Barry Zalma, Inc. on Insurance Law

ZIFL - Volume 27, Issue 8 Read the full issue ofZILF at http://zalma.com/blog/wp-content/uploads/2023/04/ZIFL-04-15-2023-1.pdf The Source For Insurance Fraud Professionals Read the full issue ofZIFL at http://zalma.com/blog/wp-content/uploads/2023/04/ZIFL-04-15-2023-1.pdf See the full video atand at https://youtu.be/hZBklODzDy8 Obesity, Diabetes and Covid Not Basis For Compassionate Release The US Congress, feeling sorry for federal prisoners, amended the law to create The First Step Act to allow a District Court to shorten a sentence when there exist extraordinary and compelling reasons to release the Prisoner. In United States Of America v. Earl Lee Planck, Jr., Criminal No. 5:20-CR-24-KKC-MAS-1, United States District Court, E.D. Kentucky, Central Division, Lexington (March 1, 2023) Earl Lee Planck, Jr moved the USDC for compassionate release under the statute. Read the full issue ofZIFL at http://zalma.com/blog/wp-content/uploads/2023/04/ZIFL-04-15-2023-1.pdf The Special Investigative Unit Investigator Insurance companies now retain the services—either by employing them directly or by use of independent contractors—of investigators whose expertise relates exclusively to insurance claims and suspected insurance fraud. The experienced claims investigator is usually a part of, or vendor to, a Special Investigative Unit (SIU) set up to protect the insurer and mandated by most states as a means to reduce the amount of fraud perpetrated against insurers. The fact that an insured is contacted by a claim investigator does not, however, mean that the insured is suspected of committing fraud. By virtue of his or her training and experience, the claim investigator is more skilled than the claim adjuster in discerning facts and evidence that can be used in a court of law if a fraud has been attempted. Read the full issue ofZIFL at http://zalma.com/blog/wp-content/uploads/2023/04/ZIFL-04-15-2023-1.pdf More McClenny Moseley & Associates Issues This is ZIFL’s fourth installment of the saga of McClenny, Moseley & Associates and its problems with the federal courts in the State of Louisiana and what appears to be an effort to profit from what some Magistrate and District judges indicate may be criminal conduct to profit from insurance claims relating to hurricane damage to the public of the state of Louisiana. Chutzpah Defined “Chutzpah” is a Yiddish term that has found its way into the English language. It is defined as “unmitigated gall” and is usually explained as a person convicted of murdering his parents who pleaded with the judge for mercy because he is an orphan. The latest actions by McClenny Moseley & Associates are a better definition of the term. Read the full issue ofZIFL at http://zalma.com/blog/wp-content/uploads/2023/04/ZIFL-04-15-2023-1.pdf Free Insurance Videos Barry Zalma, Esq., CFE has published five days a week videos on insurance claims, insurance claims law, insurance fraud and insurance coverage matters at https://www.rumble.com/zalma.https://rumble.com/c/c-262921. He 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 he practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 55 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com. Read the full issue ofZIFL at http://zalma.com/blog/wp-content/uploads/2023/04/ZIFL-04-15-2023-1.pdf The Problem with Different Degrees of Crime Fraud by any Other Name is Still Fraud Pursuant to the New Jersey Code of Criminal Justice (Code), one can be charged with the offense of insurance fraud for knowingly making a false or misleading statement of material fact in connection with an insurance claim. That third-degree offense may be elevated to the second degree by aggregating five “acts” of insurance fraud, the total value of which exceeds $1,000. In State Of New Jersey v. Randi Fleischman, A-4 September Term 2006, Supreme Court of New Jersey (March 26, 2007) the Supreme Court of New Jersey was provided with its first opportunity to construe N.J.S.A. 2C:21-4.6’s penalizing of a false “statement” as an “act of insurance fraud” that can be accumulated to elevate insurance fraud to a second-degree offense. The State indicted defendant Randi Fleischman for second-degree insurance fraud. The factual underpinnings for the charge were based on various items of false information contained in defendant’s statements to the police and to her automobile insurer in connection with a stolen car claim. Read the full issue ofZIFL at http://zalma.com/blog/wp-content/uploads/2023/04/ZIFL-04-15-2023-1.pdf Good News From the A home healthcare company has paid $9M for allegedly submitting false claims. United Energy Workers Healthcare, Corp. and related entities settled a claim with several entities including Ohio, to the U.S. Department of Energy employees and its contractors. An investigation alleged: between January 2013 and March 2021, defendants submitted claims for payment for in-home healthcare services that were never provided or were medically unnecessary, in violation of the False Claims Act. Various of the violations included: billing for case management services not actually provided, instructing caregivers to charge for more time than actually spent with patients, providing and billing for services to beneficiaries that were not covered, and providing services without possessing required licenses. Plus many more convictions for fraud. Read the full issue ofZIFL at http://zalma.com/blog/wp-content/uploads/2023/04/ZIFL-04-15-2023-1.pdf OBLIGATION OF LAWYERS WHEN A CLIENT IS SUSPECTED OF FRAUDULENT CONDUCT A lawyer who suspects that his or her client is lying about the facts to cover up fraudulent or criminal activity the lawyer is placed in a professional dilemma. The client may be faking injuries after an automobile accident or fabricating the cause of a fire at his or her home. Or the client provides the lawyer with intentionally vague information about their finances to avoid reporting the information to the IRS or other governmental agency. In July 2021, the Colorado Bar Association Ethics Committee adopted Formal Opinion 142, addressing a lawyer’s duty to inquire when the lawyer knows a client is seeking advice on a transactional matter that may be criminal or fraudulent. Like the Model Rules of Professional Conduct counterpart, Colorado’s rule 1.2(d) provides that a lawyer “shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent . . .” The opinion specifically discusses what happens when the lawyer suspects but does not actually know, that the client may be using the legal services to engage in criminal or fraudulent conduct. While the term “know” denotes “actual knowledge of the fact in question” under Colorado Rule 1.0(f), the Committee interpreted the actual knowledge standard to include “willful blindness.” Read the full issue ofZIFL at http://zalma.com/blog/wp-content/uploads/2023/04/ZIFL-04-15-2023-1.pdf Health Insurance Fraud Convictions Santa Rosa Doctor Sentenced To 2.5 Years in Prison for Unlawfully Prescribing Controlled Substances Thomas Keller, formerly a pain management doctor in Santa Rosa, was sentenced to 30 months in prison for distributing Schedule II and IV controlled substances outside the scope of his professional practice and without a legitimate medical need. The sentence was handed down by the Hon. Vince Chhabria, United States District Judge, after a jury found Keller was guilty of the crimes at trial in November 2022. Read about this and dozens more convictions. Read thRead the full issue ofZIFL at http://zalma.com/blog/wp-content/uploads/2023/04/ZIFL-04-15-2023-1.pdf Other Insurance Fraud Convictions Richfield Woman Sentenced To 10 Years Behind Bars for Insurance Fraud The Department Of Insurance Became Aware That She Was Again Misappropriating Funds With The New Agency. Charlotte Sheppard of Richfield, Idaho is headed to prison after committing insurance fraud. Sheppard allegedly stole her clients’ insurance premium to pay her personal and business bills and obligations. She was sentenced to the Idaho Department of Corrections for 10 years, with five years fixed and five years indeterminate. Sheppard was first prosecuted and found guilty in Blaine County for grand theft in 2020. But while awaiting criminal sentencing and administrative penalties, she took over the management of a second agency in Lincoln County. The Department of Insurance became aware that she was again misappropriating funds with the new agency. The DOI issued a cease-and-desist order on March 18, 2020, and revoked her license two days later. Also many more reports of convictions. Read the full issue ofZIFL at http://zalma.com/blog/wp-content/uploads/2023/04/ZIFL-04-15-2023-1.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. 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, Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; 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. Read the full issue ofZIFL at http://zalma.com/blog/wp-content/uploads/2023/04/ZIFL-04-15-2023-1.pdf

Determine Whether Property Damage Occurred A first party property policy does not insure property: it insures a person, partnership, corporation or other entity against the risk of loss of the property. Before an insured can make a claim for indemnity under a policy of first party property insurance the insured must prove that there was damage to property the risk of loss of which was insured by the policy. The obligation imposed on the insured by the policy is often relatively easy to fulfill. For example, in the case of a fire the charred building need only be shown to the insurer. Other situations may not be as easy to prove. Is a building overhanging a newly created cliff damaged? Has a church that is permeated with a gasoline odor sustained property damage? Was missing property stolen? Has a building showing signs it may collapse, subject to an insured peril called “collapse?” Often, an insurer needs the wisdom of Solomon to reach a correct and fair result. The first party property adjuster is charged with the duty of helping the insured establish the existence or nonexistence of property damage due to a risk of loss insured against and not excluded and work to keep all of the promises made by the insurance policy. When a first party property policy insures against the risk of physical loss to certain real or personal property, whether the policy is a named peril, all risk, special risk, or direct risk of physical loss policy, the insured must first prove there is damage to the property. An insured may also make claim for loss of use of the property that is the subject of the insurance. The Insured can retain the property and sustain a constructive loss of use by denial of access or danger of imminent destruction. In Hughes v. Potomac Insurance Co., 199 Cal. App. 2d 239 (1962), the court found coverage after the land next to the house slid away causing the undamaged house to overhang a cliff. The California Court of Appeal found that damage to a structure existed if it was not a safe place for people to live even though all the walls stood and the roof kept out the rain. While a loss of use may, in some cases, entail a physical loss, “loss of use” and “physical loss or damage” are not synonymous. Indeed, interpretation of physical loss as requiring only loss of use stretches “physical” beyond its ordinary meaning and may, in some cases “render the word ‘physical’ meaningless.” In Source Food Tech., Inc. v. U.S. Fidelity and Guar. Co., 465 F.3d 834, 835 (8th Cir.2006) the court found no coverage under a policy covering “direct physical loss to property” when property was meat which was not allowed to cross the border into the United States and was thus treated as unusable but in fact suffered no spoilage or contamination. The Covid 19 Pandemic caused serious litigation on the issue of what is physical loss or damage and how a limitation in a policy of insurance defeats attempts to obtain coverage for loss of use of property and interruption of business caused by orders of state authorities. Oral Surgeons, P.C., sued its insurers for loss of earnings. Oral Surgeons offers oral and maxillofacial surgery services at its four offices in the Des Moines, Iowa, area. Oral Surgeons stopped performing non-emergency procedures in late March 2020, after the governor of Iowa declared a state of emergency and imposed restrictions on dental practices because of the COVID-19 pandemic. Oral Surgeons resumed procedures in May 2020 as the restrictions were lifted, adhering to guidance from the Iowa Dental Board. The insurer refused to pay Oral Surgeons sued. In Oral Surgeons, P.C. v. The Cincinnati Insurance Company, The Restaurant Law Center Amicus on Behalf of Appellant(s), American Property Casualty Insurance Association; National Association of Mutual Insurance Companies Amici, No. 20-3211, United States Court of Appeals for the Eighth Circuit (July 2, 2021) the Eighth Circuit was asked by Oral Surgeons and some Amici to find the loss of use of its offices was physical loss and Oral Surgeons were entitled to business interruption benefits. Oral Surgeons submitted a claim to The Cincinnati Insurance Company (Cincinnati) for losses it suffered as a result of the suspension of non-emergency procedures. The policy insured Oral Surgeons against lost business income and certain extra expense sustained due to the suspension of operations “caused by direct ‘loss’ to property.” The policy defined “loss” as “accidental physical loss or accidental physical damage.” Cincinnati responded that the policy did not afford coverage because there was no direct physical loss or physical damage to Oral Surgeons’ property. Oral Surgeons sued. The district court granted Cincinnati’s motion to dismiss, concluding that Oral Surgeons was not entitled to declaratory judgment. Oral Surgeons’ appeal alleged that the COVID-19 pandemic and the related government-imposed restrictions on performing non-emergency dental procedures constituted a “direct ‘loss’ to property” because Oral Surgeons was unable to fully use its offices. Oral Surgeons argued that the policy’s disjunctive definition of “loss” as “physical loss” or “physical damage” created an ambiguity that must be construed against Cincinnati. To give the terms separate meanings, Oral Surgeons suggests defining physical loss to include “lost operations or inability to use the business” and defining physical damage as a physical alteration to property. An appellate court must construe the policy to give effect to the intent of the parties. Intent is determined by the language of the policy itself, unless there is ambiguity. Ambiguity exists only when policy language is subject to two reasonable interpretations. Generally speaking, the plain meaning of the insurance contract prevails. The Cincinnati policy clearly required direct “physical loss” or “physical damage” to trigger business interruption and extra expense coverage. Accordingly, there must be some physicality to the loss or damage of property. Oral Surgeons needed to prove, therefore, that a physical alteration, physical contamination, or physical destruction of its property brought about a loss. The common usage of “physical” in the context of a loss therefore means the loss of something material or perceptible on some level. The policy cannot reasonably be interpreted to cover mere loss of use when the insured’s property has suffered no physical loss or damage. The Eighth Circuit refused to find “loss of use” and “physical loss or damage” synonymous. Rather, they are opposites. The unambiguous requirement that the loss or damage be physical in nature accords with the policy’s coverage of lost business income and incurred extra expense from the date of the physical damage to the insured’s property until the insured restores the damaged property to use. The “period of restoration” begins at the time of “loss” and ends on the earlier of: The date when the property at the “premises” should be repaired, rebuilt or replaced with reasonable speed and similar quality; or The date when business is resumed at a new permanent location. Property that has suffered physical loss or physical damage requires restoration. That the policy provides coverage until property “should be repaired, rebuilt or replaced” or until business resumes elsewhere assumes physical alteration of the property, not mere loss of use. When the only reason the property was not used was an order of a governmental agency is not a physical loss, or physical damage. In fact, the property where Oral Surgeons practiced was unchanged during the entire time they could not perform Oral Surgery. The complaint pleaded generally that Oral Surgeons suspended non-emergency procedures due to the COVID-19 pandemic and the related government-imposed restrictions. The complaint thus alleged no facts to show that it had suspended activities due to direct “accidental physical loss or accidental physical damage, regardless of the precise definitions of the terms “loss” or “damage.” Since the policy clearly did not provide coverage for Oral Surgeon ’s partial loss of use of its offices, absent a showing of direct physical loss or physical damage. Where no ambiguity exists, an appellate court will not write a new policy to impose liability on the insurer. There is no question that the orders closing businesses due to fear of spreading Covid-19 caused damage – a loss of business income – to Oral Surgeons and all other businesses who were forced to close down by order of the state or some entity. That order did not damage the property that was the subject of the insurance and there was no need to restore it since once the order was pulled the business of Oral Surgeons was able to begin immediately. No insurance policy insures against every possible loss. The loss claimed by Oral Surgeons was one for which no insurance benefits were available. When a residence contains walls that were constructed using sheets of Chinese drywall that, over time, released sulfuric gas into the Residence it was found to have incurred property damage even though the walls remained intact. (Travco Ins. Co. v. Ward, 715 F.Supp.2d 699 (E.D. Va. 2010)) Other cases have likewise accepted the view that “damage” includes loss of function or value including a loss of power to the insured’s premises. (Dundee Mut. Ins. Co. v. Marifjeren, 1998 ND 222, 587 N.W.2d 191, Gen. Mills, Inc. v. Gold Medal Ins. Co., 622 N.W.2d 147, (Minn.Ct.App.2001); Pepsico, Inc. v. Winterthur Int'l Am. Ins. Co., 24 A.D.3d 743, 806 N.Y.S.2d 709 (2005); Wakefern Food Corp v. Liberty Mutual, 406 N.J. Super. 406 N.J. Super. 524, 968 A.2d 724 (App. Div. 2009)). In ordinary use and widely accepted definitions, physical damage to property means "a distinct, demonstrable, and physical alteration" of its structure. 10 Couch on Insurance § 148:46 (3d ed. 1998). Physical damage to a building as an entity by sources unnoticeable to the naked eye must meet a higher threshold. The Colorado Supreme Court in Western Fire Ins. Co. v. First Presbyterian Church, 165 Colo. 34, [968 A.2d 738] 437 P.2d 52 (1968), concluded that coverage was triggered when authorities ordered a building closed after gasoline fumes seeped into a building's structure and made its use unsafe. Although neither the building nor its elements were demonstrably altered, its function was eliminated. [Wakefern Food v. Liberty Mut. Ins., 968 A.2d 724, 406 N.J. Super. 524 (N.J. Super., 2009)] This post was adapted from my book Zalma on Insurance Claims Part 104 Third Edition Available as a Kindle book; Available as a hardcover; Available as a paperback; (c) 2023 Barry Zalma & ClaimSchool, Inc. 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 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 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 athttp://www.zalma.com andzalma@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://anchor.fm/barry-zalma; 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.

UM/UIM Statute Makes a Motorcycle Into an Automobile Progressive Classic Insurance Company contested the trial court's entry of summary judgment in favor of plaintiff. The sole question to the Court of Appeals was whether the insurer was required by statute to provide coverage for "newly acquired vehicles," such as plaintiffs motorcycle, notwithstanding an insurance policy term that excluded transportation devices with less than four wheels. The trial court granted plaintiffs motion and denied defendant's motion. In Steven Cantu v. Progressive Classic Insurance Company, 325 Or.App. 184, A175784, Court of Appeals of Oregon (April 5, 2023) the Court interpreted Oregon's UM/UIM statute. FACTS Plaintiff was insured by defendant for three automobiles. The policy at issue did not list any motorcycles on the declaration page. About eight days after purchasing a motorcycle, plaintiff was severely injured when another driver negligently made a left turn in front of plaintiff. As a result of the injuries, plaintiff sought damages in excess of the liability limits of the other driver. Defendant denied underinsured motorist bodily injury benefits based on specific terms of the insurance policy that excluded vehicles with less than four wheels. The trial court granted summary judgment to plaintiff, after concluding that the relevant definitions in the insurance policy impermissibly provided underinsured motorist benefits that are less favorable to the insured than the terms of ORS 742.504 required. A motorcycle, under a common understanding of the term, is a "device" "upon or by which any person" "may be transported *** upon a public highway" and is not "moved by human power" or "used exclusively upon stationary rails or tracks." A motorcycle is therefore a vehicle within the definition provided by the legislature. Defendant contended that the trial court erred by construing the statute as requiring the newly acquired vehicle provision to include the motorcycle when the policy itself did not cover any motorcycles. There is no evidence that suggests that the legislature intended a different meaning for the word "vehicle" when defining "insured vehicle" than it did when defining "hit-and-run vehicle," "phantom vehicle," "stolen vehicle," or "uninsured vehicle." The Court of Appeals concluded that it was apparent that the legislature intended the term "vehicle" to carry the definition the legislature provided in paragraph (m) and that the trial court did not err by concluding that the paragraph (m) definition of vehicle was the applicable definition of that word and it included motorcycles. The court inferred that the motorcycle did not have "at least four wheels," and was therefore excluded as a "covered auto" under the terms of the policy. A UM policy provides "less favorable" terms to an insured not by a direct comparison between the challenged provision with an individual statutory provision, rather, the coverages provided in the policy against those required by statute. Thus, the court concluded that, by limiting the definition of "auto" in the policy to devices having "at least four wheels," defendant impermissibly provided less favorable coverage to plaintiff than that required by law. The trial court did not err by concluding, or by granting summary judgment to plaintiff on that basis. ZALMA OPINION Legislatures have an uncanny ability to deprive an insurer and insured of the ability to agree to the terms and conditions of the policy contract. Here, the plaintiff and his insurer agreed that it would not insure motorcycles. The plaintiff knew this when he bought his motorcycle. He got the court to provide coverage different than that agreed to in the policy by interpreting the UM/UIM statute to make a motorcycle an auto by the definitions in the statute because Progressive provided a policy wording - approved by the Department of Insurance - that provided coverage for the operation of the motorcycle. Of course, if the accident was plaintiff's fault he would have had no liability coverage. (c) 2023 Barry Zalma & ClaimSchool, Inc. 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 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 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 athttp://www.zalma.com andzalma@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://anchor.fm/barry-zalma; 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.

Insured May Not Deprive Insurer of Right to Subrogation Following a vehicular accident, Martin Peteet entered into a release and settlement agreement with the driver of the other vehicle and her insurer. Peteet did not seek a waiver of subrogation or consent from his own automobile insurer, Mississippi Farm Bureau Casualty Insurance Company (Farm Bureau), prior to executing the release and settlement agreement. After the release and settlement agreement was executed, Peteet filed a complaint against Farm Bureau, seeking damages under the uninsured motorist (UM) provision in his auto policy with Farm Bureau. Farm Bureau moved to dismiss the complaint, and the county court denied the motion. In Mississippi Farm Bureau Casualty Insurance Company v. Martin Peteet, No. 2021-IA-01420-SCT, Supreme Court of Mississippi (April 6, 2023) the Supreme Court of Mississippi resolved the dispute. FACTS Martin Peteet was injured in a two-vehicle accident with Maurisha Bland. After the accident Peteet entered into a Full, Final and Absolute Release of All Claims, Settlement and Indemnity Agreement (the Agreement) with Bland and her insurer, Mountain Laurel Assurance Company (Mountain Laurel), in exchange for $25,000. Peteet filed a complaint against his own insurer, Farm Bureau, alleging that Farm Bureau breached its contract with Peteet. Peteet argued that the UM provision in his auto policy with Farm Bureau covered up to $50,000 per accident and was intended for this exact purpose. Since Peteet received only $25,000 in the Agreement-Bland's policy limit with Mountain Laurel-he argued that the remainder of his damages from the accident should be paid to him by Farm Bureau under the auto policy's UM provision. Farm Bureau moved to dismiss the complaint for failure to state a claim. Farm Bureau argued that since Peteet had entered into the Agreement with Bland and Mountain Laurel without first seeking a waiver of subrogation or other consent from Farm Bureau, Peteet was barred from proceeding against Farm Bureau under his UM coverage. Mississippi law established Farm Bureau had a right of subrogation and that Mississippi caselaw supported its position that cutting off the insurer's right of subrogation prohibited the insured from further proceeding against the insurer for a claim under the insurance policy. DISCUSSION Farm Bureau argued that the Agreement executed between Peteet, Bland and Mountain Laurel cut off its subrogation rights-which it is entitled to statutorily and contractually-and barred Peteet from proceeding against Farm Bureau for damages under the UM coverage. Aside from the contractual requirements to give consent to any settlement of claims and to be subrogated to an insured's right to recover, Mississippi Code Section 83-11-107 provides that an insurer has a right to subrogation. The law has long been established in the state of Mississippi the insurer is prohibited from proceeding against the tortfeasor, the insured has no further rights to proceed against the insurer. The Supreme Court has stated that an insured who executes a settlement and release agreement with an uninsured motorist-effectively cutting off their own insurer's right of subrogation-cannot then proceed against their own insurer. Subrogation is the substitution of one person in place of another. He who is substituted succeeds to the rights of the other in relation to the debt or claim, and to its rights, remedies, or securities. CONCLUSION Farm Bureau had a right of subrogation by statute and contract. The execution of the Agreement between Peteet, Bland and Mountain Laurel cut off Farm Bureau's right of subrogation without Farm Bureau's consent. Farm Bureau, therefore, has no duty to pay for Peteet's claim under the UM provision. The Supreme Court reversed the trial court's denial of the motion to dismiss and rendered judgment in favor of Farm Bureau. ZALMA OPINION Farm Bureau's policy required the insured to protect its right of subrogation as did a Mississippi statute. Peteet released the person responsible and, in so doing, deprived his insurer of its right of subrogation and, by so doing, destroyed his right to seek indemnity for underinsured motorist coverage. Failing to protect the rights of his insurer cost Mr. Peteet $25,000. He may not be without a remedy if the agreement to the release was based on the advice of counsel that violated the policy terms and the state statute. (c) 2023 Barry Zalma & ClaimSchool, Inc. 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 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 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 athttp://www.zalma.com andzalma@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://anchor.fm/barry-zalma; 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.

How an Insurer Can Succeed With Professional Claims Handlers See the full article at EXCELLENCE http://zalma.com/blog/wp-content/uploads/2023/04/EXCELLENCE.pdf In search of profit, insurers have decimated their professional claims staff. They laid off experienced personnel and replaced them with young, untrained, unprepared people. A virtual clerk replaced the old professional claims handler. Process and computers replaced hands-on human skill, empathy and judgment. Money was saved by paying lower salaries. Within three months of firing the experienced claims people gross profit increased. Insurance is a business. Corporate insurers must show their shareholders a profit that pays dividends and increases the share price of the insurer. For centuries insurers understood that catastrophes, firestorms, windstorms, hurricanes and tornados could not be predicted. Some years the insurer will make profits and some years it will incur a loss. The prudent insurer recognizes, because of the impossibility of predicting all possible losses, they measured profitability over a decade or several decades. No insurer can measure its profitability for periods of a quarter of a year. Insurance is a service business. The insurance contract is a collection of promises made by the insurer to those persons or entities who face risks of loss pay for an insurance contract that promises to protect the insured against the risks of loss the insured faces. The person or entity insured relies on the professionalism of the employees of the insurer who are called upon to resolve the claims of the insured and provide the protection promised by the policy. Insurance Claims Professionals Insurers have developed over the last few centuries professional claims personnel who they trained to interpret the terms and conditions of the policy of insurance, investigate every claim thoroughly and assist the insured in the presentation and resolution of claims made by or against the insured. The promises are kept by the professional claims person: the adjuster or claims representative. The prudent insurer understands that keeping a professional claims staff dedicated to excellence in claims handling is cost-effective over long periods of time. A professional and experienced adjuster will save the insurer millions by resolving disputes, paying claims owed promptly and fairly, and by so doing avoiding litigation. The professional claims person exists to resolve claims to the satisfaction of the insured and the insurer. When the claims person does so the person insured will be satisfied that the promises made by the insurance policy were kept both the insured and insurer are satisfied with the interaction. Satisfying an insured that the promises made by the policy were fairly and completely kept is the key fulfillment of the insurer’s desire to avoid the expense and bad publicity of litigation. There will never be a suit for breach of contract or the tort of bad faith. Only when claims professionals resolve more claims for no less than is necessary to satisfy the insured neither party will need to involve counsel. A happy insured or claimant satisfied with the results of his or her claim will never find a need to sue the insurer. On the other hand, barely competent, incompetent or inadequate claims personnel will seldom resolve claims fairly and to the satisfaction of the insured or claimant. Inadequate claims personnel will often force insureds and claimants to public insurance adjusters and lawyers. It is axiomatic that every study performed on claims establishes that claims with an insured or claimant represented by counsel or a public insurance adjuster, cost more to resolve than those where counsel or a public adjuster is not involved. Prompt, effective, professional claims handling is cost effective for both the insured, the claimant and the insurer, and saves money for because there is no need to pay the fees of a lawyer or public adjuster. When the insurer fulfills the promises made by the policy to the satisfaction of the insured when the insured acquired the policy. Insurers who believe they can handle first or third party claims with young, inexpensive, inexperienced and untrained claims handlers should be accosted by angry stockholders whose dividends have plummeted or will plummet as a result. When an insurer compromises on staff, profits, thin as they may have been previously, will move rapidly into negative territory. Tort and punitive damages will deplete reserves. Insurers will quickly question why they are writing insurance. Those who stay in the business of insurance will either adopt a program requiring excellence in claims handling from every member of their claims staff or they will fail. The Need for Change The insurance business must change—this time for the better—if it is to survive. Insurers must rethink the firing of experienced claims staff and reductions in training to save “expenses” recognizing that the expense to train, educate and maintain a staff of professional claims handlers, is a small part of the money that flows out of an insurer’s coffers. The major expense is the cost to pay claims. When inadequate or inexperienced adjusters pay claims the insurer did not owe, refuse to pay claims it did owe, or pays more than is appropriate, the potential for an insurer to make a profit is reduced much more than is saved by reducing the expense incurred by paying a professional claims staff. Insurers should, if they wish to succeed, adopt a program to promote excellence in claims handling. Only with a staff of claims handlers dedicated to excellence in claims handling can insurers promptly, fairly and in good faith keep the promises made by the insurance policy and avoid charges of breach of contract and the tort of bad faith in both first and third party claims. Insurers must understand that they cannot adequately fulfill the promises they make to their insureds and their obligations under fair claims practices acts without a professional, well trained and experienced claims staff. An insurer must work vigorously and intelligently to create a professional claims department or recognize it will lose its market and any hope of profit. Insurance claims professionals are people who: can read and understand the insurance policies issued by the insurer. understand the promises made by the policy and their obligation, as an insurer’s claims staff, to fulfill the promises made. are competent investigators. have empathy and recognize the difference between empathy and sympathy. understand medicine relating to traumatic injuries and are sufficiently versed in tort law to deal with lawyers as equals. understand how to repair damage to real and personal property and the value of the repairs or the property. A Proposal to Create Claims Professionals To avoid claims of breach of contract, bad faith, punitive damages, unresolved losses, and to make a profit, insurers must, in my opinion, maintain a claims staff dedicated to excellence in claims handling. They must recognize that they, as representatives of the insurer, are obligated to assist the policyholder and the insurer to fulfill all the promises made by the insurer in the wording of the policy. An insurer can create a claims staff dedicated to excellence in claims handling by, at least: Hiring well trained, educated and empathetic insurance claims professionals. If professionals are not available, train all members of the existing claims staff to be insurance claims professionals. Train each member of the claims staff annually on the local fair claims settlement practices regulations. Supervise each claims handler closely to confirm all claims are handled professionally and in good faith. Explain to each member of the claims staff the meaning of the covenant of good faith and fair dealing from its inception in the 18th Century to the present. Require that staff treat every insured with good faith and fair dealing. Demand excellence in claims handling from the claims staff on every claim whether small or major, whether an individual or a corporate insured. Explain to the claims staff that the insurer is ready to immediately dismiss any claims handler who fails to treat every insured with good faith and fair dealing. If any experienced claims professionals exist on the insurer’s staff, the insurer must cherish and nurture them and use their experience and professionalism to train new claims people. If none are available, the insurer has no option but to train its people from scratch using available materials produced by the National Association of Insurance Commissioners, the State’s Department of Insurance, Insurance associations, and professionals who have – for a reasonable fee – the ability to properly and effectively train claims personnel. When the claims staff is made up of claims people who treat all insureds and claimants with good faith and fair dealing and provide excellence in claims handling litigation between the insurer and its insureds will be reduced exponentially. To keep the professional claims staff operating efficiently and in good faith they must be honored with increases in earnings and perquisites. Conversely, those who do not treat all insureds and claimants with good faith and fair dealing should be counseled and given detailed training if they are willing to learn. If less than professional claims persons continue with less than professional conduct they must be fired. The insurer must make clear to all employees that it is committed to immediately eliminating staff members who do not provide excellence in claims handling and must be ready to fire publicly and quickly those who cannot or do not provide excellence in claims handling. HOW TO CREATE AN EXCELLENCE IN CLAIMS HANDLING PROGRAM An excellence in claims handling program begins with a statement in the insurer’s claims manual or statement of professionalism, that it is dedicated to provide excellence in claims handling to every insured who presents a claim. The excellence in claims handling program should include, at a minimum: A series of lectures supported by text materials explaining: A definition of insurance. How to read and understand an insurance policy. How to interview an insured, witness, or claimant. How to assist an insured in the insured’s obligation to prove a claim. How to repair or replace damaged real or personal property. How to repair or replace damaged vehicles. How to identify causes of loss. How to recognize the red flags of fraud. The duty of the claims person who suspects attempted fraud. How to negotiate with an insured, claimant, public adjuster or lawyer to resolve a claim. How to recognize when retaining counsel to represent the insurer is necessary. How to retain counsel to represent the insured. How to read and understand the contract that is the basis of every adjustment, including but not limited to: The formation of the insurance policy. The rules of contract interpretation. Tort law: including negligence, strict liability in tort, and intentional torts. Contract law including: the insurance contract, the commercial or residential lease agreement, the bill of lading, nonwaiver agreements, proofs of loss, releases and other claims related contracts or documents. In addition the claims professional needs to understand: The duties and obligations of the insured in a personal injury claim. The duties and obligations of the insurer in a personal injury claim. The duties and obligations of the insured in a first party property claim. The duties and obligations of the insurer in a first party property claim. The Fair Claims Practices Act and the regulations that enforce it. The thorough investigation: Basic investigation of an auto accident claim. Investigation of a construction defect claim. Investigation of a nonauto negligence claim. Investigation of a strict liability claim. Investigation of the first party property claim. The recorded statement of the first party property claimant. The recorded statement or interview of a third party claimant. The recorded statement of the insured. The red flags of fraud. The SIU and the obligation of the claims representative when fraud is suspected. Claims report writing. The evaluation and settlement of the personal injury claim. How to retain coverage counsel to aid when a coverage issue is detected. How to control coverage counsel. How to instruct coverage counsel on the issue to be resolved. Instruction, by lecture, documents, webinars on: Dealing with a plaintiff’s lawyer. Dealing with personal injury defense counsel. The evaluation and settlement of the property damage claim. The Appraisal process. Arbitration and mediation and the claims representative. Claims handling without excellence is both dangerous and expensive. Insurers should develop a professional claims staff and provide excellence in claims handling because by so doing they will profit more than if they keep an inadequate and unprofessional claims staff. The training lectures must be supplemented by meetings between supervisors and claims staff on a regular basis to reinforce the information learned in the lectures. To guarantee that the training and requirement for excellence in claims handling is effective the insurer must also institute a regular program of auditing claims files to establish compliance with the requirement to deal fairly and in good faith to the insured. The insurer’s management must support the training and repeat it regularly. The insurer’s management must audit claims files to determine the training has taken and is being applied to each claim. There is no quick and easy solution. Training takes time; learning takes longer. If the insurer does not have personnel with the ability to train its staff it should use outside vendors who can do so effectively. Many such sources are available from professional associations, independent claims adjuster firms, independent counsel, insurance related publications, insurance related podcasts, and continuing education providers. I have created, to assist those who wish to create a professional claims staff dedicated to provide excellence in claims handling, a series of publications at my Locals community and at Substack.com. In addition, at Illumeo.com I produced a short Excellence in Claims Handling program available at https://www.illumeo.com/courses/introduction-excellence-claims-handling and multiple insurance claims related programs. I have published at Rumble.com more than 660 videos dealing with insurance, insurance coverage, insurance claims handling, insurance law, and investigation of claims with similar videos at YouTube.com. I have also published more than 4450 blog posts digesting appellate decisions modified from the actual language of the court decisions, condensed for ease of reading, and convey the opinions of the author regarding each case on insurance, insurance coverage, insurance claims handling, insurance law, and investigation of claims available for no cost to anyone who watches. Barry Zalma, Esq., CFE 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. Assistance in creating an excellence in claims handling program can be obtained from the following: Go to the Insurance Claims Libraryat https://zalma.com/blog/insurance-claims-library/ Subscribe to e-mail Version of Zalma’s Insurance Fraud Letter (ZIFL), it’s Free at https://visitor.r20.constantcontact.com/manage/optin?v=001Gb86hroKqEYVdo-PWnMUkV7pkuOtkiv6oakpgK33CNlNAYW-WBlLCOZFtgvpSdcL7R-tsWKfMVqG6fEuvmM7Hh7gUEJ7yKOdgHDbGl_cGAU%3D Read last two issues of ZIFL at https://zalma.com/zalmas-insurance-fraud-letter-2/ Go to the Barry Zalma, Inc. web site at https://www.zalma.com Go to the blog at https://zalma.com/blog

Failure to Report, Acknowledge and Make Claim to Your Client's Insurer is Legal Malpractice David Quaknine and several of his companies sued their former attorney and his law firm for alleged malpractice connected to a 2014 suit. The district court granted the defendants' motion to dismiss. It ruled that the two-year limitations period, which at the latest began to run in September 2019, expired before the plaintiffs sued in December 2021. In Concepts Design Furniture, Inc., et al. v. Fisherbroyles, LLP and Alastair J. Warr, No. 22-2303, United States Court of Appeals, Seventh Circuit (March 31, 2023) the Seventh Circuit resolved the dispute. FACTS The parties called Comptoir, which did business from Quebec, Canada, were sued for intellectual-property infringement in 2014. Over a year later, Comptoir hired Alastair Warr and his law firm to negotiate a settlement or, failing that, represent Comptoir in court. Comptoir told Warr that it had a policy with Intact Insurance Company that potentially could cover defense costs and indemnify it for claims. Warr did not advise Comptoir to submit a claim to Intact nor did it do so on its own. The lawsuit did not go well and the disclosures in the suit stated that Comptoir had "no insurance agreement." A jury eventually found against Comptoir with a judgment over three million dollars in damages. In February 2018, Comptoir-through other counsel-told Intact about the attorney's fees. The notice, four years after the suit, was the first time Intact learned of the intellectual-property suit. Comptoir reorganized after the adverse judgment. The bankruptcy court declared Comptoir bankrupt and discharged the judgment debt from the 2014 litigation. Intact denied coverage on September 10, 2019. When it demanded coverage, Comptoir sent to Intact (apparently for the first time) a copy of the complaint in the 2014 suit. In denying Comptoir's demand in September 2019, Intact gave three reasons: the suit against Comptoir was not covered under the policy. because Comptoir "failed to promptly notify Intact of the [2014] Complaint and to immediately upon receipt thereof, deliver to Intact a copy of the Complaint," it violated the policy and forfeited its right to and was "time barred" from reimbursement. Comptoir listed its defense fees "as amounts due to creditors," which implied that only the bankruptcy trustee could collect them. Intact sued seeking a declaration in Cook County Circuit Court that it was not obligated to pay defense fees or indemnify Comptoir. Comptoir made its defense-fees claim outside the three-year statute of limitations applicable under Quebec law. Thus, Comptoir's complaint and subsequent demand for reimbursement of fees was time barred. On December 17, 2021, refusing to admit is errors and failure to promptly act, Comptoir sued Warr and FisherBroyles for legal malpractice. The district court granted Warr and FisherBroyles's motion to dismiss the suit as untimely under Illinois law. Both parties accept that Illinois's two-year statute of limitations for malpractice suits applies to this case. They also do not dispute that the Illinois statute of limitations incorporates the so-called "discovery" rule, which delays the commencement of the relevant statute of limitations until the plaintiff knows or reasonably should know that he has been injured and that his injury was wrongfully caused. Comptoir's claim is not based on the mishandling of litigation. Rather, its claim arises out of the defendants' alleged failure to advise Comptoir to file a timely claim with its insurer. These damages existed before-and regardless of- the outcome of the declaratory-judgment suit. It is undisputed that one explicit reason for Intact's denial was that Comptoir failed to promptly notify Intact of the Complaint and to immediately upon receipt thereof, deliver to Intact a copy of the complaint, and that the policy stated that failure to notify meant a forfeiture of rights to compensation. Once a malpractice plaintiff is aware of injury the plaintiff is not required to wait for a court's judgment certifying that the plaintiff's attorneys erred. Thus, the limitations clock for Comptoir started when it reasonably should have known of the alleged malpractice and that occurred, at the latest, when Intact sent its letter in September 2019 denying coverage to Comptoir. The statute of limitations is an affirmative defense, and Comptoir was not required to anticipate the defense in its complaint. Comptoir accepts that Intact denied coverage in September 2019, starting the two-year clock that expired before it sued in December 2021. ZALMA OPINION Lawyers, like people not trained in the law, like their clients, all have an uncanny ability to avoid reading an insurance policy. The defense lawyer, with knowledge of the existence of a policy that could provide a defense to Comptoir, ignored the fact, answered discovery reporting no insurance, and defended the suit on its merits, only to impose a multi-million dollar verdict on Comptoir. After the judgment and a bankruptcy action Comptoir made claim for its attorneys fees only to lose because the claim was time barred. Waiting even longer it sued its lawyers for failing to advise it to report its claim to its insurer, only to lose again because it was time barred. (c) 2023 Barry Zalma & ClaimSchool, Inc. 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 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 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 athttp://www.zalma.com andzalma@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://anchor.fm/barry-zalma; 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 Must Demand & Prove Restitution Required to Make Them Whole Defendants Alfredo Ayala and Juan Luis Ayala owned farm labor contracting businesses and shared business offices and office staff. Defendants were charged with insurance and tax fraud by underreporting their payroll amounts. Alfredo and Juan pleaded no contest to workers' compensation insurance fraud and tax fraud, agreed to pay restitution to the Employment Development Department (EDD), and requested a restitution hearing to determine restitution owed to their workers' compensation insurance companies. After a hearing, the trial court awarded restitution to the insurance companies measured by the amount of lost premiums caused by defendants' false payroll reporting. In The People v. Alfredo Ayala, The People v. Juan Luis Ayala, F083941, F083974, California Court of Appeals, Fifth District (March 16, 2023) a lengthy opinion reviewing facts in detail and evidence from the defrauded workers' compensation insurers affirmed the restitution orders based on the evidence presented by the insurers. FACTUAL BACKGROUND Defendants stipulated to a factual basis for their pleas based on police reports and grand jury proceedings. Juan pleaded no contest to workers' compensation fraud and tax evasion by false statement, Alfredo pleaded no contest to tax evasion by false statement. Alfredo waived time for sentencing, and the trial court reduced count 21 to a misdemeanor and ordered Alfredo to serve a three-year term of probation with conditions that Alfredo obey all laws, pay restitution to EDD, and return for a restitution hearing. The trial court held a restitution hearing as to both defendants on July 9, 2021, and announced its decision on August 24, 2021. The trial court denied defendants' subsequently filed motion for reconsideration on December 17, 2021, and sentenced Juan to three years in prison, suspended execution of that sentence, and placed him on probation for two years. PREMIUM FRAUD Typical workers' compensation insurance policies are based on estimates. The experience modification is determined by comparing a specific employer's payroll and losses to other similar employers. The experience modification can lower the premium if the employer has good safety practices but can result in a higher premium if the employer has a negative history of accidents. TRIAL COURT RULING The trial court stated that restitution should make the victims whole and not entitle them to profit but, in this case, the trial court used the findings of the insurance company auditors whom "[q]uite frankly, [it] just felt ... were more credible." DISCUSSION California crime victims have a constitutional and statutory right to receive full restitution for economic losses suffered as a result of a defendant's criminal conduct. When a defendant is convicted and sentenced to state prison, section 1202.4 limits restitution to losses caused by the criminal conduct for which the defendant was convicted. The Trial Court Did Not Abuse Its Discretion In Determining that Defendants' Criminal Conduct Was Responsible for the Insurance Companies' Lost Premiums and the Amounts of those Losses. At a restitution hearing, the prosecution is required to establish the amount of the victim's economic loss, not the criminal conduct underlying the charges. Restitution hearings are intended to be informal and do not require any particular kind of proof. The trial court may accept a property owner's statement made in the probation report about the value of stolen or damaged property as prima facie evidence of loss. Defendants argued that the trial court could not award restitution unless the prosecution presented direct evidence that defendants intentionally falsified payroll and submitted falsified payroll to generate lower premiums. Defendants' pleas of no contest and accompanying waivers were sufficient to support the trial court's award of restitution based upon defendants' massive underreporting of payroll to the insurers to reduce their policy premiums. The Trial Court Did Not Abuse Its Discretion Ordering Restitution Because It Used a Rational Method to Determine the Insurance Companies' Economic Losses Defendants' pleas of no contest established that defendants intentionally and falsely underreported their monthly payroll to the insurers to pay lower premiums. Furthermore, the willful underpayment of insurance premiums constitutes an economic loss. The methodology adopted by the trial court appeared rational to the Court of Appeals and it concluded did not produce an arbitrary result. By the plain language of the statute, the victim's economic loss must come as a result of the defendant's conduct. Victims are only entitled to an amount of restitution so as to make them whole, but nothing more, from their actual losses arising out of the defendants' criminal behavior. The Court of Appeals concluded that the trial court did not abuse its discretion in awarding restitution for the total amount of unreported payroll as opposed to limiting the award to the payroll amounts reflected in the voided payroll check register even if it had not rejected defendants' evidence. To the extent the scope and nature of defendants' misconduct precludes an exact determination of the insurers' losses, the equities favor the insurers as far as calculating the amount of restitution that is due. After reviewing all the relevant considerations, the Court of Appeals was satisfied there was a factual and rational basis for the trial court's restitution order. No abuse of discretion or other ground for reversal has been shown. The Court of Appeals, therefore, concluded that the trial court did not abuse its discretion in calculating restitution in this case and affirm the judgments. ZALMA OPINION Insurance fraud convictions, especially workers' compensation insurance fraud convictions are rare. The fraudsters often get away with their crime. When there is a conviction, like that of the Ayala brothers, must make restitution to the workers' compensation insurers who they admitted they defrauded. The court reviewed the testimony of each insurer and ordered restitution based upon the evidence from the insurers about the premiums they should have received. Those insurers should be emulated by every insurer that is the victim of insurance fraud and provide evidence and demand full restitution, as did the insurers who were defrauded by the Ayalas. Restitution is often paid because failure to pay defeats probation and the defendants go directly to jail. (c) 2023 Barry Zalma & ClaimSchool, Inc. 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 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 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 athttp://www.zalma.com andzalma@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://anchor.fm/barry-zalma; 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.

Fraud by any Other Name is Still Fraud Pursuant to the New Jersey Code of Criminal Justice (Code), one can be charged with the offense of insurance fraud for knowingly making a false or misleading statement of material fact in connection with an insurance claim. That third-degree offense may be elevated to the second degree by aggregating five "acts" of insurance fraud, the total value of which exceeds $1,000. In State Of New Jersey v. Randi Fleischman, A-4 September Term 2006, Supreme Court of New Jersey (March 26, 2007) the Supreme Court of New Jersey was provided with its first opportunity to construe N.J.S.A. 2C:21-4.6's penalizing of a false "statement" as an "act of insurance fraud" that can be accumulated to elevate insurance fraud to a second-degree offense. The State indicted defendant Randi Fleischman for second-degree insurance fraud. The factual underpinnings for the charge were based on various items of false information contained in defendant's statements to the police and to her automobile insurer in connection with a stolen car claim. FACTS On December 4, 2003, after she made arrangements for a friend to dispose of her 2000 Chrysler Sebring, the defendant contacted the Edison Police to report that her car had been stolen. Defendant also telephoned her automobile insurer, Liberty Mutual Insurance Company (Liberty Mutual), to report that her car had been stolen. In response to questioning about the claim, she told her insurer that she still possessed the automobile's keys and that she had not been trying to sell her car. On December 12, 2003, defendant filed with Liberty Mutual an Automobile Theft Affidavit, in which she swore that the automobile had been stolen from the Menlo Park Mall parking lot, and that she had no information about the car's whereabouts. Fleischman's affidavit also stated that she did not own any other automobile and that her car had not been for sale. Fleischman subsequently confessed that her car had not been stolen and withdrew her insurance claim. She was later indicted for insurance fraud. She moved to dismiss the second-degree insurance fraud count (Count One). The motion court found that the State presented only three acts of insurance fraud: defendant's fraudulent report to Liberty Mutual; the false affidavit that she submitted to Liberty Mutual; and defendant's fraudulent police report. Accordingly, the court dismissed Count One, leaving intact the remaining charges. The Appellate Division affirmed Count One's dismissal, holding that each lie told in support of one fraudulent claim in a single document cannot reasonably be seen as a separate act of insurance fraud, but rather only as a component of the one fraudulent claim. Pursuant to the statute a person commits "insurance fraud" when one knowingly makes, or causes to be made, a false, fictitious, fraudulent, or misleading statement of material fact in . . . any record, bill, claim or other document, in writing, electronically, orally or in any other form, that a person attempts to submit, ... a claim for payment, reimbursement or other benefit pursuant to an insurance policy . . . [(Emphasis added).] The offense is elevated from the third to the second degree when a person commits five or more acts of insurance fraud and the aggregate value of "property, services or other benefits obtained or sought" exceeds $1,000. N.J.S.A. 2C:21-4.6(b). The statute further provides: Each act of insurance fraud shall constitute an additional, separate and distinct offense, except that five or more separate acts may be aggregated for the purpose of establishing liability pursuant to this subsection. Multiple acts of insurance fraud which are contained in a single record, bill, claim, application, payment, affidavit, certification or other document shall each constitute an additional, separate and distinct offense for purposes of this subsection. [Ibid. (emphasis added).] Thus, the breadth of the phrase "act of insurance fraud" for grading purposes depends, in part, on the breadth of the term "statement," in subsection a. of the Act. No definition of "statement" answers the question posed by this appeal. The statute's reference to a "statement" is, to the New Jersey Supreme Court, ambiguous. Although it is evident that the Legislature intended to curb insurance fraud, the Supreme Court could not ignore that the Legislature created two separate offenses of different degrees. The Supreme Court rejected the argument that more than five "acts" of insurance fraud were perpetrated by defendant when she made three statements in support of her fraudulent insurance claim. Therefore, the Supreme Court held that when a defendant provides to officials in connection with a fraudulent claim a document or oral narrative that contains a material fact or facts relating to the claim, each such document or narration is a "statement" equating to an "act" of insurance fraud. Although there can be multiple "statements" in a single document the Supreme Court rejected the assertion that the Legislature intended every discrete fact within a narrative assertion about a single claim would amount to an "act" of insurance fraud. Because defendant's oral and written statements related to a single claim of a stolen automobile, the State presented three "acts" of insurance fraud to the grand jury: defendant's report to the police, defendant's oral report of the alleged theft to Liberty Mutual, and defendant's affidavit submitted to Liberty Mutual in support of her claim. ZALMA OPINION To me, insurance fraud, is a single crime. Adding grades of fraud is an attempt by the Legislature to make some types of insurance fraud more criminal than other types of fraud. As silly as this grading system is, it is the law of New Jersey, and the defendant could not be charged with a higher degree of fraud because she only made three fraudulent statements. This was a "hard fraud" that was premeditated. The Legislature should do what other states do: declare insurance fraud of any degree or amount a felony subject to five years in state prison. (c) 2023 Barry Zalma & ClaimSchool, Inc. 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 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 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 athttp://www.zalma.com andzalma@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://anchor.fm/barry-zalma; 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.

Obesity, Diabetes, and Covid Not Basis for Compassionate Release The US Congress, feeling sorry for federal prisoners amended the law to create The First Step Act to allow a District Court to shorten a sentence when there exists extraordinary and compelling reasons to release the Prisoner. In United States Of America v. Earl Lee Planck, Jr., Criminal No. 5:20-CR-24-KKC-MAS-1, United States District Court, E.D. Kentucky, Central Division, Lexington (March 1, 2023) Earl Lee Planck, Jr moved the USDC for compassionate release under the statute. Planck was originally sentenced Planck to a prison term of 56 months after he pleaded guilty to conspiring to defraud the United States Crop Insurance Fund, and tax evasion. He is scheduled for release on March 4, 2025. The First Step Act allows the court to grant a motion for compassionate release filed by the defendant himself after the defendant has fully exhausted all administrative rights to appeal a failure of the Bureau of Prisons to bring a motion on the defendant's behalf or the lapse of 30 days from the receipt of such a request by the warden of the defendant's facility, whichever is earlier. The compassionate release statute permits the Court to “reduce the term of imprisonment” and “impose a term of probation or supervised release with or without conditions that does not exceed the unserved portion of the original term of imprisonment.” The Court may grant this relief only if it finds that “extraordinary and compelling reasons" warrant such a reduction, and the reduction is consistent with applicable policy statements issued by the Sentencing Commission. Planck did not set forth any circumstances that the Court could find extraordinary and compelling. He stated he has various medical conditions that put him at an increased risk of serious complications if he contracts COVID-19, including heart disease, high blood pressure, sleep apnea, diabetes, and obesity. The USDC noted that the Court sentenced Planck below the advisory guideline range of 78 to 97 months. He has not yet served even half of the sentence imposed by the Court and he has available treatment for his conditions and the availability of vaccines. Therefore the Court ordered that Planck's motion for compassionate release was denied. ZALMA OPINION Defrauding the government's crop insurance program takes money out the U.S. Treasury and is taken more seriously by federal judges than defrauding private insurers. The fact that Mr. Planck got fat, couldn't sleep, and has created heart disease and high blood pressure does not create a ground for compassionate release. Fraudsters, whether they defraud private insurers or the federal government insurance plans, deserve prison and should stay for their full sentence. The USDC had no compassion for a prisoner who got fat in jail and ruined his health. (c) 2023 Barry Zalma & ClaimSchool, Inc. 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 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 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 athttp://www.zalma.com andzalma@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://anchor.fm/barry-zalma; 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.

After Rescission an Insurer May be Required Only to Pay an Innocent Injured Person Insurers Should Carefully Avoid Suing Another Insurer On rare occasions bus accidents create a temptation to passengers to claim injuries as soon as it looks like insurance may apply. When the passengers on a bus insured by West Bend Mutual Insurance Company (West Bend), their injuries appeared like magic. As a result of its attempted investigation of a bus accident, West Bend moved for summary judgment and defendant Citizens Insurance Company of the Midwest's (Citizens) responded and filed a counter motion for summary judgment. In West Bend Mutual Insurance Company v. Affiliated Diagnostic Of Oakland, LLC, et al., Civil Action No. 21-cv-11007, United States District Court, E.D. Michigan, Southern Division (February 21, 2023) the USDC weighed the equities and resolved the dispute between two insurers. BACKGROUND West Bend's amended complaint states that multiple individuals (“claimants”) allege that they were involved in an automobile accident on February 3, 2020. West Bend insured Kristy's Early Childhood Development Center, Inc. (Kristy's), pursuant to which West Bend undertook to insure Kristy's solely against risks associated with the childcare business. At the time of the accident, West Bend alleged that the vehicle was not being used for the childcare business but was instead being used by a separate business entity, DLB Transportation LLC, which had held the vehicle out for hire to the claimants. West Bend determined that Kristy's had made material misrepresentations or concealed material facts when the policy was issued in so far as DLB would be using the vehicle in connection with its business. West Bend sought rescission of the policy and a declaration that the policy was void ab initio. Only one defendant appeared in this matter and now remains: Citizens is the assigned claims plan insurer for the claims arising out of the underlying accident. In its motion for summary judgment, West Bend seeks to extend rescission of the policy as to 16 natural person defendants and certain medical providers who allegedly provided services to natural person defendants. ANALYSIS Rescission Of An Insurance Policy As To Innocent Third Parties Under Michigan Law Requires A Balancing Of The Equities Rescission as to innocent third parties is not an absolute right. When two equally innocent parties are affected, the court is required, in the exercise of its equitable powers, to determine which blameless party should assume the loss. West Bend demonstrated that it did not have any notice or opportunity to discover the true use of the vehicle. Citizens' argued that with some additional investigation West Bend could have figured out that the bus was not being used by Kristy's in the manner indicated in the insurance policy. Citizens offered no indication of some previous malfeasance, irregularity in the application, or other information that would have made it imprudent for West Bend to take Kristy's at its word that the vehicle was going to be used by the childcare center for transporting children. An insurer has a reasonable right to expect honesty in the application for insurance. WEST BEND'S ADDITIONAL FACTORS WEIGH IN FAVOR OF RESCISSION West Bend offers two additional arguments in support of rescission. As Citizens acknowledges: West Bend urged that natural person defendants have repeatedly stonewalled and thwarted West Bend's efforts to investigate their claims and alleged injuries and that their failure to participate in this litigation has resulted in a substantial increase in time and cost for West Bend to prosecute this case. Because there was no evidence that West Bend engaged in any wrongdoing in connection with Natural Person Defendants' claims, West Bend urged that Natural Person Defendants' conduct in pursuing their claims also weighs in favor of rescission. In particular, the natural person defendants refused to appear for examination under oath and that six individuals refused to appear for depositions in a related state-court lawsuit. West Bend urged that although natural person defendants did not directly cause the accident, testimony was offered that the Natural Person Defendants acted as though they were injured only after a police officer entered the bus. The bus passengers' refusal to participate in litigation regarding rescission of the policy as against them suggests either ambivalence or acquiescence in the relief sought by West Bend. The Court assumed that both West Bend and the bus passengers were innocent with regard to the perpetration of the fraud. But the passengers' conduct immediately following the accident and during the course of the litigation is not entirely blameless and tips the scales in favor of rescission. The Court was persuaded that the two additional considerations offered by West Bend regarding the bus passengers' conduct following the accident shed further light onto the true innocence of the parties. The defrauded insurer bears the burden of establishing that rescission is warranted. Given the availability of benefits through the assigned claims program and the bus passengers' conduct after the accident which has had the effect of obscuring and complicating the litigation related to processing of their claims, the Court found that the equities favor rescission of the policy as to the natural person and provider defendants. West Bend's motion for summary judgment was granted. ZALMA OPINION It was clear that the insured lied on the application and rescission was appropriate. Whether the injured and the insurer who paid their no-fault benefits - innocent of the misrepresentation - were entitled to recover. Their default and refusal to submit to an examination under oath placed the equities in favor of West Bend who had been defrauded and the 14 people on the bus who claimed injuries only after a police officer arrived made the case a classic bus jumping case that protected West Bend. (c) 2023 Barry Zalma & ClaimSchool, Inc. 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 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 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 athttp://www.zalma.com andzalma@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://anchor.fm/barry-zalma; 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.

No Contract Compelling Arbitration Between Insurer and Insured No Arbitration In Alex Weingarten v. Certain Underwriters At Lloyd's, London Subscribing To Policy Number IML-0114N0-190029, B321148, California Court of Appeals, Second District, Fourth Division (March 23, 2023) Certain Underwriters at Lloyd's, London (Lloyd's Underwriters) appealed from the trial court's order denying their motion to compel arbitration of plaintiff Alex Weingarten's complaint for breach of implied covenant of good faith and fair dealing, intentional infliction of emotional distress, and negligent misrepresentation. FACTUAL BACKGROUND The Underlying Malpractice Action In 2013, Adam Levin, Tristen Lazareff, and Criterion Capital Partners, LLC, retained Weingarten Brown LLP to defend them in the case entitled MXB Holdings LP, et al. v. Adam Levin, et al (the MXB action). The retainer agreement (the Levin/Weingarten retainer agreement) contained an arbitration provision. Adam Levin and Criterion Capital Partners, LLC, filed an action in the Los Angeles Superior Court for legal malpractice and breach of fiduciary duty against Weingarten et al (the malpractice action). The complaint alleged Weingarten negligently represented the defendants in the MXB action. The parties later stipulated to arbitration before JAMS based on the arbitration provision in the retainer agreement. Weingarten notified Lloyd's Underwriters about the malpractice action, and Lloyd's Underwriters accepted the defense of the Weingarten defendants. The arbitrator found in favor of Adam Levin and Criterion Capital Partners, LLC, and issued an award that exceeded Weingarten's insurance coverage. The Bad Faith Action Weingarten sued Lloyd's Underwriters for breach of the implied covenant of good faith and fair dealing, intentional infliction of emotional distress, and negligent misrepresentation. In the operative complaint (the SAC) Weingarten alleged Lloyd's Underwriters acted in bad faith in the malpractice action by, among other things, "[r]ejecting settlement within the policy limits..." On January 31, 2022, Lloyd's Underwriters filed a motion to compel arbitration of the SAC based on the arbitration provision in the Levin/Weingarten retainer agreement. Weingarten opposed the motion, arguing: the insurance policy issued by Lloyd's Underwriters does not contain an arbitration provision; Lloyd's Underwriters are not intended, or third party, beneficiaries of the Levin/Weingarten retainer agreement; and the doctrine of equitable estoppel is inapplicable. After a hearing on the motion to compel arbitration, the trial court denied the motion. DISCUSSION Motion to Compel Arbitration Lloyd's Underwriters contended that the trial court erred by denying their motion to compel arbitration based on the arbitration clause in the Weingarten/Levin retainer agreement. A third party beneficiary is someone who may enforce a contract because the contract is made expressly for his or her benefit. The terms of the contract must demonstrate the express intent to confer the benefit. The Court of Appeal concluded that Lloyd's Underwriters were not third party beneficiaries of the Levin/Weingarten retainer agreement. The retainer agreement describes the scope of legal services to be provided by Weingarten's law firm to the defendants in the MXB action. Nothing in the retainer agreement demonstrates an express intent to benefit a third party-whether Lloyd's Underwriters specifically or any other insurance company generally. The FAC does not assert claims against Lloyd's Underwriters that are based on the Levin/Weingarten retainer agreement; the claims are based on the insurance policy provided to Weingarten by Lloyd's Underwriters. The FAC, therefore, does not rely on or use any terms of the Levin/Weingarten retainer agreement as a foundation for its claims. Accordingly, the Court of Appeals concluded there was no basis in law or equity for preventing Weingarten from suing Lloyd's Underwriters in court. Before referring a dispute to an arbitrator, the court determines whether a valid arbitration agreement exists. Thus, the trial court properly determined the threshold issue of whether the nonsignatory defendants (Lloyd's Underwriters) could compel the signatory plaintiff (Weingarten) to arbitrate his claims. ZALMA OPINION If the Lloyd's Underwriters wished to arbitrate disputes between themselves and their insureds it would have been easy to include in the contract of insurance an arbitration agreement like the agreement in the Weingarten retainer agreement. Although the Lloyd's Underwriters provided a defense to the malpractice agreement they refused a proposed settlement within the policy limits. Weingarten claims it was harmed because Lloyds' Underwriters failed to accept the settlement, a common bad faith claim. The attempt to compel arbitration was designed to avoid trial on the bad faith issue and, although creative, it did not have a basis in fact or law that the Court of Appeal was willing to accept. (c) 2023 Barry Zalma & ClaimSchool, Inc. 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 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 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 athttp://www.zalma.com andzalma@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://anchor.fm/barry-zalma; 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.

ZIFL Volume 27, Issue 7 - http://zalma.com/blog/wp-content/uploads/2023/03/ZIFL-04-01-2023.pdf The Source For Insurance Fraud Professionals Louisiana and Texas Charge Public Adjuster Not an April Fools Story Andrew Joseph Mitchell, was indicted by a grand jury in Kimble County, Texas on a second-degree forgery charge for allegedly signing the names of property owners on settlement checks so he could keep the funds for himself. Mitchell is currently jailed in Louisiana after being charged with running a similar scheme in Louisiana. Read the full article and the full issue at http://zalma.com/blog/wp-content/uploads/2023/03/ZIFL-04-01-2023.pdf The Victims of Fraud Virtually anyone can fall prey to fraudulent crimes. Con artists do not pass over anyone due to such factors as a person’s age, finances, educational level, gender, race, culture, ability, or geographic location. In fact, fraud perpetrators often target certain groups based on these factors. Very often insurers are the victims of fraud. Read the full article and the full issue at http://zalma.com/blog/wp-content/uploads/2023/03/ZIFL-04-01-2023.pdf More McClenny Moseley & Associates Issues This is ZIFL’s third installment of the saga of McClenny, Moseley & Associates and its problems with the federal courts in the State of Louisiana and what appears to be an effort to profit from what some Magistrate and District judges indicate may be criminal conduct to profit from insurance claims relating to hurricane damage to the public of the state of Louisiana. The article will include details on the Suspension of Richard William Huye III by the Louisiana Supreme Court; The order of Judge James D. Cain, Jr. Suspending MMA from practice in the federal court; Two class action lawsuits filed against MMA and it lawyers; an order from Judge North regarding violation of Rule 11 that started out: "When ego and greed become lawyers’ guiding principles, we get cases like Franatovich versus Allied Trust.” You can read the full 28 page report at https://www.linkedin.com/in/matthewdmonson/recent-activity/all/; a race discrimination suit filed against MMA; the order of Judge Brian K. Abels restraining MMA from spending any fees collected; the disappearance of MMA from Louisiana; a suit by Apex Roofing against Huye for malpractice; and Huye's filing of withdrawal as counsel in multiple suits using MMA letterhead. Read the full article and the full issue at http://zalma.com/blog/wp-content/uploads/2023/03/ZIFL-04-01-2023.pdf Free Insurance Videos See the more than 500 videos at https://www.rumble.com/zalma. Good News from the Coalition Against Insurance Fraud Multiple reports of insurance fraud convictions including the following: Estranged from his wife, Scott Lee Smith shot her for $1M of life insurance in Littleton, Colo. He filed for divorce from Nok just 11 days before shooting her in the basement of her home. Smith called 911 after shooting Nok in the face, lying she attacked him with a butcher knife. Yet he had no visible injuries, nor were there signs of a struggle. All three security cameras — which would’ve shown the shooting — were missing. Smith had called his mother after being taken into custody, asking her to recover the cams. Officials also found Smith and his father moving belongings from the house into two vehicles after he was released from custody. And inside the home, they found a duffel bag that was packed for a move elsewhere. Smith also showed “concerning behavior” in the months before shooting Nok. He surveilled her, set odd calendar reminders and obsessed over what would happen to her money once their pending divorce was finalized. Nok told family and friends that she was afraid of Smith and was trying to escape him. She allowed him to live in the basement of the home while she stayed upstairs. Smith received 30 years in prison. His mother is charged as an accessory, plus other crimes. Read the full article and the full issue at http://zalma.com/blog/wp-content/uploads/2023/03/ZIFL-04-01-2023.pdf How to Add to the Professionalism of Insurance Claims Personnel Every insurer, insurance syndicate, insurance brokerage, insurance sales agency, insurer branch office, and vendors to the insurance industry should add to the libraries of their various offices or employees. See “Excellence in Claims Handling” at https://barryzalma.substack.com/welcome. Read the full article and the full issue at http://zalma.com/blog/wp-content/uploads/2023/03/ZIFL-04-01-2023.pdf What is Insurance Fraud? Insurance fraud is the most popular and perpetrated crime in the world next to, perhaps, tax fraud. The possibility of a tax-free profit, coupled with the commonly held belief (supported by actual arrest and conviction records) that criminal prosecution will probably not occur, is sometimes too difficult for normally honest people to resist. Read the full article and the full issue at http://zalma.com/blog/wp-content/uploads/2023/03/ZIFL-04-01-2023.pdf Health Insurance Fraud Convictions Hundreds Of Millions of Potential Liability Result from Federal Jury False Claims Act Verdict Cameron-Ehlen Group, Inc., which does business as “Precision Lens,” and its owner, revealing a prime example of the significant interplay between the Anti-Kickback Statute (“AKS”) and the False Claims Act (“FCA”), a federal jury has returned a verdict of more than $43 million in damages against the Cameron-Ehlen Group, Inc. The verdict in this long-running and closely watched fraud case out of the U.S. District Court for the District of Minnesota comes after a six-week trial, with the jury ultimately finding that the defendants paid kickbacks to ophthalmic surgeons to induce their use of defendants’ products in cataract surgeries reimbursed by Medicare, resulting in the submission of 64,575 false claims between 2006 and 2015. Read the full article including dozens of convictions and the full issue at http://zalma.com/blog/wp-content/uploads/2023/03/ZIFL-04-01-2023.pdf Other Insurance Fraud Convictions Sady Ribeiro, 72, was sentenced to 36 months in prison for his participation in a scheme to obtain fraudulent insurance reimbursements and other compensation from fraudulent trip-and-fall accidents, by U.S. District Judge Sidney H. Stein. During the course of the fraud scheme, Ribeiro and others attempted to defraud their victims of more than $31 million. Riberio, a New York-licensed pain management was also sentenced to three years of supervised release. Ribeiro pleaded guilty last October before Judge Stein. Four other co-conspirators also previously pleaded guilty for their involvement in the same scheme, and three were convicted at trial in May 2019 for their participation and sentenced in May 2020. Read the full article including dozens of convictions and the full issue at http://zalma.com/blog/wp-content/uploads/2023/03/ZIFL-04-01-2023.pdf It’s Time to Subscribe to Locals or Substack For Subscribers Only I Have Published Special Insurance Videos I publish on Locals.com more than 30 videos and two webinars of the Excellence in Claims Handling program. I also publish on Substack.com videos and webinars of the Excellence in Claims Handling Program available only to Subscribers. The subscribers have access to all the videos and a webinar on “The Examination Under Oath A Tool Available to Insurers to Thoroughly Investigate Claims and Work to Defeat Fraud” among others. The videos start with the history of insurance and work their way through various types of insurance and how to obtain and deal with insurance claims. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe.Subscribe to my publications at substack at substack.com/refer/barryzalmaGo to substack at substack.com/refer/barryzalma 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 54 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. 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, Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; 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.

Intoxicated Driving Not in the Course and Scope of Employment In Gerard Loftus, et al. v. Three Palms Crocker Park, LLC, et al., Appeal by Robert Sotka, 2023-Ohio-927, No. 111639, Court of Appeals of Ohio, Eighth District, Cuyahoga (March 23, 2023) an intoxicated person injures a passenger when he lost control of a vehicle at 120 miles per hour and crashed. Robert Sotka appealed the trial court's grant of summary judgment in favor of his employer, Three Palms Crocker Park, LLC ("Three Palms") and its insurer, State Auto Mutual Insurance Company ("State Auto"). FACTUAL OVERVIEW Plaintiff Gerard Loftus was severely injured as a passenger in a single-car accident in which Sotka was the driver. Sotka was the manager at the Three Palms pizzeria restaurant. Sotka had discussions with Loftus about potentially purchasing a restaurant with him. Sotka left the restaurant at 5:15 p.m. and traveled over 60 miles to the Canoe Club to meet Loftus and a group of Loftus's friends. At around 10:15 p.m., Sotka was driving exceeding a speed of 120 m.p.h. The car left the road and hit a guardrail, causing extensive damage. Sotka's passenger, Loftus, suffered extensive and permanent injuries. Sotka was later convicted of the crimes of Operating Vehicle Under the Influence of Alcohol or Drugs - OVI, a misdemeanor of the first degree, and Vehicular Assault, a felony of the fourth degree in the Ottawa County Court of Common Pleas. Loftus sued Sotka and Three Palms, Sotka's employer. State Auto, who had issued Three Palms a business insurance policy, intervened in the lawsuit and sought a declaratory judgment action that it need not provide a defense or coverage because the accident that resulted in Loftus' injuries was not covered by the insurance policy because Sotka was not conducting or furthering its business when he crashed his car injuring Loftus. The trial court granted summary judgment to both Three Palms and State Auto. LAW AND ARGUMENT An employer may be subject to respondeat superior liability for an employee's accident when that employee is acting within the scope of employment. Conduct is within the scope of a servant's employment if it is of the kind which he is employed to perform, occurs substantially within the authorized limits of time and space, and is actuated, at least in part, by a purpose to serve the employer. State Auto's insurance policy provides liability coverage to Three Palms pursuant to the Commercial General Liability Coverage ("CGL policy"). The parties agreed that the CGL policy specifically excludes damages from motor vehicle accidents pursuant to exclusion. The Auto Endorsement provides CGL coverage for damages arising out of the use of any “non-owned auto” in the business by any person. There was no dispute that Sotka was driving a non-owned auto as defined by the Auto Endorsement. However, the Auto Endorsement only provides coverage while the non-owned auto is being used in Three Palms' business. The trial court determined that neither condition was present upon the record and specifically found that there are no genuine issues of material fact that defendant Sotka was not within the course and scope of his employment with defendant Three Palms Crocker Park, LLC at the time of the subject accident. The court noted that Sotka left the restaurant at 5:15 p.m., traveled a distance of over 60 miles, and admitted the purpose of his trip was to meet with his friend and soon to be new business partner, Loftus. There was no evidence Sotka went to Catawba for any business purpose to benefit Three Palms. Traveling 60 miles and socializing to pursue personal business unrelated to his employer cannot be deemed to be in the service of Three Palms. Considering Sotka's conduct in total, assuming he contacted employees and spoke with others about the general aspects of the operation of a restaurant, those actions are merely incidental to the purpose of his evening: socializing with Loftus and furthering a personal business venture. Moreover, the restaurant employees present on the evening of the accident closed the restaurant without Sotka's direction or input. The record reflects that Sotka's purpose in going to Catawba that evening was to socialize and further his own personal business opportunities. Arguing that the accident occurred while Sotka was acting within the scope of his employment or in furtherance of Three Palms' business, was unbelievable. Sotka committed the offenses of operating a vehicle under impairment, and vehicular assault, a felony. This conduct cannot fairly and reasonably be deemed to be an ordinary and natural incident or attribute of the service to be rendered, or a natural, direct, and logical result of the pizzeria. ZALMA OPINION After spending an evening drinking and reviewing potential opportunities to obtain a new, and personal business with an acquaintance, and then (while intoxicated) starting a return ride at more than 120 miles per hour to take his acquaintance home or to the restaurant owned by Sotka's employer, Sotka was convicted of a felony as a result of his driving and the injuries of the plaintiff. The conduct was obviously not part of Sotka's employment as the manager of a Pizzeria and, therefore, no coverage from the employer or the employer's insurer. (c) 2023 Barry Zalma & ClaimSchool, Inc. 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 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 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 athttp://www.zalma.com andzalma@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://anchor.fm/barry-zalma; 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.

Satisfaction of Mortgage Eliminates Right of Mortgagee to Recover from Homeowners Policy In Thomas P. Williams, Sr. v. Nationwide Insurance a/k/a Nationwide Mutual Insurance Company, Civil Action No. 22-1090, United States District Court, E.D. Pennsylvania (March 24, 2023) Nationwide denied the claim of its insured because they failed to comply with the Policy's post-loss duties by failing to appear for scheduled examinations, not producing requested documents, making material misrepresentations to Nationwide and because Nationwide's investigation of the fire revealed that it was “intentionally set.” The homeowners sold the fire-damaged property to the plaintiff. The money from the sale was used to satisfy the entirety of the homeowners' outstanding mortgage with a bank. The plaintiff requested that the insurer reimburse him for the amount he claims he paid toward satisfying the homeowners' mortgage. He based his request on a standard mortgage clause in the homeowners' insurance policy, which stated that a denial of the homeowners' claim would not preclude payment to a valid claim of the mortgagee. PNC Bank was the original mortgagee. The plaintiff claims that he stepped into the shoes of the bank once he allegedly paid the balance of the mortgage. Thus, the plaintiff claims that he is entitled to the same payment the insurer would have had to pay to the bank, namely the amount it would cost to repair the property. The insurer refused to pay the plaintiff's claim and the plaintiff sued. PROCEDURAL HISTORY The plaintiff Thomas P. Williams alleged that he had purchased a fire-damaged property and paid off the mortgage encumbering the property. FACTUAL BACKGROUND The Ruchs owned property located in Albrightsville, PA (“the Property”). They had insured the Property for property damage under a policy with Nationwide (“the Policy”) and had a mortgage on the Property with PNC Bank NA (“PNC”). A fire caused damage to the Property. The Ruchs submitted a claim to Nationwide under the Policy, and Nationwide eventually determined that the amount of the adjusted claim was $103,000.00. However, Nationwide later denied the claim because of breach of condition and fraud. The Policy contained a mortgage clause allowed payment to the bank upon receipt of a proof of loss. Williams purchased an assignment of the proceeds of the Policy from the Ruchs but not the bank. At the time of the sale, the Ruchs owed $135,490.13 on the mortgage to PNC and used the funds from the sale to satisfy the outstanding balance. At that time, Nationwide had not made any payment to PNC pursuant to the mortgage clause. After receiving the payment, PNC filed a Satisfaction of Mortgage with the Carbon County Recorder of Deeds. DISCUSSION Williams argued that because his funds paid to the Rauch's satisfied the mortgage on the Property and because Nationwide would have had to pay PNC if it fulfilled the policy conditions, he stepped into the shoes of PNC. Nationwide argued that it had no obligation to pay under the mortgage clause because the mortgage was satisfied. Further, Nationwide contended that Williams misconstrues his property interest because he stepped into the shoes of the mortgagor (the Ruchs), not the mortgagee (PNC). When he bought the property Williams’ interest in the property became that of owner, not mortgagee. He had no rights under Nationwide's Policy.” The court concluded that Nationwide was correct on both points. There was no evidence demonstrating Williams assumed any legal rights under the mortgage. While Williams novel argument demonstrates a logical creativity, he cites no case law, and the court found none to support his contention that a purchaser of a property steps into the shoes of the mortgagee when the funds from the purchase are used to satisfy an outstanding mortgage. Duty to Pay Pursuant to the Mortgage Clause Nationwide averred that Williams had no cognizable claim because the Ruchs satisfied the mortgage at closing and there was no present obligation to pay. Because the law permits a mortgagee to recover the amount necessary to satisfy the mortgage but no more, the court found that because the mortgage was satisfied and there is no evidence of a new mortgage, the mortgagee is not entitled to any further payment under the Policy's standard mortgage clause. The fire damaged the Property and after the loss, Williams obtained his interest in the Property. The insured mortgage was fully satisfied and neither party presented any evidence that once Williams obtained his interest, there was any outstanding mortgage on the Property. Therefore, any further recovery under the Policy would constitute an unjust enrichment for the mortgagee. At bottom, the mortgagee cannot seek further payment under the Policy and Nationwide had no obligation to pay. The court granted Nationwide's motion for summary judgment and denied Williams' cross-motion for summary judgment. ZALMA OPINION Nationwide had two contracts: first with the Rauch's as named insured and second with PNC Bank as mortgagee. Once Nationwide denied the claim of the named insureds it had the obligation to pay PNC if it presented a sworn proof of loss. Before PNC even attempted to protect its rights under the policy Williams purchased the property and the money he paid to the owners was used to satisfy the mortgage, thereby eliminating the right of PNC to make a claim to Nationwide. Had Williams obtained an assignment from PNC rather than the Rauch's he would have a claim. He did not and his "creative" argument failed. (c) 2023 Barry Zalma & ClaimSchool, Inc. 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 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 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 athttp://www.zalma.com andzalma@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://anchor.fm/barry-zalma; 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.

WILFUL ACT EXCLUDED BY CALIFORNIA STATUTE Markel American Insurance Company (“Markel”) issued a management liability policy to United Talent Agency (“UTA”). UTA was sued by a competitor, Creative Artists Agency (“CAA”) for allegedly stealing its clients and employees. Markel declined coverage for the action, based on the policy's professional liability exclusion and California Insurance Code § 533, which provides that “[a]n insurer is not liable for a loss caused by the wilful act of the insured.” UTA sued Markel for breach of contract and bad faith. The district court held that § 533 did not apply but concluded that coverage was precluded by the policy's professional liability exclusion, and entered judgment in favor of Markel. United Talent Agency, LLC, a Delaware limited liability company v. Markel American Insurance Company, a Virginia company, Nos. 22-55205, 22-55357, United States Court of Appeals, Ninth Circuit (March 15, 2023) The Ninth Circuit disagreed with the district court's conclusion that CAA's allegations that UTA illegally stole clients and agents from CAA come within the purview of the policy's professional liability exclusion. The allegations by CAA that UTA stole clients and agents from CAA does not bring the conduct within the meaning of rendering professional services. Application of § 533 is a matter of statutory construction, not of contract interpretation. Section 533 reflects a fundamental public policy of denying coverage for willful wrongs and discouraging willful torts. Liability arising from intentional and inherently or predictably harmful conduct cannot be covered by liability insurance. The Ninth Circuit concluded that the legislative purpose is both clear and unequivocal. It is to deny insurance coverage for wilful wrongs. Section 533 creates a statutory exclusion which is read into every insurance policy. The policy's requirement of a judgment establishing a wilful act for the exclusion to apply is not pertinent to the § 533 analysis. A wilful act for purposes of § 533 means either an act deliberately done for the express purpose of causing damage or intentionally performed with knowledge that damage is highly probable or substantially certain to result. A wilful act also includes an intentional and wrongful act in which the harm is inherent in the act itself. Section 533 precludes coverage of litigation when the allegations of the underlying complaint can be established only by showing wilful misconduct. The court must examine the allegations in the underlying complaint to determine whether those allegations necessarily involve a wilful act within the meaning of § 533. The district court did not do so. The Ninth Circuit, therefore remanded the case for the district court to make a determination that § 533 applies to the allegations of wilful misconduct. In light of the remand, the Ninth Circuit declined to consider the parties' other contentions on appeal and reversed the grant of Markel's summary judgment motion on the professional liability exclusion, reversed the denial of Markel's summary judgment motion as to § 533, and remanded the case for the district court to make the appropriate determination on Markel's summary judgment motion as to the application of § 533 because the allegations of the underlying complaint could only be proved if CAA proves the conduct of UTA was wilful. ZALMA OPINION Liability insurance protects the insured from suits seeking damages for its liability due to the insured's negligent acts. Most liability insurance policies exclude intentional acts like assault or battery. California, by statute, compels the existence of an exclusion not written in the policy that states the is no coverage for a: "loss caused by the wilful act of the insured." That section applies and cannot be changed by the wording of the policy even if the insured and the insurer wish to insure against such wilful acts, they cannot do so in California although other states that do not have a similar statute may require coverage. (c) 2023 Barry Zalma & ClaimSchool, Inc. 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 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 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 athttp://www.zalma.com andzalma@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://anchor.fm/barry-zalma; 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.

Occupancy Provision Prevents Coverage for Insured Injured as a Pedestrian George Mims was injured when he was struck by an automobile while walking toward his own vehicle. At the time of the accident Mims had no contact with his vehicle, either before or after the accident, and there was no causal connection between his vehicle and the injuries he suffered. In George Mims; Cecilia Mims v. USAA Casualty Insurance Company, No. 21-1654, United States Court of Appeals, Fourth Circuit (March 21, 2023), George and Cecilia Mims appealed the district court's orders granting USAA Casualty Insurance Company's motion for summary judgment and denying the Mimses' subsequent motion to alter or amend the judgment or for certification of questions to the South Carolina Supreme Court on the Mimses' declaratory judgment action related to the stacking of underinsured motorist coverage under their insurance policy with USAA. SOUTH CAROLINA LAW Summary judgment is only warranted if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Under South Carolina law, stacking allows an insured motorist to recover damages under more than one policy until he satisfies all of his damages or exhausts the limits of his available policies. An insured may stack unless limited by statute or a valid provision in his insurance policy. South Carolina law limits stacking of underinsured motorist coverage if none of the insured's or named insured's vehicles is involved in the accident. Instead, coverage is available only to the extent of coverage on any one of the vehicles with excess or underinsured coverage. THE RECORD The record made clear that Mims had no contact with his vehicle, either before or after the accident, and established that there was no causal connection between his vehicle and the injuries he suffered. Mims was walking to his vehicle at the time he was struck but, according to his own testimony, he had not yet reached his vehicle or physically engaged with it besides unlocking it remotely from across the parking lot. ANALYSIS Regardless of whether the Mims' policy provision broadens or narrows the circumstances in which stacking is allowed, the circumstances here are not encompassed by the provision, as Mims was not "in, on, getting into or out of" his vehicle at the time of the accident. Under South Carolina law, act of getting to or approaching a vehicle is beyond terms of insurance policy with occupancy provision. ZALMA OPINION Although stacking is important to a person injured by an uninsured or underinsured motorist, when there is a policy that requires the insured to occupy his vehicle for there to be coverage, the right to stacking becomes irrelevant. since Mr. Mims was not "in, on, getting into or out of his vehicle" at the time of the accident. When there is no coverage at all there is no need to stack coverages. (c) 2023 Barry Zalma & ClaimSchool, Inc. 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 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 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 athttp://www.zalma.com andzalma@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://anchor.fm/barry-zalma; 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.

Forum Non Conveniens Dismissal Is Not A Judgment On The Merits The Fifth Circuit Court of Appeals resolved insurance issues concerning cable-damage in the Arabian Gulf by recognizing the difference between a broker and an agent, the place where - and to whom - a policy was delivered, and how to deal with the issue personal jurisdiction the court has over the parties and that a forum non conveniens dismissal is not a judgment on the merits; it is, instead a determination that the merits should be adjudicated elsewhere. In Dynamic Industries, Incorporated; Dynamic Industries International, L.L.C.; Dynamic Industries Saudi Arabia, Limited v. Walaa Cooperative Insurance Company; Marsh & McLennan Companies, Inc., doing business as Marsh, Inc.; Marsh USA, Inc., doing business as Marsh USA Risk Services, No. 22-30033, United States Court of Appeals, Fifth Circuit (March 13, 2023) the disputes were resolved. CLAIM OF INSUREDS The insureds (Dynamic) assert that their insurance brokers (Marsh) failed to procure adequate insurance coverage from the insurer (Walaa), or in the alternative, that Walaa breached the insurance policy by declining coverage for an incident involving undersea cable-damage in the Arabian Gulf. The district court granted Marsh's motion to dismiss the suit as untimely under Louisiana law. The district court also granted Walaa's motion to dismiss the suit for forum non conveniens, reasoning that the insurance policy at issue designates Saudi Arabia as the exclusive forum. DISCUSSION First, as for Marsh, Louisiana law requires insureds who wish to sue their insurance broker to do so "within one year from the date that the alleged act, omission, or neglect . . . should have been discovered." [La. Rev. Stat. § 9:5606]. Case Against Broker Dynamic sued Marsh after Walaa denied coverage. But Dynamic received a copy of the insurance policy from Walaa almost 18 months earlier. When Dynamic received that copy, it also received constructive notice of any deficiencies that the policy contained. Dynamic's claims against Marsh are therefore untimely. Dynamic rejects constructive notice, arguing that the policy contains "absolutely no indication that coverage would be denied." But the denial was Walaa's choice, not Marsh's. According to Dynamic, the policy either omits coverage that Marsh is liable for failing to procure or offers coverage that Walaa must honor. For purposes of asserting its in-the-alternative claims against Marsh Dynamic asked the Fifth Circuit to assume that the policy omitted coverage. Any such omission was present when Dynamic received the policy so its suit is time barred. Choice of Jurisdiction Dynamic argued that the Walaa policy's choice of Saudi Arabian law is unenforceable, under Louisiana law, if the policy was "delivered" in Louisiana. Dynamic says that it received delivery in Louisiana from Walaa's agent - a Marsh affiliate known as Marsh KSA. Walaa responded that Marsh KSA was actually Dynamic's agent, and that delivery therefore occurred in Saudi Arabia (where Walaa delivered the policy to Marsh KSA). The Fifth Circuit agreed with Walaa since Marsh, as a broker, is an agent of the insured not the insurer. Under Louisiana law, an insurance broker is generally deemed to be the agent of the insured rather than the insurer. A broker who is asked by the client to procure coverage wherever possible at the best price is not the agent of the insurer. Marsh KSA "approached" multiple insurers looking for a "competitive price" for Dynamic. Marsh KSA was thus Dynamic's agent. After conducting an independent assessment of the clause's enforceability, the district court properly concluded that delivery occurred in Saudi Arabia to the agent of the insured. LACK OF PERSONAL JURISDICTION Separately, the district court concluded that it lacked personal jurisdiction over a Marsh affiliate known as Marsh & McLennan Companies, Inc. ("Marsh Inc.). Yet the district court's judgment dismissed Dynamic's claims against Marsh Inc. "with prejudice" - that is, on the merits. " A federal court generally may not rule on the merits of a case without first determining that it has jurisdiction over the parties i.e., personal jurisdiction. Because the district court lacked personal jurisdiction, it also lacked power to issue a merits judgment regarding Marsh Inc. Likewise, the district court dismissed Dynamic's claims against Walaa "with prejudice." That too was an error, because a forum non conveniens dismissal is not a judgment on the merits; it is, instead a determination that the merits should be adjudicated elsewhere. The Fifth Circuit, therefore, reversed dismissal as to Walaa Cooperative Insurance Company and Marsh & McLennan Companies, Inc., and remanded with instructions for the district court to enter judgment dismissing Dynamic's claims against Walaa Cooperative Insurance Company and Marsh &McLennan Companies, Inc. without prejudice." In all other respects, the District Court’s decision was affirmed. ZALMA OPINION The parties won some arguments and lost others. The case established the fact that an insurance broker is not an agent of the insurer but is the agent of the insured who, on the insured's behalf, transacts insurance. The District Court exceeded its authority and the Fifth Circuit set it straight affirmed part of the decision and reversed others. (c) 2023 Barry Zalma & ClaimSchool, Inc. 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 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 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 athttp://www.zalma.com andzalma@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://anchor.fm/barry-zalma; 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.

Claims Made Policy May Not Respond to Claims Made After Expiration of the Policy Twin City Fire Insurance Company sold a malpractice insurance policy to John S. Xydakis, an attorney and one of the Defendants. Xydakis made claims under the policy based on lawsuits and motions filed against him in Illinois state court. Twin City sought a declaratory judgment that it owes no insurance coverage to Defendants for these claims or, in the alternative, rescission of the policy. In Twin City Fire Insurance Company v. Law Office Of John S. Xydakis, P.C., et al., No. 18 C 6387, United States District Court, N.D. Illinois, Eastern Division (March 20, 2023) the USDC resolved the dispute. In the affidavit to which Xydakis objected, Twin City's counsel avered that several publicly filed documents were either served on Twin City or retrieved from the Cook County Clerk of Court or the Illinois Appellate Court and his objection failed because the Court could take judicial notice of publicly filed documents in other courts if, as in this case, their existence was not subject to reasonable dispute. BACKGROUND Underlying Lawsuits The Chen Lawsuit. Fiona Chen Consulting Company (“Chen Consulting”) sued Xydakis for failing to pay retained expert witness fees. Xydakis filed a sworn Answer, Affirmative Defenses, and Counterclaim against Chen Consulting, demonstrating that all the acts and conduct related to the Chen Lawsuit occurred between January 2012 and November 2012. The Spiegel Motions for Sanctions. Litigants in a separate set of lawsuits (collectively the “Spiegel Lawsuits”) brought three motions for sanctions The presiding Cook County judge ruled on all three motions and entered judgment against Spiegel and Xydakis for over $1,000,000. The Klein Lawsuit. On August 14, 2019, Tiberiu Klein filed a complaint against Twin City and Xydakis alleging legal malpractice, breach of contract, and breach of fiduciary duty. The Klein Lawsuit alleged that Xydakis's wrongful conduct caused Klein to lose his “statutory deadlines” and his opportunity to collect a “significant recovery” of settlement proceeds in an underlying 2014 tort action. The Klein Lawsuit alleged that Xydakis knew of his malpractice on March 9, 2018 after the Seventh Circuit Court of Appeals “issued a damning decision criticizing Xydakis for his various failures in representing [Klein], which amounts [to] legal malpractice ” [see also Klein v. O'Brien, 884 F.3d 754, 757 (7th Cir. 2018)] The Twin City Insurance Policy In December 2016, Xydakis applied for legal malpractice insurance coverage from Twin City. Twin City underwrote and issued a claims-made-and-reported Lawyers' Professional Liability Policy to the Law Office of John S. Xydakis (the “Policy”). Xydakis sought coverage from Twin City for liability in the Chen Lawsuit and for the Spiegel Motions for Sanctions. Twin City denied it owed Xydakis defense or indemnity obligations in these matters. Additionally, the Klein Lawsuit sought damages in connection with Xydakis's alleged malpractice. Twin City likewise denied it owed defense or indemnity obligations for the Klein Lawsuit. DISCUSSION Under Illinois law, the insurer's duty to defend arises when the facts alleged in the underlying complaint fall within, or potentially within, the policy's provisions. The insured bears the burden of proving that its claim falls within the policy's coverage. Once the insured has established coverage, the burden shifts to the insurer to prove that a limitation or exclusion applies. Claims-made insurance policies protect against the risk of an injured party bringing a claim against the insured during the covered period. Xydakis entered into a claims-made policy with Twin City that began on January 26, 2017 and specified January 26, 2016 as the retroactive date. By its plain language, the Policy covers only damages arising from Xydakis's acts or omissions that occurred on or after January 26, 2016. The policy ended on January 26, 2018 and was not renewed. It allowed up to sixty calendar days after its termination to report a claim. So, Xydakis had until March 27, 2018 to make claims under the Policy. The Chen Lawsuit, the Spiegel Motions for Sanctions, and the Klein Lawsuit each fall outside the Policy's scope of coverage, either for underlying conduct occurring before its retroactive date or for claims made after its expiration. ESTOPPEL Xydakis argued that a genuine issue of material fact exists as to whether Twin City should be estopped from denying coverage. Estoppel only applies where the insurer has breached its duty to defend. When the policy and the underlying complaint are compared there was clearly no coverage or potential for coverage, estoppel does not apply. Estoppel may not be used to create or extend coverage where none exists. DUTY TO INDEMNIFY Where no duty to defend exists and the facts alleged do not even fall potentially within the insurance coverage, such facts alleged could obviously never actually fall within the scope of coverage. Under no scenario could a duty to indemnify arise. Twin City owed Defendants no duty to defend in any of the underlying actions; therefore, no duty to indemnify existed. The Court, therefore, granted Twin City's Motion for Summary Judgment. The Court further declared that Twin City Fire Insurance Company owed no duty to defend or indemnify Xydakis under all his professional and individual forms. ZALMA OPINION A lawyer should know how to read an insurance policy. Since a claims made policy requires that there is only coverage if the claim is made during the policy period. Xydakis failed to report the existence of the claims during the policy period so there was neither a duty to defend nor a duty to indemnify. In addition, he concealed the fact of litigation against him that predated the inception of the policy. Xydakis is properly out of business and no longer practices law and must pay any judgment against him from his own assets. (c) 2023 Barry Zalma & ClaimSchool, Inc. 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 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 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 athttp://www.zalma.com andzalma@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://anchor.fm/barry-zalma; 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.

California Insurance Code § 533 Prohibits Insurance for Wilful Acts of the Insured Aspen Specialty Insurance Company appealed from the district court order dismissing its complaint against Miller Barondess, LLP, and several of its partners (collectively "MB"). Aspen appealed to the Ninth Circuit in Aspen Specialty Insurance Company v. Miller Barondess, LLP Louis R. Miller; James Goldman; Alexander Frid; Jason Tokoro, No. 22-55032, United States Court of Appeals, Ninth Circuit (March 15, 2023) who interpreted California Insurance Code § 533. DISCUSSION Under California statutory law, "[a]n insurer is not liable for a loss caused by the wilful act of the insured." [Cal. Ins. Code § 533.] Section 533 is considered a statement of the public policy of the state of California. It was enacted to prevent encouragement of wilful torts. Section 533 is a codification of the jurisprudential maxim that no man shall profit from his own wrong. It is an implied exclusionary clause which, by statute, must be read into all insurance policies. As a result, the parties to an insurance policy cannot contract for such coverage. THE TRIAL COURT The district court concluded that § 533 did not apply because there was no final adjudication that the insureds engaged in malicious prosecution. The California Court of Appeal had concluded that § 533 precluded indemnification for an underlying malicious prosecution action, even though the matter had been settled without a final adjudication. California precedent confirmed that courts examine the allegations of the underlying complaint, not whether there has been an adjudication of the allegations, in determining whether § 533 bars coverage. Insurance coverage is precluded by Insurance Code § 533 as a matter of law. The underlying complaint against MB alleged malicious prosecution, which is categorically a willful act within the meaning of § 533. This is so because malicious prosecution requires a wilful act. DISCUSSION Since the malicious prosecution action was not based on an innocent party's vicarious liability for the wrongdoing of another the complaint alleged that the insureds themselves, not an agent or third party, engaged in the acts of malicious prosecution. For example, the complaint alleged that the insured knowingly submitted NMS' perjured testimony to the trial court, and actively and knowingly assisted NMS in its fraudulent and malicious scheme. The law firm thus could have been vicariously liable for the partner's conduct. There was no question that the MB partners were acting in their capacity and within their authority when they litigated the action that became the subject of the malicious prosecution allegations. The district court order dismissing Aspen's complaint was reversed and the matter remanded for further proceedings and Aspen was awarded its costs on appeal. ZALMA OPINION When a law firm maliciously brings an action against another knowing that the action is false and fraudulent and then presents false, perjured evidence in an attempt to prove the false case, it has acted wilfully and maliciously against the defendant. When the law firm lost the suit the defendant sued seeking damages for malicious prosecution and the lawyers sought defense and indemnity from its insurer. The Ninth Circuit found that since malicious prosecution is always wilful, § 533 prevented the insurer from defending or indemnifying the law firm Miller Barondess, LLP and lawyers Louis R. Miller; James Goldman; Alexander Frid; Jason Tokoro. (c) 2023 Barry Zalma & ClaimSchool, Inc. 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 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 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 athttp://www.zalma.com andzalma@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://anchor.fm/barry-zalma; 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.

MCS-90 Is a Surety Agreement Different from the Insurance Policy An insurer and tort claimants-dispute the insurer's maximum theoretical liability under a surety agreement. In Wesco Insurance Company v. Edward Eugene Rich, as wrongful death beneficiary of LaDonna C. Rich, Deceased; Edward Shayne Rich, as wrongful death beneficiary of LaDonna C. Rich, Deceased, No. 22-60283, United States Court of Appeals, Fifth Circuit (January 12, 2023) resolved the dispute over the limits created by the federally required MCS-90 endorsement. The MCS-90 is surety endorsement that Wesco Insurance Company included with a liability-insurance policy that it issued to Sam Freight Solutions, LLC. The insurance policy provides up to $1,000,000 in insurance coverage for a specific "covered auto," a 2012 Volvo Tractor (and certain trailers attached thereto). The MCS-90 surety endorsement, on the other hand, is a policy endorsement by which Wesco, by the endorsement's terms, assumed up to "$750,000" in liability for "any final judgment recovered against Sam Freight for public liability resulting from negligence in the operation" of any vehicle. The MCS-90 Endorsement is Not Insurance. Instead, it "creates a suretyship, which obligates an insurer to pay certain judgments against the insured . . ., even though the insurance contract would have otherwise excluded coverage." Facts On July 29, 2018, LaDonna Rich died in an automobile collision involving a 2010 Freightliner. The Defendants are her beneficiaries, and they filed a wrongful-death suit against Sam Freight in Mississippi state court. The insurance policy (as distinct from the MCS-90 surety endorsement) that Sam Freight purchased from Wesco does not name the 2010 Freightliner as a covered auto. Therefore, the Wesco policy does not independently offer coverage for the collision. The issue before the Fifth Circuit was the amount of coverage that the MCS-90 endorsement would provide in the event of a judgment against Sam Freight. The Beneficiaries argued that the MCS-90 endorsement would provide up to $1,000,000 in coverage, while Wesco argued that $750,000 would be the maximum available amount. The district court granted summary judgment for Wesco, declaring that the MCS-90 endorsement unambiguously provides that Wesco shall not be liable for amounts in excess of $750,000. While this appeal was pending, the parties reached a settlement agreement under which Wesco agreed that it "will pay" whichever of the two amounts the Fifth Circuit determined the surety agreement to require. Since the MCS-90 is a "federally mandated" endorsement the operation and effect of a federally mandated endorsement is a matter of federal law. As a result the Fifth Circuit’s analysis focused on the plain language of the endorsement. To the extent that Mississippi substantive law governs any residual questions, such as those regarding only the policy, construction of an insurance policy is a question of law, which we the Fifth Circuit was required to review. The insurance policy offers coverage of up to $1,000,000 per accident, but only for "covered autos." The parties agreed that the 2010 Freightliner was not a "covered auto" under the insurance policy's definition of that term. The MCS-90 endorsement makes Wesco "liable," as a surety, for up to "$750,000 for each accident." The endorsement applies "regardless of whether or not each motor vehicle is specifically described in the policy." The MCS-90 attached to the Wesco policy consists of a fill-in-the-blank form that provides spaces for the parties to identify, among other things: the insurer's name, the insured for whom the insurer is acting as surety, and the policy number that the endorsement supplements. In this case, the following amount appears in the blank space on the MCS-90: "[T]he company shall not be liable for amounts in excess of $750,000 for each accident." As a result, Wesco agreed to provide $1 million in insurance coverage for Sam Freight's covered autos, but only $750,000 in public liability coverage for all other vehicles. The defendants argued that number that appears in the blank space ($750,000) is a "change" of the policy. But, it is a change, only if the Beneficiaries are otherwise correct that the MCS-90 and the insurance policy must have identical coverage limits. The MCS-90, for instance, contains the following language: In consideration of the premium stated in the policy to which this endorsement is attached, the insurer (the company) agrees to pay, within the limits of liability described herein, any final judgment recovered against [Sam Freight] .... [emphasis added] The language quoted above sets up an unambiguous distinction between the policy and the endorsement. Likewise, the words "this endorsement" show that the liability limit described "herein" is the limit that appears in the endorsement, not the policy. Neither the policy nor the endorsement required Wesco to provide suretyship liability in the exact same amount that it offers insurance coverage. The MCS-90's plain text limits Wesco's suretyship liability to $750,000. The District Court’s decision was affirmed. ZALMA OPINION The MCS-90 endorsement is a creation of federal law. It is not insurance. It is an act of Congress to require an insurer to indemnify a person injured by a trucker insured who did not pay a premium for the insurance of a specific vehicle it was operating. Sam Freight identified a single vehicle when it acquired insurance from Wesco with limits of liability up to $1 million. The MCS-90 endorsement - compelled by federal law - limited the exposure of Wesco, acting as a surety not an insurer, up to $750,000. The language of the MCS-90 was clear and unambiguous and if the wrongful death beneficiaries received a judgment up to or more than $750,000 Wesco would be required to pay no more than $750,000 and any additional damages would be the responsibility of Sam Freight. (c) 2023 Barry Zalma & ClaimSchool, Inc. 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 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 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 athttp://www.zalma.com andzalma@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://anchor.fm/barry-zalma; 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.

One Year Suit Provision Defeats Late Suit GEICO Marine Insurance Company sued Lee Mandel seeking a declaratory judgment as to the rights and obligations of the parties under two yacht insurance policies. In GEICO Marine Insurance Company v. Lee Mandel, No. 19-CV-3107 (GRB)(AYS), United States District Court, E.D. New York (March 10, 2023) the USDC dealt with the private limitation of action provision of the GEICO policy and the late demand for appraisal. FACTS Lee Mandel was the owner of a 52' SeaRay sedan bridge-model seafaring vessel. GEICO issued Mandel two yacht insurance policies for 2015-16 and 2016-17. Both policies required that: “With respect to any claim or loss to insured property, the action must begin within one year of the date of loss or damage.” In December 2015, Mandel submitted a claim for damage to the starboard, i.e., right-side, engine. GEICO approved piecemeal repairs of approximately $92,400. In July 2016, Mandel submitted a supplemental claim for damages caused by a crack in the engine cylinder. In August 2016, Mandel submitted a claim for damages to the port, i.e., left-side, engine. Afterward, the starboard engine began emitting blue-white smoke. GEICO inspected the vessel in September and November 2016 to investigate Mandel's claims. In December 2016, Mandel removed and replaced the starboard and port engines. In February 2017, GEICO gave Mandel a supplemental and final payment of approximately $17,400 for damage to the starboard engine. GEICO inspected the vessel once again in November 2017. GEICO's February 2018 report declined to pay Mandel the replacement cost of the engine because the decision to proceed with the replacement of Mr. Mandel's engines was made at his direction and not in accordance with the previous settlements issued since replacements of both engines and auxiliary components do not represent, as set forth by the policy, a reasonable cost of repair, but instead constituted betterment. Later that month, GEICO paid Mandel approximately $23,200 for damage to the port engine. Over a year later, in April 2019, Mandel renewed his demand for the cost of replacing the starboard and port engines - approximately $213,500 after payments received - and advised that he would pursue litigation if not paid. The complaint for declaratory relief asserted three causes of action based on the insurance policies' exclusions and the one-year limitation for bringing legal action. THE MOTION FOR SUMMARY JUDGMENT In December 2019, GEICO moved for partial summary judgment on its third cause of action regarding the policies' one-year limitation, and on Mandel's counterclaims for breach of contract and “bad faith.” The Court held that Mandel's breach of contract counterclaim accrued in February 2018 when GEICO advised Mandel that it declined to pay his demands. Since the breach of contract counterclaim was filed more than a year after liability accrued, it was time-barred under the policies' one-year time limitation provision. As to the claim for the breach of the implied covenant of good faith and fair dealing, the Court held that this claim was also time-barred with respect to the allegedly negligent and/or inadequate investigation and failure to promptly conclude its investigation. DISCUSSION A prima facie case of bad faith requires showing a “gross disregard” of the insured's interests. Mandel claimed GEICO initiated this action instead of an appraisal and rejected multiple settlement offers in order to “punish Mr. Mandel for attempting to get the insurance coverage he paid for.” Mandel also argued that GEICO had no reasonable belief that the claims were not covered. Mandel's claim for breach of the implied covenant of good faith and fair dealing fails for a panoply of reasons including all of his claims were time-barred by the policies' one-year time limitation and Mandel did not seek an appraisal within a reasonable time because the one-year deadline for submitting his claim had already passed. GEICO acted well within its rights by seeking a judicial declaration that it had no legal obligations with respect to the subject vessel's engines because they were time-barred under the policies. Moreover, an appraisal is not the appropriate remedy because the dispute turns on whether engine replacement constituted an excludable “betterment” under the policies. Therefore, the Court granted GEICO’s summary judgment on Mandel's counterclaim for breach of the implied covenant of good faith and fair dealing, and found that GEICO Marine has no further obligations to Mandel under the insurance policies or at law with respect to claims involving the vessel's starboard and port engines. ZALMA OPINION The private limitation of action provisions in most first-party insurance policies have been universally upheld by the courts of the United States and the individual states. They have been enforced because they protect insurers against stale claims and protect the insurer's right to have an insured promptly fulfill the requirement to prove the loss. Mandel failed to act promptly to protect his rights and even if his claims were well founded his claim against GEICO Marine failed. (c) 2023 Barry Zalma & ClaimSchool, Inc. 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 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 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 athttp://www.zalma.com andzalma@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://anchor.fm/barry-zalma; 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.

Convicted Insurance Fraud Felon Must Stay in Jail Charles Moss, a federal inmate proceeding pro se, appealed the district court's dismissal of his habeas corpus petition for lack of statutory jurisdiction. In Charles Moss v. D. Jones, Acting Warden, No. 22-1210, United States Court of Appeals, Tenth Circuit (February 21, 2023) the Tenth Circuit gave respect to a pro se appellant and showed he failed in his attempt to get out of jail. BACKGROUND Moss played a role in separate insurance fraud schemes that culminated in arson, murder, and the destruction of a van used in the killing. A federal jury in Louisiana convicted Moss "of conspiracy to commit mail and wire fraud, . . use of fire to commit obstruction of justice in relation to the van fire[,] . . . [and] use of fire to commit mail fraud in relation to [a] house fire." Moss appealed and the Fifth Circuit rejected his arguments. Moss, among other things, then argued actual innocence based on newly discovered evidence and an intervening change in law. The court denied the motion. The magistrate judge recommended dismissing the petition for lack of statutory jurisdiction noting that the so-called "savings clause" permits a federal prisoner to proceed only when the remedy under the statute is inadequate or ineffective to test the legality of his detention. The Magistrate concluded that Moss failed to demonstrate that the remedy available to him in the sentencing court was inadequate or ineffective and warned Moss about the hazards he faced if he did not promptly respond. Waiver Under the Tenth Circuit's firm waiver rule, the failure to timely object to a magistrate judge's finding and recommendations waives appellate review of both factual and legal questions. There are two exceptions to the rule when: a pro se litigant has not been informed of the time period for objecting and the consequences for failing to object, or when the interests of justice require review. Factors relevant to the second exception include a pro se litigant's effort to comply with the objection requirement, the force and plausibility of the explanation for his failure to comply, and the importance of the issues raised. The first exception does not apply because the magistrate judge informed Moss of the time period for objecting and warned him of the consequences attendant to his failure to object. Regarding the second exception, Moss does not assert he made any effort to comply with the objection requirement or offer any excuse for his failure to make such an effort. He instead argued the court should apply the interests of justice exception to the firm waiver rule because the district court plainly erred in dismissing his § 2241 habeas corpus petition. The Tenth Circuit rejected this argument. Moss did not meet his burden to show that the remedy provided by the statutes was inadequate or ineffective. While he argued that his conviction lacked legal sufficiency, a showing of actual innocence is irrelevant to the savings clause inquiry. Under the Tenth Circuit’s firm waiver rule Moss waived any challenge to the magistrate judge's factual findings or legal determinations by failing to object to them and the district court's judgment was affirmed. ZALMA OPINION Criminals, by definition, have little or no respect for the law. After being convicted of the serious crimes of insurance fraud schemes that resulted in arson and murder, Moss refused to accept the punishment for his vicious crimes and failed in his first appeal and then filed a habeas corpus action which was given respect it did not deserve, and he is still in jail and has the right to appeal further even though he has no chance of success. Moss, therefore, continues his criminal activity by abusing the judicial system requiring it to give respect to his appeals. (c) 2023 Barry Zalma & ClaimSchool, Inc. 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 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 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 athttp://www.zalma.com andzalma@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://anchor.fm/barry-zalma; 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.

You Only Get What You Pay For In Auto-Owners Insurance Company v. Michael Cook, Michael Schuster, and Highland Auto Glass, Inc., No. 21-cv-348-JPG, United States District Court, S.D. Illinois (March 9, 2023) Auto-Owners Insurance Company's motion for summary sought declarations that its policy owed neither defense, indemnity nor uninsured motorist coverage to the defendants. BACKGROUND Schuster and Cook on one side and Devin Dahmer on the other were involved in an auto accident. Schuster, president and sole shareholder of Highland, was driving a van he and Highland jointly owned with Cook as his passenger. Both Schuster and Cook were injured in the accident. Cook sued Highland, Schuster, and Dahmer for negligence. Auto-Owners seeks declarations regarding a “Tailored Protection” insurance policy. Auto-Owners argued that the Auto-Owners Garage Policy does not cover vehicles owned by Highland or Schuster like the vehicle involved in this accident. FACTS Schuster was driving a Ford Econoline van he and Highland owned jointly; Cook was his passenger. Dahmer pulled his van into the roundabout in front of the Highland van, nearly missing the van. Down the road, Dahmer pulled over, and Schuster pulled the Highland van to the side of the road several car lengths in front of Dahmer's van. Schuster got out, and then Dahmer drove his van into the Highland van, injuring Schuster and Cook. Dahmer's insurance paid its limits to Schuster, and then Schuster made a claim for a defense, indemnity, and UIM coverage under Highland's Garage Policy. The Garage Policy When obtaining insurance from Auto-Owners, Highland paid premiums for coverage under Division II only which limited the available coverage. ANALYSIS To determine if the underlying suit alleges a situation potentially within the insurance coverage, the Court is required to compare the complaint to the relevant provisions of the insurance policy. If any theory of recovery in the underlying complaint falls within the insurance coverage, the insurer will have a duty to defend. The Garage Policy is clear that the policy covers bodily injury arising out of an automobile “not owned, hired leased, rented, or registered by the insured or an officer, if it is a corporation.” Highland was the insured and Schuster was an officer of Highland, and they both owned the Econoline van so there was no coverage under that section for bodily injuries arising from the Econoline van, including from the collision between Dahmer and the van. The only identified Garage Policy provision that would potentially cover bodily injuries arising out of automobiles owned by the insured is Division I coverage, which Highland did not purchase. Since there is no coverage of the Econoline van under Section II, there is also no underinsured motorist coverage arising from an accident with that van. Schuster agreed but claimed that the “exclusion,” at least to the extent it precludes UIM coverage, violates public policy. The insured bears the heavy burden of showing an insurance provision violates public policy. Schuster pointed to nothing in the Garage Policy that violates Illinois public policy. Rather, he asked the court to award him the coverage he declined to purchase. It does not violate public policy to exclude coverage an insured expressly declined to purchase when it was available. The court also noted that Schuster was not being left without a remedy for injuries caused by an underinsured motorist. Schuster maintained a separate personal automobile insurance policy from Owners Insurance Company, an affiliate of Auto-Owners, as required by the Financial Responsibility Law and Owners paid the UIM coverage under that policy. The court granted Auto-Owners' motion for summary judgment and directed the Clerk of Court to enter judgment accordingly, including declarations that: Auto-Owners owed no duty to defend or indemnify defendants Highland Auto Glass, Inc. and Michael Schuster in connection with the lawsuit Cook v. Highland, in the Circuit Court for the Third Judicial Circuit, Madison County, Illinois; and Plaintiff Auto-Owners Insurance Company owes no underinsured motorist coverage to Michael Schuster under the Auto-Owners policy. ZALMA OPINION A person seeking insurance is faced with the obligation to determine what coverage to buy before an accident occurs where the coverage is needed. The insureds chose a limited coverage, declined to buy a more extensive coverage, and after an accident tried to get the court cure the error and - with an argument that the policy violates public policy - and give them the coverage they refused to buy. Courts are required to interpret insurance contracts they are not required to, nor will they ever, rewrite a policy. (c) 2023 Barry Zalma & ClaimSchool, Inc. 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 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 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 athttp://www.zalma.com andzalma@zalma.com 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://anchor.fm/barry-zalma; 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.

Sexual Abuse of Students not Educational Employment Activities In Nautilus Insurance Company v. Nicole Dufault, Isaiah Ziyambe-Freeman, Uchechi Ike, Matthew Derilus, Isaiah Gavin, Ormond Simpkins, Frankie Jerome, Brandon Hayes, and John Does 1-10, Civil Action No. 22-cv-836, United States District Court, D. New Jersey (March 9, 2023) Nautilus refused to defend or indemnify a convicted sexual abuser of children. Because Nicole Dufault (“Defendant” or “Dufault”) was convicted of the crime Nautilus sought a declaration form the USDC and brought: A motion for summary judgment seeking a declaration that it is not obligated to defend or indemnify Defendant Nicole Dufault in several underlying civil lawsuits; and A motion for default judgment against defendants Matthew Derilus, Isaiah Gavin, Ormond Simpkins, Frankie Jerome, Brandon Hayes, Isaiah Ziyambe-Freeman, and Uchechi Ike (collectively, the “Default Defendants” or “Underlying Plaintiffs”) BACKGROUND The Underlying Plaintiffs, in separate civil actions, alleged that Defendant Nicole Dufault, an insured high-school teacher formerly of Columbia High School in New Jersey, sexually abused them while they were under the age of 16. On February 11, 2015, an Essex County grand jury returned a 40-count indictment against Defendant, charging her with first-degree aggravated sexual assault and second-degree endangering welfare of a child. The Indictment accused Defendant of engaging in sexual relations with six male students under the age of 16 in 2013 and 2014. In 2020 Defendant pleaded guilty in the criminal action to three counts of third-degree aggravated criminal sexual contact as to three of the abused minors. The Nautilus Policies and Coverage Dispute Plaintiff issued an Excess Educators Employment Liability Insurance Policy to the New Jersey Education Association, of which Defendant is a member, covering September 2013 through September 2015. (hereinafter, the “Nautilus Policies”). The Nautilus Policies provided defense and indemnity coverage on behalf of an insured educator, but only for claims arising from the insured's “education employment activities.” For defense and indemnity coverage to attach under the Nautilus Policies, the subject matter of the suit for which coverage is sought must be premised on “education employment activities.” The Nautilus Policies expressly define “education employment activities” as either: “(1) pursuant to the express or implied terms of his or her employment by an educational unit; or (2) at the express request or with the express approval of his or her supervisor, provided that, at the time of such request or approval, the supervisor was performing what would appear to be his or her educational employment activities.” Even if coverage attaches through “education employment activities,” the Nautilus Policies contain exclusions that disclaim coverage for claims arising out of a “criminal proceeding that has resulted in the Insured's conviction,” or “[o]ccurrences involving damages which are the intended consequence of action taken by the Insured.” Nautilus disclaimed all defense and indemnity coverage for the underlying claims. The Instant Actions for Summary Judgment and Default Judgment Specifically, Plaintiff sought a declaration from the Court that it has no duty to indemnify or defend Dufault in the civil actions brought by the Underlying Plaintiffs because: her conduct does not fall within the Nautilus Policies' definition of “educational employment activities;” her convictions for criminal sexual contact, the acts of which constitute the underlying lawsuits, preclude coverage under the Nautilus Policies' exclusions; and her intentional sexual abuse of minor children excluded her from coverage under the “Intentional Damages” provision of the Nautilus Policies. DISCUSSION Plaintiff argued that Defendant's purported sexual abuse clearly falls outside the definition of covered “education employment activities,” and thus Defendant may not invoke coverage under the Nautilus Policies. The Court agreed with Plaintiff and granted a declaratory judgment in Nautilus' favor. The terms of the Nautilus Policies are clear and unambiguous - Nautilus disclaims its obligation to defend and indemnify civil lawsuits in which the underlying subject matter is not related to “educational employment activities." It was undisputed that the alleged sexual abuse of minor students was not conducted pursuant to the terms of Defendant's (or any educator's) educational employment. Therefore, the court found that coverage does not attach to Defendant under the Nautilus Policies because the Underlying Plaintiffs' claims against Defendant do not arise out of her “educational employment activities.” Plaintiff's motion for summary judgment against Defendant was granted and Plaintiff's motion for default judgment against the Default Defendants - was granted. ZALMA OPINION No liability insurance policy covers every possible claim against its insureds. Almost all, like the Nautilus policies, exclude intentional and criminal acts. Since defendant was convicted of a crime, the sexual abuse of minor students, was not part of her employment as a teacher and was clearly intentional, there was no possibility that Nautilus had an obligation to defend or indemnify the abusive teacher. (c) 2023 Barry Zalma & ClaimSchool, Inc. 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 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 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 athttp://www.zalma.com andzalma@zalma.com 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://anchor.fm/barry-zalma; 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.

ZIFL - Volume 27, Issue 6 Ohio Insurance Department Warns of ‘Past Posting’ Fraud Scheme The Ohio Department of Insurance warned of an insurance fraud scheme committed after an auto accident or property damage that is trending in the state. Named the “past posting” scheme, the term describes the action of a person attempting to secure insurance after an incident in which they did not have coverage or making it appear they had insurance when the incident occurred, such as by manipulating paperwork. Read this article and the full issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/03/ZIFL-03-15-2023.pdf The California Bar Admits It’s Failure to Properly Deal with now Disbarred Tom Girardi State Bar Employees Bribed to Ignore Wrongful Conduct by Now Disbarred Attorney Former State Bar employee Tom Layton, who was terminated in 2015, (and his wife) received gifts and payments estimated at over $1 million from Girardi, through his firm, while Layton was employed at the State Bar. Those payments and gifts were never properly disclosed. Other State Bar employees and Board members accepted and failed to report gifts and other items of value from Girardi. Relatives of staff members were employed by Girardi’s firm. Staff in the Office of Chief Trial Counsel (OCTC) were improperly involved in matters assigned to outside conflict counsel. Eight Girardi cases were closed by individuals who May determined had conflicts of interest at the time they worked on the cases. The report found that their conflicts tainted their decisions to close the cases. Interim Executive Director Bob Hawley ghostwrote decisions in matters assigned to outside conflict counsel without disclosing that fact, including a decision to recommend closure of a complaint against Girardi. Between 2013 and 2015, both the Executive Director’s Office and Office of General Counsel received reports about Girardi’s influence at the State Bar and connection to Layton and others but failed to investigate. Former Executive Director Joe Dunn, who was terminated in 2014, and Hawley made questionable terminations of two OCTC attorneys who were advocating for disciplinary actions against Girardi. On at least one occasion, Girardi successfully deployed his connections at the State Bar to discourage people from making complaints against him. Read this article and the full issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/03/ZIFL-03-15-2023.pdf More McClenny Moseley & Associates Issues Three attorneys who once worked in MMA’s New Orleans office have posted notice on their LinkedIn pages that they are now “self-employed.” Founding partner James M. McClenny has resigned from the law firm. Several attorneys who once worked for the law firm outside of Louisiana are no longer listed on the law firm’s website. After the Louisiana Supreme Court suspended Huey last week, the bios of the three other attorneys who worked with him in the New Orleans office disappeared from MMA’s website. Read this article and the full issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/03/ZIFL-03-15-2023.pdf Good News from the A soulless soul-food murder plot was shut down. The owner of a soul-food restaurant featured on the hit TV reality show Welcome to Sweetie Pie’s had his nephew gunned down for a $450K life policy. James “Tim” Norman received life in prison for arranging a hit on his nephew Andre Montgomery in St. Louis. Norman paid Travell Anthony Hill $5K to shoot Montgomery with a .380-caliber handgun outside the rap studio where Montgomery worked. He then disposed of the gun and his burner phone. Exotic dancer Terica Ellis was in a relationship with Norman. He paid her $10K in cash to lure Montgomery to where he was shot. Insurance agent Waiel “Wally” Rebhi Yaghnam helped Norman secretly take out life insurance that named Norman the sole beneficiary if Montgomery died. Yaghnam helped Norman file applications that included false info about Montgomery’s net worth and background. Norman called the insurance agency to collect the insurance money just 16 days after Montgomery was shot. He also fake-played the role of grieving relative. TV clips from Welcome to Sweetie Pie’s circulated showing Norman mourning the death he himself set up. Norman even visited the murder scene with his mother and TV cameras in an episode. “Since Andre’s passing I haven’t gone through this part of the city,” Norman said on the show. “I’ve been avoiding it.” The entire murder crew now stands convicted. Read this article including dozens of convictions and the full issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/03/ZIFL-03-15-2023.pdf Health Insurance Fraud Convictions Former State Lawmaker Sentenced for COVID-19 Fraud Scheme at Springfield Health Care Charity Patricia “Tricia” Ashton Derges, 64, of Nixa, Mo., was sentenced by U.S. District Judge Brian C. Wimes to six years and three months in federal prison without parole. The court also ordered Derges to pay $500,600 in restitution to her victims. Read this article including dozens of convictions and the full issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/03/ZIFL-03-15-2023.pdf Other Insurance Fraud Convictions LA Business Owner and Conspirator Sentenced In $54 Million Workers’ Compensation Fraud Scheme Wesley Owens, 54, of Atlanta, Georgia, and Beau Wilson, 38, also of Atlanta, pleaded no contest to multiple felony counts of insurance fraud and conspiracy in Department 50 of the Los Angeles Superior Court before Judge Kerry White. The charges were filed after a California Department of Insurance investigation found the two defendants perpetrated a $54 million workers’ compensation insurance fraud scheme. Read this article including dozens of convictions and the full issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/03/ZIFL-03-15-2023.pdf It’s Time to Subscribe to Locals or Substack For Subscribers Only I Have Published Special Insurance Videos I published on Locals.com more than 25 videos and two webinars of the Excellence in Claims Handling program. I also published on Substack.com videos and webinars of the Excellence in Claims Handling Program available only to Subscribers. The subscribes have access to all the videos and a webinar on “The Examination Under Oath A Tool Available to Insurers to Thoroughly Investigate Claims and Work to Defeat Fraud” among others. Read this article and the full issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/03/ZIFL-03-15-2023.pdf (c) 2023 Barry Zalma & ClaimSchool, Inc. 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 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 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 athttp://www.zalma.com andzalma@zalma.com 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://anchor.fm/barry-zalma; 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.