Court of Alaska (January 26, 2024) the Supreme Court resolved the dispute over interpretation of the policy wording. FACTS Claiming that the policy should cover her injury because in her view the aircraft became mere "parts" after her husband removed the wings, elevators, and tail rudder. The superior court disagreed, concluding that the fuselage was still an "airplane" and that, in any event, her injuries arose from her husband's ownership of the aircraft. The court determined that her injuries were therefore not covered by the policy. Around 2011 Matthew Mrzena purchased a 1946 Piper PA-12 airplane (Piper). Mrzena stopped using the Piper in 2014 when it failed an annual inspection and was deemed no longer airworthy. Mrzena removed the wings, tail rudder, and elevators from the fuselage, leaving the remainder of the fuselage and many other parts intact, including the wheeled landing gear, propeller, seats, windows, and engine. Mrzena kept the Piper in a plastic temporary garage at his home in Palmer, Alaska. In 2019, Mrzena purchased a new residence where he planned to live with his now-wife Lisa Thompson. During the summer Thompson and Mrzena were in the process of moving their belongings, including the Piper, to the new home. As part of the move the Piper needed to be pushed out of the garage and onto a trailer. Mrzena was pushing from the back of the Piper, with Thompson at the front, when Thompson became pinned under the Piper's nose. Thompson's resulting injuries were severe. At the time of the injury Mrzena had the Piper registered as an aircraft with the Federal Aviation Administration (FAA). He also held an aircraft owner-specific liability policy on the Piper with Avemco Insurance Company (Avemco). Throughout his ownership of the Piper, Mrzena continued to renew both the Piper's FAA registration and the Avemco aircraft policy. DISCUSSION Interpreting USAA's aircraft exclusion pursuant to the reasonable expectations of the lay insured, the Supreme Court concluded that the policy's exclusion of coverage for injuries arising out of the ownership or maintenance of an aircraft applies to exclude coverage for Thompson's injuries. The USAA policy broadly excludes coverage for bodily injury "arising out of"  ownership and maintenance of an aircraft. This language supports the reasonable expectation that Thompson's injuries would not be covered because Mrzena and Thompson's movement of the fuselage, and her resulting injuries, "ar[ose] out of" Mrzena's ownership and maintenance of the Piper. Reasonable plane owners would not expect that their planes cease to be aircraft solely because the aircraft had been partially disassembled to perform maintenance. . ZALMA OPINION Common sense exists in the Alaska Supreme Court. An aircraft under repair is still an aircraft even if it cannot fly. The Plaintiff was injured while she an her husband were moving the aircraft to a new home where the intended repairs could continue. Therefore, the Plaintiff and her husband were involved in the ownership, maintenance use of an aircraft and the exclusion applies. (c) 2024 Barry Zalma & ClaimSchool, Inc. Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.


Feb 09, 202408:46
Zalma's Insurance Fraud Letter February 1, 2024

Zalma's Insurance Fraud Letter February 1, 2024

ZIFL Volume 28 Issue 3 Post 4726Subscribe AT https://visitor.r20.constantcontact.com/manage/optin?v=001Gb86hroKqEYVdo-PWnMUkcitKvwMc3HNWiyrn6jw8ERzpnmgU_oNjTrm1U1YGZ7_ay4AZ7_mCLQBKsXokYWFyD_Xo_zMFYUMovVTCgTAs7liC1eR4LsDBrk2zBNDMBPp7Bq0VeAA-SNvk6xgrgl8dNR0BjCMTm_gE7bAycDEHwRXFAoyVjSABkXPPaG2Jb3SEvkeZXRXPDs%3D Zalma’s Insurance Fraud Letter (ZIFL) continues its 28th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma.  It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ The current issue can be read in full at http://zalma.com/blog/wp-content/uploads/2024/01/ZIFL-02-01-2024.pdf and includes the following articles: Fraudulently Submitting Fake Applications Violates Licensing Statutes Insurance Producer Fraudulently Submits Applications to Insurer Read this full article and the entire issue of ZIFL http://zalma.com/blog/wp-content/uploads/2024/01/ZIFL-02-01-2024.pdf More McClenny Moseley & Associates Issues This is ZIFL’s twenty third installment of the saga of McClenny, Moseley & Associates and its problems with the federal courts in the State of Louisiana and what appears to be an effort to profit from what some Magistrate and District judges indicate may be criminal conduct to profit from insurance claims relating to hurricane damage to the public of the state of Louisiana. 12/19/2023 $10,170,665.53 Default Judgment Against MMA (Including Interest) Read this full article and the entire issue of ZIFL http://zalma.com/blog/wp-content/uploads/2024/01/ZIFL-02-01-2024.pdf Now Available The Compact Book of Adjusting Property Claims – Fourth Edition On January 2, 2024, in Kindle, paperback and hardback formats, The Compact Book of Adjusting Property Claims, Fourth Edition is now available for purchase here.and here. Read this full article and the entire issue of ZIFL http://zalma.com/blog/wp-content/uploads/2024/01/ZIFL-02-01-2024.pdf Convictions From the Coalition Against Insurance Fraud Dr. Michael Villarroel, working as a doctor in the US Navy, was sentenced in federal court to one year and one day in custody. Villarroel admitted that from 2012 to at least December 2015, he conspired with other members of the Navy to obtain money from the United States by making claims for life insurance payments based on exaggerated or fake injuries and disabilities. Villarroel certified that he reviewed the records and determined the injuries were legitimate when in fact he knew they were fake or exaggerated. Read this full article and the entire issue of ZIFL here.http://zalma.com/blog/wp-content/uploads/2024/01/ZIFL-02-01-2024.pdf Health Insurance Fraud Convictions Four Plead Guilty to Healthcare Offenses, Including Doctors and Lab Owners Mark Rubin, 58, Renee Field, 44, Kelly Nelson, 52, and Carlos Hornedo, 61, were all charged via felony informations in December 2023. Mr. Rubin, on January 17th, and Mr. Hornedo, on January 10th, both pleaded guilty to one count of conspiracy to solicit and receive illegal kickbacks. federal prison, a $250,000 fine, and may be ordered to pay restitution. Read this full article and the entire issue of ZIFL http://zalma.com/blog/wp-content/uploads/2024/01/ZIFL-02-01-2024.pdf Lawyer With Unfortunate Name & Advertising Asking that People Should ‘Hire A Dick’ Faces Six Figure Sanctions Eric B. Dick, Esq, for the second time in three months has been ordered to reimburse an insurer more than $100,000 for filing a “frivolous, groundless” lawsuit made “solely for the purpose of harassment.” Read this full article and the entire issue of ZIFL http://zalma.com/blog/wp-content/uploads/2024/01/ZIFL-02-01-2024.pdf


Feb 09, 202408:05
Property Investigation Checklists

Property Investigation Checklists

Uncovering Insurance Fraud Property Investigation Checklists: Uncovering Insurance Fraud, 14th Edition provides detailed guidance and practical information on the four primary areas of any investigation of suspicious claims:  Recognizing suspicious claims  Proper investigation procedures  Analysis of laws concerning fraudulent personal and real property claims  Evaluating and settling claims The book also examines recent developments in areas such as arson investigation procedures, bad faith, extracontractual damages, The fake burglary, and Lawyers Deceiving Insurers, Courts & Their Clients During, Catastrophes—A New Type Of Fraud and the appendices includes the NAIC Insurance Information and Privacy Protection Model Act and usuable forms for everyone involved in claims. . Table of Contents CHAPTER 1. INSURANCE AND THE INDICATORS AND ELEMENTS OF FRAUD CHAPTER 2. INVESTIGATION CHAPTER 3. THE “ARSON DEFENSE” CHAPTER 4. CIVIL REMEDIES: RESCISSION AND AVOIDANCE CHAPTER 5. CONDITIONS PRECEDENT CHAPTER 6. AUTOMOBILE MATERIAL DAMAGE FRAUD CHAPTER 7. GOOD FAITH; BAD FAITH CHAPTER 8. ADJUSTING AND PAYING THE SUSPICIOUS CLAIM CHAPTER 9. DISPUTE RESOLUTION—SETTLEMENT AND APPRAISAL CHAPTER 10. CASE HISTORIES CHAPTER 11. RESCISSION AS A TOOL TO DEFEAT INSURANCE FRAUD                            FRAUD IN THE ACQUISITION OF INSURANCE CHAPTER 12. LAWYERS DECEIVING INSURERSCOURTS & THEIR CLIENTS DURING CATASTROPHES—A NEW TYPE OF FRAUD -- McClenny Moseley & Associates & Louisiana The newest book joins other insurance, insurance claims, insurance fraud, and insurance law books by Barry Zalma all available at the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/


Feb 01, 202404:56
Punitive Damages

Punitive Damages

How to Put Fear of Insolvency Into a Defendant For more than fifty six years I have personally seen the fear in the faces of corporate executives faced with a suit claiming wrongful conduct and punitive damages. Even those who knew that they had acted properly and fairly and that the allegations of the suit were totally spurious, the fear and trembling engendered by a suit seeking punitive damages is patent. The defendant who should be leading a charge like General Patton acts more like Prime Minister Neville Chamberlain. Defendants seem to prefer to appease a plaintiff rather than litigate good and viable defenses. Unless counsel advises a 100% chance of total victory – a statement no trial lawyer will ever make – the defendant does not want to go to trial and is willing to pay more than it owes to avoid the potential of a serious punitive damage judgment. Contrary to common belief the chances of a suit seeking punitive damages actually obtaining an award of punitive damages is very small. Defendants often, incorrectly, concentrate on trial verdicts and overlook that almost all civil litigation matters result in out-of-court settlements. Verdicts are important but punitive damage verdicts are more like the tip of the proverbial iceberg than evidence of a trend. Practical evidence indicates that the small number of trials affect decisions in the vast majority of lawsuits that do not proceed to trial. Verdicts are taken as important signals to the litigants. It is important to first understand the basic dynamics of a lawsuit. Most of the work in pre-trial litigation is designed to provide the litigants with enough information to allow them to reach an amicable settlement. A large punitive damages verdict skews the evidence available to the litigants and causes plaintiffs to demand more than their cases are truly worth and defendants to pay more than they should to resolve a suit seeking punitive damages. Under basic American litigation practice the plaintiff has the opening strategic advantage. A plaintiff with a weak case places the defendant in the position of having to defend himself (and therefore incurring legal costs), or else the defendant will be liable for the full claim on a default judgment. Even a defendant facing a suit that has no merit and no chance of success before a court will often be willing to pay an amount that is less than his prospective defense costs to settle the case and “make it go away.” Appeasement of the plaintiff is, to a corporate defendant, seen to be economically the best solution. Most often a defendant is willing to pay a settlement up to the amount of his defense costs in order to avoid having to respond to the plaintiff's complaint. The Supreme Court's rulings in State Farm Mutual Automobile Insurance Co. v. Campbell, 123 S.Ct. 1513, 155 L.Ed.2d 585 (U.S. 2003) limits, by due process, the multipliers that can be applied when setting punitive damages. In addition, the uncertainty posed by the prospect of unlimited punitive damages, combined with the relative probability of a punitive damage award if a case goes to jury trial, provide litigants who demand punitive damages with potent leverage against risk-averse defendants, like insurance companies or candidates for the presidency, and tip the balance in settlement bargains in favor of litigants with weak or even frivolous cases. Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.


Feb 01, 202412:10
Liability Insurance & the Need for Fortuity

Liability Insurance & the Need for Fortuity

Fortuity Post 4723 Liability insurance requires that the loss or damage that needs defense or indemnity from an insurer, must be contingent or unknown at the time the policy was acquired. For insurance to apply, on a third party policy, the risk of loss insured against must be fortuitous. Simply stated fortuitous means the loss happened by chance. The doctrine of fortuity (accidental or unintended acts causing injury) requires it be established that the event was a chance event beyond the control of the insured. [Martin/Elias Props., 544 S.W.3d at 643 & Blakeley v. Consol. Ins. Co. (Ky. Ct. App. 2021)] A "fortuitous event" is defined as: "[A]ny occurrence or failure to occur which is, or is assumed by the parties to be, to a substantial extent beyond the control of either party." Thus, the requirement of a fortuitous loss is a necessary element of insurance policies based on either an "accident" or "occurrence." The insured has the initial burden of proving that the damage was the result of an "accident" or "occurrence" to establish coverage where it would not otherwise exist [Northville Indus., 89 N.Y.2d at 634).] Once coverage is established, the insurer bears the burden of proving that an exclusion applies. [Consolidated Edison Co. v. Allstate Ins., 774 N.E.2d 687, 746 N.Y.S.2d 623, 98 N.Y.2d 208 (N.Y. 2002)] Insurance is designed to protect against unknown, fortuitous risks, and fortuity is a requirement of all policies of insurance. [Burlington Ins. Co. v. Tex. Krishnas, Inc., 143 S.W.3d 226, 230 (Tex. App.-Eastland 2004, no pet.); Scottsdale Ins. Co. v. Travis, 68 S.W.3d 72, 75 (Tex. App.-Dallas 2001, pet. denied); Two Pesos, Inc. v. Gulf Ins. Co., 901 S.W.2d 495, 502 (Tex.App.-Houston [14th Dist.] 1995, no writ) (op. on reh'g).] An insured cannot insure against something that has already begun and which is known to have begun. [Summers v. Harris, 573 F.2d 869, 872 (5th Cir.1978).] The fortuity doctrine precludes coverage for two categories of losses: known losses and losses in progress. A "known loss" is one that the insured knew had occurred before the insured entered into the contract for insurance. [Burch v. Commonwealth County Mut. Ins. Co., 450 S.W.2d 838, 840-41 (Tex.1970)] A "loss in progress" involves those situations in which the insured knows, or should know, of a loss that is ongoing at the time the policy is issued. [Warrantech Corp. v. Steadfast Ins. Co., 210 S.W.3d 760 (Tex. App. 2006)] In determining whether an event constitutes an accident courts must analyze this issue according to the doctrine of fortuity: whether the insured intended the event to occur; and whether the event was a chance event beyond the control of the insured. Policy language insuring against accidents applies only if the insured did not intend the event or result to occur. [Blakeley v. Consol. Ins. Co. (Ky. Ct. App. 2021)] Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.


Feb 01, 202408:50
Zalma's Insurance Fraud Letter February 1, 2024

Zalma's Insurance Fraud Letter February 1, 2024

ZIFL Volume 28 Issue 3 Post 4726Subscribe AT https://visitor.r20.constantcontact.com/manage/optin?v=001Gb86hroKqEYVdo-PWnMUkcitKvwMc3HNWiyrn6jw8ERzpnmgU_oNjTrm1U1YGZ7_ay4AZ7_mCLQBKsXokYWFyD_Xo_zMFYUMovVTCgTAs7liC1eR4LsDBrk2zBNDMBPp7Bq0VeAA-SNvk6xgrgl8dNR0BjCMTm_gE7bAycDEHwRXFAoyVjSABkXPPaG2Jb3SEvkeZXRXPDs%3D Zalma’s Insurance Fraud Letter (ZIFL) continues its 28th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma.  It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ The current issue can be read in full at http://zalma.com/blog/wp-content/uploads/2024/01/ZIFL-02-01-2024.pdf and includes the following articles: Fraudulently Submitting Fake Applications Violates Licensing Statutes Insurance Producer Fraudulently Submits Applications to Insurer Read this full article and the entire issue of ZIFL http://zalma.com/blog/wp-content/uploads/2024/01/ZIFL-02-01-2024.pdf More McClenny Moseley & Associates Issues This is ZIFL’s twenty third installment of the saga of McClenny, Moseley & Associates and its problems with the federal courts in the State of Louisiana and what appears to be an effort to profit from what some Magistrate and District judges indicate may be criminal conduct to profit from insurance claims relating to hurricane damage to the public of the state of Louisiana. 12/19/2023 $10,170,665.53 Default Judgment Against MMA (Including Interest) Read this full article and the entire issue of ZIFL http://zalma.com/blog/wp-content/uploads/2024/01/ZIFL-02-01-2024.pdf Now Available The Compact Book of Adjusting Property Claims – Fourth Edition On January 2, 2024, in Kindle, paperback and hardback formats, The Compact Book of Adjusting Property Claims, Fourth Edition is now available for purchase here.and here. Read this full article and the entire issue of ZIFL http://zalma.com/blog/wp-content/uploads/2024/01/ZIFL-02-01-2024.pdf Convictions From the Coalition Against Insurance Fraud Dr. Michael Villarroel, working as a doctor in the US Navy, was sentenced in federal court to one year and one day in custody. Villarroel admitted that from 2012 to at least December 2015, he conspired with other members of the Navy to obtain money from the United States by making claims for life insurance payments based on exaggerated or fake injuries and disabilities. Villarroel certified that he reviewed the records and determined the injuries were legitimate when in fact he knew they were fake or exaggerated. Read this full article and the entire issue of ZIFL here.http://zalma.com/blog/wp-content/uploads/2024/01/ZIFL-02-01-2024.pdf Health Insurance Fraud Convictions Four Plead Guilty to Healthcare Offenses, Including Doctors and Lab Owners Read this full article and the entire issue of ZIFL http://zalma.com/blog/wp-content/uploads/2024/01/ZIFL-02-01-2024.pdf Lawyer With Unfortunate Name & Advertising Asking that People Should ‘Hire A Dick’ Faces Six Figure Sanctions Read this full article and the entire issue of ZIFL http://zalma.com/blog/wp-content/uploads/2024/01/ZIFL-02-01-2024.pdf New Book Now Available from Barry Zalma Property Investigation Checklists: Uncovering Insurance Fraud, 14th Edition Read this full article and the entire issue of ZIFL http://zalma.com/blog/wp-content/uploads/2024/01/ZIFL-02-01-2024.pdf Other Insurance Fraud Convictions Life Insurance Fraud in South Africa Onthatile Sebati and her co-accused and cousin Tumelo Mokone with Mokone's brother Kagiso, were found guilty of killing her parents, sister and brother in 2016. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808

Feb 01, 202408:05
You Only Get What You Pay For

You Only Get What You Pay For


To Obtain Coverage Insured Must Pay a Premium Erie Insurance Exchange (Erie Insurance) claims that the trial court erred in granting partial summary judgment in favor of Icon, d/b/a Allure on the Lake (Icon), on Icon's complaint for breach of contract. Erie Insurance contends that the trial court improperly determined as a matter of law that the commercial insurance policy (the Policy) it issued to Icon was ambiguous and entitled Icon to additional income protection coverage after a fire had destroyed Icon's building. In Erie Insurance Exchange v. Icon, Inc., d/b/a Allure on the Lake, et al., No. 23A-PL-664, Court of Appeals of Indiana (January 12, 2024) the Court of Appeals interpreted the entire policy. FACTS On June 3, 2019, a fire in Chesterton, Indiana destroyed a banquet hall (the Hall) that Icon owned. At the time of the fire, the Hall was insured by Erie Insurance. The Policy stated that "in return for your timely premium payment, your compliance with all of the provisions of this policy . . . [Erie Insurance agrees] to provide the coverages you have purchased." [emphasis added] The Declarations page specifically directed the insured to refer to the Supplemental Declarations to find additional information about included coverages under the Policy.  Income protection coverage-as identified in "Coverage 3" of the Declarations-is defined as loss of "income" and/or "rental income" you sustain due to partial or total "interruption of business" resulting directly from "loss" or damage to property on the premises described in the "Declarations" from a peril insured against. "Loss" or damage also includes property in the open, or in a vehicle, on the premises described in the "Declarations" or within 1,500 feet thereof. The Supplemental Declarations specifically indicate what "amount of insurance" the Policy provides for by displaying a dollar amount under the "amount of insurance" column. The Policy further provided that when additional income coverage is not purchased by the insured, a minimal, i.e., "standard" protection coverage is provided as part of the basic package. CLAIM PAYMENTS Erie Insurance paid both the property damage and building contents portion of Icon's claim, it maintained that the maximum income protection afforded under the Policy was $25,000 and not $1 million because Icon did not pay a premium for additional income protection coverage. REFUSAL TO PAY INCOME LOSSES breach of contract and bad faith. The trial court granted Icon's cross-motion for partial summary judgment, concluding that the Policy was ambiguous as to the available amount of income protection coverage to which Icon was entitled. DISCUSSION AND DECISION Insurance policies are contracts subject to the same rules of judicial construction as other contracts. Insurance policies must be read as a whole. The trial court’s conclusion was reversed and the trial court was instructed to enter partial summary judgment for Erie Insurance and to conduct further proceedings consistent with this opinion. ZALMA OPINION Insurance contracts must be read before accepting the offer from an insurer to insure. In this case the insured, Icon, either failed to read the coverages provided or decided to not purchase income coverages. The Court of Appeals found that since Icon did not pay a premium for the income coverage it had no coverage. Regardless of why it did not pay the premium by not doing so Icon recovered the minimal coverage for Income but not the coverages they wanted after a real loss. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com  https://www.newsbreak.com/@c/1653419?s=01 Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.




Jan 18, 202407:48
The Baseball Card Scam

The Baseball Card Scam

Insurance Fraud Costs Everyone Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story that follows are designed to help everyone Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ­­­Perpetrators than any Other Crime. The insurance industry, unintentionally, instructs its insureds how to successfully perpetrate insurance fraud. Insurers encourage fraud by: 1. decimating its professional claim staff by short-sighted cost cutting. 2. by selling insurance to persons unknown to the company or the broker. 3 by accepting the word of new applicants without a pre-risk survey. 4 by allowing threats of bad faith lawsuits to intimidate the company into a quick settlement. Why A Retail Baseball Card Store Was an Invitation to Fraud The husband and wife had failed in several tries to conduct a profitable retail business. They simultaneously closed their comic book store and opened a new business called Out In Left Field where they sold baseball cards in the 1980’s at the apex of the baseball card fad. They located in a new, strip shopping center, in a residential area of Fresno, California. This type of loss will continue to occur as long as insurers fail to maintain adequately trained claims and underwriting staff. If insurers continue to accept insureds at face value without any pre-risk inspections or investigation this type of loss will multiply. Insurance agents and brokers will have their loss ratios increase logarithmically. Profits will fall because they did not inspect and control the risks they insure. Adapted from my book, Insurance Fraud Costs Everyone Available as a Kindle Book and a Paperback from Amazon.com.


Jan 18, 202417:42
Zalma's Insurance Fraud Letter - January 15, 2024

Zalma's Insurance Fraud Letter - January 15, 2024

ZIFL Volume 28, Issue 2 Read the full January 15, 2024 issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2024/01/ZIFL-01-15-2024.pdf Subscribe here: https://visitor.r20.constantcontact.com/manage/optin?v=001Gb86hroKqEYVdo-PWnMUkcitKvwMc3HNWiyrn6jw8ERzpnmgU_oNjTrm1U1YGZ7_ay4AZ7_mCLQBKsXokYWFyD_Xo_zMFYUMovVTCgTAs7liC1eR4LsDBrk2zBNDMBPp7Bq0VeAA-SNvk6xgrgl8dNR0BjCMTm_gE7bAycDEHwRXFAoyVjSABkXPPaG2Jb3SEvkeZXRXPDs%3D Zalma’s Insurance Fraud Letter (ZIFL) continues its 28th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma.  It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ The current issue includes the following articles: GEICO Takes a Bite Out of Fraud NO FAULT INSURANCE IS A FORMULA FOR INSURANCE FRAUD GEICO, as a pro-active victim of insurance fraud, sued Jean-Pierre Barakat, M.D., et al, alleging that Defendants defrauded GEICO in violation of the Racketeering Influenced and Corrupt Organizations Act (“RICO,” 18 U.S.C. § 1962(c), (d)), by submitting hundreds of fraudulent bills for no-fault insurance charges. Plaintiffs also allege common law fraud and unjust enrichment and seek a declaratory judgment as to all pending bills. In Government Employees Insurance Company, et al v. Jean-Pierre Barakat, M.D.et al No. 22-CV-07532 (NGG) (RML), United States District Court, E.D. New York (January 2, 2024) the USDC provided an injunction. Read the full January 15, 2024 issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2024/01/ZIFL-01-15-2024.pdf More McClenny Moseley & Associates Issues This is ZIFL’s twenty first installment of the saga of McClenny, Moseley & Associates and its problems with the federal courts in the State of Louisiana and what appears to be an effort to profit from what some Magistrate and District judges indicate may be criminal conduct to profit from insurance claims relating to hurricane damage to the public of the state of Louisiana. Read the full January 15, 2024 issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2024/01/ZIFL-01-15-2024.pdf Florida Residential Property Claims and Litigation Report Closed Claims Data for Calendar Year 2022 as of 11/1/2023 The full report is available at https://www.floir.com/docs-sf/default-source/property-and-casualty/other-property-casualty-reports/january-2024-pclr.pdf?sfvrsn=d8c92a4f_4 Read the full January 15, 2024 issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2024/01/ZIFL-01-15-2024.pdf Now Available The Compact Book of Adjusting Property Claims – Fourth Edition ALLSTATE TAKES A BITE OUT OF CRIME Another Proactive Insurer Works to Take the Profit Out of Insurance Fraud In Allstate Insurance Company, Allstate Indemnity Company, Allstate Fire & Casualty Insurance Company, and Allstate Property & Casualty Insurance Company v. Bradley Pierre. Insurance Fraud Next to tax fraud, insurance fraud is the most practiced crime in the world. It is perpetrated by members of every race, religion, and nationality. It is found in every profession. The possibility of a tax-free profit when coupled with the commonly held beli Read the full January 15, 2024 issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2024/01/ZIFL-01-15-2024.pdf Health Insurance Fraud Convictions New Jersey Laboratory and Its Owner and CEO Agree to Pay Over $13 Million to Settle Allegations of Kickbacks Clinical laboratory RDx Bioscience Inc. (RDx), of Kenilworth, New Read the full January 15, 2024 issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2024/01/ZIFL-01-15-2024.pdf (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Go to X @bzalma; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.



Jan 18, 202408:36
https://rumble.com/v47rz2q-httpsyoutu.besrufrkzia90.html

https://rumble.com/v47rz2q-httpsyoutu.besrufrkzia90.html

Bankruptcy of Storage Facility Created a Compensable Loss Plaintiffs insurers sought a declaration that there is no coverage for the insurance claim made under the policy for the loss of soybeans. The Defendants moved for partial summary judgment on its first and second counterclaim. In Endurance American Insurance Company, Zurich American Insurance Company, and, Atain Insurance Company v. Stonex Commodity Solutions, LLC F/K/A FC Stone Merchant Services, LLC, 2024 NY Slip Op 30076(U), Index No. 653234/2022, Motion Seq. No. 004, NYSCEF Doc. No. 108, Supreme Court, New York County (January 8, 2024) the Supreme Court (trial court) resolved the dispute. BACKGROUND ZALMA OPINION Since the evidence showed that there were enough soybeans to cover that deposited by the defendants when EGT was forced into bankruptcy the division of the assets by the court resulted in a loss to the defendants that was not excluded from the coverages provided by the Plaintiffs. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com  https://www.newsbreak.com/@c/1653419?s=01 Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.


Jan 18, 202407:40
ALLSTATE TAKES A BITE OUT OF CRIME

ALLSTATE TAKES A BITE OUT OF CRIME

Another Proactive Insurer Works to Take the Profit Out of Insurance Fraud Post 4709 In Allstate Insurance Company, Allstate Indemnity Company, Allstate Fire & Casualty Insurance Company, and Allstate Property & Casualty Insurance Company v. Bradley Pierre, Medical Reimbursement Consultants Inc., Marvin Moy, M.D., Rutland Medical P.C. D/B/A Medicalnow, William A. Weiner, D.O., and Nexray Medical Imaging, P.C. d/b/a Soul Radiology Medical Imaging, No. 23-CV-06572 (NGG) (LB), United States District Court, E.D. New York (January 8, 2024) Allstate joins GEICO and other insurers taking a proactive effort against no-fault insurance fraud perpetrators. Plaintiffs Allstate Insurance Company sued Bradley Pierre, et al, CONCLUSION Allstate's motion for preliminary injunctive relief was GRANTED. Consequently: all pending no-fault collection arbitrations by Rutland (or its agents) against Plaintiffs are stayed. Rutland is enjoined from filing any further no-fault collection arbitrations or lawsuits against Allstate pending resolution of the instant federal action. Allstate's request that the court waive their obligation to post security was also GRANTED. ZALMA OPINION Allstate, like many other insurers writing no-fault auto insurance in New York state find that they are victims of fraudulent schemes like the one described by Allstate in its lengthy and well documented law suit. The court faced with overwhelming evidence, including the fact that one of the defendants is under indictment by the federal Department of Justice. This lawsuit indicates a complete failure of the no-fault insurance system and the inability of the state of New York to police the crime. Allstate, like GEICO, should be honored and emulated for their action in an attempt to take the profit out of insurance fraud. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.


Jan 12, 202409:08
Murder Pays

Murder Pays

LIFE INSURANCE FRAUD FOR FUN & PROFIT "This following is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of many designed to help the public Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ­­­Perpetrators than any Other Crime." “George,” Adam said, “The only way we can get out of this financial mess is our life insurance policies.” “I don’t want to die to collect,” George said. “Neither do I,” Adam replied. “But I still want to collect.” “Do you propose to murder me.” “No, George, I propose that we find a homeless person who physically resembles one of us and kill him. We can plant identification on the corpse and then share in the $6,000,000 double indemnity payment.” “My,” replied George, “that’s a brilliant, although evil and criminal, plan.” “I see no other way out. It’s either the death of a useless human being or total financial catastrophe for us.” “Adam, they have a death penalty in this state.” “So, what, the plan is perfect. No one will know. We’ll retire in luxury.” “Okay, I’ll go along with it, but I don’t like it. This is dangerous.” The partners began to travel skid row. They needed a homeless person who physically resembled one of them in height, weight and coloring. It took them a week to find the right person. They befriended him with a bottle of wine and a free meal. They told him that they had just completed a twelve-step program and part of that program was to help a person in need. Together, they took the homeless person to Adam’s house. The partners washed off the grime in Adam’s massive master bath, dressed him in Adam’s clothes, and outfitted him with accessories until he looked like a Century City lawyer about to meet an important client. Although she considered Adam to be a prodigious lover, the young lady was more interested in cash than love. From the hotel, she drove directly to the West Los Angeles station of the Los Angeles Police Department and introduced herself to a detective. She knew that a life insurance claim had been made and wanted the police to know that the person whose murder they were investigating was presently sound asleep in his hotel room at the Four Seasons Hotel in Beverly Hills. She explained to them how Adam, after twenty minutes of horizontal Rhumba, explained to her how he had defrauded an insurance company out of $6,000,000. She explained to the police that she would never be a party to such a crime and wanted it noted in their report that she was the source of the information and the person to whom any rewards posted by the insurance company should be paid. Adam and George were arrested and tried for the murder of Fuzzy as well as several counts of insurance fraud. The testimony of the young lady, the presence of Adam and the Los Angeles Airport recording of George’s license plate on entry and exit from the airport parking lot made their defense impossible. They were convicted. Adam and George are now spending the remainder of their lives in the State Penitentiary. The insurer recovered $4,000,000 of the $6,000,000 (George and Adam had lived well for that year and a half) and paid the lustful young woman a $400,000 reward. She lived happily ever after. Adapted from my book, Insurance Fraud Costs Everyone (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com  https://www.newsbreak.com/@c/1653419?s=01 Go to X @bzalma; Gnce-claims-library.


Jan 11, 202413:02
No Coverage for Benefits no Right to Bad Faith Damages

No Coverage for Benefits no Right to Bad Faith Damages

CONCURRENT CAUSE REQUIRES SEGREGATION OF COVERED FROM NON COVERED LOSSES


Jan 11, 202408:57
Oregon Allows Emotional Distress Damages for Poor Claims

Oregon Allows Emotional Distress Damages for Poor Claims

Violation of Statute Allows Suit for Negligent Failure to Resolve Insurance Claim Post 4706 Christine Moody, individually, and in her capacity as the Personal Representative of the Estate of Steven "Troy" Moody, Deceased v. Oregon Community Credit Union, aka OCCU, an Oregon entity, association, union, or corporation et al., Defendants, and Federal Insurance Company, an Indiana corporation, 371 Or. 772, SC S069409, Supreme Court of Oregon (December 29, 2023) Plaintiff, whose husband was accidentally shot and killed during a camping trip, brought this action against defendant, a first-party life insurer, claiming, among other things, that defendant had negligently failed to investigate and pay her claim for policy benefits, causing her to have fewer financial resources to navigate the loss of a bread-winning spouse and, consequently, to suffer economic harm and emotional distress. FACTS In the case now before the Supreme Court it must consider whether plaintiff has alleged a legally protected interest sufficient to subject defendant to liability for emotional distress damages. To decide whether that alleged interest is a legally protected interest sufficient to subject defendant to liability for emotional distress damages. Plaintiff has alleged a viable common-law negligence claim against defendant for emotional distress damages. Therefore, the trial court erred in granting defendant's motions to dismiss plaintiffs negligence claim and in striking her claim for emotional distress damages. ZALMA OPINION The state of Oregon, like many states, has enacted statutes punishing insurers for bad faith claims handling. The insurer, after a change in allegations, paid the plaintiff the $3,000 life insurance limit, only to find itself sued for negligent claims handling. The suit was dismissed by the trial court and reversed by the Court of Appeals and the Oregon Supreme Court. Since the statute requires fair claims handling the plaintiffs allegations allowed it to sue the insurer for emotional distress damages when it initially refused to pay because of an exclusion.  This is a limited decision and stretches the obligations of an insurer beyond fairness and even with a clear and unambiguous exclusion it can be sued for emotional distress. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.


Jan 11, 202412:03
Equity Requires Fairness

Equity Requires Fairness

Equitable Indemnity Only Available to One Without Fault In Martha M. Fountain and Curtis Fountain v. Fred's, Inc. and Wildevco, LLC v. Tippins-Polk Construction, Inc. and Rhoad's Excavating Services, LLC, of whom Tippins-Polk Construction, Inc. is the Petitioner, Appellate Case No. 2020-000651, Opinion No. 28086, 436 S.C. 40, 871 S.E.2d 166, Supreme Court of South Carolina (Filed March 2, 2022) established the requirements for obtaining equitable indemnity. FACTS Respondent Fred's was a Tennessee corporation that operated a chain of discount general merchandise stores in several states, including South Carolina. In April 2005, Wildevco entered into a contract with general contractor Tippins-Polk for the construction of the Fred's store and adjoining strip center. The construction contract between Wildevco and Tippins-Polk included drawings prepared by an architect, as well as site plans prepared by an engineer. The contract specifically stated that Tippins-Polk was responsible for "All Site Work," including "[g]rading, concrete curbing, utilities & paving [p]er site plans." Wildevco provided Tippins-Polk with two sets of construction drawings—the architectural drawings, which established the design elements including the sidewalk surrounding the store, and the site plans, which controlled the grading, elevations, pavement, and underground utilities. If an inspection had taken place, it would have been visible to the naked eye that an elevation change in the sidewalk existed and was not painted yellow. Five years after the Fred's store opened, Ms. Fountain hit her head and hand on the glass door and fell to her knees. I The case was set for a date certain trial in March 2016. On the eve of trial, Wildevco and Fred's settled with the Fountains for $290,000, with Wildevco paying $250,000 and Fred's paying $40,000. The general theory of the third-party claim was that Tippins-Polk deviated from the site plans and improperly constructed the entrance curbing, which was the sole proximate cause of Ms. Fountain's injuries. As to the relevant elements of equitable indemnification, the trial court found a special relationship existed between Fred's and Tippins-Polk. EQUITABLE INDEMNIFICATION South Carolina has long recognized the principle of equitable indemnification.  Indemnity is that form of compensation in which a first party is liable to pay a second party for a loss or damage the second party incurs to a third party. Tippins-Polk argued that it was error to affirm the finding that Wildevco and Fred's were without fault. Special Relationship As a matter of equity, a party is entitled to indemnity if the relation between the parties is such that either in law or in equity there is an obligation on one party to indemnify the other, as where one person is exposed to liability by the wrongful act of another in which he does not join. The trial court and court of appeals found the connection between Without Fault Since there was no evidence in the record that either Fred's or Wildevco warned of or attempted to remedy the trip hazard identified by their own safety expert, despite the condition existing for almost five years before the accident occurred. In sum, Fred's and Wildevco failed to establish they were without fault in the Fountains’ premises liability action. Because the Supreme Court found Respondents failed to establish they were without fault in the underlying action, the trial court verdict was reversed. ZALMA OPINION (c) 2023 Barry Zalma & ClaimSchool, Inc. Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.


Jan 11, 202409:30
GEICO take a Bite Out of Fraud

GEICO take a Bite Out of Fraud

No Fault Insurance is a Formula For Insurance Fraud Post 4703 GEICO, as a pro-active victim of insurance fraud, sued Jean-Pierre Barakat, M.D., et al, alleging that Defendants defrauded GEICO in violation of the Racketeering Influenced and Corrupt Organizations Act ("RICO," 18 U.S.C. § 1962(c), (d)), by submitting hundreds of fraudulent bills for no-fault insurance charges. Plaintiffs also allege common law fraud and unjust enrichment and seek a declaratory judgment as to all pending bills. In Government Employees Insurance Company, et al v. Jean-Pierre Barakat, M.D. No. 22-CV-07532 (NGG) (RML), United States District Court, E.D. New York (January 2, 2024) the USDC provided an injunction. BACKGROUND GEICO, faced with at least 43 allegedly fraudulent no-fault claims from health care providers, moved for a preliminary injunction to stay all 43 pending no-fault insurance collection arbitrations commenced against GEICO by or on behalf of Defendants. In New York, an insurer is required to provide certain no-fault insurance benefits ("No-Fault Benefits") to the individuals that they insure ("Insureds"). No-Fault Benefits cover up to $50,000 of necessary healthcare expenses that result from automobile accidents. These benefits are provided to ensure that injured victims of motor vehicle accidents have an efficient mechanism to pay for and receive the health care services that they need. Insurers are only given 30 days to review and investigate claims before paying those claims to avoid risk of penalty for denying or delaying a claim. Operation of the Alleged Scheme GEICO alleged that in 2021 Defendant Barakat was recruited by the John Doe Defendants to participate in a complex fraudulent insurance scheme Between February 15,2021 and March 3, 2022, Barakat and the John Doe Defendants used Defendant Patriot Medical to bill GEICO and other New York automobile insurers for an experimental treatment called ESWT.   Moreover, Defendants submitted bills seeking more than Evidence of the Alleged Scheme In support of its fraud claims, GEICO has submitted a "representative sample" chart, totaling 1,371 entries of allegedly fraudulent no-fault claims submitted by the Barakat Practices. GEICO asserts that it has paid at least $183,000.00 to the Barakat Practices in no-fault claims. DISCUSSION The showing of irreparable harm is perhaps the single most important prerequisite for the issuance of a preliminary injunction, and the moving party must show that injury is likely before the other requirements for an injunction are considered. The harm must be shown to be actual and imminent, not remote or speculative. CONCLUSION For the foregoing reasons, GEICO's motion to stay all pending no-fault insurance collection arbitrations by or on behalf of Defendants Patriot Medical and JPB Medical waive their obligation to post security were granted. ZALMA OPINION GEICO must be honored for its proactive conduct against fraud perpetrators since it appears the state of New York is not concerned about fraud against insurers and will not prosecute the fraudsters. Using RICO not only will allow GEICO to work to defeat the fraudulent claims but will take the profit out of the crime by forcing the fraudsters to pay the insurers for their fraudulent conduct. Other insurers, facing the same fraud, should jump in with GEICO to make the fraud perpetrators understand that they will lose their criminal profits and may find they will pay the insurers more than they stole. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com  https://www.newsbreak.com/@c/1653419?s=01 Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.


Jan 05, 202408:03
No Right to Indemnity After Policy Limit Exhausted

No Right to Indemnity After Policy Limit Exhausted

Insurer has no Obligation to Pay More than an Aggregate Limit of Liability Post 4702 Denis Mucha sustained injuries after he was assaulted by employees at defendant MDF 92 River Street, LLC d/b/a Wild Moose Saloon and The Birch (MDF) (the bar) in Hoboken, New Jersey while a patron. Plaintiff Watford Specialty Insurance Company (Watford) insured MDF. Watford filed a declaratory judgment action seeking a declaration that its obligation to provide insurance coverage to MDF arising out of Mucha's lawsuit were satisfied under its endorsement for assault and battery claims, and Watford's $1,000,000 limit of liability had been exhausted. The Court of Appeal concluded that the trial court's decision was correct when if awarded Watford summary judgment. ZALMA OPINION Watford lived up to its mistake to insure the bar against assault and battery and paid out its policy limit of $1,000,000 to five different victims of the insured's bouncers. Adding insult to the injury, Mr. Mucha tried to get around the assault and battery limit by claiming he was wrongfully evicted from the premises to obtain access to a different policy limit. The trial failed since throwing him down a flight of stairs was a clear battery and fit within the limit. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com  https://www.newsbreak.com/@c/1653419?s=01 Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.


Jan 05, 202408:42
Failure to Reside at Dwelling Eliminates Coverage

Failure to Reside at Dwelling Eliminates Coverage

FOR COVERAGE TO EXIST ON A HOMEOWNERS POLICY THE INSURED MUST RESIDE AT THE RESIDENCE Post 4700 The USDC was asked to grant dueling motions for summary judgment: (1) Motion for Summary Judgment filed by Defendant Nationwide Mutual Fire Insurance Company (“Nationwide”); and (2) Motion for Partial Summary Judgment filed by Plaintiff Maurice Heh, substituted by Perry Rutter and Mary Jane Urbanec, Executor and Executrix of Heh's Estate (hereinafter collectively referred to as “Heh”). In Perry Rutter And Mary Jane Urbanec, Executor And Executrix Of The Estate Of Maurice Heh, Deceased v. Nationwide Mutual Fire Insurance Company, Civil Action No. 20-1581, United States District Court, W.D. Pennsylvania (December 22, 2023) the USDC resolved the dueling motions. BACKGROUND Heh owned a home at 206 Parklane Drive in Braddock, Pennsylvania. At all times relevant to this case, Nationwide insured the risks of loss to the structure and contents of the home. NATIONWIDE INSURANCE POLICY Heh's Nationwide Homeowner Policy names Heh as the insured and lists the Property on its Declarations under “Residence Premises Information.” At Page A1 of the Policy, under “Insuring agreement,” Nationwide avers that coverage is contingent on “compliance with all the policy provisions.” Coverage A (Dwelling) is described as coverage of “[t]he dwelling on the residence premises used mainly as your private residence, including attached structures and attached wall-to-wall carpeting.” Coverage C (Personal Property) is described as the coverage of “personal property owned or used by an insured at the residence premises.” The term “residence premises” is defined as the “one, two, three or four-family dwelling, other structures and grounds located at the mailing address shown on the Declarations unless otherwise indicated.” THE PROPERTY Heh purchased the Property in 1990 and resided there with his wife until her passing. On January 1, 2019, Heh agreed to rent the Property and he and tenants entered a leasing agreement. There were indicia in the record that the agreement between Heh and his tenants provided for the possibility that the tenants would rent to own. There were also indicia in the record that Heh included his furniture-either for the tenants' use during their occupancy or for the tenants to own-in the agreement. After Heh leased the Property he moved to Point Pleasant Retirement Community. Once he moved into Point Pleasant, it is undisputed that Heh did not at any point move back to the Property. FIRE AT THE PROPERTY On February 3, 2020, before the tenants had fully moved out of the Property, there was a fire that resulted in significant physical damage to Heh's home and the personal property inside of it.  Heh sued Nationwide and alleged that an adjuster had determined that the loss caused by the fire resulted in damages over the Policy limit of $172,400.00. DISCUSSION Nationwide established that there was no factual debate about whether Heh was living at the Property. Coverage A (Dwelling

Nationwide's Motion for Summary Judgment was granted and Heh's Motion for Partial Summary Judgment was denied. ZALMA OPINION Anyone who reads a homeowners policy - as did the USDC - will see that it only provides coverage if the insured actually lives at the property that is the subject of the insurance. Heh left the residence and moved into a retirement facility. He did not tell his insurer of his move or attempt to obtain coverage for the property as a rental property that is commonly available. As a result of his decision to move Mr. Heh paid for insurance that provided no coverage for the loss to the property although it did provide liability coverage.  I, as was the court, am not unsympathetic to the loss incurred by Mr. Heh, he has no one to blame for his loss but himself. (c) 2023 Barry Zalma & ClaimSchool, Inc. Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.


Jan 05, 202410:46
Zalma’s Insurance Fraud Letter – January 2, 2024

Zalma’s Insurance Fraud Letter – January 2, 2024

Zalma’s Insurance Fraud Letter (ZIFL) continues its 25th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma.  It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/

FREE subscriptions are provided to clients and friends of Barry Zalma, Inc., clients of ClaimSchool, Inc.

Please feel free to forward ZIFL to anyone you know engaged in the efforts to reduce fraud. If you want to be on the free mailing list as a subscriber to ZIFL please connect and subscribe below. If you want to be removed from the list click on the link at the end of the notice that the new edition of ZIFL is available and your subscription will be deleted. ZIFL will be posted for a full month in pdf and full color and in text format.

You can subscribe to ZIFL by clicking on this link.

The comments made in each issue of ZIFL are for information only and are not intended as legal advice.

If this has been forwarded to you by a colleague Register with Zalma’s Insurance Fraud Letter at this link to receive the latest news directly to your inbox regularly. Subscribe at this link.

ZIFL will be posted here for a full month in pdf and in full color.

Zalma’s Insurance Fraud Letter — Published in Adobe pdf format effective December  15, 2023Zalma’s Insurance Fraud Letter — Published in Adobe pdf format effective January 1, 2024
The comments made in each issue of ZIFL are for information only and are not intended as legal advice.Subscribe here:

Zalma’s Insurance Fraud Letter (ZIFL) continues its 25th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma.  It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/

FREE subscriptions are provided to clients and friends of Barry Zalma, Inc., clients of ClaimSchool, Inc.

Please feel free to forward ZIFL to anyone you know engaged in the efforts to reduce fraud. If you want to be on the free mailing list as a subscriber to ZIFL please connect and subscribe below. If you want to be removed from the list click on the link at the end of the notice that the new edition of ZIFL is available and your subscription will be deleted. ZIFL will be posted for a full month in pdf and full color and in text format.

You can subscribe to ZIFL by clicking on this link.

The comments made in each issue of ZIFL are for information only and are not intended as legal advice.

If this has been forwarded to you by a colleague Register with Zalma’s Insurance Fraud Letter at this link to receive the latest news directly to your inbox regularly. Subscribe at this link.

ZIFL will be posted here for a full month in pdf and in full color.

The comments made in each issue of ZIFL are for information only and are not intended as legal advice.

Zalma’s Insurance Fraud Letter — Published in Adobe pdf format effective December  15, 2023Zalma’s Insurance Fraud Letter — Published in Adobe pdf format effective January 1, 2024

Jan 02, 202411:14
Clear Policy Exclusion Defeats Claim

Clear Policy Exclusion Defeats Claim

Policy only Applies to Risks Taken by Insurer Post 4699 Plaintiffs in multiple consolidated actions appeal the Judgment granting the Motion for Summary Judgment in favor of defendant, The Burlington Insurance Company ("TBIC") based upon a clear and unambiguous exclusion. In Cameron Soule v.  Woodward Design + Build, LLC, et. al., Nos. 2022-CA-0352, 2022-CA-0353, 2022-CA-0354, 2022-CA-0355, 2022-CA-0356, Court of Appeals of Louisiana, Fourth Circuit (December 21, 2023) Louisiana resolved the dispute. STATEMENT OF FACTS Program ("CCIP") policy or "Wrap-Up" policy from Houston Casualty Company ("HCC") for the insurance on the Project. Regarding insurance, Eagle's Subcontract stated, in pertinent part, that Woodward "has arranged for the Project to be insured under a controlled insurance program (the "CCIP" or "Wrap-Up")." In connection with the accident, plaintiffs filed suit against various parties and TBIC, Eagle's own commercial general liability ("CGL") insurer. TBIC denied coverage for Eagle, maintaining that its CGL policy contained a"Wrap-Up Exclusion" which precluded coverage to Eagle for all claims arising from the Project. The Wrap-Up Exclusion provided, in pertinent part, that coverage is excluded in "[a]ll locations where you perform or have performed work that is or was to be insured under a consolidated (wrap-up) insurance program as described below." (Emphasis added). On April 24, 2017, the Administrator sent a letter advising Eagle that it was not covered "under the General Liability Contractor Controlled Insurance Program for the trade of Hoist Rental and Service - the Standard Project." TBIC maintained that the CCIP policy was intended to cover Eagle under two distinct provisions: 1) as a lessor of equipment under the above mentioned "Additional Insured" endorsement; and 2) as an enrolled contractor, (for Eagle's work pursuant to the Subcontract to erect, dismantle, and provide preventative maintenance for the hoist) under the Wrap-Up endorsement. The latter endorsement provided that Woodward's "enrolled contractors" are insured "only while performing duties related to the project." Interpretation of Insurance Contracts An insurance policy is a contract between the parties and should be construed using the general rules of interpretation of contracts set forth in the Civil Code. The judicial responsibility in interpreting insurance contracts is to determine the parties' common intent. An insurance policy should not be interpreted in an unreasonable or a strained manner so as to enlarge or to restrict its provisions beyond what is reasonably contemplated by its terms or so as to achieve an absurd conclusion. If after applying the other general rules of construction an ambiguity remains, the ambiguous contractual provision is to be construed against the insurer and in favor of coverage. Under this rule of strict construction, equivocal provisions seeking to narrow an insurer's obligation are strictly construed against the insurer. ANALYSIS Woodward's Subcontract with Eagle specifically provides that Woodward Moreover, the plain language of the Wrap-Up Exclusion stated  that coverage for Eagle is excluded in "[a]ll locations where you perform or have performed work that is or was to be insured under a consolidated Accordingly, the Wrap-Up Exclusion must be enforced as written. ZALMA OPINION Courts are required to read the entire policy at issue and interpret the policy as its wording relates to the facts of the incident that resulted in bodily injury to the plaintiffs. The court did so and ignored the creative, yet unconvincing, arguments made by the plaintiffs. The policy excluded the incident. (c) 2023 Barry Zalma & ClaimSchool, Inc.


Dec 29, 202308:41
Lie to Your Insurer and You Will Lose

Lie to Your Insurer and You Will Lose

Coverage Limited to What the Insured Pays For at Inception Post 4691 The Eleventh Circuit Court of Appeals was asked to resolve whether two residential homes destroyed by a fire while under construction were covered under an insurance policy (the "Policy") issued by Travelers Property Casualty Company of America ("Travelers") to its named insured, Talcon Group LLC ("Talcon"). Talcon is an underground utility contractor for sewer, storm drains, and treatment plants and never told Travelers it was building two residential buildings. In Travelers Property Casualty Company Of America v. Talcon Group LLC, No. 22-13547, United States Court of Appeals, Eleventh Circuit (December 20, 2023) the Eleventh Circuit decided the extent of the coverage available to Talcon. TWO RESIDENTIAL HOMES Talcon was to benefit from the sale of the two residential homes by becoming a "local vendor" in the county where the homes were being constructed, entitling it to a 5% advantage with other contractors when bidding on future projects in the county. Wildfire Peril In May 2020, a wildfire completely destroyed the two residential homes. At that time, the residential homes were mostly complete but did not have certificates of occupancy. THE POLICY In 2019  Talcon, through an insurance agent, submitted a '"Commercial Insurance Application" with Travelers. Talcon's application was for a renewal of a 2018 policy with Travelers. In an application field titled "Description of Primary Operations," Talcon listed "[u]nderground utility contractor." Travelers  covered "Installation" property from direct physical loss or damage. The Policy "Definitions" section defined "Installation" as "[p]roperty described in the Declarations under 'Installation' owned by you or property of others for which you are legally liable, that you or your subcontractors will install, erect or fabricate at the job site.'" DISCUSSION Under Florida law every insurance contract shall be construed according to the entirety of its terms and conditions as set forth in the policy and as amplified, extended, or modified by any application therefor. While Rick and Zack testified that Talcon constructed multiple residential homes in recent years, Talcon's renewal application did not include this past residential work or indicate the prospect of future residential construction. Even though Talcon had begun constructing the two residential homes at the time of the renewal application, it misrepresented to Travelers that it was not engaged in any residential construction. Talcon, in fact, stated that 0% of its current work was "Residential" and 100% was "Municipal/Government." ZALMA OPINION The covenant of good faith and fair dealing requires that neither party to the contract of insurance will do anything to deprive the other of the benefits of the contract nor misrepresent or conceal material facts from the other. In this case Talcon lied when it submitted its application by claiming it did no residential construction work at the time that it was, in fact, constructing two residential properties. Since it is true that liars never prosper the lie about the work being done defeated its claims. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com  https://www.newsbreak.com/@c/1653419?s=01 Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.


Dec 28, 202308:07
Go to Jail, Do Not Pass Go

Go to Jail, Do Not Pass Go

Fraudster Must Serve Time and Lose His Residence to Pay Restitution Post 4698 Armando Valdes appealed his 60-month sentence for health care fraud after he pleaded guilty. Valdes's conviction and sentence arose out of his scheme to submit millions of dollars in fraudulent medical claims to United Healthcare and Blue Cross Blue Shield for intravenous infusions of Infliximab, an expensive immunosuppressive drug. These infusions, purportedly given to patients at Valdes's medical clinic, Gasiel Medical Services ("Gasiel"), were either not provided or were medically unnecessary. In United States Of America v. Armando Valdes, No. 22-12837, United States Court of Appeals, Eleventh Circuit (December 19, 2023) the Eleventh Circuit disposed of the arguments asserted by Valdes. LOSS AMOUNT Federal Courts sentence convicted defendants based upon offense levels set by federal statutes. The sentences are increased with the amount of "loss" caused by the offense. In Valdes's case, his base offense level was increased by 22 levels because the district court found that the loss amount was $38 million, and thus more than $25 million. Section 2B1.1(b)(1)(L) provides that a defendant's base offense level is increased by 22 levels if the loss from the fraud offense was more than $25 million but less than $65 million.  Intended loss includes harm "that would have been impossible or unlikely to occur." ANALYSIS Valdes did not show the Eleventh Circuit that the district court's loss amount of $38 million was clearly erroroneous. Valdes admitted that through Gasiel, he submitted approximately $33 million in fraudulent claims to United Healthcare and approximately $5 million in fraudulent claims to Blue Cross Blue Shield. Even if United Healthcare was unlikely to reimburse Valdes for the entire amount billed or for duplicate claims those claims were nonetheless properly included in the intended loss amount. At the sentencing hearing, Valdes's own fraud analyst testified that, even accounting for duplicate claims, the total loss amount was above $25 million, the threshold for the 22-level increase in Valdes's offense level. Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.


Dec 27, 202308:19
Fictionalized True Crime

Fictionalized True Crime

The Largest Residential Burglary of All Time This is a Fictionalized True Crime Stories of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help Everyone to Understand How Insurance Fraud in America is Costing Those who Buy Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ­­­Perpetrators than any Other Crime. To obtain the insurance he concealed from the American insurers that he was, at the time he purchased the insurance: an alien a court had ordered deported; that in his home country he was a wanted criminal; that he had left his home country with over $60,000,000.00 in checks unpaid; that every insurer at Lloyd’s, London had refused to insure him; that all of his property was appraised for more than twice its actual retail replacement value; and that most of the antiques he had insured in reliance on an “appraisal” attesting to a $3,500,000 value, were fakes. Within seven days of the delivery of his policy, a “burglary” was reported. A total of $7,000,000.00 of specifically identified and scheduled personal property was reported stolen. He claimed an additional $2,000,000 in unscheduled diamonds were stolen from their hiding place in one of his 50 suit coats hanging in his master bedroom closet. The insurers refused to pay because they believed the insured made material misrepresentations and he concealed material facts in the purchase of the insurance. The Insured retained a prestigious plaintiff’s bad faith lawyer to represent his interests. Because of the reputation of counsel for the Insured and the fear of an extra-contractual judgment, the insurers (against the advice of three different defense firms) settled for more than $4,000,000.00 of the $7,000,000.00 claim. The Insured’s lawyer took a contingent fee of 50%, the insured’s creditors took 20%, and the Insured took what remained. Because the IRS was unable to assert its multi-million-dollar lien in time, it got nothing. After a trip to China to take an examination under oath of the insured’s sister – who was also named as an insured – and two years of discovery, counsel for the insurers moved the court for summary judgment confirming rescission of the policy. The evidence available of multiple misrepresentations and the concealment of material facts, rescission was warranted and counsel was confident the court would agree. The day before the insurers’ counsel were to appear for oral argument on the motion for summary judgment the insurers and the insured’s lawyer settled the suit without communicating with defense counsel and against the recommendations of defense counsel. To recover the money lost by paying the Insured the insurers could only pass the payment on to other, honest, insureds and the reinsurers. Once an insurer gets a reputation for paying for fraudulent claims rather than fighting with all of its assets those who perpetrate fraudulent claims will gather like vultures over a rotting carcass ready to pick the bones clean. The reverse is also true: when an insurer makes it clear it will never pay a fraudulent claim, regardless of cost, those who earn their living by fraud will stay away. It is time that prosecutors learn that the victim is not the giant insurance company but each and every person who buys insurance. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.


Dec 27, 202312:30
Insurance Fraud as a State Crime
Dec 27, 202311:19
Waiver of Right to Appeal Effective

Waiver of Right to Appeal Effective

Insurance Agent Defrauded Clients by Taking Premium Money and Keeping it for Personal Expenses When a criminal defendant's valid guilty plea includes a waiver of the right to appeal, the Fourth Circuit Court of Appeals generally enforces the waiver by dismissing any subsequent appeal that raises issues within the scope of the waiver. However, even if an appeal waiver is valid and applicable, the Fourth Circuit will review a claim that a district court's sentence or restitution order exceeded the court's statutory authority. In United States Of America v. Glenda Taylor-Sanders, Nos. 21-4136, 20-4604, United States Court of Appeals, Fourth Circuit (December 12, 2023) the Defendant sought a change of the sentence and restitution order. FACTS From February 2017 through May 2019, Taylor-Sanders took advantage of her role as a licensed insurance agent to defraud several trucking companies and the insurance finance company BankDirect Capital Finance. She defrauded the trucking companies by misappropriating funds that the companies provided her to pay for their insurance policy premiums and BankDirect Capital Finance by obtaining loans under the guise of nonexistent insurance policies. Instead of using the funds she obtained to pay insurance policy premiums or to pay back BankDirect Capital Finance for the legitimate loans it made to the trucking companies, Taylor-Sanders spent the funds on personal expenditures including cars, football tickets, and mortgage payments. Predictably, some of the trucking companies' insurance policies ZALMA OPINION Fraud perpetrators have no honor. Even after obtaining a plea agreement that saved her years in prison, Taylor-Sanders took up the time of the District Court and the Fourth Circuit to hear a spurious motion to withdraw her guilty plea after knowingly entering into the plea agreement and waiving her right to appeal. She will pay restitution and spend an appropriate time in jail. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com  https://www.newsbreak.com/@c/1653419?s=01 Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.


Dec 20, 202308:57
A Christmas Fable of Fraud

A Christmas Fable of Fraud

The Christmas Gift of Insurance Fraud


Dec 20, 202318:46
Subrogation Must be Fair

Subrogation Must be Fair

Insurer May Never Subrogate Against its own Insured Zurich American Insurance et al sued their coinsurers - Appellant Certain Underwriters at Lloyd's, London Subscribing to Policy Number B12630308616 (Lloyd's) and Defendant Arch Insurance Company (Arch) - seeking a declaratory judgment that Lloyd's is barred under New York law from bringing a common law indemnification or contribution claim against a party insured by Zurich, Arch, and Lloyd's. The district court granted Zurich's motion for summary judgment, holding that New York's anti-subrogation rule precludes Lloyd's from bringing that claim. In Zurich American Insurance Company, American Zurich Insurance Company v. Certain Underwriters at Lloyd's of London Subscribing to Policy Number B12630308616, Arch Insurance Company, No. 22-2697, United States Court of Appeals, Second Circuit (December 12, 2023) the Second Circuit resolved the dispute. Many Layers of Insurance This dispute arose from a large construction project at LaGuardia Airport. Pursuant to the contract, Skanska and LGA obtained a Contractors Controlled Insurance Program for the project, which included a "tower" of general liability insurance with $300 million of coverage in three layers. Zurich underwrote the base layer of coverage, Arch provided a first layer of excess coverage, and then Lloyd's provided a second excess policy, i.e. a third layer of coverage on top of Arch's. Zurich arranged for counsel to represent Port Authority and LGA beginning in August 2018. Roughly three years later, Lloyd's contacted that counsel and requested that LGA and Port Authority commence a third-party claim for common law indemnification or contribution against Skanska. Counsel analyzed the feasibility of such a claim but concluded that New York's anti-subrogation rule would bar it. The Anti-Subrogation Rule New York courts have established an anti-subrogation rule that is an exception to an insurer's usual right of subrogation against third parties. It provides that an insurer has no right of subrogation against its own insured for a claim arising from the very risk for which the insured was covered. The anti-subrogation rule is needed both to prevent the insurer from passing the incidence of loss to its own insured and to guard against the potential for conflict of interest that may affect the insurer's incentive to provide a vigorous defense for its insured. ZALMA OPINION Subrogation is an equitable remedy where, when an insurer pays a debt owed by its insured, fairness requires the insured to provide the insurer with the insured's rights against third parties to recoup its payment on behalf of the insured. Regardless, it is unfair for an insurer to seek damages from its own insured because doing so violates the public policy of the state of New York and is, on its face, unfair. When two people are in a simple auto accident but are insured by the same insurer, they will both be paid regardless of who is at fault since the insurer can't subrogate against its own insured. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com  https://www.newsbreak.com/@c/1653419?s=01 Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;  Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.


Dec 18, 202307:42
Zalma's Insurance Fraud Letter - December 15, 2023

Zalma's Insurance Fraud Letter - December 15, 2023

Zalma's Insurance Fraud Letter - December 15, 2023

Merry Christmas,  Happy Hanukah, and May the Winter Solstice be Peaceful & Mild


Dec 18, 202310:06
Insurance Litigation Never Easy

Insurance Litigation Never Easy

When Appraisers Fail to Agree on Umpire Court Must Appoint One


When a claim for damages due to a hurricane was disputed the parties demanded appraisal and appointed their respective appraisers. However, the appraisers could not agree on an umpire for reasons unclear and bad faith litigation ensured. Because of the inability of the appraisers to agree on an umpire the parties went to the District Court to appoint an umpire so the appraisal process can proceed.

In DORIAN THEODORE v. ALLIED TRUST INSURANCE COMPANY, Civil Action No. 22-951-SDD-RLB, United States District Court, M.D. Louisiana (October 18, 2023) the parties moved the USDC in Louisiana to appoint an Appraisal Umpire. The parties submitted separate lists of proposed umpires and their respective CVs for the Court's consideration.

The lawsuit involves claims for damage to property located in Gonzales, Louisiana as a result of Hurricane Ida.  Dorian Theodore (“Plaintiff”) sought coverage and statutory bad faith damages related to claims made under an insurance policy (the “Policy”) issued by Allied Trust Insurance Company (“Defendant”).

The parties represent that the Policy provides the following language with respect to appraisals, including the appointment of an umpire:

Appraisal

If you and we fail to agree on the amount of loss, either may demand an appraisal of the loss. In this event, each party will choose a competent and impartial appraiser within 20 days after receiving a written request from the other. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 days, you or we may request that the choice be made by a judge of a court of record in the state where the "residence premises" is located. The appraisers will separately set the amount of loss. If the appraisers submit a written report of an agreement to us, the amount agreed upon will be the amount of loss. If they fail to agree, they will submit their differences to the umpire. Any outcome of the appraisal will not be binding on either party.

Each party will:

1. Pay its own appraiser; and

2. Bear the other expenses of the appraisal and umpire equally.

Prior to the filing of this lawsuit, the parties selected their initial appraisers when Defendant demanded an appraisal of the loss. Plaintiff designated Matthew Addison as Plaintiff's appraiser, and Defendant designated Ronald West as its appraiser. After the filing of this lawsuit, Plaintiff designated Mike Deckelman as Plaintiff's appraiser.  The parties' appraisers were unsuccessful in jointly selecting an umpire in accordance with the Policy.

As ordered, the parties submitted separate lists of proposed umpires for potential appointment.

There is no dispute between the parties that the appraisal provision in the Policy is enforceable. The parties have jointly sought court appointment of an umpire in accordance with the appraisal provision in the Policy.

If Mr. Cole declines to serve as umpire in this matter, then the Court selects Joel Moore as umpire. His resume demonstrates that he is As discussed above, although both Mr. Cole and Mr. Moore were proposed by the Plaintiff, the Court has no reason to suggest that both can fulfill this role in a fair, neutral and impartial manner.

Insurance claims resulting from hurricanes that have struck Louisiana have become aggressive, unfair and unreasonable. For two appraisers to fail to pick an umpire is an indication of litigation game playing forcing the District Court to appoint an umpire. This litigation requiring a judge to do what insurance appraisers do every day with little or no discussion reflects a desire to make the process more expensive and difficult rather than fulfill its purpose to quickly and fairly resolve the quantum of a loss.

(c) 2023 Barry Zalma & ClaimSchool, Inc.



Dec 14, 202306:28
No Right to Insurance Proceeds After Foreclosure

No Right to Insurance Proceeds After Foreclosure

Foreclosure Changes Insurable Interest from Borrower to Lender Post 4787 In this contested residential mortgage foreclosure, defendants Mitchell and Deanna Minchello appealed from the entry of summary judgment. Defendants contended that plaintiff violated the covenant of good faith and fair dealing by "refusing to disburse defendants' insurance proceeds and forcing defendants' home to remain in disrepair" and that the trial court applied an improper standard. In Wilmington Savings Fund Society, FSB, d/b/a Christiana Trust, as owner trustee of the Residential Credit Opportunities Trust V v. Mitchell Minchello and Deanna Minchello, and J Hofert Company, FIA Card Services NA, Schumann Hanlon LLC, Discover Bank, Vanz LLC-December 10 Series01, Mri-West Morris Associates, and State Of New Jersey, No. A-3522-21, Superior Court of New Jersey, Appellate Division (December 8, 2023) the issues were resolved. FACTS The essential facts were undisputed. Defendants borrowed $522,000 in January 2007, secured by a thirty-year purchase money mortgage on their home in Mt. Arlington. Defendants stopped making their loan payments in 2010, and in 2012 they stopped paying the taxes and insurance on the property. In 2014 the lenders asserted its rights by suing for foreclosure in March 2015. Defendants filed a bankruptcy petition under Chapter 13. The following day, December 7, defendant Deanna Minchello drove her car into defendants' home, resulting in structural damage. The only insurance was forced placed insurance in the name of the lender. ANALYSIS The trial judge granted plaintiff's motion for summary judgment. The judge found no dispute over the validity of the note and mortgage, defendants' default in 2010 and plaintiff's standing to foreclose the mortgage. Whether the lender allowed the insurance money to go to repair the structure was irrelevant since the foreclosure put the insurable interest in the lender and the lender was the only person insured. Although the procedural history is long and complicated with the parties' appendices exceeding 800 pages, the legal issues are straightforward, and the Court of Appeals had no hesitation in holding plaintiff established its entitlement to both summary judgment. CONCLUSION The trial court's orders that plaintiff established its right to foreclose the mortgage, that defendants did not succeed in establishing plaintiff should be barred from asserting that equitable remedy, and that final judgment of foreclosure was properly entered against defendants. ZALMA OPINION When borrowers fail to pay mortgage payments, insurance premiums and taxes they have no insurance in their name, only the insurance acquired by the lender to protect its interests. The lendER can apply the insurance to repair or simply apply it to reduce the debt. It took some unmitigated gall to sue the lenders in this after defaulting in every obligation owed by a property owner that pledged the property as security for the loan. The court found it necessary to read and analyze all 800 pages and still found the trial court's judgment in favor of the lender to be appropriate. Why the court did not sanction the borrowers and their attorneys is confusing to me. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com  https://www.newsbreak.com/@c/1653419?s=01 Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257


Dec 12, 202305:27
When Parties Agree to Appraisal Court has no Choice but to Agree

When Parties Agree to Appraisal Court has no Choice but to Agree

Appraisal Required to Resolve Extent of Loss Post 4786 In an insurance dispute stemming from Hurricane Ian. The parties agree that their case should go to appraisal to determine the extent of the loss. When an insurance policy contains an appraisal provision, “the right to appraisal is not permissiv e but is instead mandatory, so once a demand for appraisal is made, ‘neither party has the right to deny that demand.'” [McGowan v. First Acceptance Ins. Co., Inc., 411 F.Supp.3d 1293, 1296 (M.D. Fla. 2019) (quoting United Cmty. Ins. Co. v. Lewis, 642 So.2d 59, 60 (Fla. 3d DCA 1994)]. Like other stipulations about dispute resolution, the Court enforces contractual appraisal provisions by non-dispositive order. Therefore, in Buena Vista Of Deep Creek Condominium Association, Inc. v. Clear Blue Specialty Insurance Company, No. 2:23-cv-957-SPC-KCD, United States District Court, M.D. Florida (November 27, 2023) the court concluded that because appraisal will not dispose of any claims or defenses, the Court did not treat the motion to compel appraisal as one for summary judgment. Since the parties agreed that appraisal is appropriate, their request was granted. Further, the parties requested a stay during appraisal which was also granted because the Hurricane Ian Scheduling Order contemplates such relief if the parties agree that appraisal is appropriate. Thus, the case will be stayed. All deadlines and events in the Hurricane Ian Scheduling Order are suspended. The parties have agreed that the appraisal panel must itemize the awarded damages by coverage, to be accompanied by a supporting estimate. Though the parties cite no contractual provision that requires such an award, because the parties agree, their request will be granted. According, it is hereby ORDERED: The Joint Stipulation for Appraisal and Stay of the Case was GRANTED, and the appraisal panel must itemize the awarded damages by coverage, to be accompanied by a supporting estimate. This case is STAYED pending appraisal, and the Clerk must add a stay flag to the file and administratively close the case. The parties are DIRECTED to file a joint report on the status of appraisal on or before February 26, 2024, and every ninety days thereafter until appraisal has ended. Within 15 days of a signed appraisal award, the parties are directed to jointly notify the Court of (a) what issues, if any, remain for the Court to resolve; (b) whether the stay needs to be lifted; and (c) how this action should proceed, if at all. ZALMA OPINION The Appraisal condition of a first party property policy is an extra-judicial means of resolving disputes between an insurer and an insured about the amount of loss. Since the parties agreed that appraisal was an appropriate manner of resolving that limited dispute they moved to stay the action in hopes that the appraisal result will allow the parties to resolve all their differences. The court understood and issued orders to fulfill the agreement of the parties. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com  https://www.newsbreak.com/@c/1653419?s=01 Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;  Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.


Dec 12, 202305:22
Drunk Driving into a Pole Not a Covered Loss

Drunk Driving into a Pole Not a Covered Loss

No Coverage for Loss After Policy Cancelled In an action for declaratory judgment to determine whether the plaintiffs had a duty to defend and indemnify the defendants under certain insurance policies for injuries sustained in a motor vehicle accident, where the trial court granted the plaintiffs' motion for summary judgment. In Liberty Insurance Corporation et al. v. Theodore Johnson et al., No. AC 45933, Court of Appeals of Connecticut (December 5, 2023) the Court of Appeals resolved the dispute.FACTSThe defendants, Theodore Johnson (Theodore) and Kim Johnson (Kim), appealed from the judgment rendered by the trial court following its granting of a motion for summary judgment filed by the plaintiffs, Liberty Insurance et al and Safeco Insurance Company of Illinois (Safeco). The primary issue is duty to defend a separate action that stemmed from a motor vehicle accident in which the defendants' son, Aaron Johnson (Aaron), was driving a motor vehicle owned by Theodore when he lost control of the vehicle and struck a telephone pole, causing serious injuries to a passenger in the vehicle, Jordan Torres.At some point prior to 1:33 a.m. on December 26, 2019, Aaron left the defendants' house and operated a 1997 Audi A4 2.8 Quattro (Audi) owned by Theodore. Torres was a passenger in the Audi at the time. As Aaron attempted to navigate a curve, he lost control of the Audi, crossed into the westbound lane of traffic, and left the roadway, striking a telephone pole.Torres sustained personal injuries in the accident and sued a bar in Newington and its backer, as well as Theodore, Kim and Aaron. In the Torres action, Torres alleged that, on December 25, 2019, Aaron, a minor, consumed alcohol at the bar, after which he went to the defendants' house in Glastonbury, where he was visibly intoxicated and consumed more alcohol. Following the commencement of the Torres action, the defendants sought coverage from the plaintiffs for Torres' claims under three policies of insurance:a homeowners insurance policy issued to the defendants by Liberty Insurance (homeowners policy);an automobile insurance policy issued to the defendants by Safeco (automobile policy); andan umbrella insurance policy issued to the defendants by Liberty Mutual (umbrella policy). Thereafter, the insurer plaintiffs sued seeking a judgment declaring that the plaintiffs are not obligated to defend or indemnify the defendants with respect to Torres’ action.Specifically, the insurers based that argument on an exclusion in the homeowners policy that excludes coverage for" 'bodily injury' or 'property damage' . . . arising out of (1) [t]he ownership, ... of motor vehicles ... operated by or rented or loaned to an 'insured' [motor vehicle exclusion] . . . ."


Dec 12, 202305:22
Mold Suit Must Be Defended

Mold Suit Must Be Defended

Equally Fair Interpretation Favors Insured WCPP Risk Purchasing Group, Inc. ("WCPP") asserted coverage claims under a Commercial General Liability Policy ("Policy") issued by Defendant, Lexington Insurance Company, on behalf of Village of Stoney Run, LLC ("Village of Stoney Run") seeking defense and indemnity from an insurer who claimed a mold exclusion defeated coverage. In WCPP Risk Purchasing Group, Inc. v. Lexington Insurance Company, Civil Action No. CAM-L-1025-22, Superior Court of New Jersey, Law Division, Camden (November 29, 2023) the Superior Court resolved the coverage dispute. BACKGROUND The Underlying Action alleges negligence, breach of the warranty of habitability, and breach of contract, asserting injury and damage claims against Village of Stoney Run due to toxic fungus/mold infestation in Pratt's apartment. It is asserted that the mold caused the death of Pratt and damaged her personal property. Plaintiff purchased the Policy on behalf of Village of Stoney Run as part of a joint purchasing group. WCPP is a risk purchasing group for primarily habitation and commercial real property locations. The Underlying Action was initiated by Brian Pratt and Dawn Pratt ("Underlying Plaintiffs"), the co-administrators of the Estate of Darlene Pratt ("Decedent") against the Village of Stoney Run, an apartment complex owned by a Bleznak Organization. As part of the action, Underlying Plaintiffs asserted claims of negligence, breach of warranty, and breach of contract arising out of allegations that Plaintiff failed to properly maintain and repair Decedent's apartment at the Village of Stoney Run, resulting in dangerous living conditions, including mold. Suit in the underlying action was forwarded to Lexington Insurance Company. AIG Claims, Inc. issued a disclaimer of coverage on behalf of AIG Property Casualty, Inc. That policy of insurance disclaimed coverage based upon the fungus/mold exclusion contained in the insurance policy. ANALYSIS The court must enforce the clear and unambiguous terms of the policy of insurance. A policy of insurance is ambiguous only where reasonably intelligent persons would differ regarding its meaning. The court places the obligation on the insurance carrier to draft clear and unambiguous contracts. Where the policy language will support two interpretations, only one of which will support a finding of coverage, the court will choose the interpretation favoring the insured and find that coverage exists. Lexington asserts that the policy of insurance contains a mold exclusion which precludes coverage for the claims in the underlying suit. The claims in this case arose from water leaks which resulted in the conditions about which plaintiffs decedent in the underlying complaint bases the cause of action. The court concluded that the interpretation of the mold exclusion by plaintiff that the loss was due to the water leaking, not mold per se, is equally reasonable to that interpretation of the defendant insurers. Under the circumstances it is the interpretation most favorable to the insured which controls. Accordingly, the court concluded that coverage exists for the exposure to mold as a result of water leakage. ZALMA OPINION Courts interpret insurance contracts differently than other contracts. If a court finds an ambiguity or, as here, an interpretation of an exclusion by the insured and the insurer are equally reasonable, the interpretation of the insured will be enforced. Paraphrasing George Orwell in his novel Animal Farm, all litigants are equal, some - the insured suing an insurer - are more equal than the insurer. (c) 2023 Barry Zalma & ClaimSchool, Inc. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.


Dec 12, 202308:19
Tardy Claim Allows Judgment for Defendant

Tardy Claim Allows Judgment for Defendant

Claim Against State Must be Filed in Accord with Statute In Angela Erika Cantu v. California Department Of Transportation et al., F084601, California Court of Appeals (November 30, 2023) Angela Cantu sued the California Department of Transportation (Caltrans) and James Hinson for alleged injuries sustained in a motor vehicle incident. Because she failed to file a proper and timely claim the trial court granted summary judgment to Caltrans and Hinson and Cantu appealed.. FACTUAL BACKGROUND Angela Cantu and James Hinson, a Caltrans employee, were involved in a motor vehicle collision on State Route 168 in Fresno.  Two months later, on August 17, 2018, Caltrans received, via facsimile, a letter from counsel retained by Angela Cantu. Richard Maynard, an analyst with the California Department of General Services, responded to Cantu's "letter of representation dated 8-17-2018," and shortly thereafter informed Cantu's attorneys that he would be "handling this file for the State of California." Maynard advised counsel that "The State of California has a six-month statute of limitation. If your claim is not resolved within six months from the date of loss, California law requires you to file a formal claim with the Government Claims Program (GCP) (Government Code 900, et seq.). Cantu's counsel took no further action until January 8, 2020, over 18 months after the underlying traffic collision. In the meantime, the six month claim period lapsed on December 19, 2018. Eventually, on January 8, 2020, Cantu's counsel filed a Government Claim form, along with the $25 filing fee and an application to file a late claim. Thereafter Cantu filed a complaint in the Fresno County Superior Court. Caltrans and James Hinson filed a motion for summary judgment on grounds that Cantu had failed to file an appropriate claim under the Government Claims Act, a mandatory prerequisite to filing a lawsuit. Judgment was subsequently entered in favor of Caltrans and James Hinson. Cantu appealed. DISCUSSION Trial Court Properly Granted Summary Judgment Based on Cantu's Failure to Comply with the Government Claims Act The trial court found Cantu had not complied with the claim presentation requirement of the Government Claims Act in this matter. Since plaintiff's counsel's letter does not touch on many of the required elements of a claim as specified in Government Code section 910, there was no substantial compliance. Cantu's Claims are Barred Under the Government Claims Act The California Government Claims Act (Gov. Code, § 900 et seq.) requires a plaintiff seeking money damages against public entities and public employees acting within the scope of their employment, to file an initial claim with the relevant public entity. http://zalma.com/blog/insurance-claims-library.


Dec 12, 202308:24
Never Assume You Are Insured

Never Assume You Are Insured

ontractor Needs Permission of Insurer to be Protected by an Owner-Controlled Insurance Program Team Industrial Services, Inc. (Team) found it had incurred a $222 million judgment against it in a wrongful-death lawsuit arising out of a steam-turbine failure in June 2018 at a Westar Energy, Inc. (Westar) power plant. Team sought indemnity for the judgment from Westar, Zurich AmeCrican Insurance Company (Zurich), and two other insurance companies, arguing that it was, or should have been, provided protection by Westar's Owner-Controlled Insurance Program (OCIP) through insurance policies issued by Zurich and the two other insurers. In Team Industrial Services, Inc. v. Zurich American Insurance Company, et al, No. 22-3275, USCA, Tenth Circuit (November 29, 2023) resolved the dispute acknowledging that Team's arguments were well reasoned and creative.BACKGROUNDIn 2013 Westar instituted its OCIP, through which contractors and subcontractors could obtain insurance protection for work performed at covered locations. Westar had discretion to decide which contractors would be eligible to enroll in the OCIP. Eligible contractors had to complete enrollment forms to be considered for participation. During the time relevant to this dispute, insurance was provided by a Zurich policy, whose premiums were paid by Westar. According to Zurich's policy, an enrolled contractor's "rights and duties under this policy may not be transferred without [Zurich's] written consent." (emphasis added)Westar never made Team eligible to enroll in the OCIP.  Team never submitted an enrollment application, and it was never enrolled. Team's parent company acquired Furmanite's parent company.Although Team and Furmanite became "sister companies," they were distinct legal entities and never merged. Team assumed Furmanite's workload at the power plant. Furmanite's insurance coverage under the Westar OCIP continued even though its service contract had been retired. Furmanite's coverage continued, even after it perhaps should have ended.Team argued to the District Court that it inherited Furmanite's coverage under the OCIP.The District Court ruled that Change Order No. 2 unambiguously retired Furmanite's MSA and left Team's MSA as the sole governing document.


Dec 12, 202308:24
Never Assume You Are Insured

Never Assume You Are Insured

Contractor Needs Permission of Insurer to be Protected by an Owner-Controlled Insurance Program Team Industrial Services, Inc. (Team) found it had incurred a $222 million judgment against it in a wrongful-death lawsuit arising out of a steam-turbine failure in June 2018 at a Westar Energy, Inc. (Westar) power plant. Team sought indemnity for the judgment from Westar, Zurich American Insurance Company (Zurich), and two other insurance companies, arguing that it was, or should have been, provided protection by Westar's Owner-Controlled Insurance Program (OCIP) through insurance policies issued by Zurich and the two other insurers. In Team Industrial Services, Inc. v. Zurich American Insurance Company, et al, No. 22-3275, USCA, Tenth Circuit (November 29, 2023) resolved the dispute acknowledging that Team's arguments were well reasoned and creative.BACKGROUNDIn 2013 Westar instituted its OCIP, through which contractors and subcontractors could obtain insurance protection for work performed at covered locations. Westar had discretion to decide which contractors would be eligible to enroll in the OCIP. Eligible contractors had to complete enrollment forms to be considered for participation. During the time relevant to this dispute, insurance was provided by a Zurich policy, whose premiums were paid by Westar. According to Zurich's policy, an enrolled contractor's "rights and duties under this policy may not be transferred without [Zurich's] written consent." (emphasis added)Westar never made Team eligible to enroll in the OCIP.  Team never submitted an enrollment application, and it was never enrolled. Team's parent company acquired Furmanite's parent company.Although Team and Furmanite became "sister companies," they were distinct legal entities and never merged. Team assumed Furmanite's workload at the power plant. Furmanite's insurance coverage under the Westar OCIP continued even though its service contract had been retired. Furmanite's coverage continued, even after it perhaps should have ended.Team argued to the District Court that it inherited Furmanite's coverage under the OCIP.The District Court ruled that Change Order No. 2 unambiguously retired Furmanite's MSA and left Team's MSA as the sole governing document. DISCUSSION Team ignored that the enrollment in Westar's OCIP was not automatic. Since Team never enrolled nor was it even invited to enroll in Westar's OCIP, nor did Zurich ever give written approval to a transfer of coverage from Furmanite to Team, coverage did not exist.The Change Order did not contain a mention of insurance coverage or the OCIP. There is no ambiguity in the language of the change order from Finally, Team raises a perfunctory claim of promissory estoppel.  Since there was no allegation that Westar knew about the reporting it could hardly have expected to induce Team's reliance. Nor was there any evidence of a promise by Zurich to provide insurance coverage to Team.The Tenth Circuit affirmed the judgment. ZALMA OPINION When Team's parent company acquired Furmanites parent company and took over the work originally done by Furmanite it assumed that it was covered under the OCIP but did nothing to confirm the fact, proving that breaking it up into its component part and will cost Team $222 million. Insurance, even a contract as complex as an OCIP, must be fulfilled and to gain the coverage Westar needed to allow them to apply, Team needed to file an application with Zurich and Zurich had to agree. None of those things happened and Team had no coverage. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos


Dec 05, 202310:41
Chutzpah: Criminal Seeks Disability Because his Crime was

Chutzpah: Criminal Seeks Disability Because his Crime was

Claim of Disability Because of Stress of Arrest & Conviction Fails Jason Brand ("Brand") appealed from the judgment of the district court entered on September 30, 2021, challenging the court's dismissal of Brand's counterclaims for breach of contract and breach of the implied covenant of good faith and fair dealing. Brand's claimed Principal Life Insurance Company ("Principal Life") failed to pay him benefits under his disability insurance policy (the "Policy").



Dec 05, 202307:30
Zalma's Insurance Fraud Letter - December 1, 2023

Zalma's Insurance Fraud Letter - December 1, 2023

ZIFL - Volume 27 Issue 23 The Resource for the Insurance Claims and Insurance Fraud Professionals This, the 22nd issue of the 27th Year of ZIFL includes articles and reports relating to insurance fraud, including: Some Red Flags of Insurance Fraud Over the last two centuries insurers, insurance investigators, Special Investigative Unit Investigators, insurance lawyers, and insurance management have developed lists of indicators of potential insurance fraud. The indicators are known as the Red Flags of Fraud and are used to determine if it is necessary to begin a thorough investigation of an insurance claim to determine if a fraud is being attempted. To be able to work to deter or defeat attempts at insurance fraud the insurance claims person and the SIU investigators must be conversant in the red flags or indicators of insurance fraud. Read the full 21 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/11/ZIFL-12-01-2023-1.pdf More McClenny Moseley & Associates Issues This is ZIFL’s nineteenth installment of the saga of McClenny, Moseley & Associates and its problems with the federal courts in the State of Louisiana and what appears to be an effort to profit from what some Magistrate and District judges indicate may be criminal conduct to profit from insurance claims relating to hurricane damage to the public of the state of Louisiana. Read the full 21 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/11/ZIFL-12-01-2023-1.pdf Litigation Financing Although this report from Texas lawyer Steven Badger deals with the litigation around the MMA debacles it is more important for fraud investigators to understand what is happening in litigation financing.


Dec 05, 202312:08
Too Stupid to Succeed at Fraud

Too Stupid to Succeed at Fraud

Why an Amateur's Attempt at Fraud Failed "This is a fictionalized true crime story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is presented to help a reader to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ­­­Perpetrators than any Other Crime."


Dec 05, 202313:53
It is Expensive to Lie to Your Insurer

It is Expensive to Lie to Your Insurer

Fraud in Inception Allows Insurer to Rescind Lamin Fatty appealed the trial court's order granting summary disposition to Farm Bureau on the basis of finding Fatty's fraud was grounds for contract rescission and reimbursement of benefits paid. In Lamin Fatty v. Farm Bureau Insurance Company Of Michigan, No. 363888, Court of Appeals of Michigan (November 21, 2023) the Court of Appeals resolved the dispute. FACTS After a motor vehicle accident where Fatty sustained bodily injuries the issue of rescission was raised when it was discovered that at the time of the accident, Fatty was insured by Farm Bureau under the no-fault act. Fatty obtained insurance with Farm Bureau on July 17, 2019. On the application for insurance, Fatty answered the following question in the negative: "Are any vehicles to be insured used to carry persons for a fee?" Uber records indicated that Fatty began working as an Uber driver in early May 2019 (before he applied for the insurance) and drove for Uber on the day of the accident. Fatty's drive log shows he picked up a rider at 6:05 p.m. and dropped them off at 6:30 p.m. Fatty picked up another rider at 6:38 p.m. and dropped them off at their destination at 6:50 p.m. Fatty continued picking up riders and completing trips that night until 8:17 p.m. After this discovery, Farm Bureau filed a counterclaim on the basis of fraud, requesting reimbursement of benefits paid to or on behalf of Fatty with regard to the accident. The trial court granted Farm Bureau's motion for summary disposition of the counterclaim, including its request for reimbursement of $104,730.82 for benefits paid, because the policy was rescinded under the doctrine of fraud in the procurement. The trial court also found Fatty's fraud entitled Farm Bureau to attorney fees under the no-fault act, and costs. Specifically, the trial court found the requested costs of $2,599.50 were reasonable and awarded $10,000 in attorney fees. Fatty appealed. SUMMARY DISPOSITION OF THE CLAIM The trial court properly rescinded the insurance policy because Fatty committed fraud in the procurement of the contract by explicitly denying using his vehicle to carry passengers for a fee. Because of this rescission, summary disposition of Fatty's claims was appropriate, without regard to whether Fatty was driving for Uber at the time of the accident. Fraud in the inducement to enter a contract renders the contract voidable at the option of the party deceived. An insurer has a reasonable right to expect honesty in the application for insurance. Rescission abrogates the contract and restores the parties to their relative positions had the contract never been made. A court must not hold an insurance company liable for a risk that it did not assume. SUMMARY DISPOSITION OF THE COUNTERCLAIM Reimbursement of the PIP benefits paid to Fatty was an appropriate remedy following rescission. Because the claim was fraudulent and Farm Bureau was the prevailing party, the award of attorney fees and costs was also proper. The trial court properly awarded attorney fees to Farm Bureau. Farm Bureau was forced to defend against a claim pursued under a policy that was procured by fraud. Therefore, the award is within the range of reasonable and principled outcomes and was not an abuse of discretion. Accordingly, the award of attorney fees and costs to Farm Bureau was proper.


Nov 29, 202308:32