Barry Zalma, Inc. on Insurance Law

Uncovering Insurance Fraud by Barry Zalma Available here Publisher:Clark Boardman Callaghan, Copyright: 2024 Property Investigation Checklists: Uncovering Insurance Fraud, 14th Edition provides detailed guidance and practical information on the four primary areas of any investigation of suspicious claims: 1Recognizing suspicious claims 2Proper investigation procedures 3Analysis of laws concerning fraudulent personal and real property claims 4Evaluating and settling claims The book also examines recent developments in areas such as arson investigation procedures, bad faith, extracontractual damages, The fake burglary, and Lawyers Deceiving Insurers, Courts & Their Clients During, Catastrophes—A New Type Of Fraud and the appendices includes the NAIC Insurance Information and Privacy Protection Model Act and usuable forms for everyone involved in claims. . Table of Contents CHAPTER 1. INSURANCE AND THE INDICATORS AND ELEMENTS OF FRAUD CHAPTER 2. INVESTIGATION CHAPTER 3. THE “ARSON DEFENSE” CHAPTER 4. CIVIL REMEDIES: RESCISSION AND AVOIDANCE CHAPTER 5. CONDITIONS PRECEDENT CHAPTER 6. AUTOMOBILE MATERIAL DAMAGE FRAUD CHAPTER 7. GOOD FAITH; BAD FAITH CHAPTER 8. ADJUSTING AND PAYING THE SUSPICIOUS CLAIM CHAPTER 9. DISPUTE RESOLUTION—SETTLEMENT AND APPRAISAL CHAPTER 10. CASE HISTORIES CHAPTER 11. RESCISSION AS A TOOL TO DEFEAT INSURANCE FRAUD FRAUD IN THE ACQUISITION OF INSURANCE CHAPTER 12. LAWYERS DECEIVING INSURERSCOURTS & THEIR CLIENTS DURING CATASTROPHES—A NEW TYPE OF FRAUD -- McClenny Moseley & Associates & Louisiana The newest book joins other insurance, insurance claims, insurance fraud, and insurance law books by Barry Zalma all available at the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/

Reasonable Basis for Denying Coverage Defeats Bad Faith Claim Post 4720 Mitchellville Plaza Bar LP ("Mitchellville") appealed the district court's granting summary judgment to Hanover American Insurance Company on Mitchellville's breach of contract and bad faith claims arising from an insurance dispute over the infestation of its property by vultures. Mitchellville's complaint alleged that Hanover wrongfully denied coverage under its insurance policy for commercial property damage caused by turkey vultures to the roof of one of Mitchellville's properties. Hanover denied coverage under an exclusion for damage caused by an "infestation" of birds. In Mitchellville Plaza Bar LP v. The Hanover American Insurance Company, No. 22-2089, United States Court of Appeals, Fourth Circuit (January 19, 2024) the Fourth Circuit resolved the policy interpretation. FACTS Mitchellville concedes that the only disputed issue in its breach of contract claim is whether the "infestation" policy exception applies to bar its claim. A contract is not rendered ambiguous by the mere fact that the parties do not agree upon the proper construction. ANALYSIS Mitchellville argued the exclusion was ambiguous. The court must consider a written contract and can not find it is ambiguous only when a policy provision is reasonably susceptible of more than one meaning. The Fourth Circuit noted that the district court did not err in determining that the vulture presence on Mitchellville's property constituted an "infestation" under a plain and ordinary understanding of this term. Indeed, as the district court found, the various definitions of the term "infestation" commonly characterize an infestation as the persistent, invasive presence of unwanted creatures. The evidence of the vulture activity at the property, including the eyewitness testimony detailing the substantial bird activity at the property over the course of many months, meets this definition. Accordingly, the district court properly granted summary judgment to Hanover on Mitchellville's breach of contract claim. Bad Faith While an insurer's motive of self-interest or ill-will is potentially probative it is not a mandatory prerequisite to bad faith recovery. Proof of the insurer's knowledge or reckless disregard for its lack of reasonable basis in denying the claim is sufficient. Hanover based its denial of policy benefits on several reports that, taken together, gave Hanover a reasonable basis for denying coverage. The reports indicated that substantial, persistent, and troublesome bird activity had caused the relevant damage to the roof of the property. Accordingly, the Fourth Circuit concluded that the district court did not err in granting summary judgment to Hanover on this claim and affirmed the judgment of the district court. ZALMA OPINION When a flock of vultures lands on a roof over a period of months and damages or destroys the roof, that is an infestation of birds and was excluded by clear and unambiguous language of the policy. Courts are required to apply the facts and the law to the clear and unambiguous language of the policy. No insurance policy covers every possible cause of loss. This policy told the insured when it acquired the policy that it would not cover losses caused by an infestation of birds. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Go to X @bzalma; Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

Never Sign an Application Without Reading It Post 4719 Betty Baldwin appealed from a summary judgment in favor of Kentucky National Insurance Agency (KNIC) and Holton, Melugin, and Haverstock Insurance Agency, Inc., d/b/a Haverstock Insurance Agency, Inc. (Haverstock) because of false statements on an application for insurance. In Betty Baldwin v. Kentucky National Insurance Company; and Holton, Melugin And Haverstock Insurance Agency, Inc., D/B/A Haverstock Insurance Agency, Inc., No. 2022-CA-0840-MR, Court of Appeals of Kentucky (January 19, 2024) the Court of Appeals applied state law to resolve the issues. FACTS According to Baldwin two of the answers provided on the application were incorrect at the time of signing. Baldwin indicated in Question 28 that she did not specifically have a German Sheperd. Further, Baldwin in Question 32 indicated that she had never had a prior fire loss. Sometime after signing the Kentucky Homeowner Application, Baldwin purchased a homeowner insurance policy through Kentucky National Insurance Company. On October 13, 2019, a fire occurred and resulted in the total loss of the above-described home. On March 5, 2020, after denying Baldwin's coverage, Kentucky National Insurance Company (hereinafter "KNI") filed a Complaint for Declaration of Rights and Monetary Damages arising from the house fire on October 13, 2019. KNIC filed a motion for summary judgment. Because of the admitted misrepresentations in the application, KNIC maintained that it was permitted to rescind the homeowner's insurance policy and the Circuit Court agreed. Baldwin argued that she did not make the misrepresentations in the application. Rather, Baldwin asserted that Van Haverstock or an employee under his direction completed the application, and she merely signed same without reading it. The circuit court rendered summary judgment in favor of KNIC and Haverstock. In so doing, the circuit court reasoned that it was undisputed that Baldwin did not read the application before signing it; that above Baldwin's Signature was the language that avered: ‘I have read the entire application and I warrant that to the best of my knowledge and belief all of the statements made herein are true." In this case, it is undisputed that Baldwin suffered a major fire loss to her previous home in 1994 and was paid $90,000 by her homeowner's insurance company. It is also uncontroverted that in the insurance application with KNIC, Baldwin was asked if she "ever had a fire loss," and the answer was no. Baldwin signed the insurance application without reading it. Because Baldwin was solely responsible for the answers in the application, the misrepresentations were only her responsibility and KNIC was entitled to rely on the statements and could rescind the policy when it was established that the application contained false representations. The Court of Appeals concluded that the circuit court properly rendered summary judgment dismissing Baldwin's claims against KNIC. ZALMA OPINION Baldwin tried to avoid the rescission by claiming she relied on the broker and did not read the application because she trusted the broker. The trust was misplaced because she signed the application without reading and finding the misrepresentations to which she admitted at deposition. She was responsible for the statements in the application and as a result had no insurance at the time of the fire. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Go to X @bzalma; Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

Insurer v. Insurer Disputes Should be Resolved by Mediation Rather Than Litigation Post 4717 In an insurance coverage dispute that arose out of the tragic death of an employee on a construction site the Fifth Circuit was called upon to determine which insurer was obligated to deal with the claims of the family of the deceased employee because the insurers could not agree. In Gemini Insurance Company v. Indemnity Insurance Company of North America, No. 23-20026, United States Court of Appeals, Fifth Circuit (January 12, 2024) the court dealt with the coverage disputes over which insurer is obligated to defend and or indemnify which person or entity. BACKGROUND FACTS ExxonMobil Corporation ("Exxon Mobil") retained Bechtel Oil, Gas, and Chemicals, Inc. ("Bechtel") as a general contractor to build a new hydrocarbon processing facility in Beaumont, Texas (the "Project"). As part of its contract with Bechtel, Exxon Mobil implemented an Owner Controlled Insurance Program ("OCIP"), which provided workers' compensation and employers' liability coverage to Bechtel and all of its subcontractors. Bechtel retained Echo Maintenance, L.L.C. ("Echo") as a subcontractor to perform mechanical, structural, and piping work on the Project. Bechtel and Echo subsequently entered into a contract that incorporated the OCIP and required Echo to enroll in the program (the "Subcontract"). Both Bechtel and Echo were enrolled in the OCIP. Indemnity's Workers' Compensation and Employers' Liability Policies Issued Under The OCIP Under the OCIP, Indemnity Insurance Company of North America ("Indemnity") issued a workers' compensation and employers' liability insurance policy to Bechtel ("OCIP Policy"). Separately, Gemini Insurance Company ("Gemini") issued a general commercial liability policy to Echo under which Bechtel was an additional insured. Part Two the OCIP Policy sets forth the type of covered claim that Indemnity agreed to defend and indemnify Bechtel. The OCIP contained a VCEL Endorsement whose first provision explains that the endorsement "adds Voluntary Compensation Insurance to the policy," and that the insurance applies to bodily injury by accident so long as it is "sustained by an employee included in the group of employees described in the Schedule" and "arise[s] out of and in the course of employment necessary or incidental to work in a state listed in the Schedule." Employers' Liability Insurance It defines "State of Employment" in relevant part as "Texas but only at the site indicated in the designated premises endorsement." Underlying Incident and Lawsuit In December 2017, Ms. Espinoza was working as a pipefitter helper on the Project when she was struck by a piece of pipe and sustained fatal injuries. In response to the suit brought by her heirs, Bechtel sought coverage as an additional insured on the commercial general liability policy issued by Gemini to Echo and received a defense from Gemini under a reservation of rights. Bechtel moved for summary judgment on the heirs suit because Exxon Mobil's OCIP provided blanket workers' compensation insurance and coverage to Bechtel and Echo, Intervenors' sole remedy in accordance with Texas Labor Code was workers' compensation benefits. The state court granted Bechtel's motion for summary judgment. DISCUSSION The main issue was whether Ms. Espinoza was an "employee" of Bechtel within the terms of the OCIP policy. Reading the VCEL Endorsement together with Part Two, the Fifth Circuit concluded that the only reasonable interpretation was that the VCEL Endorsement expanded the definition of a Bechtel "employee." The ordinary meaning of "employee" is someone who works in the service of another person (the employer) under an express or implied contract of hire, under which the employer has the right to control the details of work performance. The Fifth Circuit concluded that the VCEL Endorsement expanded the OCIP Policy's definition of "employee" to include employees of Bechtel's subcontractors, such as Ms. Espinoza. THE DUTIES TO DEFEND AND INDEMNIFY Duty to Defend Ms. Espinoza was an employee of Echo, but also simultaneously working for Bechtel at the designated premises, thus satisfying the VCEL Endorsement. Ms. Espinoza was killed while working in the scope of her employment. The allegations, construed liberally, constitute a claim potentially within the OCIP policy. As a result Indemnity had a duty to defend Bechtel in the Underlying Litigation. Duty to Indemnify There is no dispute that Ms. Espinoza was an Echo employee, that Echo was a subcontractor of Bechtel, that Bechtel and Echo had a written contract, and that the work they performed was on a "designated premises" within the meaning of the OCIP Policy the workers' compensation OCIP coverage applies. Bechtel "provided" workers' compensation insurance to Echo when they executed the Subcontract. Accordingly, Indemnity has a duty to indemnify Bechtel as well. Contractual and Equitable Subrogation Because the district court concluded that Indemnity did not have a duty to defend or indemnify Gemini, it never addressed the substance of Gemini's subrogation arguments. The Fifth Circuit reversed the district court's grant of Indemnity's motion for summary judgment and remanded the case back to the district court with instructions to: grant Gemini's motion for summary judgment on Indemnity's duties to defend and indemnify under the Policy, and consider the subrogation issues in the first instance. ZALMA OPINION Insurance policies must be dealt with as an entirety, no matter how extensive or complex. Once the court determined that Ms. Espinoza was an employee it resolved the dispute and found that Indemnity owed defense and indemnity to the defendants. The insurer's should not have engaged in this litigation but worked out a resolution to the benefit of the insureds with the assistance of a mediator knowledgeable about insurance issues. Failing to do so, after the expenditure of a discovery, a summary judgment and an appeal the obvious resulted a case where only one party was happy and there existed a possibility that much would be saved by an agreement between equals. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Go to X @bzalma; Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

Insured Must Fulfill Policy Conditions Post 4718 Pharmacia Corporation appealed the District Court's order granting summary judgment declaring that one of its excess insurers, Twin City Fire Insurance Company, did not owe a duty to pay Pharmacia's settlement and defense costs from a shareholder class action. In Pharmacia Corporation n/k/a Pfizer, Inc. v. Arch Specialty Insurance Company; Twin City Fire Insurance Company; Liberty Mutual Insurance Company, No. 22-2586, United States Court of Appeals, Third Circuit (January 19, 2024) the conditions were applied. FACTS Pharmacia, a pharmaceutical drug manufacturer, purchased a $200 million directors and officers insurance tower from thirteen companies through an insurance broker. The first layer of the tower consisted of a $25 million primary policy issued by National Union Fire Insurance Company of Pittsburgh, Pa (the "Primary Policy"). The next twelve policies provided excess insurance totaling $175 million. Twin City sold Pharmacia the eighth-layer excess policy (the "Policy"), which provided $10 million in coverage and specified that "liability for any loss shall attach to [Twin City] only after the Primary and Underlying Excess Insurers shall have [(1)] duly admitted liability and [(2)] . . . paid the full amount of their respective liability." Pharmacia shareholders sued seeking class action qualification against the company, alleging that it artificially inflated its stock by misrepresenting the results of a clinical drug study. After ten years of litigation, the case settled, and Pharmacia incurred approximately $207 million in defense and indemnity costs. Pharmacia then provided Twin City proof that the excess carriers ahead of it in the insurance tower paid their policy limits and asked Twin City to provide coverage. Twin City declined. Pharmacia sued Twin City. The District Court granted Twin City's motion for summary judgment and dismissed the case with prejudice. The Court found that: (1) the plain language of the Policy required the other excess insurers to admit liability as a condition precedent for coverage to attach; (2) six of them had disclaimed liability, and (3) as a result, a condition for coverage was not satisfied. Pharmacia appealed. POLICY INTERPRETATION The Third Circuit concluded that no conflict exists here. Specifically, courts: Give effect to the intent of the parties as expressed in the clear language of the contract, and the plain language of the contract is the cornerstone of the interpretive inquiry. May not make a different or better contract than the parties themselves saw fit to enter into. Courts should refrain from rewriting the agreement to accomplish their notions of abstract justice or moral obligation. May avoid a literal construction of the words of a contract only if that interpretation defies all bounds of common sense. ANALYSIS When the intent of the parties is plain and the language is clear and unambiguous, a court must enforce the agreement as written, unless doing so would lead to an absurd result. Applying these principles, the Policy unambiguously imposed two distinct conditions precedent for coverage to attach. Specifically, Pharmacia must show both that the insurers ahead of Twin City in the tower have: duly admitted liability and paid the full amount of their respective liability. Pharmacia failed to show that both conditions to trigger Twin City's coverage were met since six insurers refused to admit liability. Regardless of whether the other insurers in the tower paid their policy limits, the record does not demonstrate that all of those insurers admitted liability and the court is not required to accept the error of the six insurers refusing to admit liability who still paid. Because Pharmacia failed to establish at least one condition precedent, the District Court correctly declined to declare that Twin City owes Pharmacia coverage. The trial court was affirmed. ZALMA OPINION Conditions precedent in an insurance policy must be met or the insurer has no obligation to provide defense or indemnity under the policy. Twin City established that six insurers in Pharmacia's tower below Twin City did not admit liability and that, therefore, it failed to prove compliance with the condition precedent. Pharmacia luckily received contributions from insurers accepting coverage and insurers who did not but decided not to litigate. After reading this case, if the six had the same condition, they have explanations to make to their shareholders. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Go to X @bzalma; Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

To Obtain Coverage Insured Must Pay a Premium Erie Insurance Exchange (Erie Insurance) claims that the trial court erred in granting partial summary judgment in favor of Icon, d/b/a Allure on the Lake (Icon), on Icon's complaint for breach of contract. Erie Insurance contends that the trial court improperly determined as a matter of law that the commercial insurance policy (the Policy) it issued to Icon was ambiguous and entitled Icon to additional income protection coverage after a fire had destroyed Icon's building. In Erie Insurance Exchange v. Icon, Inc., d/b/a Allure on the Lake, et al., No. 23A-PL-664, Court of Appeals of Indiana (January 12, 2024) the Court of Appeals interpreted the entire policy. FACTS On June 3, 2019, a fire in Chesterton, Indiana destroyed a banquet hall (the Hall) that Icon owned. At the time of the fire, the Hall was insured by Erie Insurance. The Policy stated that "in return for your timely premium payment, your compliance with all of the provisions of this policy . . . [Erie Insurance agrees] to provide the coverages you have purchased." [emphasis added] The Declarations page specifically directed the insured to refer to the Supplemental Declarations to find additional information about included coverages under the Policy. Income protection coverage-as identified in "Coverage 3" of the Declarations-is defined as loss of "income" and/or "rental income" you sustain due to partial or total "interruption of business" resulting directly from "loss" or damage to property on the premises described in the "Declarations" from a peril insured against. "Loss" or damage also includes property in the open, or in a vehicle, on the premises described in the "Declarations" or within 1,500 feet thereof. The Supplemental Declarations specifically indicate what "amount of insurance" the Policy provides for by displaying a dollar amount under the "amount of insurance" column. The Policy further provided that when additional income coverage is not purchased by the insured, a minimal, i.e., "standard" protection coverage is provided as part of the basic package. CLAIM PAYMENTS After the Hall was destroyed, Icon submitted a timely claim to Erie Insurance under the Policy. Although Erie Insurance paid both the property damage and building contents portion of Icon's claim, it maintained that the maximum income protection afforded under the Policy was $25,000 and not $1 million because Icon did not pay a premium for additional income protection coverage. REFUSAL TO PAY INCOME LOSSES When Erie Insurance refused to pay for those additional losses, Icon filed an amended complaint against Erie Insurance on March 10, 2020, for breach of contract and bad faith. Thereafter, Erie Insurance filed a motion for partial summary judgment, claiming that it was entitled to judgment as a matter of law because Icon did not pay a premium for additional income protection and, therefore, the $1 million maximum coverage was not available to Icon for its income losses. The trial court granted Icon's cross-motion for partial summary judgment, concluding that the Policy was ambiguous as to the available amount of income protection coverage to which Icon was entitled. DISCUSSION AND DECISION Insurance policies are contracts subject to the same rules of judicial construction as other contracts. Insurance policies must be read as a whole. That is, specific words and phrases cannot be construed exclusive of other policy provisions. Furthermore, the language of an insurance policy should be construed so as not to render any words, phrases or terms ineffective or meaningless. In this case, the first page of the Declarations in the Policy denotes the coverages for which Icon paid a premium. The Policy's plain language was clear that the "Each Occurrence Limit" is specifically limited to include the total amount of insurance that will be paid for bodily injury or property damage liability and for medical expenses under the liability portion of the Policy. Hence, the unambiguous language of the Policy demonstrates that the "Each Occurrence Limit" on page l of the Declarations, which Icon relies upon, is a limit for general liability coverage, not a limit for property coverage. As a result, the $1 million "Each Occurrence Limit" shown there is irrelevant to the amount of income protection coverage afforded under the Policy. The lack of a dollar amount for Coverage 3 is a clear and unambiguous statement that additional income protection coverage was not included for the subject property. The Declarations show that Icon paid no premium for Coverage 3-income protection-and, in accordance with the plain language of the Policy, Erie Insurance did not provide such coverage to Icon. Thus, Icon is limited to income protection coverage up to $25,000 in accordance with the standard protection section of the Policy. The trial court’s conclusion was reversed and the trial court was instructed to enter partial summary judgment for Erie Insurance and to conduct further proceedings consistent with this opinion. ZALMA OPINION Insurance contracts must be read before accepting the offer from an insurer to insure. In this case the insured, Icon, either failed to read the coverages provided or decided to not purchase income coverages. The Court of Appeals found that since Icon did not pay a premium for the income coverage it had no coverage. Regardless of why it did not pay the premium by not doing so Icon recovered the minimal coverage for Income but not the coverages they wanted after a real loss. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Go to X @bzalma; Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

Insurance Fraud Costs Everyone Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story that follows are designed to help everyone Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ­­­Perpetrators than any Other Crime. The insurance industry, unintentionally, instructs its insureds how to successfully perpetrate insurance fraud. Insurers encourage fraud by: decimating its professional claim staff by short-sighted cost cutting. by selling insurance to persons unknown to the company or the broker. by accepting the word of new applicants without a pre-risk survey. by allowing threats of bad faith lawsuits to intimidate the company into a quick settlement. Commercial property insurance has proven to be an excellent training ground for novice frauds. Baseball cards are collectibles with widely varying values depending on rarity and condition. The value of a collectible card is totally subjective and, as a result, difficult to insure. Why A Retail Baseball Card Store Was an Invitation to Fraud The husband and wife had failed in several tries to conduct a profitable retail business. They simultaneously closed their comic book store and opened a new business called Out In Left Field where they sold baseball cards in the 1980’s at the apex of the baseball card fad. They located in a new, strip shopping center, in a residential area of Fresno, California. The store lease required Out In Left Field to maintain liability insurance for the landlord. Out In Left Field first tried to buy insurance from the captive agent of a major mutual insurance company. Because of their lack of experience in the baseball card business the agent’s mutual insurer would not accept the risk. The agent then investigated the surplus lines market seeking insurance for the business. In that market he found an insurer willing to take the risk without a signed application. The husband and wife, at first, had only requested the liability policy required by their lease. The agent advised them that it would be in their best interest to have a business owners’ policy (BOP). The premium was relatively low and they, therefore, bought an all risk coverage with $50,000 limits of liability on their business personal property. At no time, before the inception of the policy or after, did anyone ask the insureds for substantiation that Out In Left Field had an inventory of $50,000 in business personal property. No one asked for any documentation to show that Out In Left Field had ever performed a physical inventory. No one asked for any documentation that they had any business records that the insurer could rely upon at the time of loss. Only the local agent even visited their shop. The insureds went to several baseball card shows and began purchasing an inventory of low value cards for between one and three dollars a card. They offered these for sale at retail price in their local Fresno showroom. The earnings of Out In Left Field were no better than its predecessor, the comic book store. The insureds were considering closing their store down and walking away from their lease. They had no assets which their landlord could attach, even if he got a judgment against them. Fortuitously, for the insureds, a burglar entered the premises, removed a portable radio, an adding machine, $50.00 in change from their cash register and a few baseball cards. The insureds reported the loss to their insurer. A young adjuster, who had never been in a retail business in his life except as a customer, made first contact by telephone. He had no knowledge of the marketplace for baseball cards and no personal experience operating a business. In fact, he had just graduated from the insurer’s two week claims training class. The adjuster spoke briefly with the insureds and took a three minute recorded statement limited to the discovery of the burglary. The adjuster mailed the insureds blank sheets to fill out listing all of the property claimed taken. He also asked for purchase invoices to support the ownership of the items in question. The insureds, at the time of the burglary, were basically honest people. Their business was failing and the temptation provided to them by the young adjuster was too much to resist. The insureds stayed up for three nights and prepared a list. It included not only the theft of the radio, the cash from the cash register, and the adding machine but also of fifty (50) prime, excellent condition, baseball cards and two hundred fifty (250) modern cards valued at $2.00 each. The descriptions and values came directly from a catalogue. The list included a card of the year Henry Aaron broke the home run record and Mickey Mantle’s rookie year. It also included Roger Maris’ 61 home run year and Willie Mays’ rookie year. Each card was valued by the insureds at more than $1500 each. They then changed the purchase invoices and added to the purchase price three numbers to the left of each invoice amount. The invoices thus appeared to verify the purchases of the cards they claimed stolen. The total amount of claimed loss exceeded their policy limits. They made Xerox copies of each of the invoices to give to the adjuster. The adjuster did not even bother looking at the originals. The adjuster did not, therefore, see that some of the invoices were written in different color ink. If the adjuster saw the original invoices, he would have seen the changes. The adjuster was surprised when he received the claims forms. He did not expect such a large loss. He telephoned another retail baseball card store and learned that fifty baseball cards like those claimed stolen could easily be worth more than $50,000. He did not know what to do. He spoke with his supervisor. The supervisor suggested an audit of the books and records of Out In Left Field by an accountant. The accountant, receiving the same forged documents, the adjuster had received found that the insureds’ calculations were correct. The accountant hired to audit the records of the insureds never looked at original documentation. The supervisor, still wary of the claim, suggested an attorney conduct an examination under oath of the insureds. However, before the lawyer started the insured’s wife telephoned the adjuster to advise that, as the adjuster knew, her disabled husband’s only interest was Out In Left Field. She explained that because of the delays in the payment of their claim and the time they had to spend with the accountant the insureds were unable to buy inventory. The insureds had sold nothing and could not pay their rent. Her husband had become so depressed as a result of the delays of the adjuster that he had tried suicide. He was well, at the moment, she said and begged him to make the claim payment. The adjuster and the supervisor, with a minuscule investigation, and no facts to go on, decided to pay the policy limits as soon as possible. The adjuster delivered a draft for the amount claimed the next day. A notice of nonrenewal of the policy followed. The insureds took the money and paid their back rent. They bought some new clothes and a new car. With what was left they tried to buy additional inventory for the store. Business was still poor since they were inept at running a retail business. They decided, since the claim was so easy the first time that they would get a new insurance policy. They called every insurance agency in Fresno until they found one who was willing to present their risk to an insurer. Out In Left Field’s owners knew, because they had first tried honesty that they could not reveal the prior loss. When they reported, the prior loss to a different broker insurance was refused. When they did not reveal the prior loss, they got a policy with $150,000 in limits. The insurer’s only office was in Nebraska. The new insurer relied totally on the representations of the insureds in the application. They conducted no pre-risk survey. The broker filled in the application over the phone. The broker did not even bother visiting the store. Out In Left Field was in business again. Two months into the policy, after it had sufficiently ripened and before the second payment on the premium finance agreement was due, the insureds reported a burglary. This time, the loss more than $150,000 in baseball cards. Fortunately, for the insurer, it retained an experienced independent adjuster to investigate its loss. Checking the ISO All Claims Data Base, the adjuster for the new insurer learned of the first loss. With the authorization of the insureds he saw a complete copy of the first insurer’s claim file. The new insurer demanded examination under oath before an attorney. As soon as the demand letter arrived at the insureds’ home, the wife called the lawyer and begged an immediate settlement since her husband, depressed by the delays of the insurer, tried suicide. She told counsel she was afraid that if the insurer did not pay quickly, he would be successful in his next try. The attorney, having read the first insurer’s claim file and seen the same threat of suicide, had been forewarned. He advised his client to strengthen their resolve. He advised them not to succumb to the fear as had the first insurer. Counsel then informed the insured that to conclude the claim she and her husband must first appear for, and testify at, an examination under oath. The insurer also required they bring to the examination all original documents. The insureds retained counsel on a contingency fee who had no knowledge of their fraud. The insureds produced what they said were all original documents supporting their claim. Although the insurer’s counsel was not an expert, the documents appeared to be forgeries to counsel. He repeatedly questioned the insureds about the documents until he got clear answers. The insureds testified that they received each of the original documents from sellers. They testified that they had never modified or changed the documents in any way. They further testified that the records were the business records of Out In Left Field and had been prepared the normal course of its business. All of their testimony was false. To establish his suspicion counsel forwarded the original documents to a questioned document expert. The expert advised that every document had been changed or modified in date, amount and description from the original. Further, each of the invoices was written by two separate people in two difference handwritings, using two different writing instruments. The insurer, faced with such damming evidence, and on the advice of its counsel, rescinded the policy. The grounds stated were the material misrepresentation of fact concerning prior losses in the application for insurance. The insurer, as an alternative reason, also denied the claim for fraud. Counsel for the insurers also provided counsel for the insureds a copy of the questioned documents expert’s report. Counsel for the insured immediately withdrew representation. The insureds agreed to rescission of the policy to get the return of their premium. The insureds appeared satisfied with the resolution. At the time of their examination under oath they appeared in the offices of counsel for the insurer wearing a cervical collar and back brace respectively. At the examination under oath, they informed the insurer’s counsel that they had just had a rear-end auto accident where their best friend and neighbor had accidentally rear-ended them. Although one insurer escaped making payment to these frauds, two did not. The first, who provided the training paid $50,000 for a loss that was probably no more than $800.00. An auto insurer also found itself making payments for an automobile accident that seemed to be fictitious. This type of loss will continue to occur as long as insurers fail to maintain adequately trained claims and underwriting staff. If insurers continue to accept insureds at face value without any pre-risk inspections or investigation this type of loss will multiply. Insurance agents and brokers will have their loss ratios increase logarithmically. Profits will fall because they did not inspect and control the risks they insure. Adapted from my book, Insurance Fraud Costs EveryoneAvailable as a Kindle Book and Available as a Paperback from Amazon.com. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Go to X @bzalma; Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

ZIFL Volume 28, Issue 2 See the full video here and here https://youtu.be/xs4PPJ3NPDg Subscribe here: https://visitor.r20.constantcontact.com/manage/optin?v=001Gb86hroKqEYVdo-PWnMUkcitKvwMc3HNWiyrn6jw8ERzpnmgU_oNjTrm1U1YGZ7_ay4AZ7_mCLQBKsXokYWFyD_Xo_zMFYUMovVTCgTAs7liC1eR4LsDBrk2zBNDMBPp7Bq0VeAA-SNvk6xgrgl8dNR0BjCMTm_gE7bAycDEHwRXFAoyVjSABkXPPaG2Jb3SEvkeZXRXPDs%3D Zalma’s Insurance Fraud Letter (ZIFL) continues its 28th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ The current issue includes the following articles: GEICO Takes a Bite Out of Fraud NO FAULT INSURANCE IS A FORMULA FOR INSURANCE FRAUD GEICO, as a pro-active victim of insurance fraud, sued Jean-Pierre Barakat, M.D., et al, alleging that Defendants defrauded GEICO in violation of the Racketeering Influenced and Corrupt Organizations Act (“RICO,” 18 U.S.C. § 1962(c), (d)), by submitting hundreds of fraudulent bills for no-fault insurance charges. Plaintiffs also allege common law fraud and unjust enrichment and seek a declaratory judgment as to all pending bills. In Government Employees Insurance Company, et al v. Jean-Pierre Barakat, M.D.et al No. 22-CV-07532 (NGG) (RML), United States District Court, E.D. New York (January 2, 2024) the USDC provided an injunction. Read the full January 15, 2024 issue of ZIFL here. More McClenny Moseley & Associates Issues This is ZIFL’s twenty first installment of the saga of McClenny, Moseley & Associates and its problems with the federal courts in the State of Louisiana and what appears to be an effort to profit from what some Magistrate and District judges indicate may be criminal conduct to profit from insurance claims relating to hurricane damage to the public of the state of Louisiana. Read the full January 15, 2024 issue of ZIFL here. Florida Residential Property Claims and Litigation Report Closed Claims Data for Calendar Year 2022 as of 11/1/2023 The full report is available at https://www.floir.com/docs-sf/default-source/property-and-casualty/other-property-casualty-reports/january-2024-pclr.pdf?sfvrsn=d8c92a4f_4 The report was prepared Pursuant to Section 624.424(11), Florida Statutes, each authorized insurer or insurer group issuing personal lines or commercial lines residential property insurance policies in Florida is required to annually file a supplemental report on an individual and group basis for closed claims with the Florida Office of Insurance Regulation (OIR). The first year of data collected was for 2022 and the information below compiles aggregated information stemming from that data. Various elements of this data have been released by the Office in other reports and presentations throughout the 2023 calendar year. Read the full January 15, 2024 issue of ZIFL here. Now Available The Compact Book of Adjusting Property Claims – Fourth Edition On January 2, 2024, in Kindle, paperback and hardback formats, The Compact Book of Adjusting Property Claims, Fourth Edition is now available for purchase here.and here. The Fourth Edition contains updates and clarifications from the first three editions plus additional material for the working adjuster and the insurance coverage lawyer. Read the full January 15, 2023 issue of ZIFL here. ALLSTATE TAKES A BITE OUT OF CRIME Another Proactive Insurer Works to Take the Profit Out of Insurance Fraud In Allstate Insurance Company, Allstate Indemnity Company, Allstate Fire & Casualty Insurance Company, and Allstate Property & Casualty Insurance Company v. Bradley Pierre, Medical Reimbursement Consultants Inc., Marvin Moy, M.D., Rutland Medical P.C. D/B/A Medicalnow, William A. Weiner, D.O., and Nexray Medical Imaging, P.C. d/b/a Soul Radiology Medical Imaging, No. 23-CV-06572 (NGG) (LB), United States District Court, E.D. New York (January 8, 2024) Allstate joins GEICO and other insurers taking a proactive effort against no-fault insurance fraud perpetrators. Insurance Fraud Next to tax fraud, insurance fraud is the most practiced crime in the world. It is perpetrated by members of every race, religion, and nationality. It is found in every profession. The possibility of a tax-free profit when coupled with the commonly held belief that criminal prosecution will probably not occur, is sometimes too difficult for normally honest people to resist. Read the full January 15, 2024 issue of ZIFL here. Health Insurance Fraud Convictions New Jersey Laboratory and Its Owner and CEO Agree to Pay Over $13 Million to Settle Allegations of Kickbacks Clinical laboratory RDx Bioscience Inc. (RDx), of Kenilworth, New Jersey, and its owner and Chief Executive Officer Eric Leykin, of Brooklyn, New York, agreed to pay to the United States $10,315,023 to resolve False Claims Act allegations involving illegal kickbacks and medically unnecessary laboratory testing. RDx and Leykin will pay an additional $2,934,977 to the State of New Jersey, which jointly funded claims paid by the New Jersey Medicaid program. RDx and Leykin have agreed to cooperate with the Justice Department’s investigations of, and litigation against, other participants in the alleged schemes. Read the full January 15, 2024 issue of ZIFL here. It’s Time to Subscribe to Substack or Locals For Subscribers Only I Have Published Special Insurance Articles and 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 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 and articles available only to subscribers to the Excellence in Claims Handling at locals.com and to articles and videos also available to subscribers at Substack.com for a small fee of only $50 a year. You can Subscribe to “Zalma on Insurance” at https://zalmaoninsurance.locals.com/subscribe and to “Excellence in Claims Handling” at https://barryzalma.substack.com/welcome. Read the full January 15, 2024 issue of ZIFL here. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Go to X @bzalma; Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

Bankruptcy of Storage Facility Created a Compensable Loss Plaintiffs insurers sought a declaration that there is no coverage for the insurance claim made under the policy for the loss of soybeans. The Defendants moved for partial summary judgment on its first and second counterclaim. In Endurance American Insurance Company, Zurich American Insurance Company, and, Atain Insurance Company v. Stonex Commodity Solutions, LLC F/K/A FC Stone Merchant Services, LLC, 2024 NY Slip Op 30076(U), Index No. 653234/2022, Motion Seq. No. 004, NYSCEF Doc. No. 108, Supreme Court, New York County (January 8, 2024) the Supreme Court (trial court) resolved the dispute. BACKGROUND From 2017 to 2021, defendant stored millions of bushels of soybeans at warehouses owned by non-party, Express Grain Terminals, LLC ("EGT"). In September 2021, upon the discovery by EGT's lender that EGT had less inventory than it was reporting, EGT was forced into bankruptcy, resulting in the dispossession from StoneX of 2,780,000 bushels of soybeans subject to a determination by the bankruptcy court of various competing interests in the disposition of EGT's assets. Ultimately, in the bankruptcy proceedings, defendant recovered all but 502,315 bushels of soybeans. Defendant seeks coverage for the loss of these 502,315 bushels of soybeans. SUMMARY JUDGMENT STANDARD The proponent of a motion for summary judgment must tender sufficient evidence to show the absence of any material issue of fact and the right to entitlement to judgment as a matter of law. Courts have also recognized that summary judgment is a drastic remedy that deprives a litigant of his or her day in court. Therefore, the party opposing a motion for summary judgment is entitled to all favorable inferences that can be drawn from the evidence submitted. DISCUSSION In support of its motion defendant cites to the language of the insurance policy that provides that warehouse receipts, together with third-party inspection reports showing that the warehouse has sufficient goods to meet the insureds requirements, demonstrates the existence of an insurable interest. Defendant contends that the warehouse receipts establish that EGT was in possession of the requisite number of soybeans to cover the amount of defendant's soybeans. Further, inspection reports, prepared by independent inspectors, confirm that EGT maintained the appropriate number of soybeans to satisfy defendant's stored amount. With respect to the date of the loss, defendant contends that September 2021 is the date when it became actually dispossessed based on the bankruptcy filing by EGT. Specifically, plaintiffs contend that inspector indicating that "obligations to other depositors cannot be adequately verified [...] therefore I am unable to make any certifications on these actual obligations and their effect regarding these inventories" creates an issue of fact as to whether the soybeans for which defendant seeks coverage were in existence. CONCLUSION The New York Court found that defendant established an actual loss as well as an ascertainable date of the loss, September 29, 2021. The Court declined to read terms into the policy that are not there, specifically that defendant was required to ascertain whether EGT had sufficient soybeans to satisfy all receipt-holders. The parties could have contracted to include those terms in the policy but did not. The unrefuted evidence was that there were in fact a sufficient number of bushels of soybeans to satisfy defendants claim at the time EGT filed for bankruptcy, it follows that once EGT filed for bankruptcy defendant no longer had access to the soybeans, thus triggering the date of the loss. Defendant's motion for partial summary judgment on its first counterclaim is granted; and it is further Adjudged and Declared there is insurance coverage to cover the loss of 502,315 bushels of soybeans; and it is further Ordered that defendant's motion for summary judgment on its second counterclaim is granted; and it is further adjudged and declared that plaintiffs have breached the underlying contract between the parties for refusing to provide coverage. ZALMA OPINION Since the evidence showed that there were enough soybeans to cover that deposited by the defendants when EGT was forced into bankruptcy the division of the assets by the court resulted in a loss to the defendants that was not excluded from the coverages provided by the Plaintiffs. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Go to X @bzalma; Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

LIFE INSURANCE FRAUD FOR FUN & PROFIT "This following is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of many designed to help the public Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ­­­Perpetrators than any Other Crime." George and Adam were partners. Their business, consulting with aerospace manufacturers on preparing the reports required by the Department of Defense, had been immensely successful. For the first five years of business their billings exceeded $3,000,000 a year. They lived well. Like the average Americans they were, they spent every dollar they made and about 10% more than they made. They had no savings. They did have large credit card balances. Because they knew how important each was to the success of the partnership, they purchased Key man life insurance policies with limits of $3,000,000 each from Trustme Life Insurance Company. In 2008 the bottom fell out of the aerospace industry with the election of President Obama who cancelled space programs. Their customers stopped hiring consultants. The billings of the partnership shrank like Alice after she bit the mushroom. Adam and George could not make their mortgage or credit card payments. Their business was failing. They were facing both business and personal bankruptcy. Adam, the adventurous partner, had an idea. “George,” Adam said, “The only way we can get out of this financial mess is our life insurance policies.” “I don’t want to die to collect,” George said. “Neither do I,” Adam replied. “But I still want to collect.” “Do you propose to murder me.” “No, George, I propose that we find a homeless person who physically resembles one of us and kill him. We can plant identification on the corpse and then share in the $6,000,000 double indemnity payment.” “My,” replied George, “that’s a brilliant, although evil and criminal, plan.” “I see no other way out. It’s either the death of a useless human being or total financial catastrophe for us.” “Adam, they have a death penalty in this state.” “So, what, the plan is perfect. No one will know. We’ll retire in luxury.” “Okay, I’ll go along with it, but I don’t like it. This is dangerous.” The partners began to travel skid row. They needed a homeless person who physically resembled one of them in height, weight and coloring. It took them a week to find the right person. They befriended him with a bottle of wine and a free meal. They told him that they had just completed a twelve-step program and part of that program was to help a person in need. Together, they took the homeless person to Adam’s house. The partners washed off the grime in Adam’s massive master bath, dressed him in Adam’s clothes, and outfitted him with accessories until he looked like a Century City lawyer about to meet an important client. The homeless man was only known to them as “Fuzzy.” He was suspicious and refused to give them his full name. Fuzzy was grateful. He thanked his benefactors profusely and offered to work to earn what they had given him. Adam and George agreed and offered him the job operating the photocopy machine at their office at the rate of $18.00 an hour. While he was getting on his feet, Fuzzy could sleep in the guest room at Adam’s house. He could ride to work every morning with Adam. The normal skepticism of the homeless floated from Fuzzy like seeds from a Dandelion in a gale. He slept soundly between clean sheets for the first time in five years. He was up at 6:00 a.m., made coffee and fried bacon and eggs that he and Adam shared. They then drove to the office together in Adam’s emerald green Jaguar XJ-8 convertible. Fuzzy worked hard. He was on his best behavior all day, photocopying extra copies of old consultation reports. At noon George and Adam took Fuzzy out to lunch at their favorite restaurant and then stopped at Adam’s barber. Fuzzy was provided a free haircut exactly like that the barber had given to Adam. After the day ended and all of the employees left, Fuzzy waited for Adam to finish his work sitting in the lobby reading Sports Illustrated. Adam called Fuzzy into Adam’s office at 8:00 that night. He asked Fuzzy to sit in his desk chair and shot him in the face with a 12-gauge shotgun at close range. Adam discharged one barrel on each hand to eliminated all of Fuzzy’s fingerprints. Adam then placed his wallet with all its money, credit cards and other identification in the inside coat pocket of his old suit, removed anything that might identify Fuzzy as being someone other than Adam and then drove to the airport in George’s 750 IL BMW leaving the Jaguar in the garage. At the airport, Adam, using cash, purchased a ticket in the name of Adam Smith to New Orleans, Louisiana. He had already purchased, from street vendors on Hoover Street in Downtown Los Angeles a driver’s license in the name of Adam Smith with a birth date five years earlier than Adam’s true date of birth, a social security card, a MasterCard and Visa all issued in the name of Adam Smith. George spent that evening with a client eating dinner and then attending a performance of “Wicked” at the Pantages theater. After leaving his client at midnight George took a cab to the airport and picked up his car at long term parking. He paid in cash. His alibi was perfect. On arrival in Louisiana Adam spent two days at the Sheraton and then rented an apartment. He obtained a Louisiana driver’s license and found a job as an engineer in an electronics factory outside New Orleans. He started a scrap book with articles from the Los Angeles Times that he had obtained from the local library, dealing with his untimely and vicious murder. George, the distraught and devastated partner, filed a claim with the insurer. He informed the insurer that he left his partner in the office at 7:00 the night before his death. Adam was working on finishing a report for one of their clients. His secretary, who usually arrived at 8:00 in the morning, one hour before George, found the body when she opened the office. She telephoned George first and then the police. When George arrived, he was able, from the suit of clothes, to identify the body as that of his partner, Adam. There simply wasn’t enough of the face to identify. The insurance company did as much investigation as it could, including interviews of the night staff at the office building, all of Adam’s friends and neighbors and the police. Although they recognized that the business was failing, George’s alibi for the time of death was airtight. Since George was the only person who could gain by the murder, since the shotgun was left at the scene and had no fingerprints, since the police traced the shotgun and found that it had been stolen a year before from someone in Wyoming, there were no leads. The insurer issued a check in the amount of $6,000,000 to George who accepted it gratefully. George then deposited the money in his account, obtained a $3,000,000 cashier’s check and delivered it to Adam Smith in New Orleans. The plan was that Adam would stay in Louisiana, enjoy his newfound wealth and their perfect crime would be consummated. Adam abided by the plan for a year and a half. He assumed nothing could go wrong and decided to come back to Los Angeles to renew an acquaintance with a young lady with whom he had been seriously in lust. When he arrived on her doorstep, unannounced, the young lady, who had attended his funeral in tears, was pleasantly surprised. She entertained him as he expected and dropped him at the Four Seasons where he was staying. Although she considered Adam to be a prodigious lover, the young lady was more interested in cash than love. From the hotel, she drove directly to the West Los Angeles station of the Los Angeles Police Department and introduced herself to a detective. She knew that a life insurance claim had been made and wanted the police to know that the person whose murder they were investigating was presently sound asleep in his hotel room at the Four Seasons Hotel in Beverly Hills. She explained to them how Adam, after twenty minutes of horizontal Rhumba, explained to her how he had defrauded an insurance company out of $6,000,000. She explained to the police that she would never be a party to such a crime and wanted it noted in their report that she was the source of the information and the person to whom any rewards posted by the insurance company should be paid. Adam and George were arrested and tried for the murder of Fuzzy as well as several counts of insurance fraud. The testimony of the young lady, the presence of Adam and the Los Angeles Airport recording of George’s license plate on entry and exit from the airport parking lot made their defense impossible. They were convicted. Adam and George are now spending the remainder of their lives in the State Penitentiary. The insurer recovered $4,000,000 of the $6,000,000 (George and Adam had lived well for that year and a half) and paid the lustful young woman a $400,000 reward. She lived happily ever after. Adapted from my book, Insurance Fraud Costs Everyone (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Go to X @bzalma; Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

CONCURRENT CAUSE REQUIRES SEGREGATION OF COVERED FROM NON COVERED LOSSES Landmark Partners, Inc. (Landmark) sued Western World Insurance (Insurance) after it denied Landmark's claim under an insurance policy. Landmark asserted claims for breach of contract, statutory violations, breach of common-law duties, and attorney's fees and statutory interest. Relying in part on the testimony of Landmark's own expert, Insurance moved for summary judgment on the ground that the concurrent causation doctrine defeated Landmark's contractual claim, which in turn defeated Landmark's other claims. The trial court granted summary judgment for Insurance, and Landmark appealed. In Landmark Partners, Inc. v. Western World Insurance, No. 02-23-00116-CV, Court of Appeals of Texas, Second District, Fort Worth (December 28, 2023) the Court of Appeals applied the concurrent cause doctrine to resolve the dispute. BACKGROUND Landmark's policy with Insurance covered damage to Landmark's commercial property, but only for damage that commenced during the policy period, which began on February 4, 2020. The policy included coverage for hail and wind damage but no coverage for rain damage to the property's interior unless the rain entered the building through damage caused by a covered event. After a storm on May 7, 2020, Landmark filed a claim with Insurance, requesting that Insurance provide coverage for damage to Landmark's building, which Landmark alleged had been caused by the storm. Insurance sent a contract field adjuster to inspect the property. That adjuster reported no signs of hail damage on the property's roofing materials. Landmark hired a public adjuster who disagreed and put in proof for more than one million. Insurance then retained an engineer, Jarrod Burns, who did find some hail damage, particularly to some mechanical units on the roof, but he determined that the damage had been caused before the policy took effect. Insurance denied the claim. Landmark sued Insurance for failing to provide coverage. Insurance filed a motion for summary judgment based on the concurrent causation doctrine, which applies "when covered and excluded events combine to cause an insured's loss." If both covered and uncovered events combine to cause a loss, and the covered and uncovered events are inseparable, then causation is concurrent, the insurance policy's exclusion applies, and the insurer owes no coverage for the loss. Covered damage to the property could not be segregated from non-covered damage. The trial court signed a final judgment granting summary judgment for Insurance. Landmark appealed. DISCUSSION Because an insurer has no obligation to pay for damage caused by an event not covered under the policy, if covered and non-covered events combine to cause the damage, the insured must segregate between the damage attributable to the covered event and the damage attributable to other causes. Thus, Landmark would have to show at trial one of three circumstances: that the damage had only one cause, which was covered by the policy; that the damage had multiple independent causes, one of which was covered; or although covered and non-covered events combined to cause the damage, Landmark had segregated between the covered damage and non-covered damage. Landmark had the burden to show that the damage for which it sought coverage resulted from the May 2020 storm or another covered event. If Insurance's summary judgment evidence established as a matter of law that segregation was impossible, Insurance was entitled to judgment unless Landmark responded with evidence raising a fact issue. Because Insurance's summary judgment evidence established that any damage caused by the May 2020 storm could not be segregated from the damage caused by previous storms that were not covered, Insurance demonstrated that it had no obligation to pay under the policy, thereby negating Landmark's breach-of-contract claim. Landmark failed to segregate between covered and non-covered damage or even raise the possibility that segregation could be done. Even under Landmark's evidence, the covered and non-covered causes of property damage could not be separated. Because Landmark's evidence did not raise a fact issue sufficient to defeat summary judgment on Landmark's contract claim, the Court of Appeal found no breach of contract. EXTRACONTRACTUAL CLAIMS In addition to its contract claim, Landmark alleged violations of Texas Insurance and breach of the common law duty of good faith and fair dealing in the context of processing and payment of insurance claims. The Texas Supreme Court has explained, an insured cannot recover any damages based on an insurer's statutory violation unless the insured establishes a right to receive benefits under the policy or an injury independent of a right to benefits. As for Landmark's common-law bad-faith claim, that, too, was negated by the summary judgment evidence. Having overruled Landmark's five issues, the Court of Appeals affirmed the trial court's judgment. ZALMA OPINION Without a right to the benefits of a policy of insurance there can be no right to bad faith tort damages. Landmark failed to establish a right to the benefits of the contract of insurance because it could not segregate covered damages from damages that preceded the policy. No coverage no right to claim bad faith damages for improper claims handling. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Go to X @bzalma; Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

Violation of Statute Allows Suit for Negligent Failure to Resolve Insurance Claim Post 4706 Christine Moody, individually, and in her capacity as the Personal Representative of the Estate of Steven "Troy" Moody, Deceased v. Oregon Community Credit Union, aka OCCU, an Oregon entity, association, union, or corporation et al., Defendants, and Federal Insurance Company, an Indiana corporation, 371 Or. 772, SC S069409, Supreme Court of Oregon (December 29, 2023) Plaintiff, whose husband was accidentally shot and killed during a camping trip, brought this action against defendant, a first-party life insurer, claiming, among other things, that defendant had negligently failed to investigate and pay her claim for policy benefits, causing her to have fewer financial resources to navigate the loss of a bread-winning spouse and, consequently, to suffer economic harm and emotional distress. FACTS Plaintiffs husband, decedent, was accidentally shot and killed by a friend during a camping trip. Plaintiff filed a claim for life insurance policy benefits, and defendant initially denied plaintiffs claim on the ground that decedent's death fell within a policy exclusion for deaths "caused by or resulting from [decedent] being under the influence of any narcotic or other controlled substance"-apparently based on the fact that decedent had had marijuana in his system at the time of his death. Plaintiff sued alleging claims for breach of contract, breach of an implied contractual covenant of good faith and fair dealing, and negligence. Plaintiff sought both economic damages-the benefits payable under the policy-and emotional distress damages. Defendant filed motions to dismiss plaintiffs’ claims for negligence and breach of the implied covenant of good faith and fair dealing and to strike the allegations seeking damages for emotional distress, arguing that plaintiffs only remedy under Oregon law was contractual. Plaintiff appealed the limited judgment but, while the appeal was pending, she filed an amended complaint that alleged only breach of contract and sought only the amount of benefits payable under the insurance policy-$3,000. Thereafter, defendant paid the $3,000 to plaintiff, the parties stipulated to the entry of a judgment in favor of plaintiff and against defendant, and the trial court entered a conforming general judgment. ANALYSIS Plaintiff takes the position that her claim for common-law negligence against defendant for its failure to act reasonably in performing the obligations of a life insurer and that she is entitled to recover the emotional distress damages that she alleges. Plaintiffs’ Negligence per se claim is a shorthand for a negligence claim in which the standard of care is expressed by a statute or rule. When a negligence claim exists, and a statute or rule defines the standard of care expected of a reasonably prudent person under the circumstances, a violation of that statute or rule establishes a presumption of negligence. The Supreme Court Concluded that it is settled that a negligence complaint, to survive a motion to dismiss, must allege facts from which a factfinder could determine (1) that defendant's conduct caused a foreseeable risk of harm, (2) that the risk is to an interest of a kind that the law protects against negligent invasion, (3) that defendant's conduct was unreasonable in light of the risk, (4) that the conduct was a cause of plaintiffs harm, and (5) that plaintiff was within the class of persons and plaintiffs injury was within the general type of potential incidents and injuries that made defendant's conduct negligent. Perhaps the simplest legally protected interest is in being free from physical harm at the hands of another. Physical harm includes both bodily injury and property damage. Generally, however, people do not have a legally protected interest in being free from emotional distress, and, to date, the Supreme Court has permitted common-law tort claims for emotional distress damages only in the following three circumstances: (1) when the defendant also physically injures the plaintiff; (2) when the defendant intentionally causes the emotional distress; or (3) when the defendant negligently causes foreseeable, serious emotional distress and also infringes some other legally protected interest. In contrast to physical harm, emotional harm occurs frequently. Any number of people may suffer emotional distress as the foreseeable result of a single negligent act. Whether Plaintiff Here Has Alleged A Legally Protected Interest Sufficient To Subject Defendant To Liability For Purely Emotional Damages In the case now before us, we must consider whether plaintiff has alleged a legally protected interest sufficient to subject defendant to liability for emotional distress damages. To decide whether that alleged interest is a legally protected interest sufficient to subject defendant to liability for emotional distress damages. The statute, ORS 746.230, prohibits (1) "[refusing to pay claims without conducting a reasonable investigation based on all available information," ORS 746.230(1) (d); and (2) "[n]ot attempting, in good faith, to promptly and equitably settle claims in which liability has become reasonably clear," ORS 746.230(1)(f). ORS 746.230 includes conduct that is independent of the obligation to pay benefits due under the insurance policy. For example, ORS 746.230 prohibits insurers from, "[flailing to acknowledge and act promptly upon communications relating to claims," ORS 746.230.230(1)(b); "[f]ailing to affirm *** coverage of claims within a reasonable time," ORS 746.230.230(1)(e); and "Compelling claimants to initiate litigation to recover amounts due," ORS 746.230(1)(g). Those prohibitions suggest that the harm that the legislature sought to prevent was not limited to the financial harm that occurs when insurance benefits are not paid. The Supreme Court will not permit recovery of purely emotional injury unless it determines that the claimed harm is "of sufficient importance as a matter of public policy." The Supreme Court concluded that the question whether plaintiff has alleged a viable common-law negligence claim against defendant for emotional distress damages in the affirmative. It then cautioned that the conclusion does not make every contracting party liable for negligent conduct that causes purely psychological damage, nor does it make every statutory violation the basis for a common-law negligence claim for emotional distress damages. Far from it. Few contracting parties promise to provide necessary financial resources on the death of a spouse knowing that their obligation to act reasonably in doing so is required by statute. And few statutes impose obligations on contracting parties designed to protect the parties from the type of emotional harm that plaintiff in this case allegedly suffered. The decision in this case is a narrow one that applies and accords with the limiting principles that have been guided by past decisions and does not unfairly expose defendant to liabilities that it could not have expected and guarded against. Plaintiff has alleged a viable common-law negligence claim against defendant for emotional distress damages. Therefore, the trial court erred in granting defendant's motions to dismiss plaintiffs negligence claim and in striking her claim for emotional distress damages. ZALMA OPINION The state of Oregon, like many states, has enacted statutes punishing insurers for bad faith claims handling. The insurer, after a change in allegations, paid the plaintiff the $3,000 life insurance limit, only to find itself sued for negligent claims handling. The suit was dismissed by the trial court and reversed by the Court of Appeals and the Oregon Supreme Court. Since the statute requires fair claims handling the plaintiffs allegations allowed it to sue the insurer for emotional distress damages when it initially refused to pay because of an exclusion. This is a limited decision and stretches the obligations of an insurer beyond fairness and even with a clear and unambiguous exclusion it can be sued for emotional distress. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

Equity Requires Fairness Post 4705 In Martha M. Fountain and Curtis Fountain v. Fred's, Inc. and Wildevco, LLC v. Tippins-Polk Construction, Inc. and Rhoad's Excavating Services, LLC, of whom Tippins-Polk Construction, Inc. is the Petitioner, Appellate Case No. 2020-000651, Opinion No. 28086, 436 S.C. 40, 871 S.E.2d 166, Supreme Court of South Carolina (Filed March 2, 2022) established the requirements for obtaining equitable indemnity. FACTS Respondent Fred's was a Tennessee corporation that operated a chain of discount general merchandise stores in several states, including South Carolina. In April 2005, Wildevco entered into a contract with general contractor Tippins-Polk for the construction of the Fred's store and adjoining strip center. The construction contract between Wildevco and Tippins-Polk included drawings prepared by an architect, as well as site plans prepared by an engineer. The contract specifically stated that Tippins-Polk was responsible for "All Site Work," including "[g]rading, concrete curbing, utilities & paving [p]er site plans." Wildevco provided Tippins-Polk with two sets of construction drawings—the architectural drawings, which established the design elements including the sidewalk surrounding the store, and the site plans, which controlled the grading, elevations, pavement, and underground utilities. Tippins-Polk constructed the entrance to have a curb ramp at the entrance door. In front of the door, the ramp was flush with the parking lot, and on either side, it sloped upward to adjoin the rest of the curbing surrounding the building. Fred's opened the Williston store in October 2005. If an inspection had taken place, it would have been visible to the naked eye that an elevation change in the sidewalk existed and was not painted yellow. Five years after the Fred's store opened, Ms. Fountain hit her head and hand on the glass door and fell to her knees. In May 2010, Ms. Fountain and her husband filed a premises liability suit against Fred's and Wildevco. Ms. Fountain sought to recover her medical expenses and lost wages, and her husband filed a loss of consortium claim. The Fountains did not pursue a construction defect claim against Tippins-Polk. The case was set for a date certain trial in March 2016. On the eve of trial, Wildevco and Fred's settled with the Fountains for $290,000, with Wildevco paying $250,000 and Fred's paying $40,000. The general theory of the third-party claim was that Tippins-Polk deviated from the site plans and improperly constructed the entrance curbing, which was the sole proximate cause of Ms. Fountain's injuries. As to the relevant elements of equitable indemnification, the trial court found a special relationship existed between Fred's and Tippins-Polk. EQUITABLE INDEMNIFICATION South Carolina has long recognized the principle of equitable indemnification. Indemnity is that form of compensation in which a first party is liable to pay a second party for a loss or damage the second party incurs to a third party. Tippins-Polk argued that it was error to affirm the finding that Wildevco and Fred's were without fault. Special Relationship As a matter of equity, a party is entitled to indemnity if the relation between the parties is such that either in law or in equity there is an obligation on one party to indemnify the other, as where one person is exposed to liability by the wrongful act of another in which he does not join. The trial court and court of appeals found the connection between Fred's and Tippins-Polk was established because Tippins-Polk knew the commercial space it constructed would be leased to Fred's and open to the public and because Tippins-Polk had been the general contractor in several other unrelated construction projects for Fred's stores. Without Fault A party may be entitled to equitable indemnification only if no personal negligence of his own has joined in causing the injury. Equitable indemnity cases involve a fact pattern in which the first party is at fault, but the second party is not. If the second party is also at fault, he comes to court without equity and has no right to indemnity. The owner of property owes to an invitee or business visitor the duty of exercising reasonable or ordinary care for his safety and is liable for injuries resulting from the breach of such duty. As a matter of law, both Fred's and Wildevco owed a duty of care to Ms. Fountain, as an invitee, to keep the premises reasonably safe and warn of any unreasonable dangers that could not be remedied. Indeed, it is in this context that Fred's and Wildevco were sued for their own independent negligence — not vicariously for the negligence of Tippins-Polk. When speaking of proximate cause, courts are not referring to the “sole cause.” In order to establish actionable negligence, the plaintiff is required only to prove that the negligence on the part of the defendant was at least one of the proximate, concurring causes of his injury. To be entitled to equitable indemnity on their crossclaim against Tippins-Polk, Fred's and Wildevco were required to show not just that Tippins-Polk's construction of the ramp was a proximate cause of Ms. Fountain's injuries but also that Respondents’ failure to warn of or remedy the unsafe condition was not a proximate cause. Since there was no evidence in the record that either Fred's or Wildevco warned of or attempted to remedy the trip hazard identified by their own safety expert, despite the condition existing for almost five years before the accident occurred. In sum, Fred's and Wildevco failed to establish they were without fault in the Fountains’ premises liability action. Because the Supreme Court found Respondents failed to establish they were without fault in the underlying action, the trial court verdict was reversed. ZALMA OPINION The Supreme Court of South Carolina understood that equity requires fairness. No one is entitled to equitable indemnity if it would be unfair to allow them to recover when they are unable to prove that those seeking indemnity were without fault. Since they could not establish that they were without fault they had no right to indemnity. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

No Fault Insurance is a Formula For Insurance Fraud Post 4703 GEICO, as a pro-active victim of insurance fraud, sued Jean-Pierre Barakat, M.D., et al, alleging that Defendants defrauded GEICO in violation of the Racketeering Influenced and Corrupt Organizations Act ("RICO," 18 U.S.C. § 1962(c), (d)), by submitting hundreds of fraudulent bills for no-fault insurance charges. Plaintiffs also allege common law fraud and unjust enrichment and seek a declaratory judgment as to all pending bills. In Government Employees Insurance Company, et al v. Jean-Pierre Barakat, M.D. No. 22-CV-07532 (NGG) (RML), United States District Court, E.D. New York (January 2, 2024) the USDC provided an injunction. BACKGROUND GEICO, faced with at least 43 allegedly fraudulent no-fault claims from health care providers, moved for a preliminary injunction to stay all 43 pending no-fault insurance collection arbitrations commenced against GEICO by or on behalf of Defendants. In New York, an insurer is required to provide certain no-fault insurance benefits ("No-Fault Benefits") to the individuals that they insure ("Insureds"). No-Fault Benefits cover up to $50,000 of necessary healthcare expenses that result from automobile accidents. These benefits are provided to ensure that injured victims of motor vehicle accidents have an efficient mechanism to pay for and receive the health care services that they need. Insurers are only given 30 days to review and investigate claims before paying those claims to avoid risk of penalty for denying or delaying a claim. Operation of the Alleged Scheme GEICO alleged that in 2021 Defendant Barakat was recruited by the John Doe Defendants to participate in a complex fraudulent insurance scheme to bill GEICO and other New York automobile insurers for medically unnecessary, experimental, and otherwise non-reimbursable services. Based on the arrangement, Barakat would receive a periodic payment in exchange for the use of his name, license, and the tax identification number of the Barakat Practices. Defendants would perform medically unnecessary, high-billing value procedures. Between February 15,2021 and March 3, 2022, Barakat and the John Doe Defendants used Defendant Patriot Medical to bill GEICO and other New York automobile insurers for an experimental treatment called ESWT. Moreover, Defendants submitted bills seeking more than $106,000,00 from GEICO, spread across 43 No-Fault individual arbitration proceedings pending before the American Arbitration Association ("AAA") at the time this motion was filed. Evidence of the Alleged Scheme In support of its fraud claims, GEICO has submitted a "representative sample" chart, totaling 1,371 entries of allegedly fraudulent no-fault claims submitted by the Barakat Practices. GEICO asserts that it has paid at least $183,000.00 to the Barakat Practices in no-fault claims. DISCUSSION The showing of irreparable harm is perhaps the single most important prerequisite for the issuance of a preliminary injunction, and the moving party must show that injury is likely before the other requirements for an injunction are considered. The harm must be shown to be actual and imminent, not remote or speculative. The USDC noted that Courts in this district have found, in analogous cases, that irreparable harm occurred where an insurer is required to waste time defending numerous no-fault actions when those same proceedings could be resolved globally in a single, pending declaratory judgment action. There are currently 43 pending arbitrations that run the risk of inconsistent judgments. GEICO has shown that money damages may not be available if the Defendants are to prevail. This is sufficient to establish irreparable harm. There is no indication that granting the stay will harm the public interest. To the contrary, GEICO asserts that the injunctive relief would serve the public policy against no-fault insurance fraud. Plaintiffs have alleged irreparable harm absent a stay, that there are serious questions going to the merits of this case, that the balance of hardships tip in their favor, and that a stay would not harm the public interest. The court, therefore, granted Plaintiffs' motion for a preliminary injunction. CONCLUSION For the foregoing reasons, GEICO's motion to stay all pending no-fault insurance collection arbitrations by or on behalf of Defendants Patriot Medical and JPB Medical waive their obligation to post security were granted. ZALMA OPINION GEICO must be honored for its proactive conduct against fraud perpetrators since it appears the state of New York is not concerned about fraud against insurers and will not prosecute the fraudsters. Using RICO not only will allow GEICO to work to defeat the fraudulent claims but will take the profit out of the crime by forcing the fraudsters to pay the insurers for their fraudulent conduct. Other insurers, facing the same fraud, should jump in with GEICO to make the fraud perpetrators understand that they will lose their criminal profits and may find they will pay the insurers more than they stole. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

Insurer has no Obligation to Pay More than an Aggregate Limit of Liability Post 4702 Denis Mucha sustained injuries after he was assaulted by employees at defendant MDF 92 River Street, LLC d/b/a Wild Moose Saloon and The Birch (MDF) (the bar) in Hoboken, New Jersey while a patron. Plaintiff Watford Specialty Insurance Company (Watford) insured MDF. Watford filed a declaratory judgment action seeking a declaration that its obligation to provide insurance coverage to MDF arising out of Mucha's lawsuit were satisfied under its endorsement for assault and battery claims, and Watford's $1,000,000 limit of liability had been exhausted. In Watford Specialty Insurance Company v. MDF 92 River Street, LLC, d/b/a Wild Moose Saloon & The Birch, and Matthew Garcia and Dashon Brown, Defendants, And Denis Mucha, No. A-3505-21, Superior Court of New Jersey, Appellate Division (December 22, 2023) Mucha appealed from two Law Division orders entered on June 21, 2022, denying his motion for summary judgment and granting Watford's cross-motion for a declaratory judgment barring coverage beyond the $192,325.51 amount that was already paid to Mucha and that exhausted Watford's aggregate policy limit. Mucha alleged defendants Matthew Garcia and Dashon Brown, bouncers at the bar, negligently assaulted him resulting in "severe and permanent" injuries. Mucha alleged Garcia's and Brown's conduct was "intentional but having unintended results," and was "malicious, wanton, and reckless." In his complaint, Mucha also alleged MDF "recklessly, carelessly, and/or negligently fail[ed] to properly hire, retain, train and/or supervise competent security," resulting in his injuries. THE POLICY Watford issued a Commercial General Liability Policy (the Policy) to MDF. The Policy provided coverage up to $1,000,000 per occurrence and in the aggregate. There were five losses during the relevant Policy period, including Mucha's claim. Watford advised its insured MDF regarding Mucha's claim, advising there was a sublimit of coverage for assault or battery related claims up to $1,000,000 per occurrence and in the aggregate. Watford advised Mucha's counsel that there were five losses during the Policy period, including Mucha's claim. The letter advised that as of December 18, 2020, the four other losses were resolved for a total pay-out of $799,920.53, leaving a remainder of $200,079.47 on the Policy's eroding limits. The trial court found that the facts of this case were more in line with that of an assault than wrongful eviction, considering that the arbitrator found that Mucha was grabbed and pulled down the stairs by a "security employee." ANALYSIS When interpreting insurance contracts, appellate courts first examine the plain language of the policy and, if the terms are clear, they are to be given their plain, ordinary meaning. Mucha, a business invitee, was forcefully removed from the bar as found by the arbitrator. The arbitrator's determination that a security officer "grabbed [Mucha] and pulled him toward the stairs and then threw him down the stairs" resulting in personal injury describes "events more in line with that of assault then wrongful eviction." Watford has consistently maintained that Mucha's claim arose out of an alleged assault perpetrated by MDF's employees. Watford was not a party in the underlying lawsuit and could not file a trial de novo from the arbitrator's award. Moreover, Watford has always asserted it was only responsible for the remaining portion of the $1,000,000 policy limit in it defense of MDF. The arbitration award in favor of Mucha did not bar Watford's amended declaratory judgment action seeking to limit its responsibility to the remainder of the aggregate policy limits. The allegations in the amended complaint in the Mucha lawsuit-whether phrased as negligent assault or wrongful eviction-all arise out of the assault of Mucha by MDF employees. Since the Assault and Battery Exclusion precludes coverage for any "bodily injury" claim "directly or indirectly" "arising out of" an "assault" or "battery," the exclusion applies, barring coverage in excess of the aggregate limit. The Court of Appeal concluded that the trial court's decision was correct when if awarded Watford summary judgment. ZALMA OPINION Watford lived up to its mistake to insure the bar against assault and battery and paid out its policy limit of $1,000,000 to five different victims of the insured's bouncers. Adding insult to the injury, Mr. Mucha tried to get around the assault and battery limit by claiming he was wrongfully evicted from the premises to obtain access to a different policy limit. The trial failed since throwing him down a flight of stairs was a clear battery and fit within the limit. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

FOR COVERAGE TO EXIST ON A HOMEOWNERS POLICY THE INSURED MUST RESIDE AT THE RESIDENCE Post 4700 The USDC was asked to grant dueling motions for summary judgment: (1) Motion for Summary Judgment filed by Defendant Nationwide Mutual Fire Insurance Company (“Nationwide”); and (2) Motion for Partial Summary Judgment filed by Plaintiff Maurice Heh, substituted by Perry Rutter and Mary Jane Urbanec, Executor and Executrix of Heh's Estate (hereinafter collectively referred to as “Heh”). In Perry Rutter And Mary Jane Urbanec, Executor And Executrix Of The Estate Of Maurice Heh, Deceased v. Nationwide Mutual Fire Insurance Company, Civil Action No. 20-1581, United States District Court, W.D. Pennsylvania (December 22, 2023) the USDC resolved the dueling motions. BACKGROUND Heh owned a home at 206 Parklane Drive in Braddock, Pennsylvania. At all times relevant to this case, Nationwide insured the risks of loss to the structure and contents of the home. NATIONWIDE INSURANCE POLICY Heh's Nationwide Homeowner Policy names Heh as the insured and lists the Property on its Declarations under “Residence Premises Information.” At Page A1 of the Policy, under “Insuring agreement,” Nationwide avers that coverage is contingent on “compliance with all the policy provisions.” Coverage A (Dwelling) is described as coverage of “[t]he dwelling on the residence premises used mainly as your private residence, including attached structures and attached wall-to-wall carpeting.” Coverage C (Personal Property) is described as the coverage of “personal property owned or used by an insured at the residence premises.” The term “residence premises” is defined as the “one, two, three or four-family dwelling, other structures and grounds located at the mailing address shown on the Declarations unless otherwise indicated.” THE PROPERTY Heh purchased the Property in 1990 and resided there with his wife until her passing. On January 1, 2019, Heh agreed to rent the Property and he and tenants entered a leasing agreement. There were indicia in the record that the agreement between Heh and his tenants provided for the possibility that the tenants would rent to own. There were also indicia in the record that Heh included his furniture-either for the tenants' use during their occupancy or for the tenants to own-in the agreement. After Heh leased the Property he moved to Point Pleasant Retirement Community. Once he moved into Point Pleasant, it is undisputed that Heh did not at any point move back to the Property. FIRE AT THE PROPERTY On February 3, 2020, before the tenants had fully moved out of the Property, there was a fire that resulted in significant physical damage to Heh's home and the personal property inside of it. After the fire Nationwide investigated the cause of the loss and denied coverage “based upon the policy provision related to the occupancy of the dwelling.” In its investigation, Nationwide determined that Heh “had not resided in the residence premises for an extended period and had not notified Nationwide that the property was rented to tenants.” Heh sued Nationwide and alleged that an adjuster had determined that the loss caused by the fire resulted in damages over the Policy limit of $172,400.00. DISCUSSION Nationwide, in its summary judgment motion, argued the Policy predicates coverage under both coverage provisions on the insured residing at the Property. Nationwide established that there was no factual debate about whether Heh was living at the Property. Coverage A (Dwelling) Nationwide argued that Heh's failure to reside at the Property was an appropriate basis for denial of Coverage A (Dwelling). Because there was no dispute Heh did not reside at the Property at the time of the fire or for a significant amount of time prior thereto, Coverage A (Dwelling) was unambiguously unavailable to him. Such coverage was only available for the dwelling on the residence premises that is used “mainly” as the named insured's private residence. Since the terms of Coverage A (Dwelling) are not reasonably susceptible to an interpretation that would entitle Heh to coverage where the Property was not being used “in the principal respect” or “more than anything else” as his private residence the Court granted Nationwide's motion with respect to Heh's allegation of breach of contract for failure to provide coverage under Coverage A (Dwelling). Coverage C (Personal Property) When the Policy is read as a whole and its meaning construed according to its plain language, Coverage C (Personal Property) is conditioned upon the named insured's residence at the residence premises. While the Court was not unsympathetic to Heh's protestation that he should benefit from coverage when he lived at the Property and paid insurance premiums for decades before the 2020 fire, the Court concluded that it was required to give effect to unambiguous language of the Policy. Nationwide's Motion for Summary Judgment was granted and Heh's Motion for Partial Summary Judgment was denied. ZALMA OPINION Anyone who reads a homeowners policy - as did the USDC - will see that it only provides coverage if the insured actually lives at the property that is the subject of the insurance. Heh left the residence and moved into a retirement facility. He did not tell his insurer of his move or attempt to obtain coverage for the property as a rental property that is commonly available. As a result of his decision to move Mr. Heh paid for insurance that provided no coverage for the loss to the property although it did provide liability coverage. I, as was the court, am not unsympathetic to the loss incurred by Mr. Heh, he has no one to blame for his loss but himself. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

ZIFL - Volume 28 Issue 1 The Resource for the Insurance Claims and Insurance Fraud Professionals This, the first issue of the 28th Year of ZIFL includes articles and reports relating to insurance fraud, including: False Swearing & Insurance Fraud In common language the “false swearing” provision of an insurance policy merely means that if the insured lies under oath the policy is void whether the lie is in a proof of loss or at an examination under oath. In Texas and Oklahoma, false swearing is explained this way: where an insured knowingly and willfully overestimates the value of property destroyed or damaged, the policy is voided and the insured’s right to recover is defeated. Read the full 22 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-01-01-2024-1.pdf More McClenny Moseley & Associates Issues This is ZIFL’s twenty first installment of the saga of McClenny, Moseley & Associates and its problems with the federal courts in the State of Louisiana and what appears to be an effort to profit from what some Magistrate and District judges indicate may be criminal conduct to profit from insurance claims relating to hurricane damage to the public of the state of Louisiana. Louisiana State Police Open Criminal Investigation Into McClenny Moseley Louisiana State Police have opened a criminal investigation into efforts by McClenny Moseley & Associates and Apex Roofing to solicit customers after receiving a complaint by the state Insurance Department about “suspected fraudulent actions” related to insurance claims. Read the full 22 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-01-01-2024-1.pdf Waiver of Right to Appeal Effective Insurance Agent Defrauded Clients by Taking Premium Money and Keeping it for Personal Expenses When a criminal defendant’s valid guilty plea includes a waiver of the right to appeal, the Fourth Circuit Court of Appeals generally enforces the waiver by dismissing any subsequent appeal that raises issues within the scope of the waiver. However, even if an appeal waiver is valid and applicable, the Fourth Circuit will review a claim that a district court’s sentence or restitution order exceeded the court’s statutory authority. In United States Of America v. Glenda Taylor-Sanders, Nos. 21-4136, 20-4604, United States Court of Appeals, Fourth Circuit (December 12, 2023) the Defendant sought a change of the sentence and restitution order. Read the full 22 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-01-01-2024-1.pdf Now Available The Compact Book of Adjusting Property Claims – Fourth Edition On January 2, 2024, in Kindle, paperback and hardback formats, The Compact Book of Adjusting Property Claims, Fourth Edition is now available for purchase here and here. The Fourth Edition contains updates and clarifications from the first three editions plus additional material for the working adjuster and the insurance coverage lawyer. Read the full 22 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-01-01-2024-1.pdf Fictionalized True Crime The Largest Residential Burglary of All Time This is a Fictionalized True Crime Stories of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help Everyone to Understand How Insurance Fraud in America is Costing Those who Buy Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ­­­Perpetrators than any Other Crime. After twelve months trying to get insurance on over $3,000,000 in jewelry and a like amount of fine arts, a Taiwanese man who was a wanted criminal in his own country convinced two American insurers to agree to insure him against the risk of loss to the contents of his home. Read the full 22 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-01-01-2024-1.pdf Health Insurance Fraud Convictions Guilty Verdict of Physician Who Subjected Patients to Unnecessary and Invasive Tests Payam Toobian, M.D. Paid Kickbacks to Physicians for Patient Referrals and Defrauded Medicaid by Subjecting Patients to Unnecessary Radiological Tests. Read the full 22 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-01-01-2024-1.pdf Fraudster Must Serve Time and Lose His Residence to Pay Restitution Armando Valdes appealed his 60-month sentence for health care fraud after he pleaded guilty. Valdes's conviction and sentence arose out of his scheme to submit millions of dollars in fraudulent medical claims to United Healthcare and Blue Cross Blue Shield for intravenous infusions of Infliximab, an expensive immunosuppressive drug. These infusions, purportedly given to patients at Valdes's medical clinic, Gasiel Medical Services ("Gasiel"), were either not provided or were medically unnecessary. In United States Of America v. Armando Valdes, No. 22-12837, United States Court of Appeals, Eleventh Circuit (December 19, 2023) the Eleventh Circuit disposed of the arguments asserted by Valdes. Read the full 22 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-01-01-2024-1.pdf Other Insurance Fraud Convictions Prison Sentences In Multi-Million Dollar Insurance Fraud; Returns $7.75M to NYSIF SADAF BHATTI, 40 and his company, ANAAR CONSTRUCTION & CONTRACTING CORP., pleaded guilty November 2, 2023, in New York State Supreme Court to Insurance Fraud in the First Degree for their role in Certified Public Accountant STEVEN LYON’s scheme to defraud the New York State Insurance Fund (“NYSIF”) of more than $18 million. BHATTI was sentenced to 1-to-3 years in state prison and ANAAR CONSTRUCTION & CONTRACTING CORP. was sentenced to a three-year conditional discharge. Read the full 22 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-01-01-2024-1.pdf The Role of the Insurer’s Attorney After Ending the EUO A well-executed Examination Under Oath (EUO) is not only one of the insurer’s most effective weapons against fraud. It can also be highly instructive for the adjuster. If an attorney is responsible for performing the examination, the adjuster must make clear that it is his or her obligation to provide sufficient factual information supported by legal authority for the insurer to make a decision on the claim. The adjuster should also, if possible, attend the EUO to help the attorney and to study questioning techniques. Attorneys, whose job it is to ask questions, will usually do a more thorough job of EUO than will insurance claims staff. After the EUO, the attorney will usually suggest additional investigation and can also give the adjuster legal advice as to the insurer’s rights, duties, and obligations. Read the full 22 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-01-01-2024-1.pdf Barry Zalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. 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 and read the full 21 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/11/ZIFL-12-01-2023-1.pdf Read the full 22 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-01-01-2024-1.pdf

Policy only Applies to Risks Taken by Insurer Post 4699 Plaintiffs in multiple consolidated actions appeal the Judgment granting the Motion for Summary Judgment in favor of defendant, The Burlington Insurance Company ("TBIC") based upon a clear and unambiguous exclusion. In Cameron Soule v. Woodward Design + Build, LLC, et. al., Nos. 2022-CA-0352, 2022-CA-0353, 2022-CA-0354, 2022-CA-0355, 2022-CA-0356, Court of Appeals of Louisiana, Fourth Circuit (December 21, 2023) Louisiana resolved the dispute. STATEMENT OF FACTS After a July 28, 2017, accident at the Standard Condominium construction project ("Project"), when a construction elevator/hoist fell, injuring several workers, including multiple plaintiffs. As required by the owner of the Project, Woodward obtained a Contractor Controlled Insurance Program ("CCIP") policy or "Wrap-Up" policy from Houston Casualty Company ("HCC") for the insurance on the Project. Eagle's Subcontract with Woodward provided that Eagle agreed to "furnish all labor, equipment, miscellaneous materials, and supervision for MAN/MATERIAL HOIST ERECTION & DISMANTLE," including "[p]reventative maintenance for 12-month rental period." Regarding insurance, Eagle's Subcontract stated, in pertinent part, that Woodward "has arranged for the Project to be insured under a controlled insurance program (the "CCIP" or "Wrap-Up")." In connection with the accident, plaintiffs filed suit against various parties and TBIC, Eagle's own commercial general liability ("CGL") insurer. TBIC denied coverage for Eagle, maintaining that its CGL policy contained a"Wrap-Up Exclusion" which precluded coverage to Eagle for all claims arising from the Project. The Wrap-Up Exclusion provided, in pertinent part, that coverage is excluded in "[a]ll locations where you perform or have performed work that is or was to be insured under a consolidated (wrap-up) insurance program as described below." (Emphasis added). On April 24, 2017, the Administrator sent a letter advising Eagle that it was not covered "under the General Liability Contractor Controlled Insurance Program for the trade of Hoist Rental and Service - the Standard Project." TBIC maintained that the CCIP policy was intended to cover Eagle under two distinct provisions: 1) as a lessor of equipment under the above mentioned "Additional Insured" endorsement; and 2) as an enrolled contractor, (for Eagle's work pursuant to the Subcontract to erect, dismantle, and provide preventative maintenance for the hoist) under the Wrap-Up endorsement. The latter endorsement provided that Woodward's "enrolled contractors" are insured "only while performing duties related to the project." Interpretation of Insurance Contracts An insurance policy is a contract between the parties and should be construed using the general rules of interpretation of contracts set forth in the Civil Code. The judicial responsibility in interpreting insurance contracts is to determine the parties' common intent. An insurance policy should not be interpreted in an unreasonable or a strained manner so as to enlarge or to restrict its provisions beyond what is reasonably contemplated by its terms or so as to achieve an absurd conclusion. If after applying the other general rules of construction an ambiguity remains, the ambiguous contractual provision is to be construed against the insurer and in favor of coverage. Under this rule of strict construction, equivocal provisions seeking to narrow an insurer's obligation are strictly construed against the insurer. ANALYSIS Woodward's Subcontract with Eagle specifically provides that Woodward arranged for the Project to be insured under the CCIP policy to provide coverage for Eagle's work at the Project site. The CCIP policy was issued by HCC. Notwithstanding the reason why Eagle was ultimately not enrolled, the record demonstrates that Eagle was clearly performing work on the Project that was to be insured under the CCIP policy. Moreover, the plain language of the Wrap-Up Exclusion stated that coverage for Eagle is excluded in "[a]ll locations where you perform or have performed work that is or was to be insured under a consolidated (wrap-up) insurance program . . ." The TBIC policy Wrap-Up Exclusion clearly and unambiguously precludes coverage for Eagle's work on the Project. Accordingly, the Wrap-Up Exclusion must be enforced as written. ZALMA OPINION Courts are required to read the entire policy at issue and interpret the policy as its wording relates to the facts of the incident that resulted in bodily injury to the plaintiffs. The court did so and ignored the creative, yet unconvincing, arguments made by the plaintiffs. The policy excluded the incident. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

Coverage Limited to What the Insured Pays For at Inception Post 4691 The Eleventh Circuit Court of Appeals was asked to resolve whether two residential homes destroyed by a fire while under construction were covered under an insurance policy (the "Policy") issued by Travelers Property Casualty Company of America ("Travelers") to its named insured, Talcon Group LLC ("Talcon"). Talcon is an underground utility contractor for sewer, storm drains, and treatment plants and never told Travelers it was building two residential buildings. In Travelers Property Casualty Company Of America v. Talcon Group LLC, No. 22-13547, United States Court of Appeals, Eleventh Circuit (December 20, 2023) the Eleventh Circuit decided the extent of the coverage available to Talcon. TWO RESIDENTIAL HOMES Rick testified that "[a]lmost every bit" of Talcon's work was underground utilities, such as sewers, storm drains, and treatment plant work. Talcon did not own the Florida land on which the two residential homes were constructed. Instead, the land was owned by a different family entity. Talcon was to benefit from the sale of the two residential homes by becoming a "local vendor" in the county where the homes were being constructed, entitling it to a 5% advantage with other contractors when bidding on future projects in the county. Wildfire Peril In May 2020, a wildfire completely destroyed the two residential homes. At that time, the residential homes were mostly complete but did not have certificates of occupancy. Talcon submitted a property loss notice, stating that the two residential homes were lost in the wildfires. Travelers denied the claim, because construction of two single family homes is not the same type of work as the installation of underground utility contractor work, which is what Travelers agreed to cover. THE POLICY In 2019 Talcon, through an insurance agent, submitted a '"Commercial Insurance Application" with Travelers. Talcon's application was for a renewal of a 2018 policy with Travelers. In an application field titled "Description of Primary Operations," Talcon listed "[u]nderground utility contractor." Under the "Installation/Builders Risk Section," Talcon selected "Installation," indicated that it averaged three commercial projects each year and left blank a section to list the number and value of any residential projects. An e-mail to Travelers submitting the renewal application stated that Talcon conducted "predominately water and sewer line work," and that a "heavy contractor questionnaire" was attached to explain Talcon's exposures. Travelers covered "Installation" property from direct physical loss or damage. The Policy "Definitions" section defined "Installation" as "[p]roperty described in the Declarations under 'Installation' owned by you or property of others for which you are legally liable, that you or your subcontractors will install, erect or fabricate at the job site.'" THE SUIT Travelers filed a complaint seeking a declaratory judgment that the two residential homes were not covered property under the Policy. The district court entered summary judgment in favor of Travelers. Because the two residential homes were unrelated to Talcon's underground utility work, the court concluded that the Policy did not cover them declaring that the Policy's coverage did not extend to the construction of the two residential homes. DISCUSSION Under Florida law every insurance contract shall be construed according to the entirety of its terms and conditions as set forth in the policy and as amplified, extended, or modified by any application therefor. While Rick and Zack testified that Talcon constructed multiple residential homes in recent years, Talcon's renewal application did not include this past residential work or indicate the prospect of future residential construction. Even though Talcon had begun constructing the two residential homes at the time of the renewal application, it misrepresented to Travelers that it was not engaged in any residential construction. Talcon, in fact, stated that 0% of its current work was "Residential" and 100% was "Municipal/Government." The Eleventh Circuit concluded that the only reasonable reading of the Policy and the renewal application is that Travelers provided coverage for Talcon's underground utility and site development work. The construction of the two residential homes was neither of those items and was not covered by the Policy. ZALMA OPINION The covenant of good faith and fair dealing requires that neither party to the contract of insurance will do anything to deprive the other of the benefits of the contract nor misrepresent or conceal material facts from the other. In this case Talcon lied when it submitted its application by claiming it did no residential construction work at the time that it was, in fact, constructing two residential properties. Since it is true that liars never prosper the lie about the work being done defeated its claims. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

Fraudster Must Serve Time and Lose His Residence to Pay Restitution Post 4698 Armando Valdes appealed his 60-month sentence for health care fraud after he pleaded guilty. Valdes's conviction and sentence arose out of his scheme to submit millions of dollars in fraudulent medical claims to United Healthcare and Blue Cross Blue Shield for intravenous infusions of Infliximab, an expensive immunosuppressive drug. These infusions, purportedly given to patients at Valdes's medical clinic, Gasiel Medical Services ("Gasiel"), were either not provided or were medically unnecessary. In United States Of America v. Armando Valdes, No. 22-12837, United States Court of Appeals, Eleventh Circuit (December 19, 2023) the Eleventh Circuit disposed of the arguments asserted by Valdes. LOSS AMOUNT Federal Courts sentence convicted defendants based upon offense levels set by federal statutes. The sentences are increased with the amount of "loss" caused by the offense. In Valdes's case, his base offense level was increased by 22 levels because the district court found that the loss amount was $38 million, and thus more than $25 million. Section 2B1.1(b)(1)(L) provides that a defendant's base offense level is increased by 22 levels if the loss from the fraud offense was more than $25 million but less than $65 million. Intended loss includes harm "that would have been impossible or unlikely to occur." ANALYSIS Valdes did not show the Eleventh Circuit that the district court's loss amount of $38 million was clearly erroroneous. Valdes admitted that through Gasiel, he submitted approximately $33 million in fraudulent claims to United Healthcare and approximately $5 million in fraudulent claims to Blue Cross Blue Shield. Even if United Healthcare was unlikely to reimburse Valdes for the entire amount billed or for duplicate claims those claims were nonetheless properly included in the intended loss amount. At the sentencing hearing, Valdes's own fraud analyst testified that, even accounting for duplicate claims, the total loss amount was above $25 million, the threshold for the 22-level increase in Valdes's offense level. SOPHISTICATED MEANS ENHANCEMENT If a defendant's fraud offense involved sophisticated means, his offense level is increased by two levels. Whether conduct is sophisticated is based on the conduct as a whole, not on the individual steps. The Eleventh Circuit reviews a district court's factual findings for clear error and its application of the guideline provision to those facts. Since the Eleventh Circuit found no error in the district court's application of the two-level sophisticated means enhancement that part of the sentence was affirmed. The Eleventh Circuit noted that Valdes operated an elaborate, years-long scheme to defraud insurance companies for expensive Infliximab infusions, obtaining over $7 million as a result. The large amount of money defrauded and the six-year period the scheme went undetected supported a finding of sophisticated means. Valdes hid behind two licensed doctors, Hilario Isaba and Ramon Santiago, who claimed no ownership interest in Gasiel and did not prescribe Infliximab. In light of these facts, the district court properly applied a two-level sophisticated means enhancement. FORFEITURE OF VALDES'S RESIDENCE Valdes argued the district court erred by ordering the forfeiture of his home as substitute property. Valdes admitted, however, that as part of his plea agreement, he agreed to forfeit his primary residence as substitute property. Valdes's statements made during the plea colloquy are taken to be true. In these statements, Valdes acknowledged he had read and understood his indictment and plea agreement. Because Valdes failed to show any plain error in the district court's accepting his guilty plea as to the forfeiture allegations, he has not shown the district court erred in ordering the forfeiture of his primary residence as substitute property. ZALMA OPINION People who earn millions by defrauding health insurers find it difficult to believe that they were found guilty of a crime and were required to serve time in jail and pay restitution to their victims. Valdes admitted his crime only to be so shocked by his sentence that he filed an appeal to eliminate or reduce the sentence to the crimes he admitted by asserting a plea of guilty. He wasted the time of the trial court and the Eleventh Circuit and should have been punished further for attempting the appeal. He was lucky that the Eleventh Circuit only affirmed the sentence. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

The Largest Residential Burglary of All Time This is a Fictionalized True Crime Stories of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help Everyone to Understand How Insurance Fraud in America is Costing Those who Buy Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ­­­Perpetrators than any Other Crime. After twelve months trying to get insurance on over $3,000,000 in jewelry and a like amount of fine arts, a Taiwanese man who was a wanted criminal in his own country convinced two American insurers to agree to insure him against the risk of loss to the contents of his home. To obtain the insurance he concealed from the American insurers that he was, at the time he purchased the insurance: an alien a court had ordered deported; that in his home country he was a wanted criminal; that he had left his home country with over $60,000,000.00 in checks unpaid; that every insurer at Lloyd’s, London had refused to insure him; that all of his property was appraised for more than twice its actual retail replacement value; and that most of the antiques he had insured in reliance on an “appraisal” attesting to a $3,500,000 value, were fakes. His application gave the impression that he was a Beverly Hills, California investor with appropriate concerns for security. He also made it clear that he was willing to pay a high premium for the protection, a fact that should have raised the concern of the underwriters asked to accept the risk of loss of his property. Within seven days of the delivery of his policy, a “burglary” was reported. A total of $7,000,000.00 of specifically identified and scheduled personal property was reported stolen. He claimed an additional $2,000,000 in unscheduled diamonds were stolen from their hiding place in one of his 50 suit coats hanging in his master bedroom closet. The burglars had no problem effecting the burglary because the Insured was out of town. The burglars circumvented, what the insurers were told was a sophisticated central station alarm system, because it was merely a local gong type alarm that had never been turned on. They defeated the promised class E safe (one that requires at least 30 minutes to drill out the lock) with a simple wood drill since the actual safe was nothing more than a locking gun cabinet built into a closet. The insurers refused to pay because they believed the insured made material misrepresentations and he concealed material facts in the purchase of the insurance. The Insured retained a prestigious plaintiff’s bad faith lawyer to represent his interests. Because of the reputation of counsel for the Insured and the fear of an extra-contractual judgment, the insurers (against the advice of three different defense firms) settled for more than $4,000,000.00 of the $7,000,000.00 claim. The Insured’s lawyer took a contingent fee of 50%, the insured’s creditors took 20%, and the Insured took what remained. Because the IRS was unable to assert its multi-million-dollar lien in time, it got nothing. The insurers spent hundreds of thousands of dollars defending the lawsuit brought by the insured. To save $3,000,000.00 off the policy limit claim they paid $4,000,000.00 which they did not owe. There was no question the insured committed fraud when he got the policy. There was little question that the burglary was also a fake. The burglars even threw some of their loot off a local pier where it could be discovered to make everyone believe it was a legitimate burglary. Even if the burglary was legitimate, there was clearly no coverage. A court with just a small amount of gumption would have declared the policy void. The Insured had misrepresented that he had been refused insurance by several insurers and was canceled by another. He concealed the fact that he had neither a central station alarm system nor a class E burglar resistant safe. The promises he made when he bought the policy were false. The insurers believed the misrepresentations and facts concealed were sufficient to void the contract. After a trip to China to take an examination under oath of the insured’s sister – who was also named as an insured – and two years of discovery, counsel for the insurers moved the court for summary judgment confirming rescission of the policy. The evidence available of multiple misrepresentations and the concealment of material facts, rescission was warranted and counsel was confident the court would agree. The day before the insurers’ counsel were to appear for oral argument on the motion for summary judgment the insurers and the insured’s lawyer settled the suit without communicating with defense counsel and against the recommendations of defense counsel. Common sense showed that an insured with a legitimately acquired $7,000,000 valued policy would never settle for less than $7,000,000 if he suffered a true loss. That he was willing to settle should have convinced the insurers the claim was fraudulent. Rather, the reluctance of the court to take a position (it had moved the oral argument three times), lack of action by the courts and the police agencies, and the lack of courage on the part of the insurers, cost the insurers involved more than $4,000,000 in settlement payments and many thousand dollars in defense and investigation costs. To recover the money lost by paying the Insured the insurers could only pass the payment on to other, honest, insureds and the reinsurers. The insurers’ fear of punitive damages that shadow every claim made in the states that recognize punitive damages for breach of the covenant of good faith, seemed to be impossible for the insurers to overcome. To stop the criminal who brings a fraudulent claim, insurers must not be frustrated by the continual refusal of the authorities to prosecute insurance fraud. They should decide to recoup the monies paid to the perpetrators of fraud from the fraud perpetrators by judgment or orders of restitution, rather than the honest insured whose premiums are raised to cover the payments made to the perpetrators. Some insurers believe they have no choice but to settle because the exposure to punitive damages in a bad faith suit, no matter how frivolous, is so great that a jury might believe the fraudsters arguments. Those insurers fail to realize that paying those who perpetrate fraud, to eliminate the exposure to punitive damages, regardless of the cost of defense of bad faith lawsuits brought by frauds, is not cost effective. Bad Faith is a two-way street. Even though insurers cannot sue for tort damages as a result of an insured's bad faith they may sue to recover the damages they incur as a result of fraud. Criminal courts, when they convict insureds of fraud should be encouraged to order the person convicted to make restitution of all investigative and legal expenses incurred by the insurer as a condition of probation. When an insurer makes payment of $4,000,000 for a claim it knows is fraudulent [even if it is a $3,000,000 savings over the policy limits] the insurer is issuing an engraved invitation to every con-artist in the country to move in and try the same thing. The expense is not for just the obvious fraudulent claim that is paid. The major expense is all of the other claims that are made with the knowledge that, when pushed, the Company will pay. Once an insurer gets a reputation for paying for fraudulent claims rather than fighting with all of its assets those who perpetrate fraudulent claims will gather like vultures over a rotting carcass ready to pick the bones clean. The reverse is also true: when an insurer makes it clear it will never pay a fraudulent claim, regardless of cost, those who earn their living by fraud will stay away. It is time that prosecutors learn that the victim is not the giant insurance company but each and every person who buys insurance. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

Where There is a Will - There are Relatives Post 4695 Della Lopez, Fred Lopez, Shella Gill, and Paul Imrie (collectively "Plaintiffs") appealed from the trial court's Order, arguing the trial court erred by granting summary judgment in favor of The Prudential Insurance Company of America ("Prudential") and abused its discretion by denying Plaintiffs' Motion to Compel. In Della Lopez, Fred Lopez, Shella Gill and Paul Imrie v. The Prudential Insurance Company Of America, No. COA23-427, Court of Appeals of North Carolina (December 19, 2023) the Court of Appeals resolved the dispute of relatives of a decedent's fight over life insurance benefits. FACTUAL BACKGROUND Following her husband's death, Sherry elected to purchase a Policy from Prudential and continued to make the premium payments. To effectuate purchase of the Policy, Sherry completed and signed an Optional Group Universal Life Enrollment Form (the "Beneficiary Designation") on 25 April 2007, naming her half-sister, Diana Imrie ("Diana"), as her sole beneficiary and Diana's children as contingent beneficiaries. After her husband's death in 2007, Sherry moved in with Diana and her then-husband Paul Imrie ("Paul") in North Carolina. Diana and Paul divorced in December 2014, and Sherry continued to live with Diana in North Carolina until March 2016. Sherry believed Diana took the money because Diana was a joint signatory on the account and had access to the funds. Following this discovery, Sherry wanted to cancel the Policy with Prudential because she could no longer make the monthly payments, and "Diana was the sole beneficiary." The Prudential representative advised Della she would send a "Cancel Coverage Form" via email. Della did not complete and return this form. Without the return of this form, the cancellation of the Policy did not go into effect. In 2016, Sherry attempted to commit suicide by overdosing on her heart medication. On 22 March 2016, Sherry died due to complications from her suicide attempt. On 10 May 2016, Diana emailed Prudential with a copy of the Beneficiary Designation form Sherry had signed in April 2007. After Prudential received the Beneficiary Designation from Diana Prudential was asked to verify whether the Beneficiary Designation should be accepted by Prudential. Prudential paid Diana $54,000, the full amount of the Policy. On 5 May 2017, after Paul and Della emailed Prudential alleging Diana was aware the Policy had been canceled and therefore fraudulently claimed she was the beneficiary of the purportedly canceled Policy. As a result of Paul and Della's multiple emails and the transcription of the cancelation call, the matter was referred to Prudential's Corporate Investigations Division ("CID"). CID Investigator Peter Friscia ("Friscia") was assigned to investigate any alleged fraud regarding the payment of the Policy to Diana and the cancelation call made by Della. Following interviews with Della, Paul, and Diana, Friscia concluded there was no evidence to substantiate any fraud by Diana, but Della's impersonation of Sherry did constitute fraud. Based on Friscia's report, Prudential referred the case to the Georgia Department of Insurance (the "GDOI") for further investigation. Prudential's referral stated that Della was suspected of committing insurance fraud due to her impersonation of Sherry on the cancellation call. The referral further stated Paul "aided and abetted" Della in her attempt to cancel the Policy. Plaintiffs filed a Complaint in Gaston County District Court requesting a declaratory judgment as to their rights under the Policy. In the Complaint, the Sibling-Plaintiffs alleged Prudential was required to pay out the Policy to the surviving siblings in equal shares, and the payout to Diana was wrongful because she was not the beneficiary on file. On 21 December 2022, Judge Bell granted both of Prudential's partial motions for summary judgment. ANALYSIS First, the Sibling-Plaintiffs argued that the trial court erred but there was no uncertainty as to the respective legal rights of the parties in the Policy. The evidence in the Record showed Diana submitted a Beneficiary Designation, signed by Sherry, noting Diana as the sole beneficiary of the Policy. Prudential confirmed the information in the Beneficiary Designation and concluded the claim by Diana was valid. Moreover, the Sibling-Plaintiffs' own evidence shows they likewise believed Diana was the beneficiary of the Policy. The Sibling-Plaintiffs have failed because the evidence shows Diana was the beneficiary of the Policy and the judgment was affirmed. ZALMA OPINION Because the decedent had fallen out with her sister and wanted to cancel the policy to keep her from benefiting from the decedent's death, she asked her other sister to cancel the policy. The sister failed to do so and the person the decedent did not want to receive the benefits of the policy got the money. The rest of the family tried to make the decedent's wishes be honored but could not do so because of the incompetence of the attempt to cancel the policy. Relatives should never get involved in the life insurance held by others. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

States Make Insurance Fraud a Crime Post 4694 In Hawaii, a person was convicted of fraud in State v. Whitaker, 175 P.3d 136, 117 Hawai’i 26 (Haw.App. 12/31/2007). As a result of a claim made by Hiram Whitaker (Whitaker) to AIG Hawaii Insurance Company, Inc. (AIG), his automobile insurance carrier, in which he sought insurance benefits for vandalism damages to his car, Whitaker was indicted, convicted, and sentenced for Insurance Fraud in violation of Hawaii Revised Statutes (HRS) § 431:10C-307.7(a) (1) and (b) (2) (2005), and Attempted Theft in the Second Degree (Attempted Theft 2) in violation of HRS § 708-831(1) (b) (Supp. 2000) and HRS § 705-500 (1993). At trial, Cheryl Cabrera (Cabrera), an AIG claims-service representative, testified that she was assigned to follow up on Whitaker’s telephone call to AIG in which he reported the vandalism to his car. She called Whitaker at home, asked him to specifically describe the damages to his car, and requested that Whitaker “come in the next day for an estimate.” Cabrera recalled that the damages claimed by Whitaker were pretty extensive for a vehicle being vandalized. “I remember him stating his vehicle, the entire car was scratched or keyed. I remember damages he mentioned to the hood, trunk, passenger side, and driver’s side signal light.” The damages were inconsistent of a vehicle being vandalized. Every part of his vehicle was damaged, either scratched or indented and so forth. Both Whitaker and his wife, Eva, testified at trial. They described the vandalism damages to the car that they observed on March 1, 2001. They also acknowledged that some of the damages to the car pre-existed the vandalism. As to the Insurance Fraud offense, the indictment charged that Whitaker did knowingly present, cause or permit to be presented false information on a claim to AIG with intent to obtain benefits or recovery or compensation for benefits or services provided, to wit, insurance proceeds. When the definition of an offense specifies the state of mind sufficient for the commission of that offense, without distinguishing among the elements thereof, the specified state of mind shall apply to all elements of the offense, unless a contrary purpose plainly appears. Not all insurance fraud cases deal with individual acts like those cases. Some involve major conspiracies to defraud insurers by multiple acts of fraud. Consider a case where 46 counts of fraud were charged and how many more counts could have been charged against the schemers who operated a capping (running) scheme to recruit injured persons and inflate their injuries for profit. In New York a “runner is defined as: 'Runner' shall mean any person who, for a pecuniary benefit, procures or attempts to procure a client, patient or customer when such person knows, or a reasonable person would know, that the purpose of an owner of a no-fault motor vehicle insurance medical clinic is to falsely or fraudulently: (I) obtain medical benefits from a no-fault motor vehicle insurer; or (ii) assert a claim against an insured or a no-fault motor vehicle insurer for the provision of health care services to such client, patient or customer; provided, however, that such term shall not include a person who procures or attempts to procure clients, patients or customers through public media or a person who refers clients, patients or customers as authorized by law. Nothing in this chapter shall be deemed to prohibit an agent, broker or employee of a health maintenance organization from seeking to sell health maintenance organization coverage or health insurance coverage to any individual or group. [New York City Administrative Code § 20-900.] In People v. Zanoletti, 173 Cal.App.4th 547, 92 Cal.Rptr.3d 757 (Cal.App. Dist.2 04/28/2009) Ramon Alfonso Zanoletti (Alfonso) and his wife Magdalena Rosalis Zanoletti (Magdalena) appealed their convictions by jury of insurance fraud. Specifically, Alfonso was convicted of 19 counts of felony insurance fraud (Pen. Code, § 550, subd. (a)(1)) (counts 1, 4, 7, 10, 12, 14, 16, 18, 20, 22, 24, 26, 28, 32, 34, 38, 40, 42 & 45), with findings of a pattern of fraudulent taking of more than $100,000 (§ 186.11, subd. (a)(3)) and damages exceeding $50,000 (§ 12022.6, subd. (a)(1)). He was also convicted of one count (count 3) of misdemeanor unauthorized practice of law (Bus. & Prof. Code, § 6126, subd. (a)). Magdalena was convicted of the same insurance fraud counts and special allegations, plus another 19 counts of felony insurance fraud (§ 550, subd. (a)(5)) (counts 2, 5, 8, 11, 13, 15, 17, 19, 21, 23, 25, 27, 29, 33, 35, 39, 41, 43 & 46), with the same special allegations. The trial court sentenced each to 22 years in state prison. Magdalena worked as an office manager at the Franklin Chiropractic Clinic on West 8th Street in Los Angeles (the clinic) and received an annual salary of $40,000. Clarence Franklin worked as a chiropractor at the clinic. Magdalena’s husband Alfonso leased the space for the clinic and also leased some of the medical equipment, including the X-ray machine, and paid the clinic’s telephone bill. Alfonso, who ­was not an attorney, had an office at the Law Offices of Taghizadeh & Associates (the law office). Between December 12, 2003 and December 3, 2004, Alfonso received $183,115.42 from the law firm in sporadic checks of unequal sizes, often with the notation “for ex-services.” Magdalena testified on her own behalf. She and Alfonso had been married 35 years and have two daughters. She had worked at the clinic approximately 11 years, and denied directing patients to sign for more treatments than they received. She attributed errors in the billings to human error. Alfonso would meet clients at the clinic and also discussed patients with her. Alfonso leased the space for the clinic and paid the clinic’s telephone bill. Alfonso testified on his own behalf. He worked at the clinic from 1992 through 1995 as an administrator, and again from 2003 to 2006, though he did not recall that time very well. He also began working at the law office around September 2003. As to the $183,000 he received from the law office in 2004, he cashed the checks, then returned an unspecified sum to the law office, though he paid taxes on the full amount. The court concluded that multiple convictions were appropriate. Sign-in sheets used by the clinics were clearly fraudulent. Magdalena assisted in the preparation of this documentation, as well. She was appropriately convicted under section 550, subdivision (a) (5) for her role in personally creating such documents with the intent that they be presented in support of a fraudulent claim. Under this subdivision, the crime was complete as soon as the writing was completed. The court found that a conspiracy exists when the defendant and another person have the specific intent to commit an offense and a member of the conspiracy commits an overt act in furtherance of the conspiracy. The existence of a conspiracy may be inferred from the conduct, relationship, interests, and activities of the alleged conspirators before and during the alleged conspiracy. In this case the evidence overwhelmingly established that Alfonso and Magdalena were part of a sophisticated conspiracy to make fraudulent insurance claims. With minor modification in the judgments the two were ordered to serve their sentence. ZALMA OPINION Insurance fraud is a serious crime - a felony - in most states. Every person convicted of insurance fraud or acting as a runner or capper to assist unscrupulous lawyers to commit insurance fraud, should be arrested, tried and if convicted sentence to the full penalty allowed by the state's insurance fraud statute. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

Insurance Agent Defrauded Clients by Taking Premium Money and Keeping it for Personal Expenses When a criminal defendant's valid guilty plea includes a waiver of the right to appeal, the Fourth Circuit Court of Appeals generally enforces the waiver by dismissing any subsequent appeal that raises issues within the scope of the waiver. However, even if an appeal waiver is valid and applicable, the Fourth Circuit will review a claim that a district court's sentence or restitution order exceeded the court's statutory authority. In United States Of America v. Glenda Taylor-Sanders, Nos. 21-4136, 20-4604, United States Court of Appeals, Fourth Circuit (December 12, 2023) the Defendant sought a change of the sentence and restitution order. FACTS From February 2017 through May 2019, Taylor-Sanders took advantage of her role as a licensed insurance agent to defraud several trucking companies and the insurance finance company BankDirect Capital Finance. She defrauded the trucking companies by misappropriating funds that the companies provided her to pay for their insurance policy premiums and BankDirect Capital Finance by obtaining loans under the guise of nonexistent insurance policies. Instead of using the funds she obtained to pay insurance policy premiums or to pay back BankDirect Capital Finance for the legitimate loans it made to the trucking companies, Taylor-Sanders spent the funds on personal expenditures including cars, football tickets, and mortgage payments. Predictably, some of the trucking companies' insurance policies lapsed because Taylor-Sanders did not pay the insurance premiums. Her scheme unraveled when one trucking company, DW Express, discovered its insurance policy was canceled for nonpayment after it tried to file a claim for an April 2019 trucking accident. Taylor-Sanders signed a plea agreement, under which she agreed to plead guilty to one count of wire fraud (Count Four). She also agreed to pay "full restitution, regardless of the resulting loss amount, to all victims directly or indirectly harmed by [her] 'relevant conduct,' . . . including conduct pertaining to any dismissed counts or uncharged conduct, regardless of whether such conduct constitutes an 'offense' ..." And she "waive[d] all rights to contest the conviction and sentence in any appeal" on any grounds other than ineffective assistance of counsel or prosecutorial misconduct. In exchange, the Government agreed to dismiss all the remaining counts against her. On January 24, 2020, Magistrate Judge David C. Keesler conducted a plea hearing pursuant to Rule 11 of the Federal Rules of Criminal Procedure. After two adjournments to further explain the plea to her, Taylor-Sanders confirmed that she intended to plead guilty, understood that the decision to plead guilty was entirely hers, and had an adequate opportunity to review the plea documents and discuss possible defenses with counsel. She confirmed that she understood and agreed with the plea documents, that no one had threatened, intimidated, or forced her to enter the guilty plea, and that she understood all parts of the proceeding. She also confirmed that she was satisfied with her counsel's services, had no further questions or statements, and still wished to plead guilty. After this colloquy, the magistrate judge found that Taylor-Sanders's plea was knowing and voluntary and that Taylor-Sanders understood the charges and potential penalties and consequences of her plea. Four months later Taylor-Sanders moved to withdraw her guilty plea, asserting "she was told she had no choice but to plead guilty" and that "her plea was not knowing and voluntary because 'she did not fully understand the interplay between what her guideline range could be versus the final sentence.'" The district court found that the Government's witnesses were credible, that the documents it submitted were consistent with the factual basis document and Presentence Investigation Report, and that the evidence "overwhelmingly establishe[d] a factual basis" for Taylor-Sanders's guilty plea. In contrast, the district court found that Taylor-Sanders's testimony was not credible, noting Taylor-Sanders was "thoroughly impeached by her prior misstatements in other arenas." The district court further found that Taylor-Sanders had "engaged in a pattern of fraudulent activity over a lengthy period of time involving multiple businesses in which she received funds to obtain insurance policies..." On March 10, 2021, the district court ordered Taylor-Sanders to pay restitution in the amounts the Government requested. ANALYSIS The magistrate judge conducted a proper Rule 11 colloquy. The magistrate judge confirmed that Taylor-Sanders had reviewed the charge with counsel, understood the contents and possible consequences of her plea agreement, and was voluntarily pleading guilty. When Taylor-Sanders twice expressed concerns about the plea agreement or factual basis document, the magistrate judge provided a recess for her to convene with counsel and make any necessary changes to the plea agreement before proceeding. Taylor-Sanders's appeal waiver was valid. The restitution order included $139,847.09 for a year of DW Express's lost profits. Since Taylor-Sanders did not dispute that the Mandatory Victims Restitution Act permits restitution. The Fourth Circuit concluded that each of Taylor-Sanders's claims on appeal are barred by the appeal waiver in her guilty plea. Therefore, her appeal was dismissed. ZALMA OPINION Fraud perpetrators have no honor. Even after obtaining a plea agreement that saved her years in prison, Taylor-Sanders took up the time of the District Court and the Fourth Circuit to hear a spurious motion to withdraw her guilty plea after knowingly entering into the plea agreement and waiving her right to appeal. She will pay restitution and spend an appropriate time in jail. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

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