Barry Zalma, Inc. on Insurance Law

Negligent Broker Saved by Exclusion Boulevard RE Holdings, LLC, (Boulevard) sued Mixon Insurance Agency, Inc., (Mixon), alleging breach of contract and negligent procurement of insurance only to find that if the policy had been issued protecting Boulevard there would be no coverage because of a clear and unambiguous exclusion requiring operative fire sprinkler systems. In Boulevard RE Holdings, LLC v. Mixon Insurance Agency, Inc., No. 22-1895, United States Court of Appeals, Eighth Circuit (July 20, 2023) the Eighth Circuit applied Missouri law to resolve the dispute. FACTUAL HISTORY Boulevard owned commercial property in which BMG Service Group, LLC, (BMG) operated a bar (Property). Boulevard entered into a contract for deed with BMG for the sale of the Property for $1,275,000. Under the contract, Boulevard retained the Property's legal title until BMG paid the purchase price in full. The contract also obligated BMG to obtain, at its own expense, fire insurance in the amount of the purchase price. The insurance was to be issued in Boulevard's name. BMG asked its broker, Mixon, to have Boulevard listed as a "named insured, loss payee, additional insured, and mortgagee" on the insurance policy. Mixon procured the policy from Berkley Assurance Co. The policy was issued and contained an endorsement called the Fire Protective Safeguard Endorsement (Endorsement). The Endorsement required the insured to maintain a working automatic sprinkler system on the Property. The Endorsement also excluded all coverage for loss or damage by fire if the sprinkler system was inoperative. The policy, as issued, did not list Boulevard as a "named insured, loss payee, additional insured, and mortgagee." Approximately one year later, the Property was destroyed by fire. At the time of the fire, the sprinkler system was inoperative. Boulevard submitted a proof of loss to Berkley Assurance, claiming to have an interest in the property as a "lender." The district court held that Boulevard was not entitled to recover as a mortgagee because sellers in a contract for deed are not mortgagees under Missouri law. The district court also concluded that even if Boulevard was an insured or a mortgagee, noncompliance with the Endorsement barred recovery. BOULEVARD'S COMPLAINT AGAINST MIXON The operative complaint raises two causes of action against Mixon: negligent failure to procure insurance and breach of contract. Under Missouri law, both causes of action require showing that the defendant caused the plaintiff to suffer damages. The Eighth Circuit noted that on the record facts, even if Boulevard had been named as a mortgagee, coverage would still be barred because of the Endorsement. The Endorsement required the Property to have a working sprinkler system. The Property was destroyed by a fire that occurred while the Property lacked a working sprinkler system. Indeed, had Mixon procured the Policy in precisely the manner requested by BMG, and had the Policy issued with Boulevard listed as a mortgagee or other additional insured, Boulevard would nonetheless be in the same position in which it found itself. If the policy had issued listing Boulevard as requested, the Endorsement would still have barred coverage. ZALMA OPINION It is usual for insurers of restaurant and bar risks to require the presence of fire sprinkler systems. The bar that burned had no operative fire sprinkler systems and, as a result, had no available coverage for damage by fire. Boulevard, who sold the property under contract tried to avoid the condition precedent and its own negligence by failing to review the policy or insist on the fire sprinklers, by suing the broker for not naming it as an insured. The Eighth Circuit found the arguments sufficient to consider and then avoided all the arguments by concluding that if the broker did everything requested there would still be no coverage. In essence it concluded as did the great basketball announcer Chick Hearn: "No harm, no foul." (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at 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; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; 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 – https://zalma.com/blog/insurance-claims-library\

Insurers Should Avoid Suing Each Other The United StatesCourt of Appeals for the Ninth Circuit certified to the California Supreme Court, the following question for our review: "Under California's Motor Carriers of Property Permit Act (Veh. Code, § 34600 et seq.; the Act), does a commercial automobile insurance policy continue in full force and effect until the insurer cancels the corresponding Certificate of Insurance on file with the Department of Motor Vehicles (DMV or Department), regardless of the insurance policy's stated expiration date?" The Supreme Court in Allied Premier Insurance v. United Financial Casualty Company, S267746, Supreme Court of California (July 24, 2023) the California Supreme Court logically advised the court of its opinion based on the statute and California precedent. The certified question arose only in the context of claims for equitable contribution and subrogation between two insurance companies. It bears repeating that the plaintiffs in the underlying lawsuit were compensated to the full limits of Allied's policy under the terms of their settlement and that, at all relevant times, Porras, the trucker, properly maintained an active operating permit. BACKGROUND Commercial trucker Jose Porras is a "motor carrier of property" (motor carrier or carrier). Under the Act, a motor carrier cannot operate on public highways without securing a DMV permit, which requires proof of the carrier's financial responsibility. A carrier can satisfy that requirement by obtaining a policy of insurance. If a carrier does so, the insurer must submit a certificate of insurance to the Department as evidence that the "protection required under [section 34631.5,] subdivision (a)" is provided. The Act requires that proof of financial responsibility be continued in effect during the active life of the permit issued to the motor carrier. This requirement prohibits cancellation of a certificate of insurance without notice to the DMV by the insurer. When an insurer gives notice that a certificate will be cancelled because the policy will lapse or be terminated, the DMV must suspend the carrier's permit effective on the date of lapse or termination unless the carrier provides evidence of valid insurance coverage pursuant to section 34630. United appealed to the Ninth Circuit, which certified the question of law to the Supreme Court. If the Act requires a commercial auto insurance policy to remain in effect indefinitely until the insurer cancels the certificate of insurance on file with the DMV, then Allied must prevail. If not, United must prevail. DISCUSSION Equitable contribution assumes the existence of two or more valid contracts of insurance covering the particular risk of loss and the particular casualty in question. This assumption lies at the heart of the Ninth Circuit's question. Allied's entitlement to equitable contribution depends on whether United was obligated to indemnify Porras for any damages due to the accident. Allied is entitled to equitable contribution only if it can show that United was a "coobligor who shares . . . liability" with Allied for the loss resulting from that event. That is, did both insurers have a policy in effect because of the statute. The Act Does Not Extend the Policy Beyond the Term Contained in the Contract As to cancellation of a policy, the HCA provided that protection against liability shall be continued in effect during the active life of the trucker's permit, and that the policy of insurance or surety bond shall not be cancelable on less than 30 days' written notice to the PUC, except in the event of cessation of operations as a highway carrier as approved by the PUC. An uncancelled certificate of insurance that remains on file with the DMV does not cause the corresponding insurance policy to remain in effect in perpetuity. But that is not to say that an uncancelled certificate of insurance imposes no obligation of any kind on the responsible insurer. It is true that commercial trucking is a business affecting the public interest and that one goal of the regulating legislation is to ensure that truckers do not improperly seek to reduce costs by carrying inadequate insurance. The Act's legislative history indicates that it was also intended to "enhance public safety." CONCLUSION Under the Act, a commercial automobile insurance policy does not continue in full force and effect until the insurer cancels a corresponding certificate of insurance on file with the DMV. The duration of the policy's coverage is regulated by its terms and those of any endorsement or amendment to the policy itself. The terms of an insurance contract generally determine the duration of the policy's coverage. Although an endorsement can amend the policy, neither the Act nor the specific endorsement requires extending coverage beyond the underlying policy's expiration date. ZALMA OPINION The California Supreme Court, in a Solomon-like decision, read an insurance policy as written. Although the statute requires proof of insurance for a trucker to be able to operate on the road it does not intend to, nor can it, change the wording of the policy. If the Legislature wished to change the wording of the policy, eliminate the expiration date to a date to be determined by notice to the DMV, it could have done so. It did not. The expiration date stood and only the insurer with a policy in effect at the time of the accident was responsible and it could not force an insurer whose policy had expired to take on a portion of the liability owed. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at 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; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; 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 – https://zalma.com/blog/insurance-claims-library

Ninth Circuit Is Exhausted by Covid Insurance Claims Suit Khatchik Hairabedian d/b/a Kris Mobil ("Khatchik") appealed from the district court's order granting Defendant Security National Insurance Company's ("Security") motion to dismiss this action for insurance coverage in Khatchik Hairabedian, Dba Kris Mobil v. Security National Insurance Company, a Texas Corporation, No. 22-55355, United States Court of Appeals, Ninth Circuit (July 21, 2023) applied its precedent. THE CLAIM Khatchik sought coverage from its insurer, Security, for COVID-19 related economic losses. However, the policy had a virus exclusion that provides: Security "will not pay for loss or damage caused by or resulting from any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease." The virus exclusion "applies to all coverage under all forms and endorsements," in the policy, including "forms or endorsements that cover business income, extra expense or action of civil authority." Khatchik argued that the virus exclusion does not apply because government orders, not COVID-19, caused the losses. Here COVID-19 is the efficient proximate cause of Khatchik's alleged losses. Khatchik also contended that the virus exclusion does not apply to pandemics because Security chose not to use a publicly available "pandemic exclusion" in its policy. The Ninth Circuit disagreed. Arguing that the Virus Exclusion does not apply to bar coverage for losses stemming from the COVID-19 pandemic defies the plain and unambiguous text of the Policy and is akin to arguing that a coverage exclusion for damage caused by fire does not apply to damage caused by a very large fire. ZALMA OPINION It is time that courts stop dealing with lawsuits seeking insurance coverage resulting from Covid-19. They continue to fill the trial and appellate courts and they continue to lose. They are causing unnecessary expense to the plaintiffs, the insurers and the courts. Considering the volume of precedent it is beginning to be considered a frivolous law suit that would subject the parties and their lawyers to sanctions. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at 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; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; 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 – https://zalma.com/blog/insurance-claims-library

Mutual Benefit Insurance Defeats Subrogation Effort Typically, an insurer that pays a claim to an insured as a result of the negligent acts of a third party an insurer has the right, in the name of its insured, to sue the responsible party in the name of its insured. The right to sue in the name of the insured results from the equitable remedy of subrogation and is effective as long as the insured has not waived the right of its insurer to subrogate. In Delaware there is an exception to the equitable remedy because landlords and tenants are presumed to be co-insureds under the landlord's fire insurance policy unless a tenant's lease clearly expresses an intent to the contrary. If the rule applies, the fact that the landlord's insurance is presumed to be for the mutual benefit of the landlord and the tenant, and the insurer cannot pursue the tenant for the landlord's damages by way of subrogation. The Superior Court ruled in the tenants' favor at summary judgment that the rule applied because the lease did not clearly express an intent to hold the tenants liable for the landlord's damages. In Donegal Mutual Insurance Company A/S/O Seaford Apartment Ventures LLC T/A The Villages Of Stoney Brook Apartments v.Thangavel and Muthusamy, No. 379, 2022, Supreme Court of Delaware (July 18, 2023) the apartment's insurer sued the tenants for the $77,704.06 to repair the water damage they caused. The Superior Court ruled in the tenants' favor at summary judgment that the rule applied because the lease did not clearly express an intent to hold the tenants liable for the landlord's damages. ANALYSIS In Delaware landlords and tenants are presumed to be co-insureds under the landlord's fire insurance policy unless a tenant's lease clearly expresses an intent to the contrary. If the rule applies, the landlord's insurer cannot pursue the tenant for the landlord's damages by way of subrogation. The tenants who leased an apartment from Seaford Apartment Ventures, LLC, Donegal's insured, were considered to be coinsueds since the lease did not express an intent to the contrary. The complaint alleged that the tenants hit a sprinkler head while they flew a drone inside the apartment. Water sprayed from the damaged sprinkler head and caused damage to the apartment building. The Superior Court granted the tenants' summary judgment motion. It concluded that the lease in this case was substantially similar to the leases in three other Delaware all of which found that the leases did not clearly express an intent to the contrary. CONCLUSION The Supreme Court concluded that the Superior Court correctly found that the apartment lease did not clearly express an intent that the tenants were responsible for the water damage in this case. Since the Seaford Apartment lease did not specifically address liability for fire or water damage caused by the tenant's negligence the policy issued by Donegal was issued for the mutual benefit of the insured and the tenant and Donegal had no right to subrogate.. Also, the Superior Court correctly observed that the policy considerations recognizing the one-sided nature of residential leasing and protecting the parties' typical expectations regarding the assignment of risk of loss - are served by applying the rule in this case because residential landlords control the lease terms. If they want, they can clearly express a requirement that the tenants obtain fire insurance or notify them that they would not benefit from the landlord's fire insurance policy. ZALMA OPINION Most commercial fire insurance policies, like the Donegal policy in this case, allow the insured to waive the insurer's right of subrogation. Apparently, the landlord did not specifically waive its insurer's right to subrogation but, Delaware precedent, accomplished the same effect by, as a mater of law, made the landlord's policy a policy for the benefit of both the insured and the tenant, effectively acting as a waiver of subrogation. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at 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; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; 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 – https://zalma.com/blog/insurance-claims-library

There Must be a Claim for Coverage Under a Claims Made Policy Homeland Insurance Company of New York (Homeland) issued Plaintiff a claims made liability insurance policy covering errors and omissions, effective January 16, 2019 to January 16, 2020. Plaintiff eQHealth AdviseWell, Inc., f/k/a eQHealth Solutions, Inc., a Louisiana corporation that provides health care management services to Medicaid agencies, commercial healthcare payers, third-party administrators, and self-insured employer groups. In Eqhealth Advisewell, Inc. v. Homeland Ins. Co. Of N.Y., Civil Action No. 22-00050-BAJ-EWD, United States District Court, M.D. Louisiana (July 15, 2023) the USDC resolved the dispute over coverage. BACKGROUND Homeland issued a Managed Care Organizations Errors and Omissions Liability Policy (“the Policy”) to Plaintiff. The Policy covered “Damages and Claim Expenses in excess of the Retention that [Plaintiff is] legally obligated to pay as a result of a Claim ...” A “Claim,” as defined by the Policy, “means any written demand from any person or entity seeking money or services or civil, injunctive, or administrative relief from [Plaintiff].” Plaintiff Authorizes Treatment For B.N., A Florida Resident, In Oklahoma One of Plaintiff's contracts was to provide Medicaid management services to the State of Florida. Under this contract, Plaintiff's primary operational contact was Florida's Agency for Health Care Administration (“AHCA”), which is the state agency responsible for administering Florida's Medicaid program. As part of its contract, Plaintiff reviewed requests for patients-Medicaid recipients-to receive medical services outside of Florida. One such request for out-of-state services was a Medicaid claim by B.N. a Florida resident. B.N. was admitted on an emergency basis into non-party Brookhaven Hospital (“Brookhaven”), a licensed psychiatric hospital located in Tulsa, Oklahoma. At the end of B.N.'s initial 180-day period neared, Brookhaven submitted a continued stay authorization request to Plaintiff, requesting an additional 180 days of inpatient services for B.N. Plaintiff denied Brookhaven's request based on Plaintiff's determination that B.N. no longer met the medical necessity criteria for the level of neurological rehabilitation provided at Brookhaven. Plaintiff's Communications To Defendant Regarding B.N.'S Treatment At Brookhaven Plaintiff's April 30 Notice of Circumstances email also contained a written timeline of events for B.N.'s treatment at Brookhaven. On June 10, 2019, a lawyer with the Jones Law Firm, representing Brookhaven, sent a letter to Florida's Governor, multiple Florida AHCA officials, and a Medicare/Medicaid official. Brookhaven's June 10 letter discussed Brookhaven's disagreements with how Florida AHCA handled B.N.'s case. The lawyer stated that “[n]o lawsuit has been filed, at least as yet.” (emphasis added) The lawyer recommended to Plaintiff that it review its E&O insurance policy “to determine whether th[e] letter triggers a reporting requirement.” He concluded that “[t]his letter reasonably constitutes threatened litigation. Depending on the language of the policy, it may need to be reported.” Plaintiff and Florida AHCA's Settlement with Brookhaven Six months later, on December 12, 2019, Plaintiff “formally tender[ed]” the matter for coverage. To do so, Plaintiff wrote a letter to Defendant, discussing the history of the B.N. matter and informing Defendant that Plaintiff had participated in settlement negotiations with Florida AHCA and Brookhaven and, ultimately, settled the matter in September 2019. At the point of a settlement eQHealth had virtually no choice but to settle on the terms agreed by AHCA and Brookhaven. Had eQHealth refused, then the likely alternative would have been a suit by Brookhaven in federal court against AHCA and eQHealth, with eQHealth not only having to indemnify AHCA for any judgments but for all defense fees and costs. In order to mitigate the total exposure to all parties involved, eQHealth agreed. The settlement agreement was signed by the last parties on September 20, 2019, and pursuant to it, eQHealth paid Brookhaven $262,500. Defendant denied coverage on February 3, 2020, stating that: “[n]o Claim against eQHealth was reported to Homeland, eQHealth did not ask for consent to settle any Claim, and Homeland did not provide prior written consent for the settlement, or for any expense, payment, liability, or obligation eQHealth may have had in relation to this matter. Therefore, no coverage is available for the settlement payment eQHealth made to Brookhaven.” DISCUSSION Homeland expressly conditioned coverage of all claims under the Policy on the filing of notice of a “Claim” against Plaintiff. When considering what constitutes a “claim” to trigger coverage under a “claims-made” insurance policy, the court relied on the Fifth Circuit that instructs trial courts to differentiate the “mere threat of a claim” from an “actual claim.” The USDC concluded that despite the numerous communications between the parties and relevant third parties, no communication rose to the definitional level of a “Claim” such that coverage under the Policy was triggered. Because the Court found that none of the relevant communications prior to the September 2019 settlement between Brookhaven, Florida AHCA, and Plaintiff constituted “Claims” as defined by the Policy, coverage under the Policy was never triggered since none of the communications sought "money or services or civil, injunctive, or administrative relief." ZALMA OPINION Homeland included in its policy wording a definition of the word "claim." For the insured to obtain defense or indemnity it must establish that a claims, as defined, happened. Without question threats were made. A settlement was reached and the insured paid money to fund the settlement. Yet, no one made a "claim" as defined, the insurer was not advised of the settlement nor was it advised of the insured's intent to pay until after it paid although the decision to pay was a "business" decision since no one made a demand in writing that they pay for a cause of loss insured against, there could not be coverage for a claim or loss triggered under the policy's clear and unambiguous definition of the word "claim." (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at 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; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; 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 – https://zalma.com/blog/insurance-claims-library

Exclusion Defeats Claim for Defense and Indemnity Duckworth roofing, while repairing a roof for LGO Properties caused a fire at the Tulane Building while using hot torches to repair the roof. In Certain Underwriters At Lloyd's Of London As Subrogee Of L.G.O. Properties, LLC v. Duxworth Roofing And Sheetmetal, Inc., No. 2022-CA-0821, Court of Appeals of Louisiana, Fourth Circuit (July 18, 2023) the defendant sought coverage when the defendant's insurer denied coverage because of an exclusion called the Torch Down Roofing Exclusion. FACTS L.G.O. Properties, L.L.C. entered into a contract with Duxworth to perform roofing work at 4033 Tulane Avenue (hereinafter "the Tulane Building"). Duxworth's roofing work included the use of hot tools and the installation of a process called "torch down roofing" to repair a leak on the roof of the Tulane Building. On December 9, 2016, the Tulane Building was damaged in a fire (hereinafter "the December 2016 fire"). On October 12, 2017, Certain Underwriters at Lloyd's, as a subrogee of L.G.O. Properties, L.L.C. (hereinafter collectively "Lloyd's of London") filed a suit for damages naming Duxworth as a defendant. Lloyd's of London's petition alleges that Duxworth negligently used hot torches to perform roofing work on the Tulane Building thus causing the December 2016 fire. The petition also asserted that Duxworth failed to train its employees and take reasonable precautions to prevent damage to the Tulane Building. James River, Duckworth's insurer, filed a motion for summary judgment arguing that the Commercial General Liability insurance policy precludes Duxworth from receiving coverage. Specifically, James River maintained that the CGL policy excludes coverage for damages resulting from the use of torches to perform roofing work (hereinafter "the Torch Down Roofing Exclusion"). Duxworth opposed James River's motion for summary judgment arguing that the CGL policy and Lloyd's of London's petition contains language that does not entitle James River to summary judgment. The trial court granted James Rivers' motion for summary judgment dismissing James River, without prejudice and before Duckworth could amend James Rivers appealed. DISCUSSION Duxworth asserts multiple assignments of error challenging the trial court's ruling on the motion for summary judgment. The Language Of The Torch Down Roofing Exclusion Is Not Ambiguous The extent of coverage is determined by the parties' intent as reflected by the words in the policy. In order to resolve ambiguous language within an insurance policy, the policy must be construed as a whole. If the policy wording at issue is clear and unambiguously expresses the parties' intent, the insurance contract must be enforced as written. The Louisiana Court of Appeals found that the Torch Down Roofing Exclusion precludes Duxworth from receiving coverage from James River. A Court must give words and phrases their general meaning. Mr. Duxworth's deposition revealed that he was a part of the crew that was present and performing torch down roofing repairs to the Tulane Building on the day of the December 2016 fire. Since Mr. Duxworth testified that his team was instructed to repair a leak to the Tulane Building's roof which required the use of hot tools and torches, also known as "torch down" roofing, and since Mr. Duxworth concedes that hot tools and torches were used to install a flat torch down roof to the Tulane Building the exclusion applies. Given the plain, ordinary, and generally prevailing meaning of the words "arise out of," it was clear to the Court of Appeals that Lloyd's of London's claims against Duxworth arose out of and are derived from the property damage caused by the fire that occurred during the time Duxworth was performing ongoing torch down roofing installation. Duxworth's contention that the James River's CGL policy fails to define "Torch Down Roofing" is unpersuasive. Although the Torch Down Roofing Exclusion does not define the term "Torch Down Roofing Operations" it is undisputed that hot tools and torches were used on the date of the December 2016 fire. A plain reading of the CGL policy between James River and Duxworth provides that the damages caused by the use of hot tools to perform roofing repairs, triggers the Torch Down Roofing Exclusion, and precludes coverage. Duty to Defend A duty to defend is determined solely from the plaintiff's pleadings and on the face of the policy. James River's CGL policy provides: "we will have no duty to defend the insured against any 'suit' seeking damages for 'bodily injury' or 'property damage' to which this insurance does not apply." Lloyd's of London's petition alleges that Duxworth failed to safely use hot torches to perform roofing work on the Tulane Building. The Torch Down Roofing Exclusion unambiguously excluded the claims against Duckworth. The trial court properly sustained James River's motion for summary judgment and determining that the Torch Down Roofing Exclusion prevents coverage from the use of torch down roofing operations. ZALMA OPINION Everyone who is sued wants to use other people's money to defend the suit. Duckworth bought a policy with a "Torch Down Roofing Exclusion" that obviously applied after the insured testified he and his staff were using torches to repair the building at the time it caught fire. Using that type of roofing with a policy that excludes it accepted the full risk of loss and will have to use his own funds to pay off the Lloyd's Underwriters' subrogation action. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at 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; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; 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 – https://zalma.com/blog/insurance-claims-library.

Suing for Unfair Competition and an Injunction to Avoid Private Limitation of Action Provision Dismissed Katherine Rosenberg-Wohl had a homeowners insurance policy with State Farm Fire and Casualty Company (State Farm), providing coverage on her home in San Francisco. The policy has a limitation provision that requires lawsuits to be "started within one year after the date of loss or damage." In Katherine Rosenberg-Wohl v. State Farm Fire And Casualty Company, A163848, California Court of Appeals, First District, Second Division (July 11, 2023) she sought indemnity to remedy a defect in the home. State Farm refused to pay because there was no insurable event and because the suit was filed more than a year after the alleged loss. FACTS In late 2018 or early 2019, plaintiff noticed that on two occasions an elderly neighbor stumbled and fell as she descended plaintiff's outside staircase and learned that the pitch of the stairs had changed and that to make the stairs safe the staircase needed to be replaced. In late April 2019, plaintiff authorized the work and contacted State Farm, and on August 9, she submitted a claim for the money she had spent. The denial was based on the investigation findings and concluded there was no evidence of a covered cause for accidental direct physical damage to the property. The denial also stated that the policy does not provide coverage for preventative nor safety measures to the property. Maintenance would be the responsibility of the property owner to properly maintain the property to keep it safe. Plaintiff submitted a claim to State Farm for her construction expenses, which by then were approximately $52,600, with another $16,800 in anticipated expenses for additional work. By letter dated August 26-plaintiff alleged, without any investigation-State Farm denied the claim. The letter also specifically referenced "the suit limitation period" as a "policy defense." Plaintiff filed two lawsuits against State Farm in San Francisco Superior Court. One alleged two causes of action for breach of the policy and for bad faith. That lawsuit was removed to federal court and was resolved against plaintiff on a motion to dismiss based on the one-year limitation provision. It is currently on appeal in the Ninth Circuit. The second suit before the the Superior Court purports to allege a claim for violation of California's unfair competition law. This case was also resolved against plaintiff, also based on the limitation provision, when the trial court sustained a demurrer to the second amended complaint without leave to amend. Plaintiff appealed. On October 22, 2020-some 18 months after she had replaced the staircase, 14 months after State Farm had denied her claim the first time, and nearly six months after the one-year limitation period of the policy had expired-plaintiff filed two lawsuits in San Francisco County Superior Court. On April 20, 2021, Judge Massullo sustained the demurrer with leave to amend to add additional facts supporting waiver. On May 21, plaintiff filed a second amended complaint (SAC), adding, apparently without leave of court, a claim for false advertising. The SAC then states, again in capitalized boldface, that "This Is Not A Lawsuit For Damages For Breach Of Contract; Rather It Is A Challenge To How State Farm Does Business." State Farm filed a demurrer and a motion to strike the SAC. On July 29, Judge Massullo entered her order sustaining the demurrer without leave to amend, a comprehensive order indeed, eight pages of thoughtful analysis. She held that “the Court is persuaded that Plaintiff's claims are nonetheless 'on the policy' because they are 'grounded upon [State Farm's] failure to pay policy benefits.'” She also concluded that “[a]ll of the alleged acts which form the basis of Plaintiff's claims occurred during the claim handling process.” Finally, Judge Massullo held that State Farm had not waived the limitation provision. DISCUSSION The one-year limitation provision in the State Farm policy is there because it was required by statute. [Califonria Insurance Code section 2071] The one-year limitation provisions have long been held valid as mandated by statute. The One-Year Policy Limitation Provision Applies State Farm asserted that "the Legislature has expressly endorsed the provision under Insurance Code section 2071" and argued that because the allegations here all concern how it handled plaintiff's claim, the suit is subject to the policy limitation period under applicable law. In sum, the crux of plaintiff's claim is grounded upon a failure to pay policy benefits. An insured cannot plead around the one-year limitations provision by labeling her cause of action something different than breach of contract which, of course, includes claims for bad faith. Conduct by the insurer after the limitation period has run cannot, as a matter of law, amount to a waiver or estoppel. The policy requires any waiver to be in writing. Plaintiff does not allege State Farm agreed to waive anything in writing. Therefore, the judgment was affirmed and State Farm was allowed to recover its costs on appeal. ZALMA OPINION The Court of Appeal spent many pages resolving this fairly simple dispute. The plaintiff sued to collect benefits she believed were owed under a policy of insurance only to find that the suit was filed to late. To avoid that problem she amended the suit to allege unfair business practices and sought an injunction, all of which were seen to be an alternative way to obtain policy benefits and failed again. For more than 120 years the California Supreme Court and Courts of Appeal have upheld the private limitation of action provision required by statute and no amount of creative pleading can avoid its effect. (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 Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Subscribe to my publications at 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 podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; 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; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

State Farm Obtains Injunction Against Doctor to Stop Fraudulent No Fault Accident Claims In State Farm Mutual Automobile Insurance Company, State Farm Fire and Casualty Company v. Herschel Kotkes, M.D., P.C., Herschel Kotkes, M.D., No. 22-cv-03611-NRM-RER, United States District Court, E.D. New York (July 13, 2023) Plaintiffs, various State Farm insurers sued Herschel Kotkes and Herschel Kotkes, M.D., P.C. (“Kotkes”), alleging that Dr. Kotkes defrauded State Farm by submitting hundreds of fraudulent bills for no-fault insurance charges on behalf of insured patients who were involved in automobile accidents. State Farm alleged common law fraud and unjust enrichment, seeking damages for benefits paid under no-fault insurance policies to Kotkes. State Farm also sought a declaratory judgment establishing that, among other things, it is not obligated to pay unpaid, pending claims submitted by Kotkes. BACKGROUND Under New York Law, an automobile insurer must provide no-fault insurance benefits to the individuals they insure (“insureds”) for necessary healthcare expenses resulting from automobile injuries, for up to $50,000. No-fault insurers like State Farm may reimburse patients without requiring proof of negligence. An insured may assign their claim to their provider, who then bills the insurers directly. Factual Allegations Defendants are Dr. Herschel Kotkes (“Kotkes”) and his medical practice, Herschel Kotkes, M.D., P.C. Kotkes is a pain management specialist, whose practice includes treating insureds who have been involved in automobile accidents. The insureds assign their policies to Kotkes, who bills State Farm for the treatment purportedly rendered. State Farm alleged that Kotkes, since at least 2017, has been systematically submitting fraudulent and misleading claims to State Farm. Kotkes almost always described patient complaints in the same way (as non-specific neck and/or low back pain), diagnosed 99% of patients with radiculopathy in either the lumbar or cervical region, or both, along with “intervertebral disc displacement” in the corresponding region, but without specifying the particular location on the spine. The random sample of eighty-six patients also reveals that Kotkes provided the same prognosis for 98% of those he treated and recommended the same combination of treatment methods for nearly all patients. State Farm asserted three causes of action: for common law fraud and unjust enrichment, under which it seeks damages for claims already paid to Kotkes, and for a declaratory judgment, under which State Farm seeks a judgment declaring that Kotkes is not entitled to reimbursement for claims submitted to State Farm that have not been paid to date and are unpaid through the pendency of this litigation. COMMON LAW FRAUD Under New York law, to state a claim for fraud, a plaintiff must demonstrate a material misrepresentation or omission of fact; which the defendant knew to be false; which the defendant made with the intent to defraud; upon which the plaintiff reasonably relied; and which caused injury to the plaintiff. State Farm points to Kotkes's own testimony, from an examination under oath in a state court collection action, where he testified, for one, that he does not believe that certain procedures are medically valuable, but that he performs them as a matter of course. Kotkes also testified that it is his practice to perform a percutaneous discectomy and an IDET-two mutually exclusive procedures-at the same time and using the same needle. State Farm adequately alleged that Kotkes had motive to commit fraud: to gain a financial benefit of hundreds of thousands of dollars in insurance payments by submitting claims to State Farm. State Farm also adequately alleges that Kotkes had opportunity to commit fraud, specifically that Kotkes could submit claims to State Farm that allegedly misrepresented the necessity of certain treatments or inflated the bills for certain treatments. State Farm adequately pled that it reasonably relied on Kotkes's misrepresentation and was injured as a result. State Farm has alleged the elements of common law fraud. State Farm has adequately and plausibly alleged that Kotkes made fraudulent statements in submitting the claims at issue. State Farm alleges fraudulent knowledge and intent by showing Kotkes's motive and opportunity to submit fraudulent claims to take advantage of New York's no-fault insurance scheme. Common law fraud is sufficiently pled and Kotkes's motion to dismiss the common law fraud count was denied. DECLARATORY JUDGMENT State Farm has established a substantial controversy between the parties: whether Kotkes is entitled to payment on pending claims presented to State Farm, or whether, due to Kotkes's allegedly fraudulent scheme, State Farm is under no obligation to pay. MOTION FOR A PRELIMINARY INJUNCTION State Farm alleges that, as of March 23, Kotkes initiated 103 arbitrations and 95 state court lawsuits seeking payment on claims that State Farm has refused to pay since uncovering the alleged fraudulent scheme and initiating the instant federal lawsuit. As of March 24, 2023, approximately $1,188,841.32 in unpaid claims was at issue in pending state court litigation and arbitrations, and $1,787,989.98 of Kotkes's billed-unpaid amount was not yet the subject of pending collections litigation or arbitration. New York courts routinely stay collection actions pending declaratory judgment proceedings. Accordingly, State Farm's request that the USDC stay pending no-fault collection actions in state court was granted. State Farm's motion for a preliminary injunction was granted in full. Specifically, the Court granted State Farm's request to stay pending state civil court proceedings and no-fault arbitrations against State Farm by Kotkes, and enjoined Kotkes from filing any new collection actions against Kotkes seeking no-fault insurance benefits, whether in state court or in arbitration proceedings, pending resolution of the declaratory judgment action, absent further order of the Court. State Farm's obligation to post security was waived. ZALMA OPINION Because insurance fraud - especially with regard to individual small amounts - the only means of deterring or defeating insurance fraud relating to no-fault insurance claims assigned to less than scrupulous health care providers is to sue the providers for fraud. State Farm should be commended for its proactive work against Dr. Kotkes and was properly provided an injunction stopping further claims while litigating the declaratory relief and fraud suit. The evidence appears overwhelming and I look forward to reading about the results at trial. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at 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; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; 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 – https://zalma.com/blog/insurance-claims-library. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at 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; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; 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 – https://zalma.com/blog/insurance-claims-library.

Lie to Your Insurer and You Will Lose Plaintiffs Richard Converse and Stephanie Converse own the property. Defendant State Farm Fire and Casualty Company (“State Farm”) insured the property at the relevant time. After a fire on December 8, 2019, Plaintiffs sought coverage under the insurance policy. Plaintiffs brought this action when Defendant denied coverage for much of the claim. In Richard Converse, and Stephanie Converse v. State Farm Fire And Casualty Company, No. 5:21-CV-457 (TJM/ATB), United States District Court, N.D. New York (July 12, 2023) the USDC was asked to rule on cross-motions for summary judgment. BACKGROUND State Farm insured the Converses against the risk of loss to a rental property under a homeowners policy. The parties agree that Plaintiff Stephanie Converse sent a letter to Joseph Pelton on or about November 8, 2019 that stated: “Joe, ... Having issues with my house again. Need help this time! I will pay $5,000 cash when I get the insurance. The back door will be unlocked and open to the basement. That's where the access to utilities are. Make look like electrical. I will come up after it happens so I will meet up with you. ... It's a mint green house with garage. Love you, See you soon. Stephanie.” While Plaintiffs admit that Stephanie Converse mailed the letter, they “deny any implication or allegation that Stephanie Converse committed insurance fraud, paid anyone to commit arson on the property, or was in any way involved in the fire that caused the loss on the property.” Stephanie Converse filed a claim on December 8, 2019 for the loss caused by the fire. State Farm mailed Stephanie Converse a blank Sworn Statement in Proof of Loss and a return envelope. The cover letter stated that the Sworn Statement should be returned by February 17, 2020. State Farm Counsel Roy Mura reminded Stephanie Converse that she had to return the sworn statement. That letter warned that “a failure . . . to timely complete and return the Sworn Statement in Proof of Loss form for the reported loss may result in loss [of] your rights under the . . . policy.” Stephanie Converse appeared for an examination under oath (“EUO”) in connection with her insurance claim on March 13, 2020. Stephanie Converse affirmed during the examination that “everything as far as you can recall [was] truthful about what you told Mr. Loarca[.]” Converse further testified that she could not “recall asking anybody to burn . . . I mean I can't remember. I don't know if I did, or I didn't.” She further testified that she could not “recall” whether she had offered “to pay anybody money to” burn the property down. Defendant denied Stephanie Converse's claim on October 7, 2020 and Plaintiffs sued. ANALYSIS Defendant first argues that State Farm has no obligation to provide coverage under the policy because Stephanie Converse breached the insurance contract by making material misrepresentations in reference to her claim. The materiality requirement is satisfied if the false statement concerns a subject relevant and germane to the insurer's investigation as it was then proceeding. Plaintiffs deny that Stephanie Converse willfully made any material misrepresentations. Plaintiffs do not seriously dispute that Stephanie Converse made misrepresentations to State Farm during the course of the investigation. They could not. The undisputed evidence before the Court indicated, Stephanie Converse told an investigator that she had made no such request. Defendant does not argue that Plaintiff dissembled about the cause of the fire at the home, committed arson herself, or paid Joseph Pelton to set the home on fire. The Court found that as a matter of law Plaintiff made these misrepresentations willfully. Taken as a whole, the Court concluded that Plaintiff Stephanie Converse's statements represented a continuing attempt to conceal from State Farm that she had contacted Pelton and offered him money to burn down the insured property. The Court concluded that a reasonable juror could not find that such contradictory statements were the result of mistake or misunderstanding, but that the differences between what Plaintiff told various investigators were intentional. “The purpose” of procedures like examinations under oath and other investigative measures is to enable the insurance company to acquire knowledge or information that may aid it in its further investigation or that may otherwise be significant to the company in determining its liability under the policy and the position it should take with respect to the claim. A reasonable juror could only find that her misleading conduct was material. Stephanie Converse made material misrepresentations to insurance investigators as a matter of law and breached the insurance contract and Defendant is entitled to summary judgment in this respect. Failure to Cooperate Testifying falsely can also breach the condition of cooperation. Stephanie Converse admitted to Lee County Sheriff's Office investigators that she had written the letter she had denied to State Farm. Converse thus made misrepresentations about facts material to State Farm's investigation. Given the inconsistencies in Stephanie Converse's stories to various parties and her clear misrepresentation to State Farm about her knowledge of the letter to Pelton, no reasonable juror could find that Converse's misrepresentations were not willful. Proof of Loss When an insurer gives its insured written notice of its desire that proof of loss under a policy of fire insurance be furnished and provides a suitable form for such proof, failure of the insured to file proof of loss within 60 days after receipt of such notice, or within any longer period specified in the notice, is an absolute defense to an action on the policy. There is no dispute that the Plaintiff did not return a sworn statement of proof of loss until March 12, 2020, well after the date specified by State Farm in correspondence to Stephanie Converse. Defendant has an absolute defense to Plaintiffs' claims. Defendant's motion for summary judgment, was granted and Plaintiffs' motion for summary judgment was denied. ZALMA OPINION An insured who seeks to hire a person to set fire to her house for a fee paid from insurance proceeds is offering to pay for a felonious act. If the person refuses to set the fire, has an alibi when an arson fire actually occurred, performed by a person unknown, and the insured lies about her offer to burn her house, the lie is sufficient to deny the claim in accordance with the terms and conditions of the policy. This case proved the old saw that "liars never prosper." (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at 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; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; 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; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

Arsonist-Killer Not Eligible for Elderly House Confinement Program Jack Ferranti, acting as his own attorney, appealed the District Court's orders denying his petition for habeas relief under 28 U.S.C. § 2241 and his motion to reconsider. FACTS Ferranti was responsible for causing a fire at his business that resulted in the death of a firefighter. The trial judge sentenced him to 435 months' imprisonment. See United States v. Ferranti, 928 F.Supp. 206, 21316 (E.D.N.Y. 1996). His conviction and sentence were affirmed on appeal. See United States v. Tocco, 135 F.3d 116 (2d Cir. 1998). In Jack Ferranti v. Warden Allenwood LSCI, No. 22-1892, United States Court of Appeals, Third Circuit (June 30, 2023) noted that Ferranti was convicted in the United States District Court for the Eastern District of New York of arson homicide, arson conspiracy, 16 counts of mail fraud, and witness tampering, based on an insurance-fraud scheme. The Third Circuit resolved the request for release to the elderly home confinement program (EOHDP). In 2020, Ferranti argued that he met the criteria for the EOHDP, and he asked for the District Court to order the BOP to process his application and place him in the program. ANALYSIS As the District Court explained, federal courts do not have the authority to grant the relief that Ferranti requested to order his placement in the EOHDP. The executive branch, not the courts, have control over an inmate's placement. Moreover, even if the ability to challenge the BOP's actions were available through habeas, Ferranti did not establish that he qualified for the program. The statute disqualifies those whom "the Bureau of Prisons, on the basis of information the Bureau uses to make custody classifications, and in the sole discretion of the Bureau, [determines] to have a history of violence." Further, even if he did qualify, the BOP would not be required to place him in the EOHDP because, again, the statute leaves placement as a matter of discretion for the BOP. In any event, the BOP did not err by concluding that Ferranti's history of violence-comprised of the underlying conduct for his convictions as well as disciplinary infractions in prison-disqualified him from participating in the EOHDP. ZALMA OPINION In an example of Chutzpah, Ferranti sought release from prison into the EOHDP in violation of the program's requirement that only a non-violent prisoner is allowed into the program. Just being elderly, especially after the arson-for-profit scheme resulted in the death of a firefighter, was denied by the District Court and the Third Circuit without hesitation. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at 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; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; 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; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

ZIFL Volume 27, Issue 14 The Source For Insurance Fraud Professionals This, the fourteenth issue of the 27th year of publication Zalma’s Insurance Fraud Letter provides multiple articles on how to deal with insurance fraud in the United States. The issue begins with: No Coverage Under a False Name Liars May Never Prosper Cheryl Tisdale was injured in an automobile collision while she was driving her own vehicle containing passengers while logged into the Uber Technologies (“Uber”) application as a paid driver. Tisdale served Farmers Insurance Exchange with the complaint, seeking underinsured motorist (“UM”) coverage pursuant to an insurance policy Farmers issued to Raiser, LLC, a subsidiary of Uber. It takes a great deal of chutzpah (unmitigated gall) to be fired by Uber for cause, rejoining Uber under a false name, and then claim a right to benefits from the Uber policy. Tisdale was punished by her lies and was not allowed to profit from her fraud. Read the full issue of ZIFL at ZIFL-07-15-2023 http://zalma.com/blog/wp-content/uploads/2023/07/ZIFL-07-15-2023.pdf More McClenny Moseley & Associates Issues This is ZIFL’s tenth 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 issue of ZIFL at ZIFL-07-15-2023 http://zalma.com/blog/wp-content/uploads/2023/07/ZIFL-07-15-2023.pdf Ethics for Independent Insurance Adjusters Independent insurance adjusters serve insurance companies who do not have sufficient claims staff to handle insurance claims on behalf of those various insurers without staff in every jurisdiction where there is property the risk of loss of which was insured. The professional insurance adjuster recognizes that the work of adjusting insurance claims is a profession of public trust. Independent insurance adjusters should maintain a standard of integrity that will promote the goal of building public confidence and trust in the insurance industry. Read the full issue of ZIFL at ZIFL-07-15-2023 http://zalma.com/blog/wp-content/uploads/2023/07/ZIFL-07-15-2023.pdf Good News From the This fraudster worked with a former school principal to scam healthcare benefits; now, he’s gotten schooled by a jury for his fraud. Matthew Puccio from Randolph, New Jersey, has been convicted of scheming to defraud public health benefits plans and has been sentenced to five years in federal prison. Working as a sales representative for several pharmacies between November 2014 and March 2016, Puccio conspired with others to induce two New Jersey doctors to write phony prescriptions for compounded medications on behalf of patients Puccio recruited. Puccio received kickbacks in a scheme targeting health plans that reimbursed for compound drugs at high rates. His brother-in-law, Peter Frazzano, former principal of the Sussex Avenue Elementary School in Morris Township, awaits sentencing for his role in the scam. Frazzano pleaded guilty in 2019 to conspiring to defraud the New Jersey School Employees’ Health Benefits Program, the New Jersey State Health Benefits Plan, and other plans, out of $2.7M over the same period from 2014 to 2016. Read the full issue of ZIFL at ZIFL-07-15-2023 http://zalma.com/blog/wp-content/uploads/2023/07/ZIFL-07-15-2023.pdf How to Add to the Professionalism of The Insurance Claims Profession The insurance industry has been less than effective in training its personnel. Their employees, whether in claims, underwriting or sales, are hungry for education and training to improve their work in the industry. Read the full issue of ZIFL at ZIFL-07-15-2023 http://zalma.com/blog/wp-content/uploads/2023/07/ZIFL-07-15-2023.pdf California Commissioner Lara Announced Over $50.5 Million In Grants Awarded Statewide to Assist Law Enforcement in Fighting Fraud Press release from the California Department of Insurance Under Commissioner Lara’s leadership, these grants, funded through annual employer assessments, support law enforcement efforts in investigating and prosecuting fraud and increase outreach to our communities. Commissioner Lara also awarded an additional $400,000 in grants to protect consumers, the majority of whom are seniors, from abuse involving the sale of individual life and annuity products as part of the Life and Annuity Consumer Protection Program. Read the full issue of ZIFL at ZIFL-07-15-2023 http://zalma.com/blog/wp-content/uploads/2023/07/ZIFL-07-15-2023.pdf Health Insurance Fraud Convictions Diversicare and Two Occupational Therapy Assistants to Pay Over $1.3 Million Diversicare Healthcare Services, LLC, with related subsidiary Diversicare entities (Diversicare), along with Certified Occupational Therapy Assistants Kellie S. Lemons and Charles M. James, have agreed to pay the United States $1,377,696.00 to resolve allegations that they violated the False Claims Act (FCA) by submitting claims to Medicare for occupational therapy services that they did not provide. Read the full issue of ZIFL at ZIFL-07-15-2023 http://zalma.com/blog/wp-content/uploads/2023/07/ZIFL-07-15-2023.pdf New California Bar Rule California Supreme Court Approves New Rule Requiring Attorneys to Report Professional Misconduct New California Rule Compelling Attorneys to Report Misconduct by Other Attorneys to Circulate for Public Comment In late June, the California Supreme Court approved a new Rule of Professional Conduct, rule8.3, that will require California lawyers to report misconduct by other California attorneys. Specifically, the rule requires reporting when an attorney “has committed a criminal act or has engaged in conduct involving dishonesty, fraud, deceit, or reckless or intentional misrepresentation or misappropriation of funds or property that raises a substantial question as to that lawyer’s honesty, trustworthiness, or fitness as a lawyer in other respects.” The rule is operative August 1, 2023. Read the full issue of ZIFL at ZIFL-07-15-2023 http://zalma.com/blog/wp-content/uploads/2023/07/ZIFL-07-15-2023.pdf Other Insurance Fraud Convictions Former Santa Rosa Agent Sentenced to Prison After Stealing from Consumers Christopher Ramos, 45, of Santa Rosa, was sentenced today to four years in prison after an investigation by the California Department of Insurance found he stole over $189,000 from consumers and left them uninsured. Ramos was convicted of multiple felony counts of grand theft, theft of fiduciary funds and additional enhancements for theft over $100,000.00. Read the full issue of ZIFL at ZIFL-07-15-2023 http://zalma.com/blog/wp-content/uploads/2023/07/ZIFL-07-15-2023.pdf The Effect of the Tort of Bad Faith It is indisputable that in the 1950’s, 1960’s and 1970’s the insurance industry abused some insureds to avoid paying legitimate claims. Without a factual basis, insureds were accused of arson or other variations on insurance fraud. Indemnity payments were refused on the flimsiest of excuses. People were found to have diseases that only horses could catch. Disability payments were refused because an insured was wheeled in her wheelchair to church one day and, therefore, was not totally house-confined. Insureds were driven into bankruptcy when reasonable demands within policy limits were refused. Read the full issue of ZIFL at ZIFL-07-15-2023 http://zalma.com/blog/wp-content/uploads/2023/07/ZIFL-07-15-2023.pdf Barry Zalma Over the last 55 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals. Barry Zalma, Inc., 4441 Sepulveda Boulevard, CULVER CITY CA 90230-4847, 310-390-4455; Subscribe to Zalma on Insurance at locals.com https://zalmaoninsurance.local.com/subscribe. Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome. Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; I publish daily articles at https://zalma.substack.com, Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ to consider more than 50 volumes written by Barry Zalma on insurance and insurance claims handling. Go to Zalma's Insurance Fraud Letter at https://zalma.com/zalmas-insurance-fraud-letter-2/ Follow Mr. Zalma on Twitter at https://twitter.com/bzalma 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 – https://zalma.com/blog/insurance-claims-library/and GTTR at https://gettr.com/@zalma

Bad Faith in Arkansas Requires Proof of Dishonest, Malicious, or Oppressive Conduct Including Hatred, Ill Will, a Spirit of Revenge Owners Insurance Company moved for summary judgment as to a claim of bad faith. Separately, Owners argued the Court should make a finding that there no evidence to support a punitive damages instruction. In RMS Warehouse 1315, LLC v. Owners Insurance Company, No. 5:22-CV-5114, United States District Court, W.D. Arkansas, Fayetteville Division (July 7, 2023) the USDC resolved the bad faith issue. BAD FAITH The tort of bad faith is established in Arkansas when an insurance company affirmatively engages in dishonest, malicious, or oppressive conduct in order to avoid a just obligation to its insured. The tort requires evidence of a state of mind characterized by hatred, ill will, or a spirit of revenge. Importantly, bad faith does not arise from a mere denial of a claim; there must be affirmative misconduct. Plaintiff RMS contends its two claims of loss should have been covered under the policy of insurance it had with Owners. The first loss occurred on May 4, 2020, following a hailstorm that caused damage to RMS's warehouse. The second loss was in February 2021, after a winter storm event. RMS narrows its bad-faith claim to Owners's treatment of the winter-storm claim and explicitly states that Owners did not act in bad faith with respect to the hailstorm claim. The only evidence RMS cited in support of its bad-faith claim is the denial letter sent by insurance adjuster Brian Doherty. RMS believes Mr. Doherty “misrepresented” in the letter what the insurance policy actually provided and omitted reference to crucial portions of the policy that provided coverage. The standard for establishing a claim for bad faith is, and always should be, rigorous and difficult to satisfy. RMS betrayed a fundamental misunderstanding about the tort when, at one point in its briefing, it characterizes Owners' actions as “[a]t best... a mistake,” Neither a mistake nor a “refusal to pay a disputed claim” is tortious behavior according to Arkansas law. Summary judgment on Count II, the tort of bad faith, was therefore granted. As a consequence, RMS is not entitled to a punitive damages instruction. The Motion was granted as to Count II, and the claim of bad faith was dismissed with prejudice; as a result, RMS will not be entitled to an instruction on punitive damages. ZALMA OPINION Acting as its own worst enemy the insured's brief admitted that the insurer erred. A mistake may be sufficient to establish a breach of contract but is insufficient to prove the tort of bad faith and the right to seek punitive damages. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at 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; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; 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; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

Condo Association are Birthplaces of Litigation Plaintiff, Nationwide Mutual Insurance Company (Nationwide), brought a declaratory judgment action against insureds, Beverly Glen Homeowners' Association (Association) and members of the board of directors asking the court to declare that Nationwide had no duty to defend or indemnify defendants against claims made by the Association residents in a derivative suit. The trial court granted Nationwide's motion for judgment on the pleadings, finding that res judicata and collateral estoppel barred defendants from seeking a defense in the derivative suit where judgment rendered in a prior case determined that Nationwide had no duty to defend. In Nationwide Mutual Insurance Company v. Beverly Glen Homeowners' Association, et al, No. 3-22-0089, 2023 IL App (3d) 220089-U, Court of Appeals of Illinois, Third District (July 7, 2023) BACKGROUND This lawsuit arises out of an ongoing dispute between defendants and Teresa and Katarzyna Jagiello, two Association residents. On April 14, 2020, the trial court granted Nationwide's motion. It held that "There are no material issues of fact in dispute and it is clear, as a matter of law, that the lack of cooperation on the part of the insured and its counsel has relieved Nationwide of its duties under its policy .... Nationwide's insured failed to cooperate with Nationwide, relieving Nationwide of its duties under the policy, and Nationwide owes nothing to its insured... for any legal services. As such, Nationwide owes neither a duty to defend nor indemnify its insured in this matter." ANALYSIS Res Judicata and Collateral Estoppel The doctrine of res judicata serves to bar actions in which: (1) there was a final judgment on the merits rendered by a court of competent jurisdiction; (2) there is an identity of cause of action; and (3) there is an identity of parties or their privies in both actions. Res judicata prevents the relitigation of issues that could have been decided in the first action along with those issues that were actually decided. The directors of a Condo Association act as the arms of the Association and for all intents and purposes are one and the same. In other words, there exists a legal relationship in which the directors, acting within their corporate authority, bind the Association. When a valid and final judgment rendered in an action extinguishes the plaintiff's clam the claim extinguished includes all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose. Res judicata is an equitable doctrine that should be applied only as fairness and justice require. It is intended to be used as a shield, not a sword. Nationwide is asserting the doctrine in a declaratory judgment action to obtain a no-duty-to-defend ruling. It is, contrary to defendants' argument, attempting to use the doctrine as a shield in the underlying derivative suit. Under the circumstances, applying the doctrine to deny defendants coverage in the derivative suit would not be unfair or unjust. Defendants have refused to produce documents, ignored settlement agreements and court orders requiring them to do so, and failed to cooperate with Nationwide counsel in defending their actions. In continuing to dispute it should come as no surprise to defendants that Nationwide would have no duty to defend or indemnify their actions. The trial court did not err in granting the motion for declaratory judgment on the pleadings in insurer's favor based on doctrines of res judicata and collateral estoppel where order entered in the prior case, finding that the insurer had no duty to defend or indemnify insured, involved identical cause of action and parties were in privity with parties in the underlying dispute. ZALMA OPINION The basic covenant of good faith and fair dealing requires that neither party to the policy may do anything to deprive the other of the benefits of the policy. When the condo association failed or refused to cooperate in the investigation of a claim a court found the insurer owed neither defense nor indemnity to the association because of the breach by the association. When a new set of directors sought defense of the continuation of the same dispute res judicata applied because the association was the entity involved regardless of who sits on the Board of Directors. (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 toExcellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe 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 podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; 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; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

Multi-Unit Construction Exclusion Eliminates Coverage Midvale Indemnity Company (“Midvale”) sued Arevalos Construction Corp. (“Arevalos”), Victor Siguenza Zuniga (“Zuniga”), 625 Halsey LLC (“Halsey”), D&G Construction NY Inc. (“D&G”), and RM Construction and Development Corp. (“RM”) seeking a declaratory judgment relating to a commercial general liability insurance policy Midvale issued to Arevalos and an underlying lawsuit in New York state court, captioned Victor Siguenza Zuniga v. 625 Halsey LLC, Index No. 525911/2018 (the “Underlying Action”). In Midvale Indemnity Company v. Arevalos Construction Corp., et al, No. 22-CV-97 (FB) (RML), United States District Court, E.D. New York (July 5, 2023) was asked to overturn the report and recommendations of the Magistrate Judge to acknowledge the default and order no coverage for defense or indemnity of anyone named in the Underlying action. FACTS D&G and Zuniga timely objected to the report of the Magistrate judge. These objections triggered the US District Judge's de novo review. D&G, a subcontractor of Arevalos claiming coverage and a right to indemnification by Arevalos' insurer Midvale, and Zuniga, the injured tort claimant in the Underlying Action, has been named as defendants in this declaratory action by Midvale. D&G and Zuniga object to the Magistrate's finding that none of the named defendants was owed coverage under the policy. DISCUSSION D&G and Zuniga object to the conclusion that they lack standing to oppose Midvale's motion, its finding that none of the named defendants were entitled to coverage, and the scope of its declaratory relief. The Magistrate recommended finding that D&G's subcontractor agreement with Arevalos imposed no duty on Midvale, a “stranger to that contract,” to D&G. He also found that “D&G does not claim to be a third-party beneficiary of the Policy,” that “the Policy does not indicate an intent to confer a benefit upon D&G or any other individual or entity other than Arevalos,” and that “Zuniga is not a named insured or third-party beneficiary under the Policy.” In New York, a non-party to a contract generally lacks standing to enforce the agreement in the absence of terms that clearly evidence an intent to permit enforcement by the third party in question unless it establishes: the existence of a valid and binding contract between other parties, that the contract was intended for his benefit and that the benefit to him is sufficiently immediate, rather than incidental, to indicate the assumption by the contracting parties of a duty to compensate him if the benefit is lost. The US District Judge concluded that the Magistrate did not err. He found that Arevalos was not entitled to coverage because of the policy's Multi-Unit and Tract Housing Residential Exclusion, which “excludes coverage for ‘[b]odily injury' arising out of any ‘construction operations' that involve a ‘housing tract' or ‘multi-unit residential building.'” Since the Underlying Action seeks damages for a construction project falling under this exclusion: specifically, one for a four-story building with ten residential units the exclusion clearly applied. This scope of relief is proper because it is what Midvale requested in its Complaint, and because the Magistrate rightly found Midvale entitled to a default judgment. The Court adopted the relief recommended by the Magistrate but noted that it is only binding against the defaulting parties. The Court overrules D&G and Zuniga's objections, adopts the Magistrate’s recommendation and directs the Clerk to enter a judgment granting Midvale's motion for a default judgment against Arevalos and RM and declaring that Midvale has no duty to defend or indemnify any party with respect to the Underlying Action. ZALMA OPINION Every defendant in a law suit wants it resolved with other peoples money and even if they did not buy insurance to protect themselves will seek the benefits of insurance available to others. Claiming a benefit to an insurance contract as a result of a construction contract can be effective if the policy provided coverage. In this case there was no coverage because of a clear and unambiguous exclusion the insurer had no obligation to provide defense or indemnity to anyone. It pays to read the insurance policy before making a claim and filing a suit. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at 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; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; 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; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

Homeowners Policy Requires Insured to Reside at Premises Shanice Currie had a homeowners insurance policy with State Auto Property & Casualty Insurance Company (State Auto). After two fires severely damaged her duplex in Milwaukee, Currie sought payment from State Auto. State Auto denied the request for coverage, claiming that the duplex was not a "residence," and therefore was not covered by the policy. Currie sued State Auto. The district court granted summary judgment to State Auto. In Shanice Currie v. State Auto Property & Casualty Insurance Company, No. 22-2517, United States Court of Appeals, Seventh Circuit (July 5, 2023) the USCA for the Seventh Circuit explained the meaning of the terms "residence premises" and "reside." BACKGROUND Currie purchased the previously abandoned duplex (the Property) from the City of Milwaukee in the spring of 2018. She proceeded to install electricity and fill the bedroom with a dresser, mirror, clothing, and a bed. Yet, at the time she acquired the policy the property had no running water, kitchen appliances, no chairs or sofas in the living room, or a front door. Where a door should be, there was a wooden board that Currie would have to unscrew to enter the Property. Strangers came and went, and Currie took no action to eject them. Apart from sleeping at the Property two or three nights per month, Currie did not stay there. She bathed, prepared meals, kept personal belongings, and received mail at her two other addresses in Milwaukee. THE POLICY The homeowners policy Currie purchased from State Auto for the Property covered “residence premises,” which the policy defined as: “The two-, three-, or four-family dwelling where you reside in at least one of the family units . . . on the inception date of the policy period shown in the Declarations and which is shown as the ‘residence premises’ in the Declarations. Because the policy's inception date was September 15, 2018, Currie needed to reside in one of the units on the Property on that date for coverage to attach. She did not. THE FIRES On October 31 and on November 2, 2018, fires broke out at the Property, causing extensive damage. Currie informed State Auto that the Property was a total loss and sought full replacement value. State Auto denied Currie's claim, explaining that the Property was never her residence. DISCUSSION Currie sued. The district court granted State Auto's motion for summary judgment. The court held that, while the operative clause in the policy-"the dwelling where you reside"-was ambiguous, "[a] reasonable person would, nevertheless, understand the clause to require plaintiff to maintain and use the [Property] as a home, even if it was only one residence among many." Given Currie's lack of legal and practical ties to the Property, the district court found that a jury could not reasonably conclude that Currie resided there. There is no statutory definition of "residence" or "dwelling" in Wisconsin with respect to homeowners insurance coverage. Because neither “occupied” nor “dwelling” are technical terms, an appellate court may ascertain their meanings by reference to recognized dictionaries. Because Currie did not use the Property as a home the court found that no reasonable jury could conclude that she resided there. The Seventh Circuit concluded that the district court correctly concluded that Currie did not "actually live" at the Property, on the inception date or at any other time, thus it was not her residence. The address was not listed on her driver's license and her mail was sent to a different location. Most telling, the Property was not secure. It had no door nor facilities to support normal life. As a matter of law, Currie's Property was not a residence on the policy's inception date nor any time before or after. It was not covered by the insurance policy, and the district court's grant of summary judgment to State Auto was proper. ZALMA OPINION Insurers will issue fire insurance on vacant property but will not do so on a homeowners policy form. To protect the insurer the homeowners policy requires the insured to reside on the property. Since the property was not sufficiently equipped for a person to reside in because it had no door, no water and no other facilities to support normal life, Currie failed to fulfill the basic requirement for coverage: residence. Had the insurer been told the truth about the condition of the property it would never have agreed to the coverage. Because of the residence condition there was no need for the insurer to accuse the insured of fraud although she probably obtained the coverage by fraud. (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 toExcellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe 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 podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; 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; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

Failure to Prove Loss by a Named Peril Destroys Breach of Contract Suit Modern science allows an embryo to be created outside the body of a woman and later implanted and grown to term. The in vitro fertilization process allows more than one viable embryos to be created and they can be stored for use later in a cryogenic tank. Sherlene and Lawrence Wong (the Wongs) had stored some embryos at a facility that kept them in a cryogenic tank that failed to maintain the temperature necessary to store the embryos, following which the Wongs's fertility doctor told them they should consider the embryos "compromised" and "no longer viable, and lost." In Sherlene Wong et al. v. Stillwater Insurance Company, A162893, California Court of Appeals, First District, Second Division (June 30, 2023) the Wongs attempted to recover the value of the embryo's from a homeowners insurance policy they maintained with Stillwater Insurance (Stillwater). The policy was a specified perils policy that only insured for "direct physical loss" that was "caused by any of the following perils," going on to list 16 specified perils. The Wongs made a claim for property damage, which Stillwater denied. The Wongs sued, and Stillwater moved for summary judgment, on two bases: the Wongs could not submit evidence of (1) "direct physical loss" or (2) that "one of the sixteen specified perils occurred." The trial court granted summary judgment. BACKGROUND Beginning in 2014, the Wongs pursued in vitro fertilization, working with Aimee Eyvazzadeh, M.D., as their doctor. In 2015, the Wongs completed an in vitro fertilization (IVF) cycle, and obtained four viable embryos, one of which was implanted. As to the other three, as Dr. Eyvazzadeh put it, after discussion with the Wongs they determined to "bank the rest," which they did at Pacific Fertility Center (Pacific Fertility or PFC), a facility in San Francisco that included several cryogenic storage tanks that used liquid nitrogen to store human embryos at very low temperatures. Specifically, the embryos were stored in Tank 4, which also contained embryos belonging to other people. On or about March 4, 2018, Tank 4 failed to maintain the temperature necessary to store embryos, as a result at least some (and possibly all) of the embryos stored in that tank partially or totally thawed. The Stillwater policy provided coverage for personal property the Wongs "owned or used" while "anywhere in the world," with policy limits for personal property of $502,720. The policy was a "specified perils" policy, the significance of which is that in order to demonstrate a covered loss the insured has the threshold burden of proving the loss was caused by a specifically enumerated peril. On August 3, attorney Michelle Burton outlined her coverage evaluation to Stillwater, which among other things concluded that she "cannot ascertain from the file whether the insured's zygotes were compromised, whether they are still viable or whether there has been a determination either way." And, she further concluded, there was no evidence the claimed damage resulted from any of the 16 perils that apply to personal property as set forth in the policy. The claim was eventually denied and the Wongs sued the insurer. The Proceedings Below Stillwater filed a motion for summary judgment. The fundamental argument was that the Wongs "cannot establish essential elements" of the breach of contract claim because "the policy covers personal property only for 'direct physical loss' caused by one . . . of the [16] specified perils." No proof of any specified peril was ever provided Stillwater with evidence of why Tank 4 failed to maintain proper temperature. The opposition was accompanied by declarations of both of the Wongs, their attorney, Mr. Rosenberg-Wohl, and their fertility doctor, Dr. Eyvazzadeh who declared that as a result of this disaster, the Wongs' embryos became worthless. “No responsible fertility physician would use them; I certainly would not.” Eventually, the trial court filed its order granting the motion for summary judgment concluding that Stillwater met its burden of demonstrating that the causes of action alleged in the Wongs' complaint cannot be established, and the Wongs have not raised a triable issue of material fact as to any of those causes of action. Judgment was entered in favor of Stillwater, from which the Wongs filed an appeal. DISCUSSION The burden is on the insured to prove facts establishing the claimed loss falls within the coverage provided by the policy's insuring clause. The Wongs failed to demonstrate a direct "physical loss." Dr. Eyvazzadeh testified that she had requested Pacific Fertility to conduct a test of one of the Wongs's embryos, but that Pacific Fertility declined; and, she went on, there is "no way to know" whether the Wongs's embryos actually sustained physical damage. That does not create a triable issue of material fact as to "physical loss." Dr. Eyvazzadeh's concession there is "no way to know" whether the Wongs's embryos had actual physical damage was devastating to the Wongs's claim. And her conclusion that she deemed the embryos to be "worthless" was not a substitute for evidence that any of the embryos actually had undergone a physical change. The mere possibility that the embryos had suffered physical damage was insufficient to create a triable issue of fact to trigger coverage No Evidence of Any Specified Peril The Stillwater policy was, as noted, a "specified perils" policy. The Wongs presented no evidence that the cause of the alleged damage to the embryos was caused by one of the named perils and as a result the Court of Appeal concluded that the judgment was affirmed. ZALMA OPINION Stillwater conceded that the embryos were "personal property" that could be insured under the homeowners policy, although arguments could have been made that they were not property any more than a child born from the embryo would be property. Regardless, it effectively argued that there was no evidence that the embryos were damaged or destroyed when the temperature in the cryogenic chamber rose nor was there evidence that the embryos suffered direct physical damage only that they were "worthless" to an IVF doctor. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at 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; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; 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; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

Anti-Stacking Provision Clear & Unambiguous Plaintiffs, Mark and Karen Kuhn (the Kuhns) sued seeking a declaratory judgment of the available liability insurance covering an accident between a semitruck owned by Jason Farrell and a school bus driven by Mark. In Mark Kuhn and Karen Kuhn v. Owners Insurance Company; et al, No. 4-22-0827, 2023 IL App (4th) 220827, Court of Appeals of Illinois, Fourth District (June 28, 2023) the semitruck was insured under a policy issued by Owners Insurance Company (Owners), and that policy also insured six other vehicles-two other semitrucks and four trailers- that were not involved in the accident. Each vehicle had a limit of $1 million per accident. The Kuhns sought a declaration that the coverage limits for all of the covered vehicles should be aggregated, or "stacked," resulting in a total of available liability insurance of $7 million for the accident. The trial court entered a written judgment in favor of the Kuhns, concluding that (1) the policy was ambiguous; (2) because the ambiguity should be construed against Owners, stacking of the policy's coverage limits was permitted; and (3) the aggregate limit of insurance for liability coverage under the policy was $7 million. Accordingly, the court granted the Kuhns' motion for summary judgment and entered judgment against Owners. Owners appealed BACKGROUND "Stacking” ordinarily involves combining or aggregating the policy limits applicable to more than one vehicle where the other vehicles are not involved in the accident. The rationale behind not allowing stacking of liability coverage-that liability policies insure particular cars-is contrary to plaintiff's position. Because the insurance attaches to a particular car. The Illinois Supreme Court recently declined to consider adopting a per se rule barring stacking of automobile liability coverage as a matter of law because the antistacking provision in that case was unambiguous and enforceable as written. [Hess v. Estate of Klamm, 2020 IL 124649, ¶ 30, 161 N.E.3d 183.' The Insurance Policy at Issue The policy provided "Combined Liability" coverage on each of the seven vehicles of up to "$1 Million each accident." The Kuhns argued that the wording of the policy and accompanying declarations were ambiguous pursuant to Illinois case law because the coverages and premiums set forth in the declarations were repeated for each insured vehicle. Owners argued that the policy declarations were consistent with each other and not ambiguous. Owners argued the policy contained an unambiguous antistacking provision that cleared up any arguable ambiguity in the declarations and should be enforced as written. In particular, subsection 5 explicitly stated that the limits for the same or similar coverage applying to other vehicles could not be added to determine the amount of coverage for an accident. ANALYSIS In general, antistacking provisions in insurance policies are not contrary to public policy. In Illlinois, an unambiguous antistacking clause will be given effect by a reviewing court. In this case, the "Limit of Insurance" provisions refer back to the declarations to define the policy limits and the declarations pages state seven separate times that the "combined liability" limit on each vehicle is $1 million for each accident. Reading the policy as a whole and interpreting its plain language, the court concluded that the declarations are consistent, not ambiguous, and the antistacking clause set forth in the policy clarifies any possible ambiguity. The coverages varied based on the vehicle insured; for example, the premiums for vehicle 1 and vehicle 2 (both semitrucks) were identical for liability, UIM/UM coverage, and medical payments, but only vehicle 1 had comprehensive and collision coverage. The Antistacking Clause Even if some ambiguity existed, the policy's antistacking clause cleared up any possible confusion. The explicit antistacking clause of the policy, is unambiguous and should be enforced as written. Instead of applying the Policy's clear anti-stacking provision, the trial court engaged in the very sort of tortured and strained reading of the Policy to find an ambiguity that this Court and the Illinois Supreme Court have repeatedly rejected. This was error, the trial court’s order was reversed and the case remanded with directions to enter summary judgment in favor of Owners. ZALMA OPINION It should be axiomatic that a trial court should never engage in tortured or strained reading of a policy to find an ambiguity that did not exist. A clear and unambiguous policy wording that refuses to allow stacking of coverages that apply to more than one vehicle insured when only one vehicle is involved in an accident, should be enforced as written. The Illinois Court of Appeals read the entire policy and found no ambiguity and insisted on enforcing the contract of insurance as written. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at 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; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; 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; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

No Coverage Under a False Name Cheryl Tisdale was injured in an automobile collision while she was driving her own vehicle containing passengers while logged into the Uber Technologies ("Uber") application as a paid driver. Tisdale served Farmers Insurance Exchange with the complaint, seeking underinsured motorist ("UM") coverage pursuant to an insurance policy Farmers issued to Raiser, LLC, a subsidiary of Uber. In Tisdale v. Farmers Insurance Exchange, No. A23A0616, Court of Appeals of Georgia (June 27, 2023) Farmers moved for summary judgment, arguing that Tisdale did not qualify as an insured under the Uber policy, or, in the alternative, that she was barred from seeking coverage because she intentionally concealed or misrepresented material facts and committed fraud by using a false identity in her Uber driver application and while using the app. The trial court granted summary judgment to Farmers. Tisdale appealed. FACTS Tisdale was an Uber driver from 2015 to 2017. According to her deposition, at some point Uber "stopped [her] from driving because they did a background check [,] and something popped up on there . . . they didn't agree with." In 2019, because she did not believe that Uber would hire her under real name, Tisdale applied to work for Uber using the name "Annie Mollie." Uber approved "Mollie's" application, and Tisdale began driving for Uber as Annie Mollie. In April 2020, Tisdale was involved in an automobile accident with Graves while driving her own car, which was registered under her legal name, and while logged into the driver version of the Uber app as Annie Mollie. Tisdale gave a recorded statement to Farmers as "Annie Mollie." In May 2020, Tisdale sued Graves for damages arising out of the accident, alleging that he rear-ended her, pushing her vehicle into the path of another vehicle, which struck her, and that she incurred in excess of $184,000 in medical expenses. At the time of the accident, Tisdale had not entered into a contract to use the Uber app in her own name/capacity, and Uber had not authorized her to drive as an Uber driver; instead, Tisdale operated her vehicle while logged into the Uber app using a false identity. Under these circumstances, Tisdale did not qualify as an insured under the policy Farmer's issued to Uber. ANALYSIS The hallmark of contract construction is to ascertain the intention of the parties, as set out in the language of the contract. As a result, when the language of an insurance policy defining the extent of an insurer's liability is unambiguous and capable of but one reasonable construction, the courts must enforce the contract as written and agreed to by the parties. Tisdale served her own UM carrier - State Farm Fire and Casualty Company - and Farmers with a copy of the complaint and discovery requests. Farmers, in response, alleged that coverage for Tisdale under Uber's UM policy was void. Farmers moved for summary judgment claiming Tisdale intentionally concealed or misrepresented material facts and committed fraud by using a false identity in her Uber application and while using the app, she did not qualify as an insured under the Uber policy, and she was barred from seeking coverage based on the fraud condition in the policy. The trial court granted summary judgment to Farmers. Tisdale concedes that she intentionally misrepresented her identity and presented Uber with a false driver's license and a false insurance registration card in order to become a driver. This misrepresentation and fraud provided her coverage under the Farmer's policy, which clearly bars the payment of damages to a driver who commits fraud or intentionally misrepresents or conceals a material fact relating to coverage. Therefore, the trial court properly granted summary judgment to Farmers. ZALMA OPINION It takes a great deal of chutzpah (unmitigated gall) to be fired by Uber for cause, rejoining Uber under a false name, and then claim a right to benefits from the Uber policy. Tisdale was punished by her lies and was not allowed to profit from her fraud. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at 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; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; 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; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

ZIFL - Volume 27, Issue 13 See the full video at and at https://youtu.be/yiSwfKAB7GM The Source For Insurance Fraud Professionals From https://zalma.com/blog, this, the Thirteenth issue of the 27th year of publication Zalma’s Insurance Fraud Letter provides multiple articles on how to deal with insurance fraud in the United States. The issue begins with: Fraud in Inception is Ground for Rescission No Restitution from Defrauded Insurer Esurance Property & Casualty Insurance Company (Esurance) appealed the trial court’s order granting summary disposition in favor of Nationwide Mutual Fire Insurance Company (Nationwide) and denying Esurance’s request for summary disposition. In Nationwide Mutual Fire Insurance Company v. Esurance Property & Casualty Insurance Company, and Derek Allen Gregory and Blair Gregory, No. 361298, Court of Appeals of Michigan (June 15, 2023) Esurance alleged its insured defrauded it when it acquired the policy, and it was entitled to rescind the policy regardless of the trial court’s balancing the equities. Read the full text of ZIFL in Adobe .pdf format at ZIFL-07-01-2023 More McClenny Moseley & Associates Issues This is ZIFL’s ninth 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. June 14, 2023 US Magistrate Judge Michael North held a hearing to advise insurers on how to handle thousands of Hurricane Ida claims affected by alleged fraud by Texas law firm McClenny Moseley & Associates. It’s standing room only, more than 200 lawyers in court. One fainted. Read the full text of ZIFL in Adobe .pdf format at ZIFL-07-01-2023 Ethics And the Public Insurance Adjuster An example of a public insurance adjuster and the lawyer who failed to follow the requirements set out by National Association of Public Insurance Adjusters (NAPIA). Both represented the same client, involved in a claim that resulted from the 1994 Northridge, California earthquake. The earthquake caused billions of dollars in damage across Southern California. It drew lawyers and public adjusters seeking large fees like vultures flying over a dead antelope. As a result of the disaster, investigation by insurers was limited because of the extent of losses caused by the earthquake and the need to rapidly serve their needs. Many unnecessary and spurious suits were filed. Insurance fraud was rampant, and insurers paid rather than fight because there were inadequate staff available to deal with fraud and governmental agencies threatened insurers with major fines if they did not pay quickly. Read the full text of ZIFL in Adobe .pdf format at ZIFL-07-01-2023 Good News From the Coalition Against Insurance Fraud When faced with a fraud conviction, this woman couldn’t stop herself from doing it again. Tanea Bouma, who had been court-ordered not to obtain employment or a volunteer role involving financial authority. Read the full text of ZIFL and many more reports of convictions in Adobe .pdf format at ZIFL-07-01-2023 Order Limiting Cross-Examination Fair and Appropriate In The People v. Renae Louise Witt, G061305, California Court of Appeals, Fourth District, Third Division (June 5, 2023) a jury had convicted Renae Louise Witt of committing seven counts of medical insurance fraud in violation of Penal Code section 550, subdivision (a)(6). The trial court suspended imposition of sentence and placed Witt on two years of formal probation and ordered her to serve 364 days in jail and yet, she appealed. Read the full text of ZIFL in Adobe .pdf format at ZIFL-07-01-2023 Health Insurance Fraud Convictions Gloucester County Man Admits Healthcare Fraud Christopher Gualtieri, 50, of Franklinville, New Jersey, pleaded guilty before U.S. District Judge Robert B. Kugler to one count of an indictment charging him with conspiracy to commit health care and mail fraud and one count charging him with obtaining oxycodone through fraud. Gualtieri, a Gloucester County, New Jersey, man on June 12, 2023 admitted defrauding his employer’s health insurance plan out of more than $4 million by submitting fraudulent claims for medically unnecessary compounded medications. Read the full text of ZIFL and dozens of convictions in Adobe .pdf format at ZIFL-07-01-2023 Other Insurance Fraud Convictions Clegg Gifford Shuns Over £7 Million Worth of Fraudulent Claims Insurance broker Clegg Gifford (CG) has successfully identified and avoided more than £7 million worth of fraudulent motor trade claims over a period of four years with the help of the counter-fraud team at law firm DAC Beachcroft (DACB). Read the full text of ZIFL and more convictions in Adobe .pdf format at ZIFL-07-01-2023 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. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com Over the last 55 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals. Barry Zalma, Inc., 4441 Sepulveda Boulevard, CULVER CITY CA 90230-4847, 310-390-4455; Subscribe to Zalma on Insurance at locals.com https://zalmaoninsurance.local.com/subscribe. Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome. Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; I publish daily articles at https://zalma.substack.com, Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ to consider more than 50 volumes written by Barry Zalma on insurance and insurance claims handling.

Arbitration May be used to Resolve Fraud This case is about the relationship between New Jersey healthcare providers and the insurance companies that pay those providers for treating patients for injuries arising from automobile accidents. In GEICO In v. Caring Pain Management PC a/k/A Careon Pain Management, Jinghui Xie, M.D., First Care Chiropractice Center, L.L.C., and Konstantine Fotiou, D.C., No. 2:22-cv-05017(BRM)(JSA), United States District Court, D. New Jersey (May 31, 2023) the insurer attempted to defeat fraudulent claims under the New Jersey no-fault law. BACKGROUND Multiple GEICO insurers (the "Plaintiffs) alleged a series of fraudulent schemes, including unlawful compensation in exchange for patient referrals, misrepresentation of the nature, extent, and results of patient examinations, and false representation regarding compliance with pertinent healthcare laws. MOTION TO DISMISS In deciding a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), a district court is required to accept as true all factual allegations in the complaint and draw all inferences from the facts alleged in the light most favorable to the non-moving party. DECISION The Insurance Fraud Prevention Act (“IFPA”), which was enacted roughly a decade after the No-Fault Law, provides that an “insurance company damaged as the result of a violation of any provision of this act may sue therefor in any court of competent jurisdiction.” In part, the New Jersey Legislature enacted the IFPA to address rising insurance rates resulting from widespread fraud with the clear objective to confront aggressively the problem of insurance fraud in New Jersey by facilitating the detection of insurance fraud and eliminating the occurrence of such fraud through the development of fraud prevention programs. A person or practitioner violates the IFPA by presenting or preparing false or misleading statements in connection with an insurance claim, or by failing to disclose the occurrence of an event that affects an individual's entitlement to insurance benefits or the amount of benefits THE COMMON LAW FRAUD, UNJUST ENRICHMENT, AND RICO CLAIMS The No-Fault Law's language, legislative intent and application cover Plaintiffs' claims for common law fraud, unjust enrichment and RICO. The plain language of the No-Fault statute provides that “[a]ny dispute regarding the recovery of . . . benefits provided under personal injury protection coverage . . . arising out of the operation, ownership, maintenance or use of an automobile may be submitted to dispute resolution on the initiative of any party to the dispute.” (emphasis added) Plaintiffs' claims involve: a dispute by [Plaintiffs] involving Defendants' recovery of PIP Benefits that one party wishes to send to arbitration. Consequently, Plaintiffs' common law fraud, unjust enrichment, and RICO claims fall within the statute's arbitration provision. Having reviewed the No-Fault Law's language, legislative intent, application, and arbitrable claims with Plaintiffs' claims for common law fraud, RICO and unjust enrichment, the USDC found there was nothing preventing an arbitrator from hearing the claims. New Jersey IFPA Claim The plain meaning of the New Jersey Insurance Fraud Prevention Act (IFPA) requires insurers' claims for damages under the IFPA be judicially resolved. Although the statute states that insurers “may sue in any court of competent jurisdiction,” arbitration does not constitute a court of competent jurisdiction. To the extent the IFPA may seem to contradict the No-Fault Law, state legislatures are presumed aware of prior enactments, including the pre-existing No-Fault Law. The state legislature could have provided a carve out for PIP Benefits disputes in the IFPA but did not. The USDC concluded that to avoid duplicative findings, the Court, in its discretion, declined to separately entertain the IFPA claim under the Declaratory Judgment Act. To the extent Plaintiffs seek a declaration that Defendants violated RICO, committed common law fraud, or are liable for unjust enrichment, an arbitrator shall decide that issue. ZALMA OPINION Clearly, the health care providers who were accused by GEICO of fraud felt that they had a better chance of success with an arbitrator rather than a federal judge. The judge found the statutes allowed for arbitration and sent the fraud to an arbitrator. I would like to be that arbitrator and hope the parties get an arbitrator who dislikes insurance fraud as much as I do, and find they would have done better with a federal judge. GEICO should be honored for working to defeat fraud by attempting to take the profit out of the fraud. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at 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; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; 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; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

Suing All State Farm Insurers Unconscionable State Farm Mutual Automobile Insurance Company (“State Farm Auto”) and Defendant State Farm General Insurance Company (“State Farm General”) moved the court to dismiss all Plaintiff's claims against the entities. The motion was regarded as unopposed. In Bridget Butler v. State Farm Fire And Casualty Company, State Farm General Insurance Company, And State Farm Mutual Automobile Insurance Company, No. 3:22-Cv-03433, United States District Court, W.D. Louisiana, Lake Charles Division (June 23, 2023) a Bridget Butler whose home was damaged by two hurricanes sued three State Farm Insurance companies when only one insured her against the risk of loss of her property. INTRODUCTION Hurricane Laura made landfall near Lake Charles, Louisiana then Hurricane Delta made landfall near Lake Charles, Louisiana. During the relevant time period, Plaintiff Bridget Butler owned property in Monroe, Louisiana. An entity of State Farm provided a policy of insurance to Plaintiff. Plaintiff alleged that Defendant failed to timely and adequately compensate Plaintiff for her substantial losses pursuant to the Policy. In turn, Plaintiff filed suit against State Farm Auto, State Farm General, and State Farm Fire and Casualty Company (“State Farm Fire and Casualty”) claiming liability for damages for breach of contract plus general damages and for statutory violations and penalties under Louisiana Revised Statutes. State Farm General and State Farm Auto moved for dismissal of the claims against them. Plaintiff filed no response to the motion. RULE 12(b)(6) STANDARD Rule 12(b)(6) allows for dismissal when a plaintiff “fail[s] to state a claim upon which relief can be granted.” LAW AND ANALYSIS The Complaint alleges that the “Defendant” issued and maintained a Policy insuring Plaintiff's Property. The Complaint does not provide a specific policy number, and the Complaint asserts a policy number was unable to be identified because “Defendant” did not comply with Plaintiff's request for production of the policy number. Attached to their Motion to Dismiss State Farm General and State Farm Auto put forth an insurance policy with the policy number 99-CC-X642-7, and both companies assert that the attached policy is the Policy referenced in the Complaint. The attached policy is from State Farm Fire and Casualty and names Plaintiff as insured and the Property as the location of premises insured with a policy period of twelve months beginning August 25, 2020. State Farm General and State Farm Auto are not listed as parties in the attached policy. Additionally, both State Farm General and State Farm Auto maintain that neither entity has issued a policy to Plaintiff. Under Louisiana law, no action for breach of contract may lie in the absence of privity of contract between the parties. State Farm General and State Farm Auto are not parties to the attached policy, and each assert it did not provide Plaintiff with any insurance coverage. Therefore, neither State Farm General nor State Farm Auto are in privity of contract with the Plaintiff. According to the attached policy, Plaintiff is only in privity of contract with State Farm Fire and Casualty. CONCLUSION Defendants State Farm General Insurance Company and State Farm Automobile Insurance Company's Motion to Dismiss was granted. Plaintiff maintains claims against State Farm Fire and Casualty Insurance Company. ZALMA OPINION There should be no excuse for a plaintiff to require the State Farm entities that did not insure Ms. Butler to move the court for dismissal. A telephone call from defense counsel to plaintiff's counsel informing Ms. Butler of the proper defendant and voluntarily dismiss the wrong State Farm entities. The decision of the court was easy but Judge Cain has more important things to do than deal with an unnecessary motion. Sanctions against Plaintiff's attorney could have been warranted. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Barry Zalma, Esq., CFE, is available at http://www.zalma.com and zalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; 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; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; 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; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

Settlement Based on Mutual Mistake Must be Rescinded People with a claim against an estate entered into a settlement agreement to resolve a claim against the estate regarding life insurance coverage that the decedent was required under a divorce decree to maintain for the benefit of the children of the broken marriage. Subsequently, the parties jointly petitioned the county court for Douglas County, Nebraska, for a declaration of their rights and obligations under the agreement. The county court reformed the agreement to be fair to all. The ex-wife appealed. In In re Estate of Jordon R. Wiggins, deceased et a., No. S-22-543, 314 Neb. 565, Supreme Court of Nebraska (June 23, 2023) the Supreme Court of Nebraska resolved the dispute in a Solomon-like fashion. BACKGROUND Jordon R. Wiggins died on August 28, 2019. Prior to his death, Jordon executed a will, which established the Jordon R. Wiggins Family Trust (the Trust) for his children's benefit. Jordon's father, Robert Wiggins, was appointed personal representative of Jordon's estate on October 17, 2019. Jordon was previously married to Allison Hardy, and two minor children, Elizabeth Wiggins and Leah Wiggins, were born to them during the marriage. The divorce decree required Jordon and Allison each to "maintain a life insurance policy" of at least $250,000 "to provide for the minor children" if Jordon or Allison died. On December 20, 2019, Allison brought a claim for $250,000 plus interest against the estate on the children's behalf, alleging that the personal representative had not yet identified any life insurance policy maintained by Jordon for the children's benefit. However, after the claim was brought, Jordon's former employer informed Jordon's brother, Jason Wiggins, that Jason was the sole beneficiary of Jordon's two employer-provided life insurance policies, valued at $360,000 total. The Settlement Subsequently, Jason, as an interested party; Allison, on behalf of the minor children; and Robert, as personal representative, agreed to settle Allison's claim against the estate. The settlement agreement began by acknowledging that "to the best of the [p]arties' knowledge," Jordon had not designated the children as beneficiaries of a life insurance policy of at least $250,000. The agreement then called for Jason to "gift" $250,000 of the insurance proceeds that he received to the Trust, whereupon Allison would withdraw the claim. However, after they entered the settlement agreement, the parties learned that Jordon's daughter Elizabeth was actually the beneficiary of one of Jordon's life insurance policies, while Jason was the beneficiary of the other policy. Thereafter, the insurer paid $120,000 "directly" to Elizabeth; this money was not placed in the Trust. The insurer also paid $240,000 to Jason, who then paid $130,000 into the Trust and retained $110,000. Allison took issue with Jason's action, arguing that he was required under the divorce decree, the settlement agreement, and Nebraska law to pay the entire $240,000 into the Trust for the children. The Validity of the Settlement At the hearing on the motion for declaratory judgment, Jason argued that the settlement agreement should be rescinded on various grounds, including the parties' mutual mistake as to Jordon's life insurance coverage. Alternatively, Jason argued that the agreement should be reformed due to this mutual mistake. Allison countered that there was no basis for reformation or rescission because the agreement in its written form correctly expressed the parties' intent at the time they entered the agreement and Jason assumed the risk of mistake. The county court ruled in Jason's favor. The county court ordered that the $130,000 that Jason paid into the Trust satisfied his obligation under the settlement agreement, because he was entitled to a credit of $120,000 for the life insurance proceeds that Elizabeth received. Believing that this $120,000 had been placed in the Trust, the county court also ordered that the $250,000 received into the Trust for the children's benefit satisfied the claim against the estate. It ordered that the settlement agreement be reformed accordingly. ANALYSIS Allison argued that the settlement agreement should be enforced against Jason because the agreement as written accurately reflects the parties' intent at the time they signed the agreement. A settlement agreement is subject to the general principles of contract law. Rescission, in contrast to reformation, may be granted where the parties have apparently entered into a contract evidenced by a writing, but owing to a mistake, their minds did not meet as to all the essential elements of the transaction, so that no real contract was made by them. Generally, grounds for cancellation or rescission of a contract include fraud, duress, unilateral or mutual mistake, and inadequacy of consideration. When used in reference to rescission, however, the term "mutual mistake" is not limited to a mistake in drafting the instrument. Specifically, for purposes of rescission, a mutual mistake of fact must relate to either a present or past fact or facts that are material to the contract, and not to an opinion as to future conditions as the result of present known facts. The situation is different as to rescission. Here, the evidence clearly and convincingly showed that the parties were mutually mistaken as to a fact which was a material inducement for the contract. Specifically, their mutual mistake of fact was their belief that Jordon failed to maintain any life insurance for the benefit of the children and instead named Jason as the sole beneficiary. On its face, the settlement agreement calls for Jason to pay money that he did not receive from the life insurance proceeds. It does not seem just and fair to require Jason to pay an additional $110,000-which would result in a total of $360,000 in life insurance proceeds' being available to the children-where the divorce decree contemplated a minimum of $250,000 in life insurance proceeds, Elizabeth received $120,000 of life insurance proceeds directly from the insurer, and Jason has already paid $130,000 into the Trust, which is available to both Elizabeth and Leah. The purpose of rescission is to place the parties in a status quo, that is, return the parties to their position which existed before the rescinded contract. A mutual mistake as to the existence of a fact that was a material inducement to the contract is not ground for reformation, although it may be ground for rescission. Accordingly, the Supreme Court reversed the judgment of the county court and remand the cause with directions for the county court to rescind the settlement agreement and conduct further proceedings not inconsistent with this opinion. ZALMA OPINION The most difficult problem raised by the need for life insurance after a divorce is what to do when the spouse required to carry life insurance for the benefit of the children of the broken marriage is enforcement. It would be simple to buy the insurance, name the children as beneficiaries and provide copies of the policy to the divorced spouse and/or the children. In this case, communications failed and the parties tried to be fair with to little information. Rescission was the appropriate resolution because the settlement was reached based on false information resulting in an unfair result. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Barry Zalma, Esq., CFE, is available at http://www.zalma.com and zalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; 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; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; 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; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

Guilty Pleas Support to Crimes Against Family & Friends Deserves Consecutive Sentences Jon Settlemire ("Settlemire"), appealed the judgment of sentence imposing consecutive sentences only to find an appeals court with no mercy. When the Marion County Grand Jury returned a 45-count indictment charging Settlemire with a variety of felony-level crimes Settlemire entered a plea of not guilty to the indictment. After pre-trial proceedings Settlemire entered a negotiated plea of guilty to five crimes. In State Of Ohio v. Jon M. Settlemire, 2023-Ohio-1852, No. 9-22-33, Court of Appeals of Ohio (June 5, 2023) Settlemire pled guilty to a charge of Theft in violation, a fourth-degree felony; a charge of Forgery, a fifth-degree felony; a charge of Forgery in violation of, a fifth-degree felony; a charge of Theft, a fourth-degree felony; and amended to a charge of Forgery a third-degree felony. In exchange for the guilty plea the prosecution dismissed the remaining counts of the indictment. On April 28, 2022, a sentencing hearing was held. At that time, the trial court imposed a sentence and that all counts be served consecutively, for an aggregate sentence of 86 months in prison. THE CLAIMED ERROR In the sole assignment of error, Settlemire argueD that the trial court erred in ordering that the sentences in this case be served consecutively. Specifically, Settlemire assertd that the aggregate sentence here is disproportionate and overly severe when compared to the criminal conduct of which he was convicted. If multiple prison terms are imposed on an offender for convictions of multiple offenses, the court may require the offender to serve the prison terms consecutively if the court finds that the consecutive service is necessary to protect the public from future crime or to punish the offender and that consecutive sentences are not disproportionate to the seriousness of the offender's conduct and to the danger the offender poses to the public. In State v. Gwynne,___ Ohio St.3d ___, 2022-Ohio-4607, the Supreme Court of Ohio noted that defendants may appeal consecutive sentences, and that a statute states that an appellate court may increase, reduce, or otherwise modify a sentence or that it may vacate the sentence and remand the case for resentencing when it clearly and convincingly finds that the record does not support the sentencing courts decision. The appellate court’s review of Settlemire's sentences reflects that the trial court made the requisite consecutive-sentence findings pursuant to the statute at the sentencing hearing and incorporated those findings into the judgment entry of sentencing. The trial court noted when imposing sentence, and as confirmed by the record, Settlemire's multiple crimes of Theft and Forgery resulted in a loss of nearly $50,000.00 to the various victims, and the multiple victims in this case suffered serious economic harm. Settlemire's relationship with the victims facilitated the offenses, with one of those victims being Settlemire's elderly mother. Finally, as the trial court noted, Settlemire was initially charged with 45 felony counts in this case, and a sentencing court may consider charges that have been dismissed or reduced pursuant to a plea agreement. The number of consecutive sentences and the aggregate sentence here were not disproportionate or overly severe when compared to the criminal conduct of which Settlemire was found guilty. Having found no error prejudicial to the defendant-appellant in the particulars assigned and argued, the judgment of the Marion County Court of Common Pleas s affirmed. ZALMA OPINION Bad people who are convicted of multiple crimes deserve punishment. No fraud perpetrator is more deserving of punishment than a man who defrauds his elderly mother and relatives. The Ohio court properly sentenced Settlemire to spend the next 86 months in an Ohio State prison. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Barry Zalma, Esq., CFE, is available at http://www.zalma.com and zalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; 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; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; 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; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

Even Clear Language in Policy Can be Ambiguous AI Collection of Facial Recognition Images Violates Illinois Statute After Wynndalco Enterprises, LLC was sued in two putative class actions for violating the Illinois Biometric Information Privacy Act ("BIPA") its business liability insurer, Citizens Insurance Company of America sued seeking a declaration that it has no obligation under the terms of the insurance contract to indemnify Wynndalco for the BIPA violations or to supply Wynndalco with a defense. The district court entered judgment on the pleadings for Wynndalco, finding that the language of the catch-all exclusion is ambiguous on its face and that, construing that ambiguity in favor of the insured, Citizens consequently had a duty to defend Wynndalco. In Citizens Insurance Company of America v. Wynndalco Enterprises, LLC, et al., No. 22-2313, United States Court of Appeals, Seventh Circuit (June 15, 2023) the litigation arose from a massive database of facial-image scans assembled by Clearview AI, an artificial intelligence firm that specializes in facial recognition software. Clearview AI allegedly extracted in excess of three billion photographs of individuals from online social media; converted those images into biometric facial recognition identifiers using proprietary algorithms; collected the original images and their biometric counterparts into its database; and paired those images with information as to where those images were found on the Internet. Clearview AI has also created a facial recognition application or "app" that allows a user to identify an individual by uploading a photograph of that person to the app. The app then allows the user to see other photographs of that same person on the media platforms or websites where they appear, along with the identifying information (including their name, address, and other personal information) associated with that individual. Both suits allege that Wynndalco's role in this transaction ran afoul of BIPA. Illinois became the first state in the nation to enact biometric data privacy legislation when it promulgated BIPA. Broadly speaking, BIPA codifies an individual's right of privacy in and control over his or her biometric identifiers and biometric information. At the time of the sale of the Clearview AI app to the Chicago Police Department, Wynndalco had business owner's insurance coverage through a policy issued to it by Citizens. Section II of the policy sets forth the liability coverage for the business. Citizens contends that coverage of the class action claims is barred by a catch-all provision in a policy exclusion barring coverage for injuries arising out of certain statutory violations. The catch-all exclusion provided: “Any other laws, statutes, ordinances, or regulations, that address, prohibit or limit the printing, dissemination, disposal, collecting, recording, sending, transmitting, communicating or distribution of material or information.” Illinois regards the proper interpretation of an insurance policy as a question of law. Policy terms that purport to limit the insurance company's liability are construed in favor of coverage, but only when the terms are ambiguous or susceptible to more than one reasonable interpretation. In some instances, the language of a policy exclusion may appear clear in isolation, but when compared with a separate policy provision granting coverage for the same type of action or injury that the exclusion ostensibly reaches, an ambiguity arises, in that the exclusion appears to take away with one hand coverage that the policy purports to give with the other. Because the aim of policy interpretation is to give effect to all provisions of the policy and avoid whenever possible construing one provision in a way that tends to nullify another provision, a court when confronted with such an ambiguity must consider whether the reach of the "swallowing" exclusion can be deemed narrower than its plain terms taken in isolation would otherwise suggest. There was no dispute that a literal, plain-text reading of the catch-all provision would include BIPA violations. The text does not seem particularly ambiguous. Quite the opposite, it seems clear as a bell- and the clear message is that the provision sweeps broadly. The text is undoubtedly broad. The Seventh Circuit agreed with Wynndalco that the catch-all provision of the exclusion is ambiguous. A plain-text reading of that provision would swallow a substantial portion of the coverage that the policy otherwise explicitly purports to provide in defining a covered "personal or advertising injury," and arguably all of the coverage for certain categories of wrongs-copyright infringement, to take one example- that are entirely statutory in nature. On a plain text reading, the catch-all provision has an extremely broad sweep-so broad, in fact, that the exclusion on its face would eliminate coverage for a number of statutory injuries expressly included in the definition of "personal and advertising injur[ies]" that the policy purports to cover. This clash between competing provisions of the policy gives rise to the Seventh Circuit concluding there is an ambiguity in the insurance contract language and that catch-all provision is "intractably ambiguous." Applying yet another well-established canon the ambiguity must be construed against Citizens and in favor of the insured. As the catch-all provision says nothing about injuries arising from statutes regulating privacy interests, and "[o]ral or written publication, in any manner, of material that violates a person's right of privacy" is covered the Seventh Circuit concluded that the injuries alleged complaints at least potentially fall within the coverage of the Citizens policy. The Seventh Circuit concluded that Citizens thus owes its insured, Wynndalco, a duty to defend it against those complaints. ZALMA OPINION Exclusions in policies exist to limit the coverages provided by the insuring agreement and cause it to provide less coverage than an unlimited insuring agreement. Since people are entitled to enter into any contract that the insurer is willing to offer and the insured is willing to accept, the court will usually not rewrite the contract. There was no question that the "catch-all" exclusion was clear and unambiguous but the District Court and the Seventh Circuit created an ambiguity because the exclusion limited the effect of the insuring agreements. In this case the Seventh Circuit rewrote the policy and provided the insured more coverage than was provided by the policy. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Barry Zalma, Esq., CFE, is available at http://www.zalma.com and zalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; 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; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; 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; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

No Restitution from Defrauded Insurer Esurance Property & Casualty Insurance Company (Esurance) appealed the trial court's order granting summary disposition in favor of Nationwide Mutual Fire Insurance Company (Nationwide), and denying Esurance's request for summary disposition. In Nationwide Mutual Fire Insurance Company v. Esurance Property & Casualty Insurance Company, and Derek Allen Gregory and Blair Gregory, No. 361298, Court of Appeals of Michigan (June 15, 2023) Esurance alleged its insured defrauded it when it acquired the policy and it was entitled to rescind the policy regardless of the trial court's balancing the equities. PERTINENT FACTS In 2015, Derek Gregory (Derek) was driving a truck insured by Esurance and co-owned with his wife, Blair Gregory (Blair). The truck collided with Daniel Moore (Moore), who was riding a bicycle. Moore was injured in the accident. Moore was uninsured, and his claim for personal protection insurance ("PIP") benefits was assigned to Nationwide via the Michigan Automobile Insurance Placement Facility (MAIPF). Nationwide paid a total of $454,871.09 in medical expenses on behalf of Moore. Nationwide subsequently filed this lawsuit against Moore and Esurance seeking to recover the PIP benefits it paid on Moore's behalf. Nationwide alleged that Esurance, as the insurer of the truck was in a higher priority position and was required to reimburse Nationwide. The Bases for Rescission Esurance subsequently filed a third-party complaint against Nationwide and the Gregorys, alleging that Blair had failed to disclose several material facts in her application for the insurance policy, including that she was married, that Derek occasionally drove the truck, that Derek had been in prior accidents involving alcohol, that Blair had been involved in prior accidents, and that Blair had filed prior claims with other insurance providers. Esurance argued that Blair's misrepresentations in her insurance application constituted fraud, warranted rescission of the policy, and prohibited Nationwide from recovering from Esurance as a higher-priority insurer. After a hearing on Nationwide's motion, the trial court issued a written opinion granting summary disposition in favor of Nationwide. The trial court noted that rescission is not automatically applicable in the face of fraud. The trial court held that Esurance had failed to show that rescission was warranted, and that Nationwide could stand in Moore's shoes and recover from Esurance on the basis of equitable subrogation RESCISSION Esurance argued that the trial court erred by granting summary disposition in Nationwide's favor. Specifically, Esurance contended that the trial court abused its discretion in concluding that the balance of the equities weighed against rescission. Equitable subrogation is a flexible, elastic doctrine of equity that is decided on a case-by-case basis. Equitable subrogation is the mode which equity adopts to compel the ultimate payment of a debt by one who in justice, equity, and good conscience ought to pay it. The Michigan Supreme Court has held that the plain language of the no-fault act does not preclude or otherwise limit an insurer's ability to rescind a policy on the basis of fraud. Although PIP benefits are mandated by statute, the no-fault act neither prohibits an insurer from invoking the common-law defense of fraud nor limits or narrows the remedy of rescission. However, the presence of fraud by the insured does not automatically entitle an insured to rescission. When innocent parties are affected, rescission is left to the trial court's discretion. Rescission should not be granted in cases where the result thus obtained would be unjust or inequitable or in cases where the circumstances of the challenged transaction make rescission infeasible. There is no dispute that Esurance is an innocent insurer, and that Moore is an innocent third party. Caselaw clearly demonstrates that the equities must be balanced between the injured person and the party seeking rescission. The Michigan Supreme Court already rejected Esurance's arguments and held that such insurers may be reimbursed via equitable subrogation for PIP benefits paid on behalf of an uninsured person. There was no evidence presented demonstrating that Esurance knew about this fraud before Moore was injured, and there was no showing of how Esurance could have been more diligent in reviewing the insurance application or in detecting the fraud. A determination of whether policy enforcement only serves to relieve the fraudulent insured of what would otherwise be the fraudulent insured's personal liability to the innocent third party. In totality, the court of appeal concluded that the trial court abused its discretion by holding that Esurance had failed to show that rescission was warranted. The ultimate issue in innocent-third-party cases is which innocent party should bear the ultimate burden of the insured's fraud. In this case, Moore has already recovered benefits from an alternate source, and rescission will have no effect on that coverage. In other words, if the policy is rescinded, neither Esurance nor Moore would, in practical terms, bear the burden of Blair's fraud. Under these circumstances, the trial court's decision to deny rescission fell outside the range of principled outcomes. The trial court was ordered to enter an order granting summary disposition in favor of Esurance. ZALMA OPINION No one should profit from fraud. Not even an innocent insurer that paid benefits under a no-fault insurance scheme since it would have had to pay even if there was no insurance on the other side. Esurance was entitled to rescind because it would never have insured the Gregorys but for the fraud in the inception. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Barry Zalma, Esq., CFE, is available at http://www.zalma.com and zalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; 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; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; 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; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.