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Felon Must Pay Restitution to Each Victim John James Succi appealed pro se from the order dismissing his "Motion to Vacate Restitution/Sentencing." In Commonwealth Of Pennsylvania v. John James Succi, No. 229 EDA 2022, No. J-S22022-22, Superior Court of Pennsylvania (February 28, 2023) the Superior Court gave consideration to the pro se motions of the convicted felon. FACTS In a prior appeal, a panel of the Pennsylvania Superior Court summarized the facts leading to the underlying convictions as follows: Succi was a residential and commercial contractor. Beginning in 2005 and continuing through 2013, Succi entered into thirteen contracts to build, remodel, or construct additions on certain properties located in Bucks County, Pennsylvania, Philadelphia County, Pennsylvania, and Margate, New Jersey. In each instance, Succi either failed to finish the work, failed to obtain necessary permits, failed to perform under the contract, claimed he was insured when he was not, or provided fraudulent receipts. It was also typical for Succi to quote a price for a particular project and then increase the costs. If the homeowner challenged Succi's work practices, he threatened them with legal proceedings that would financially cripple the homeowners. In at least two instances, Succi placed mechanic's liens on homeowners' properties. [Commonwealth v. Succi, 480 EDA 2015 (unpub. memo. at 1-2) (Pa. Super. Jan. 5, 2017).] Succi was charged with multiple counts of home improvement fraud, theft by deception, and deceptive business practices, and one count of insurance fraud. Succi was convicted of 12 counts each of deceptive business practices and theft by deception, two counts of home improvement fraud, and one count of insurance fraud. SENTENCING HEARING The sentencing hearing proceeded with victim impact testimony presented by the Commonwealth, and character evidence presented by Succi. The trial court sentenced Succi to an aggregate term of 15 to 30 years' imprisonment, imposing consecutive sentences with respect to each victim. After announcing the sentence for each criminal conviction, the court imposed restitution, as requested by the Commonwealth. Succi filed a direct appeal and argued: several convictions were barred by the statute of limitations; jurisdiction and venue in the Bucks County Court of Common Pleas was improper; and the "life sentence" imposed by the trial court was unconstitutional and illegal. The Appellate Court affirmed the judgment of sentence, and the Pennsylvania Supreme Court denied allocatur review. THE PRO SE MOTION The trial court entered an order denying Succi relief. The court explained that it considered Succi's motion to be a second, untimely PCRA petition, and it had no jurisdiction to address Succi's claim. Whether a PCRA petition or not restitution is governed by state statute that mandates that a trial court "shall order full restitution [r]egardless of the current financial resources of the defendant, so as to provide the victim with the fullest compensation for the loss." The statute further requires that the court "specify the amount and method of restitution" at the time of sentencing. The crux of Succi's claim is that the trial court did not impose restitution at the time of his sentencing as required by statute. After announcing the prison terms imposed for the crimes against each victim, the trial court admitted the Commonwealth's sentencing exhibits, which detailed the restitution requested for each victim. The court noted that if it believed Succi could repay the victims, it "would have entered a different sentence [,]" presumably with a shorter prison term. Therefore, Succi's claim that the court did not impose restitution at the time of his sentencing hearing was simply incorrect. Moreover, the May 20, 2015, order - which Succi claims the court, belatedly and without conducting a hearing, added restitution to his sentence - makes no mention of any restitution amounts which had been set at sentencing. The trial court's order was affirmed. ZALMA OPINION Victims of crime must make certain that the state prosecutor, after convicting the criminal, like Succi, must demand restitution. The victims did so in this case and the prosecutor effectively obtained, at sentencing, an order of restitution. Succi, sentenced to many years in prison may never be able to pay the ordered restitution unless there are assets that could be taken to pay the restitution. Regardless, convicted felons have nothing but time so he wasted the appellate courts time by bringing this pro se motion which failed. He will remain in the Gray Bar Hotel for the next 15 to 30 years. (c) 2023 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

Biological Damage Cover Must Overcome Mold Exclusion In Clay Buchholz; Lindsay Buchholz v. Crestbrook Insurance Company, doing business as Nationwide Private Client, No. 22-50265, United States Court of Appeals, Fifth Circuit (April 18, 2023) Clay and Lindsay Buchholz sued their insurer after recovering $745,778 for damage to their ten-thousand-square-foot house in Austin, Texas. The Buchhholz' insured their home with Crestbrook Insurance Company. Their policy included "Biological Deterioration or Damage Clean Up and Removal" coverage ("mold coverage"). The Buchholz family discovered a widespread mold infestation in their home. Although Crestbrook covered many of their losses, it denied a generalized claim for mold growing in the Buchholzes' walls and heating, ventilation, and air conditioning system. A magistrate judge issued a report and recommendation in favor of Crestbrook, and the district court adopted the magistrate judge's conclusions. FACTS Crestbrook paid $745,778 in covered losses on five of the six claims submitted. However, Crestbrook asserted that the sixth claim for general mold growth and mold in the HVAC system was excluded. The Buchholz family retained MLAW Forensics, Inc., to investigate the cause of their mold infestation. Crestbrook paid for MLAW's investigation. Dean R. Read, P.E., wrote a causation report on what he concluded led to the mold growth at the Buchholzes' house that found that "discrete leaks and a 'global' issue due to interruption or restriction of the moisture vapor drive drying process" caused the mold. Specifically, he concluded that the house's HVAC system was "[i]mproperly designed or configured and non-functional," which resulted in "elevated moisture content []" and subsequent mold growth. Based on MLAW's causation report Crestbrook denied Appellants' mold claim. The denial letter referred to policy exclusions for biological deterioration or damage, a defect or inadequacy in design, workmanship, construction and materials. In addition, the policy contained exclusions for weather conditions or dampness, and gradual or sudden loss due to a mechanical breakdown. Crestbrook concluded that the biological deterioration or damage additional limited coverage would not apply to this claim. In their final complaint, the Buchholz family alleged that Crestbrook breached their insurance contract in bad faith and violated the Texas Insurance Code. The magistrate judge concluded that the Buchholz family had failed to demonstrate a "covered cause of loss" as required by their mold coverage. ANALYSIS Under Texas law, when deciding a dispute regarding insurance coverage, the court first looks to the language of the policy because it presumes parties intend what the words of their contract say. The court must give the policy's words their ordinary and generally accepted meaning unless the policy shows the words were meant in a technical or different sense. A disagreement between the parties regarding the meaning of policy terms or interaction between terms does not create ambiguity. The Insured's Burden In a coverage dispute, the insured has the burden first to prove that their loss falls within the terms of the contract. Once the insured demonstrates this, the burden shifts to the insurer, who, to avoid liability, must show that the loss falls into an exclusion to the policy's coverage. The Fifth Circuit Conclusion The Fifth Circuit concluded that the magistrate judge correctly laid out the Texas insurance dispute burden-shifting framework in her report and recommendation she concluded: “[The Buchholzes] fail to identify the cause of the mold damage. Instead, [the Buchholzes] submit that the Policy is an inclusive, all risk policy that covers all-risk of accidental direct physical loss to the property unless an exception applies... Accordingly, [the Buchholzes] fail to meet their burden to show that the Mold Claim is covered under the [mold coverage] provision.” In its motion for summary judgment, Crestbrook argued that mold infestation is an excluded peril under the policy. Applying the Texas insurance burden-shifting framework, the Fifth Circuit agreed with Crestbrook that the mold exclusion bars coverage for the Buchholz family's claim. Under the Texas insurance dispute framework, the Buchholzes must first show a direct physical loss as required under their all-risk policy. Then Crestbrook can identify any exclusions to coverage of that loss. The policy excluded coverage for "loss to any property resulting directly or indirectly from any of the following . . . Biological Deterioration or Damage, except as provided by [the mold coverage]." The Buchholzes showed they suffered a mold infestation, nothing more. Their theory is that water intrusion causes mold. But water intrusion as such is not a loss covered by the policy when its only manifested harm to covered property is fungal growth. Consequently, the Buchholzes did not show that their mold coverage serves as an exception to the mold exclusion. So, their generalized mold claim is excluded by the terms of their policy. Although the Fifth Circuit found that the district court incorrectly applied the Texas insurance coverage burden-shifting framework Crestbrook is still entitled to summary judgment because it has demonstrated that a generalized mold claim is excluded under the policy. ZALMA OPINION The Fifth Circuit concluded that it was required to interpret the insurance policy as it was written and that the generalized mold claim was clearly and unambiguously excluded. Nothing more need be said. The Buchholzes should not have sued their insurer they should have sued the contractor, designer or manufacturer of the defective HVAC system. In fact they should join with their insurer in seeking damages from those who were responsible for the defects that caused the mold infestation. (c) 2023 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

Lloyd's Marine Policy Only Insured Against Loss of Property in Transit After Hurricane Irma damaged its property, Pero Family Farm filed an insurance claim. Lloyd’s accepted coverage for part of the claim but denied coverage for the rest. Lloyd's sued seeking declaratory judgment that the insurance policy did not cover the denied portion of the claim. The district court granted summary judgment to Lloyd’s. In Certain Underwriters At Lloyd’s London Subscribing To Policy No. B0799MC029630K v. Pero Family Farm Food Co., Ltd., No. 20-12711, United States Court of Appeals, Eleventh Circuit (April 10, 2023) the Eleventh Circuit interpreted the policy. FACTUAL BACKGROUND Pero grows vegetables (primarily peppers and beans) that it prepares and packages for either retail sale at grocery stores or wholesale by food service companies. The seeds Pero uses are either prepared by Pero from its own vegetables or purchased from third-party seed providers. Pero plants some of its seeds in fields it owns or leases in Florida. But Pero also sends seeds to Trans Gro, a third-party plant grower. Trans Gro plants the seeds and grows the seedlings in its greenhouses in Immokalee, Florida, until the seedlings are mature enough to be transported to Pero's fields and planted in the ground. Once Pero harvests its vegetables, it transports them to its cooled storage facility in Delray Beach, Florida, where it cleans, sorts, stores, and packages the vegetables. Pero packages some of its vegetables in plastic packaging. It then transports the vegetables from the Delray Beach facility to its final customers. The Policy In its 2015 insurance application, Pero stated that its "primary operations" were "[g]rower, [p]acker, [s]eller of vegetables[,] mainly [p]eppers and [g]reen [b]eans"; that the "[t]ype of [g]oods to be [i]nsured" was "produce, primarily peppers [and] beans"; and that it sought to insure "[d]omestic shipments" of "[g]reen beans [and] peppers on vehicles (dump trucks) moving from field to packing house[;] seed is also stored on location." The policy contained a Florida choice of law provision. Subject-Matter Insured All goods and/or merchandise of every description incidental to the business of the Assured or in connection therewith. The policy limits were $150,000 for "[a]ny one domestic inland conveyance" and $5,000,000 for "[a]ny one location." Pero's Insurance Claim On September 10, 2017, Hurricane Irma struck South Florida. Pero submitted a claim to Lloyd’s for the damage it suffered as a result of the hurricane. Pero sought coverage for the loss of vegetables stored in the coolers at its packing house in Delray Beach, as well as: (1) seedlings that had been growing in Trans Gro's greenhouses in Immokalee; (2) plants that had been growing in Pero's fields; and (3) plastic coverings that had been placed over the plants growing in Pero's fields. Lloyd’s accepted coverage (and issued payment) for Pero's loss of the vegetables in its coolers that were in transit but denied coverage for the damage to the seedlings growing in Trans Gro's greenhouse, the plantings in Pero's fields, and the plastic coverings on Pero's fields that were not in transit. The Lawsuit Lloyd’s sued Pero seeking a declaration that the policy did not cover the damage to the seedlings, plantings, or plastic coverings. Lloyd’s alleged that coverage was not due under the policy because: "[t]he seedlings, planted crops, and crop covers were not in transit at the time of the loss," so "there [was] no 'in transit' coverage"; "[t]he seedlings, planted crops, and crop covers were not in storage at any location as defined by the [policy]," so "there [was] no 'location' coverage"; and "[s]eedlings and immature plants are crops and the [policy] d[id] not provide crop coverage"-because Pero "specifically sought cargo coverage for the transit and storage of fresh harvested produce, dry seeds[,] and packaging from field to storage and while in storage," not "crop insurance." Summary Judgment for Lloyd’s The district court granted summary judgment for Lloyd’s and denied Pero's motion because "the unambiguous language in the [p]olicy d[id] not provide coverage for Pero's damaged seedlings, plantings, and plastic coverings." DISCUSSION The Eleventh Circuit agreed with Pero that the policy's language was clear and unambiguous. But it also agreed with Lloyd’s and the district court that the policy did not cover Pero's damaged seedlings, plantings, and plastic coverings. The policy unambiguously covered goods or merchandise only while they were in transit or, by extension, "in store" as "stock" at a "location" during the transit process: Within the geographical limits of this policy, cover hereunder shall attach from the time the Assured assumes an interest in and/or responsibility for the subject [-] matter insured and continues uninterrupted, including transit, stock[,] and location coverage until that interest and/or responsibility ceases. The geographical limits of the policy were from a beginning point to an end location, and anywhere goods or merchandise stopped in between. Coverage "continue[d] uninterrupted, including transit, stock [,] and location coverage," during that trek. The policy was titled "Marine Cargo Insurance," and "cargo," although not defined in the policy, was generally understood, at the time, to mean "[g]oods transported by a vessel, airplane, or vehicle." Consistent with the "Duration of Voyage Clause," the policy's title, and the claims procedure, the policy's other provisions showed that it covered goods or merchandise only while in transit or in storage during the transit process. The policy's "Information" section said that the policy covered "[t]ransits from field to packing house." And the statement of value attached to the policy noted that Pero's Delray Beach "packing house" held "[s]tock/[i]nventory" valued at $5,000,000-the same amount as the policy's per "location" coverage limit. Pero's 2015 insurance application which was attached to and made a part of the effective policy, which the Eleventh Circuit must treat as part of the contract, explained that the policy covered only goods or merchandise in transit or in storage during the transit process. Specifically, the application documents showed that Pero sought to insure "[d]omestic shipments" of "[g]reen beans [and] peppers on vehicles (dump trucks) moving from field to packing house" and the "seed . . . stored on location." Because the insurance policy clearly and unambiguously did not cover the portion of Pero's claim that Lloyd’s denied, the district court properly granted summary judgment for Lloyd’s and denied partial summary judgment for Pero. ZALMA OPINION Insurance policies are contracts and must be interpreted as written if unambiguous. The policy obtained by Pero was not insurance of its crop but was limited to coverage for that portion of its crop while in transit. The hurricane caused damage to some of the crop and merchandise in transit but did not insure other damages caused by the hurricane to property not in transit. Lloyd's used simple, clear, unambiguous language that both parties agreed was unambiguous and the Eleventh Circuit applied the insurance contract as written. (c) 2023 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

Reporting Suspected Insurance Fraud is Subject to a Qualified Privilege in Oklahoma Sue Chimento sued claiming defamation, negligence, intentional interference with business relations, false representation, constructive fraud, and conspiracy against Gallagher Benefit Services, Inc., and Scott McCoy, based on allegations they made to the Tulsa Police Department, Tulsa County District Attorney's Office, and the Oklahoma Insurance Department that she had embezzled money while under their employment. The trial court granted partial summary judgment to Defendants, finding that their statements to the police and district attorney were subject to an absolute privilege and their statements to Oklahoma Insurance Department were subject to a qualified privilege under 36 O.S. § 363. In Sue Chimento v. Gallagher Benefit Services, Inc., and Scott Mccoy, Individually, Nos. 120089, 120101, 2023 OK 22, Supreme Court of Oklahoma (March 21, 2023) resolved the dispute. BACKGROUND Petitioner, Sue Chimento would pay individual premiums on behalf of the client Native American Tribes' employees out of the Tribal Account. Given how the Tribal Account was utilized, it was typical for the Tribal Account to have a zero balance. In March 2017, Midfirst Bank found that the Tribal Account was overdrafted. Shortly after management's Mr. McCoy inquired of Chimento as to why the account was overdrafted, Chimento resigned her employment with AJG. McCoy then filed a report with the Tulsa Police Department ("TPD") alleging that Chimento embezzled approximately fifty-one thousand dollars ($51,000.00). Shortly thereafter the Tulsa County District Attorney filed a criminal information charging Chimento with one count of felony embezzlement. The District Attorney later dismissed the charges against Chimento for insufficient evidence. IMMUNITY DEFENSES Defendants asserted that any of their statements to TPD, the District Attorney's Office, and the OID were subject to an absolute privilege, and thus, to the extent any of Chimento's claims were based on these statements, the claims must fail. The trial court granted summary judgment to AJG/GBS on all of Chimento's remaining claims. The trial court found that Defendants' statements to TPD and to the District Attorney's office were subject to an absolute privilege under 12 O.S. § 1443.1 and their statements to the OID were subject to a qualified privilege under 36 O.S. § 363. DISCUSSION The Supreme Court concluded that Defendants' statements to law enforcement were entitled to a qualified privilege. Statements to law enforcement are entitled to a qualified privilege. For example, in Johnson v. Inglis, 1942 OK 80, 123 P.2d 272, the plaintiff sued for defamation after defendant reported to several Oklahoma City police officers that the plaintiff was illegally selling alcohol out of her home. The Supreme Court in the past applied an absolute privilege to communications made during various proceedings and find that statements made to law enforcement enjoy a qualified – and not absolute – privilege. Thus, any statements Defendants made to TPD and the District Attorney's Office only enjoy a qualified privilege. Defendants' Statements To The Oklahoma Insurance Department Are Entitled To A Qualified Privilege. The immunity provisions of §363 expressly apply to reports made when an insurer furnishes information, either orally or in writing for an investigation or prosecution of suspected insurance fraud. The terms of the statute, insofar as to when immunity applies, are clear and unambiguous. If any insurer furnished information for an investigation or prosecution, as they did in this case, they are protected from civil action for libel, slander or any other relevant tort or any criminal action. The Supreme Court concluded that the clear and unambiguous intent of § 363 is to provide qualified immunity from civil actions for individuals who furnish information to the OID regarding fraudulent insurance activity. As noted in the OID's Notice of Hearing to Chimento, its investigation was prompted by and relied upon the investigation of the Tulsa Police Department into allegations made by Defendants against Chimento. The allegations in the Notice of Hearing relate exclusively to Chimento's employment by the Defendants. Therefore, Defendants statements to TPD and the District Attorney's Office are entitled to a qualified privilege. Likewise, Defendants statements to the Oklahoma Insurance Department are entitled to a qualified privilege under 36 O.S.Supp.2012 § 363. ZALMA OPINION State law requires insurers to report to the Oklahoma Department of Insurance (OID) suspected insurance fraud and by statute an insurer is provided an immunity from certain suits like those made by the Plaintiff if the suit is based upon the report to the OID. The report to police, if made in good faith, usually provides an absolute immunity but Oklahoma no makes the immunity qualified. Whether qualified or absolute the immunity protects the defendants. (c) 2023 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

Res Judicata Requires Fraudster to Lose Again After it Sues Again Forcing Two Courts to Deal With a $366.64 Fraudulent Claim is Chutzpah Integrated Pain Management, PLLC, sought $366.64 in no-fault insurance benefits for medical services it rendered to assignor Mikwan Murphy on August 16, 2018 although the insurer had already obtained a judgment that the claim was fraudulent. In Integrated Pain Management, PLLC, as assignee of Mikwam Murphy v. Empire Fire & Marine Insurance Company, 2023 NY Slip Op 50219(U), Index No. CV-712234-21/BX, Civil Court of the City of New York, Bronx County (March 22, 2023) the services allegedly provided by Integrated consisted of treatment for injuries Murphy allegedly sustained in an automobile accident on July 22, 2018. Defendant moved for summary judgment contending that plaintiff was barred by the doctrines of res judicata, collateral estoppel, and law of the case from relitigating the issue of coverage for this claim. Plaintiff ignored the motion. PRIOR ACTION In 2019, Empire Fire commenced a declaratory judgment action in Kings County Supreme Court against Integrated Pain Management and Murphy, among others. In that case, Empire Fire alleged that Integrated Pain Management and Murphy participated in an insurance fraud scheme in which rented vehicles would intentionally get into "accidents" with unsuspecting third-party drivers. The drivers and passengers in the rented vehicles would receive payments of up to $1,500, and in exchange for those payments would seek medical treatment from certain designated medical providers, who would seek reimbursement under Empire Fire's no-fault insurance policy. On April 8, 2021, Supreme Court granted default judgment for Empire Fire, ruling in relevant part that Empire Fire was not contractually obligated to reimburse Integrated Pain Management for the services it rendered to Murphy arising from the July 22, 2018 accident because the alleged losses were not the result of an "accident" as contemplated by the insurance policy. DISCUSSION Given Supreme Court's ruling that contractually there is no no-fault coverage for the July 22, 2018 purported "accident." Since Integrated Pain Management and Murphy were both parties to the Brooklyn Action and the claims again from the very same "accident" at issue in that case. Under res judicata, or claim preclusion, a valid final judgment bars future actions between the same parties on the same cause of action. The doctrine applies if the issue in the second action is identical to an issue which was raised, necessarily decided and material in the first action, and the plaintiff had a full and fair opportunity to litigate the issue in the earlier action. The Court found that defendant met its prima facie burden for summary judgment under the doctrines of res judicata and collateral estoppel. Plaintiff sought to wrongfully relitigate the identical issue raised and decided against it in the Brooklyn Action. Defendant's motion for summary judgment seeking dismissal of the complaint was granted and the case was dismissed with prejudice. ZALMA OPINION Fraud perpetrators in the state of New York, like the Plaintiff, have the unmitigated gall to sue an insurer twice for the same fraudulent scheme, waste the time of the courts by causing the courts to rule twice on the same issue and, in my opinion, should face sanctions and punishment from the court and a referral to the prosecutors for criminal prosecution. (c) 2023 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

Duty to Defend is Less than Duty to Indemnify Massachusetts Bay Insurance Company (MBIC) seeks reimbursement of $2 million that it paid under a reservation of rights to settle litigation brought against its insured, Neuropathy Solutions, Inc. (Neuropathy). In Massachusetts Bay Insurance Company v. Neuropathy Solutions, Inc., dba Superior Health Centers, and Rigoberto Bernal, an individual; et al., No. 22-55272, United States Court of Appeals, Ninth Circuit (April 3, 2023) the Ninth Circuit determined who owed the settlement payment. The District Court Decision On cross-motions for judgment on the pleadings, the district court held that MBIC had a duty to defend and indemnify Neuropathy in the underlying case (the Bernal action), and that MBIC was thus not entitled to any reimbursement. MBIC satisfied the prerequisites for seeking reimbursement of the amount it paid to settle the Bernal action on Neuropathy's behalf. To seek reimbursement under California law, an insurer must provide (1) a timely and express reservation of rights; (2) an express notification to the insured of the insurer's intent to accept a proposed settlement offer; and (3) an express offer to the insured that it may assume its own defense in the event that the insured does not wish to accept the proposed settlement. The Reservation of Rights MBIC provided a timely and express reservation of rights and informed Neuropathy of its intention to settle the claims for the $2 million policy limit, subject to Neuropathy's approval and MBIC's reservation of rights. This letter also informed Neuropathy of its "right to assume the further handling of this matter going forward" if Neuropathy did not wish to settle the claims for $2 million. Neuropathy signed the settlement agreement on May 28, 2021. Contrary to Neuropathy's argument, MBIC gave Neuropathy sufficient time to consider the proposed settlement. Under California law, the insurer's duty to indemnify runs to claims that are actually covered, in light of the facts proved. By contrast, the insurer's duty to defend runs to claims that are merely potentially covered, in light of facts alleged or otherwise disclosed. Thus, the insurer's duty to defend is broader than its duty to indemnify. The District Court Erred The Ninth Circuit concluded that the district court erred by invoking the broader duty-to-defend standard (potentiality of coverage) to require MBIC to cover not just the cost of defending the underlying Bernal suit but also the $2 million paid to settle it. To the extent that the underlying Bernal action falls within the coverage provisions of the insurance policy coverage is excluded under the policy's "Professional Services" exclusion. That provision excludes: “’Bodily injury’, ‘property damage’, [and] ‘personal and advertising injury’ caused by the rendering of or failure to render any professional service, advice or instruction: (1) By [the insured]; or (2) On [the insured's] behalf; or (3) From whom [the insured] assumed liability by reason of a contract or agreement, regardless of whether any such service, advice or instruction is ordinary to any insured's profession.” Then Ninth Circuit concluded that based on California case law, the insurance policy's text, and the operative complaint in the Bernal action, Neuropathy's liability in Bernal fell within the "Professional Services" exclusion. The "Professional Services" exclusion extends to wrongdoing in the supervision and monitoring of others in the provision of professional services, and Neuropathy incurred liability because of its provision of professional advertising and medical services, not inadequate recordkeeping or poor customer service. Finally, the complaint's allegation that Neuropathy engaged in discriminatory marketing techniques and high-pressure sales tactics falls within the Professional Services exclusion for advertising services and health advice or instruction. Neuropathy's liability in the Bernal action was thus excluded from coverage, and MBIC is entitled to reimbursement of the $2 million it paid to settle that lawsuit. ZALMA OPINION Liability insurance provides a very broad duty to defend an insured that is more than the duty to indemnify. In this case MBIC paid to defend its insured and properly gave the insured to take over the defense if it did not want to settle. It refused and the Ninth Circuit required the insured to reimburse the insurer for the $2 million paid to settle. (c) 2023 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

Breach of Contract & Intentional Act Not Insured Carl Hemphill asked the Third Circuit to find that his liability insurer, Landmark American Insurance Co., is obligated to defend him in a lawsuit by a former employee. That employee brought a panoply of claims against Hemphill in his original complaint. None is covered by Hemphill's policy with Landmark. In Carl Hemphill; MJC Labor Solutions, LLC v. Landmark American Insurance Company, No. 20-2544, United States Court of Appeals, Third Circuit (April 5, 2023) applied the four corners rule to resolve the dispute. FACTS Carl Hemphill and MJC Labor (together, Hemphill) provide temporary employee placement and visa application processing services to workers from Mexico and Central America. Hemphill is insured by a miscellaneous professional liability (MPL) policy with Landmark, covering claims "arising out of [] negligent act[s], error[s] or omission[s]" "in the rendering or failure to render . . . permanent and/or temporary placement services[.]" Former MJC client Jose Castillo sued Hemphill (the Castillo Lawsuit), alleging violations of federal human trafficking, wage-and-hour, and unfair trade practices laws, as well as claims for breach of contract and unjust enrichment. When Castillo eventually arrived in the U.S., Hemphill and his wife confiscated his passport; housed him in conditions he described as "filthy," overcrowded, and vermin-infested; assigned him tasks outside the scope of his employment contract; and considerably underpaid him. The parties have since settled the Castillo Lawsuit, but the reimbursement of legal defense costs, incurred in the underlying suit, remain in dispute. ANALYSIS Landmark declined to defend Hemphill on the grounds that Castillo's allegations arose from Hemphill's intentional actions, occurring after Castillo had been placed as an employee, rather than from negligent actions in providing placement services. If the underlying complaint avers facts that might support recovery under the policy, coverage is triggered, and the insurer has a duty to defend. Under Pennsylvania law, the question of whether a claim against an insured is potentially covered is answered by comparing the four corners of the insurance contract to the four corners of the complaint. Courts applying Pennsylvania law must not stray from the operative complaint in determining duty-to-defend issues, even when later proceedings reveal the existence of a covered claim. The District Court Conclusion The District Court found that: Hemphill could not expect Landmark to cover him for any claim not listed in the Landmark policy, and Castillo's complaint does not allege a covered claim. Insured's Reasonable Expectations An insured's reasonable expectations may occasionally prevail over the express terms of a contract, but only in very limited circumstances to protect non-commercial insureds from policy terms not readily apparent and from insurer deception. Hemphill did not argue that the Landmark policy language is facially unclear or that Landmark engaged in deceptive tactics. Instead, he claims that the mere fact that Landmark defended a different lawsuit created a reasonable expectation that it would defend the Castillo Lawsuit. Landmark subjected its defense of the earlier Lawsuit to a complete reservation of rights. The Duty to Defend An insurer's duty to defend is determined solely from the language of the complaint against the insured. It is the potential, rather than the certainty, of a claim falling within the insurance policy that triggers the insurer's duty to defend. Castillo's unfair trade practices claim alleged that Hemphill "deceiv[ed]" Castillo "about rental housing in which he would be living." But Castillo does not allege that Hemphill or MJC ever represented to him that his housing conditions would be sanitary or not crowded, or that he would not have accepted Hemphill's employment offer had he known that the housing conditions were subpar. As for Castillo's start date, his allegations amount to nothing more than a breach-of-contract claim: he alleges that his contracted-for start date was delayed and that he lost money and employment opportunities as a result. Landmark expressly carved out breach-of-contract claims in its policy with Hemphill. It has no duty to defend this one, or any other claim in Castillo's suit. ZALMA OPINION The four corners rule allowed the insurer to refuse to defend or indemnify its insured because Castillo's suit was basically for breach of contract and did not meet any of the requirements of the policy which limited its coverages and did not promise to defend a claim of breach of contract. (c) 2023 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

It's Hard to Sue the U.S. Government Without Its Permission Roberta Jean Champlin appealed a decision from the United States Court of Federal Claims dismissing for lack of subject matter jurisdiction her claim that the United States must pay damages for the nonpayment of life insurance proceeds from her deceased former husband's Federal Employees Group Life Insurance policy. In Roberta Jean Champlin v. United States, No. 2022-1402, United States Court of Appeals, Federal Circuit (April 10, 2023) Ms. Champlin sought payment of a Federal Employees' Group Life Insurance (FEGLI) policy after he ex-husband died because her divorce decree granted her half ownership in the policy. BACKGROUND The Federal Employees' Group Life Insurance Act (FEGLIA) establishes a group life insurance program for federal employees. The United States Office of Personnel Management (OPM) is responsible for managing FEGLI polices and has entered a contract with Metropolitan Life Insurance Company (MetLife) to provide insurance to federal employees. FEGLI proceeds are to be paid in the following order of precedence: (1) designated beneficiaries; (2) widowed spouse; (3) children or descendants; (4) parents of deceased; (5) executor or administrator of the estate; and (6) next of kin. The order of precedence can be overridden "if and to the extent expressly provided for in the terms of any court decree of divorce, annulment, or legal separation" but only if that order or decree is "received . . . before the date of the covered employee's death, by the employing agency or, if the employee has separated from service, by the [OPM]." When these circumstances are met, the proceeds "shall be paid (in whole or in part) by the [OPM]" to the individual who is entitled to the proceeds under the court order. Factual & Procedural Background Lewis Dean Champlin, during and after his marriage to Ms. Champlin, had life insurance through a FEGLI policy. In September 2012, the Champlins divorced. As part of their divorce proceedings, Ms. Champlin obtained from the Alaskan state divorce court "award[ed Ms. Champlin] the option to continue maintaining a one-half interest in that policy . . . [while Mr. Champlin] ha[d] the option of paying the other half of the policy and c[ould] designate whoever he chooses to be beneficiary to the other half of the policy benefits." Ms. Champlin paid for half of the policy thereafter. On January 3, 2016, Mr. Champlin died. Ms. Champlin did not receive her half of the proceeds of his life insurance policy. Instead the proceeds were paid to Mr. Champlin's designated beneficiary at the time of his death-Marilyn Susano. Ms. Champlin sued the United States in the Court of Federal Claims, alleging that she is entitled to half of Mr. Champlin's issued life insurance coverage and further requesting a judgment directing the United States to pay her half of the FEGLI proceeds, along with costs and attorney fees. Unfortunately for Ms. Champlin the complaint failed to allege a statutory or legal basis for jurisdiction for her claim. The government moved to dismiss Ms. Champlin's claim for lack of subject matter jurisdiction on the basis that FEGLI-related claims cannot be against the United States because the government has not waived its sovereign immunity for such claims. The OPM authorized MetLife to provide life insurance, and MetLife established an administrative office, which is responsible for administering FEGLI claims. The Court of Federal Claims noted that it found that Ms. Champlin's complaint made no claim for a breach of a legal duty, only a claim to obtain money due under the FEGLI policy. DISCUSSION The Court of Federal Claims' determination that it lacked subject matter jurisdiction over Ms. Champlin's claim for life insurance proceeds from Mr. Champlin's FEGLI policy was correct. The Federal Circuit concluded that Court of Federal Claims is a court of specific jurisdiction and can resolve only those claims for which the United States has waived sovereign immunity. The government's duties under the statute are limited to contracting with and managing private insurance companies that issue FEGLIA-compliant insurance to federal employees, as well as implementing regulations to support the FEGLIA's statutory mandates." Because the United States' duties under the FEGLIA and relevant regulations do not extend to claims for proceeds due under a FEGLI policy, Ms. Champlin has failed to establish that the United States has breached any duty when insurance proceeds are allegedly due. Ms. Champlin sought money that she believes is due to her under the policy because she complied with a divorce court's order. The fact that the policy had already been paid out to another beneficiary before Ms. Champlin became aware of her alleged injury had no effect on the regulation's application. The Court affirmed the Court of Federal Claims' dismissal for lack of subject matter jurisdiction. ZALMA OPINION Ms. Champlin sued the wrong party. The US had no obligation under the FIGLIA statute and did not waive its sovereign immunity. She could have sued MetLife but did not. Alaska's court order could not compel the US to do anything and if anything her case is against the ex-husband's estate for not complying with the Alaska Order to make her a designated beneficiary. The payment was made to a designated beneficiary so MetLife did what it was required to do. A person can only sue the government if it waives its sovereign immunity. Since it did not do so she had no case. (c) 2023 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

Litigants May Not Try Again After Losing The plaintiffs in this action are a group of special-purpose entities that acquired various commercial properties and funded those acquisitions with loans. The loans required the plaintiffs, as borrowers, to obtain residual value insurance policies guaranteeing payment of the outstanding loan to the lenders if the borrowers did not satisfy the loan at maturity. The defendants are the insurers under those policies and related entities. The parties litigated the dispute to final judgment in Michigan and Idaho and filed a new suit in Delaware seeking the remedies they were not allowed to receive in Michigan and Idaho. In PVP Aston LLC, et al v. Financial Structures Limited, et al., C. A. No. N21C-09-095 AML CCLD, Superior Court of Delaware (March 31, 2023) the court was faced with a claim of collateral estoppel - that is - once you lose in one court you cannot go to another court for a different result on the same issue. A "Final Judgment" is Final At the end of the loans' terms, the plaintiffs did not pay the balloon payment, and the defendants therefore paid the lenders the insured value. In exchange for those payments, the lenders assigned the loans and related documents to the defendants. The insurance policies likewise required the borrowers to transfer all title and ownership interest in the properties to the defendants, but the plaintiffs refused to do so. Instead, they took the position that the insurers and lenders breached the parties' agreement or the parties' agreement was otherwise unenforceable. The question that ultimately is dispositive for purposes of the pending motions is whether the collateral estoppel doctrine bars the plaintiffs from relitigating the issues already decided in Michigan and Idaho. FACTUAL BACKGROUND The Parties and the Loan Purchases Plaintiffs are thirty-four special-purpose entities that obtained commercial loans (each, a "Loan") from several lenders or agents of lenders (each, a "Lender") to finance the sale and leaseback of properties formerly owned by Rite-Aid drugstores (each, a "Property"). The Loans were evidenced and secured by a mortgage, note, and related instruments for each Property (the "Loan Documents"). Each Loan required a considerable "balloon" payment when the Loan matured in 2020 or 2021. Defendants are Financial Structures Limited ("FSL") and its special-purpose subsidiaries. Filings in other Courts This litigation is not the only dispute between various Borrowers and FSL, the Lenders, and their affiliates. In addition to the two actions pending in Delaware, litigation has arisen in several states where the subject properties are located, as FSL, its nominees, or third-party purchasers have asserted ownership and possession rights in the properties. Importantly for the purposes of Defendants' motion to dismiss, decisions in two of those states address the same claims and legal theories Plaintiffs seek to advance in this case. Specifically, during the period between the filing of Plaintiffs' initial Complaint and their Amended Complaint, courts in Michigan and Idaho issued decisions that rejected the theories and contractual constructions Plaintiffs advanced in Delaware. Defendants have moved to dismiss the Amended Complaint on the basis of those decisions. Claims in Amended Complaint On December 22, 2021, Plaintiffs moved for partial summary judgment. The Court stayed consideration of that motion while it resolved Defendants' motion to dismiss the Original Complaint. After the Court partially dismissed that complaint and Plaintiffs filed their Amended Complaint, Defendants again moved to dismiss. ANALYSIS Plaintiffs' Amended Complaint Must Be Dismissed In Its Entirety Because All Plaintiffs' Claims Are Barred Under The Collateral Estoppel Doctrine. Collateral estoppel, also known as issue preclusion, refers to the preclusive effect of a judgment on the merits of an issue that was previously litigated or that could have been litigated. Under the collateral estoppel doctrine, once an issue is actually and necessarily determined by a court of competent jurisdiction, that determination is conclusive in subsequent suits based on a different cause of action involving a party to the prior litigation. The Issues Previously Decided Are Identical To The Issues Presented In This Action. The first question for collateral estoppel purposes is whether the issues are identical. Identicality depends on whether the contentions raised in the second proceeding are necessarily inconsistent with the previously adjudicated issues. The Michigan and Idaho courts both disagreed with the Borrowers' position that the parties intended the Insurer's right to a Loan assignment to be conditioned on the performance of an appraisal. The Michigan Court also rejected Plaintiff's effort to recover breach of contract damages because the Policy provides that "the [Insurer] shall have no liability to [the Plaintiff] except to make payment to the Additional Insured in accordance with this Policy." The Idaho Court similarly found that the breach of contract claim was futile. In addition, having concluded the ICA was enforceable, the Idaho Court rejected the claim that FSL allegedly sold unenforceable agreements. The Prior Actions Have Been Finally Adjudicated On The Merits. Under Delaware law, a Delaware court will give the judgments of another state court the same preclusive effect as would a court in that state. Collateral estoppel law in Idaho and Michigan is substantially the same as the law in Delaware. Delaware follows the majority rule that an appeal does not render a judgment non-final for purposes of res judicata or collateral estoppel. Michigan and Idaho law control the question of finality for purposes of this Court's collateral estoppel analysis, and Michigan and Idaho also follow the majority rule. The Michigan Plaintiff And Idaho Borrowers Had A Full And Fair Opportunity To Litigate The Issues In Those Actions. Finally, it is apparent that the parties had a full and fair opportunity to litigate the issues addressed in the Michigan and Idaho actions. The decisions issued by those courts describe the cases' procedural history and reflect that the parties had the opportunity to fairly present their positions. Those courts fully analyzed and considered the parties' multifaceted arguments. The Michigan Borrower moved for reconsideration of the April 22, 2022 decision but did not argue that it had lacked an opportunity to fully litigate the issues. Rather, it argued the Court erred in its analysis of the law regarding clogging the equity of redemption. Defendants' Motion to Dismiss is Granted. Accordingly, Plaintiffs' Motion for Partial Summary Judgment is Denied As Moot. ZALMA OPINION The old children's motto that says one must try and try again when they fail does not apply to litigation. The insurers in this case were entitled to their subrogation rights to require payment of the loan and get title to the property. Once the plaintiffs' lost in Idaho and Michigan they did not have the right to bring the same claims in Delaware and were prevented by the application of the collateral source doctrine. (c) 2023 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

ZIFL - Volume 27, Issue 8 Read the full issue ofZILF at http://zalma.com/blog/wp-content/uploads/2023/04/ZIFL-04-15-2023-1.pdf The Source For Insurance Fraud Professionals Read the full issue ofZIFL at http://zalma.com/blog/wp-content/uploads/2023/04/ZIFL-04-15-2023-1.pdf See the full video atand at https://youtu.be/hZBklODzDy8 Obesity, Diabetes and Covid Not Basis For Compassionate Release The US Congress, feeling sorry for federal prisoners, amended the law to create The First Step Act to allow a District Court to shorten a sentence when there exist extraordinary and compelling reasons to release the Prisoner. In United States Of America v. Earl Lee Planck, Jr., Criminal No. 5:20-CR-24-KKC-MAS-1, United States District Court, E.D. Kentucky, Central Division, Lexington (March 1, 2023) Earl Lee Planck, Jr moved the USDC for compassionate release under the statute. Read the full issue ofZIFL at http://zalma.com/blog/wp-content/uploads/2023/04/ZIFL-04-15-2023-1.pdf The Special Investigative Unit Investigator Insurance companies now retain the services—either by employing them directly or by use of independent contractors—of investigators whose expertise relates exclusively to insurance claims and suspected insurance fraud. The experienced claims investigator is usually a part of, or vendor to, a Special Investigative Unit (SIU) set up to protect the insurer and mandated by most states as a means to reduce the amount of fraud perpetrated against insurers. The fact that an insured is contacted by a claim investigator does not, however, mean that the insured is suspected of committing fraud. By virtue of his or her training and experience, the claim investigator is more skilled than the claim adjuster in discerning facts and evidence that can be used in a court of law if a fraud has been attempted. Read the full issue ofZIFL at http://zalma.com/blog/wp-content/uploads/2023/04/ZIFL-04-15-2023-1.pdf More McClenny Moseley & Associates Issues This is ZIFL’s fourth installment of the saga of McClenny, Moseley & Associates and its problems with the federal courts in the State of Louisiana and what appears to be an effort to profit from what some Magistrate and District judges indicate may be criminal conduct to profit from insurance claims relating to hurricane damage to the public of the state of Louisiana. Chutzpah Defined “Chutzpah” is a Yiddish term that has found its way into the English language. It is defined as “unmitigated gall” and is usually explained as a person convicted of murdering his parents who pleaded with the judge for mercy because he is an orphan. The latest actions by McClenny Moseley & Associates are a better definition of the term. Read the full issue ofZIFL at http://zalma.com/blog/wp-content/uploads/2023/04/ZIFL-04-15-2023-1.pdf Free Insurance Videos Barry Zalma, Esq., CFE has published five days a week videos on insurance claims, insurance claims law, insurance fraud and insurance coverage matters at https://www.rumble.com/zalma.https://rumble.com/c/c-262921. He now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and he practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 55 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com. Read the full issue ofZIFL at http://zalma.com/blog/wp-content/uploads/2023/04/ZIFL-04-15-2023-1.pdf The Problem with Different Degrees of Crime Fraud by any Other Name is Still Fraud Pursuant to the New Jersey Code of Criminal Justice (Code), one can be charged with the offense of insurance fraud for knowingly making a false or misleading statement of material fact in connection with an insurance claim. That third-degree offense may be elevated to the second degree by aggregating five “acts” of insurance fraud, the total value of which exceeds $1,000. In State Of New Jersey v. Randi Fleischman, A-4 September Term 2006, Supreme Court of New Jersey (March 26, 2007) the Supreme Court of New Jersey was provided with its first opportunity to construe N.J.S.A. 2C:21-4.6’s penalizing of a false “statement” as an “act of insurance fraud” that can be accumulated to elevate insurance fraud to a second-degree offense. The State indicted defendant Randi Fleischman for second-degree insurance fraud. The factual underpinnings for the charge were based on various items of false information contained in defendant’s statements to the police and to her automobile insurer in connection with a stolen car claim. Read the full issue ofZIFL at http://zalma.com/blog/wp-content/uploads/2023/04/ZIFL-04-15-2023-1.pdf Good News From the A home healthcare company has paid $9M for allegedly submitting false claims. United Energy Workers Healthcare, Corp. and related entities settled a claim with several entities including Ohio, to the U.S. Department of Energy employees and its contractors. An investigation alleged: between January 2013 and March 2021, defendants submitted claims for payment for in-home healthcare services that were never provided or were medically unnecessary, in violation of the False Claims Act. Various of the violations included: billing for case management services not actually provided, instructing caregivers to charge for more time than actually spent with patients, providing and billing for services to beneficiaries that were not covered, and providing services without possessing required licenses. Plus many more convictions for fraud. Read the full issue ofZIFL at http://zalma.com/blog/wp-content/uploads/2023/04/ZIFL-04-15-2023-1.pdf OBLIGATION OF LAWYERS WHEN A CLIENT IS SUSPECTED OF FRAUDULENT CONDUCT A lawyer who suspects that his or her client is lying about the facts to cover up fraudulent or criminal activity the lawyer is placed in a professional dilemma. The client may be faking injuries after an automobile accident or fabricating the cause of a fire at his or her home. Or the client provides the lawyer with intentionally vague information about their finances to avoid reporting the information to the IRS or other governmental agency. In July 2021, the Colorado Bar Association Ethics Committee adopted Formal Opinion 142, addressing a lawyer’s duty to inquire when the lawyer knows a client is seeking advice on a transactional matter that may be criminal or fraudulent. Like the Model Rules of Professional Conduct counterpart, Colorado’s rule 1.2(d) provides that a lawyer “shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent . . .” The opinion specifically discusses what happens when the lawyer suspects but does not actually know, that the client may be using the legal services to engage in criminal or fraudulent conduct. While the term “know” denotes “actual knowledge of the fact in question” under Colorado Rule 1.0(f), the Committee interpreted the actual knowledge standard to include “willful blindness.” Read the full issue ofZIFL at http://zalma.com/blog/wp-content/uploads/2023/04/ZIFL-04-15-2023-1.pdf Health Insurance Fraud Convictions Santa Rosa Doctor Sentenced To 2.5 Years in Prison for Unlawfully Prescribing Controlled Substances Thomas Keller, formerly a pain management doctor in Santa Rosa, was sentenced to 30 months in prison for distributing Schedule II and IV controlled substances outside the scope of his professional practice and without a legitimate medical need. The sentence was handed down by the Hon. Vince Chhabria, United States District Judge, after a jury found Keller was guilty of the crimes at trial in November 2022. Read about this and dozens more convictions. Read thRead the full issue ofZIFL at http://zalma.com/blog/wp-content/uploads/2023/04/ZIFL-04-15-2023-1.pdf Other Insurance Fraud Convictions Richfield Woman Sentenced To 10 Years Behind Bars for Insurance Fraud The Department Of Insurance Became Aware That She Was Again Misappropriating Funds With The New Agency. Charlotte Sheppard of Richfield, Idaho is headed to prison after committing insurance fraud. Sheppard allegedly stole her clients’ insurance premium to pay her personal and business bills and obligations. She was sentenced to the Idaho Department of Corrections for 10 years, with five years fixed and five years indeterminate. Sheppard was first prosecuted and found guilty in Blaine County for grand theft in 2020. But while awaiting criminal sentencing and administrative penalties, she took over the management of a second agency in Lincoln County. The Department of Insurance became aware that she was again misappropriating funds with the new agency. The DOI issued a cease-and-desist order on March 18, 2020, and revoked her license two days later. Also many more reports of convictions. Read the full issue ofZIFL at http://zalma.com/blog/wp-content/uploads/2023/04/ZIFL-04-15-2023-1.pdf Barry Zalma Over the last 55 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals. Barry Zalma, Inc., 4441 Sepulveda Boulevard, CULVER CITY CA 90230-4847, 310-390-4455; Subscribe to Zalma on Insurance at locals.com https://zalmaoninsurance.local.com/subscribe. Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; I publish daily articles at https://zalma.substack.com, Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ to consider more than 50 volumes written by Barry Zalma on insurance and insurance claims handling. Read the full issue ofZIFL at http://zalma.com/blog/wp-content/uploads/2023/04/ZIFL-04-15-2023-1.pdf

Determine Whether Property Damage Occurred A first party property policy does not insure property: it insures a person, partnership, corporation or other entity against the risk of loss of the property. Before an insured can make a claim for indemnity under a policy of first party property insurance the insured must prove that there was damage to property the risk of loss of which was insured by the policy. The obligation imposed on the insured by the policy is often relatively easy to fulfill. For example, in the case of a fire the charred building need only be shown to the insurer. Other situations may not be as easy to prove. Is a building overhanging a newly created cliff damaged? Has a church that is permeated with a gasoline odor sustained property damage? Was missing property stolen? Has a building showing signs it may collapse, subject to an insured peril called “collapse?” Often, an insurer needs the wisdom of Solomon to reach a correct and fair result. The first party property adjuster is charged with the duty of helping the insured establish the existence or nonexistence of property damage due to a risk of loss insured against and not excluded and work to keep all of the promises made by the insurance policy. When a first party property policy insures against the risk of physical loss to certain real or personal property, whether the policy is a named peril, all risk, special risk, or direct risk of physical loss policy, the insured must first prove there is damage to the property. An insured may also make claim for loss of use of the property that is the subject of the insurance. The Insured can retain the property and sustain a constructive loss of use by denial of access or danger of imminent destruction. In Hughes v. Potomac Insurance Co., 199 Cal. App. 2d 239 (1962), the court found coverage after the land next to the house slid away causing the undamaged house to overhang a cliff. The California Court of Appeal found that damage to a structure existed if it was not a safe place for people to live even though all the walls stood and the roof kept out the rain. While a loss of use may, in some cases, entail a physical loss, “loss of use” and “physical loss or damage” are not synonymous. Indeed, interpretation of physical loss as requiring only loss of use stretches “physical” beyond its ordinary meaning and may, in some cases “render the word ‘physical’ meaningless.” In Source Food Tech., Inc. v. U.S. Fidelity and Guar. Co., 465 F.3d 834, 835 (8th Cir.2006) the court found no coverage under a policy covering “direct physical loss to property” when property was meat which was not allowed to cross the border into the United States and was thus treated as unusable but in fact suffered no spoilage or contamination. The Covid 19 Pandemic caused serious litigation on the issue of what is physical loss or damage and how a limitation in a policy of insurance defeats attempts to obtain coverage for loss of use of property and interruption of business caused by orders of state authorities. Oral Surgeons, P.C., sued its insurers for loss of earnings. Oral Surgeons offers oral and maxillofacial surgery services at its four offices in the Des Moines, Iowa, area. Oral Surgeons stopped performing non-emergency procedures in late March 2020, after the governor of Iowa declared a state of emergency and imposed restrictions on dental practices because of the COVID-19 pandemic. Oral Surgeons resumed procedures in May 2020 as the restrictions were lifted, adhering to guidance from the Iowa Dental Board. The insurer refused to pay Oral Surgeons sued. In Oral Surgeons, P.C. v. The Cincinnati Insurance Company, The Restaurant Law Center Amicus on Behalf of Appellant(s), American Property Casualty Insurance Association; National Association of Mutual Insurance Companies Amici, No. 20-3211, United States Court of Appeals for the Eighth Circuit (July 2, 2021) the Eighth Circuit was asked by Oral Surgeons and some Amici to find the loss of use of its offices was physical loss and Oral Surgeons were entitled to business interruption benefits. Oral Surgeons submitted a claim to The Cincinnati Insurance Company (Cincinnati) for losses it suffered as a result of the suspension of non-emergency procedures. The policy insured Oral Surgeons against lost business income and certain extra expense sustained due to the suspension of operations “caused by direct ‘loss’ to property.” The policy defined “loss” as “accidental physical loss or accidental physical damage.” Cincinnati responded that the policy did not afford coverage because there was no direct physical loss or physical damage to Oral Surgeons’ property. Oral Surgeons sued. The district court granted Cincinnati’s motion to dismiss, concluding that Oral Surgeons was not entitled to declaratory judgment. Oral Surgeons’ appeal alleged that the COVID-19 pandemic and the related government-imposed restrictions on performing non-emergency dental procedures constituted a “direct ‘loss’ to property” because Oral Surgeons was unable to fully use its offices. Oral Surgeons argued that the policy’s disjunctive definition of “loss” as “physical loss” or “physical damage” created an ambiguity that must be construed against Cincinnati. To give the terms separate meanings, Oral Surgeons suggests defining physical loss to include “lost operations or inability to use the business” and defining physical damage as a physical alteration to property. An appellate court must construe the policy to give effect to the intent of the parties. Intent is determined by the language of the policy itself, unless there is ambiguity. Ambiguity exists only when policy language is subject to two reasonable interpretations. Generally speaking, the plain meaning of the insurance contract prevails. The Cincinnati policy clearly required direct “physical loss” or “physical damage” to trigger business interruption and extra expense coverage. Accordingly, there must be some physicality to the loss or damage of property. Oral Surgeons needed to prove, therefore, that a physical alteration, physical contamination, or physical destruction of its property brought about a loss. The common usage of “physical” in the context of a loss therefore means the loss of something material or perceptible on some level. The policy cannot reasonably be interpreted to cover mere loss of use when the insured’s property has suffered no physical loss or damage. The Eighth Circuit refused to find “loss of use” and “physical loss or damage” synonymous. Rather, they are opposites. The unambiguous requirement that the loss or damage be physical in nature accords with the policy’s coverage of lost business income and incurred extra expense from the date of the physical damage to the insured’s property until the insured restores the damaged property to use. The “period of restoration” begins at the time of “loss” and ends on the earlier of: The date when the property at the “premises” should be repaired, rebuilt or replaced with reasonable speed and similar quality; or The date when business is resumed at a new permanent location. Property that has suffered physical loss or physical damage requires restoration. That the policy provides coverage until property “should be repaired, rebuilt or replaced” or until business resumes elsewhere assumes physical alteration of the property, not mere loss of use. When the only reason the property was not used was an order of a governmental agency is not a physical loss, or physical damage. In fact, the property where Oral Surgeons practiced was unchanged during the entire time they could not perform Oral Surgery. The complaint pleaded generally that Oral Surgeons suspended non-emergency procedures due to the COVID-19 pandemic and the related government-imposed restrictions. The complaint thus alleged no facts to show that it had suspended activities due to direct “accidental physical loss or accidental physical damage, regardless of the precise definitions of the terms “loss” or “damage.” Since the policy clearly did not provide coverage for Oral Surgeon ’s partial loss of use of its offices, absent a showing of direct physical loss or physical damage. Where no ambiguity exists, an appellate court will not write a new policy to impose liability on the insurer. There is no question that the orders closing businesses due to fear of spreading Covid-19 caused damage – a loss of business income – to Oral Surgeons and all other businesses who were forced to close down by order of the state or some entity. That order did not damage the property that was the subject of the insurance and there was no need to restore it since once the order was pulled the business of Oral Surgeons was able to begin immediately. No insurance policy insures against every possible loss. The loss claimed by Oral Surgeons was one for which no insurance benefits were available. When a residence contains walls that were constructed using sheets of Chinese drywall that, over time, released sulfuric gas into the Residence it was found to have incurred property damage even though the walls remained intact. (Travco Ins. Co. v. Ward, 715 F.Supp.2d 699 (E.D. Va. 2010)) Other cases have likewise accepted the view that “damage” includes loss of function or value including a loss of power to the insured’s premises. (Dundee Mut. Ins. Co. v. Marifjeren, 1998 ND 222, 587 N.W.2d 191, Gen. Mills, Inc. v. Gold Medal Ins. Co., 622 N.W.2d 147, (Minn.Ct.App.2001); Pepsico, Inc. v. Winterthur Int'l Am. Ins. Co., 24 A.D.3d 743, 806 N.Y.S.2d 709 (2005); Wakefern Food Corp v. Liberty Mutual, 406 N.J. Super. 406 N.J. Super. 524, 968 A.2d 724 (App. Div. 2009)). In ordinary use and widely accepted definitions, physical damage to property means "a distinct, demonstrable, and physical alteration" of its structure. 10 Couch on Insurance § 148:46 (3d ed. 1998). Physical damage to a building as an entity by sources unnoticeable to the naked eye must meet a higher threshold. The Colorado Supreme Court in Western Fire Ins. Co. v. First Presbyterian Church, 165 Colo. 34, [968 A.2d 738] 437 P.2d 52 (1968), concluded that coverage was triggered when authorities ordered a building closed after gasoline fumes seeped into a building's structure and made its use unsafe. Although neither the building nor its elements were demonstrably altered, its function was eliminated. [Wakefern Food v. Liberty Mut. Ins., 968 A.2d 724, 406 N.J. Super. 524 (N.J. Super., 2009)] This post was adapted from my book Zalma on Insurance Claims Part 104 Third Edition Available as a Kindle book; Available as a hardcover; Available as a paperback; (c) 2023 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

UM/UIM Statute Makes a Motorcycle Into an Automobile Progressive Classic Insurance Company contested the trial court's entry of summary judgment in favor of plaintiff. The sole question to the Court of Appeals was whether the insurer was required by statute to provide coverage for "newly acquired vehicles," such as plaintiffs motorcycle, notwithstanding an insurance policy term that excluded transportation devices with less than four wheels. The trial court granted plaintiffs motion and denied defendant's motion. In Steven Cantu v. Progressive Classic Insurance Company, 325 Or.App. 184, A175784, Court of Appeals of Oregon (April 5, 2023) the Court interpreted Oregon's UM/UIM statute. FACTS Plaintiff was insured by defendant for three automobiles. The policy at issue did not list any motorcycles on the declaration page. About eight days after purchasing a motorcycle, plaintiff was severely injured when another driver negligently made a left turn in front of plaintiff. As a result of the injuries, plaintiff sought damages in excess of the liability limits of the other driver. Defendant denied underinsured motorist bodily injury benefits based on specific terms of the insurance policy that excluded vehicles with less than four wheels. The trial court granted summary judgment to plaintiff, after concluding that the relevant definitions in the insurance policy impermissibly provided underinsured motorist benefits that are less favorable to the insured than the terms of ORS 742.504 required. A motorcycle, under a common understanding of the term, is a "device" "upon or by which any person" "may be transported *** upon a public highway" and is not "moved by human power" or "used exclusively upon stationary rails or tracks." A motorcycle is therefore a vehicle within the definition provided by the legislature. Defendant contended that the trial court erred by construing the statute as requiring the newly acquired vehicle provision to include the motorcycle when the policy itself did not cover any motorcycles. There is no evidence that suggests that the legislature intended a different meaning for the word "vehicle" when defining "insured vehicle" than it did when defining "hit-and-run vehicle," "phantom vehicle," "stolen vehicle," or "uninsured vehicle." The Court of Appeals concluded that it was apparent that the legislature intended the term "vehicle" to carry the definition the legislature provided in paragraph (m) and that the trial court did not err by concluding that the paragraph (m) definition of vehicle was the applicable definition of that word and it included motorcycles. The court inferred that the motorcycle did not have "at least four wheels," and was therefore excluded as a "covered auto" under the terms of the policy. A UM policy provides "less favorable" terms to an insured not by a direct comparison between the challenged provision with an individual statutory provision, rather, the coverages provided in the policy against those required by statute. Thus, the court concluded that, by limiting the definition of "auto" in the policy to devices having "at least four wheels," defendant impermissibly provided less favorable coverage to plaintiff than that required by law. The trial court did not err by concluding, or by granting summary judgment to plaintiff on that basis. ZALMA OPINION Legislatures have an uncanny ability to deprive an insurer and insured of the ability to agree to the terms and conditions of the policy contract. Here, the plaintiff and his insurer agreed that it would not insure motorcycles. The plaintiff knew this when he bought his motorcycle. He got the court to provide coverage different than that agreed to in the policy by interpreting the UM/UIM statute to make a motorcycle an auto by the definitions in the statute because Progressive provided a policy wording - approved by the Department of Insurance - that provided coverage for the operation of the motorcycle. Of course, if the accident was plaintiff's fault he would have had no liability coverage. (c) 2023 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

Insured May Not Deprive Insurer of Right to Subrogation Following a vehicular accident, Martin Peteet entered into a release and settlement agreement with the driver of the other vehicle and her insurer. Peteet did not seek a waiver of subrogation or consent from his own automobile insurer, Mississippi Farm Bureau Casualty Insurance Company (Farm Bureau), prior to executing the release and settlement agreement. After the release and settlement agreement was executed, Peteet filed a complaint against Farm Bureau, seeking damages under the uninsured motorist (UM) provision in his auto policy with Farm Bureau. Farm Bureau moved to dismiss the complaint, and the county court denied the motion. In Mississippi Farm Bureau Casualty Insurance Company v. Martin Peteet, No. 2021-IA-01420-SCT, Supreme Court of Mississippi (April 6, 2023) the Supreme Court of Mississippi resolved the dispute. FACTS Martin Peteet was injured in a two-vehicle accident with Maurisha Bland. After the accident Peteet entered into a Full, Final and Absolute Release of All Claims, Settlement and Indemnity Agreement (the Agreement) with Bland and her insurer, Mountain Laurel Assurance Company (Mountain Laurel), in exchange for $25,000. Peteet filed a complaint against his own insurer, Farm Bureau, alleging that Farm Bureau breached its contract with Peteet. Peteet argued that the UM provision in his auto policy with Farm Bureau covered up to $50,000 per accident and was intended for this exact purpose. Since Peteet received only $25,000 in the Agreement-Bland's policy limit with Mountain Laurel-he argued that the remainder of his damages from the accident should be paid to him by Farm Bureau under the auto policy's UM provision. Farm Bureau moved to dismiss the complaint for failure to state a claim. Farm Bureau argued that since Peteet had entered into the Agreement with Bland and Mountain Laurel without first seeking a waiver of subrogation or other consent from Farm Bureau, Peteet was barred from proceeding against Farm Bureau under his UM coverage. Mississippi law established Farm Bureau had a right of subrogation and that Mississippi caselaw supported its position that cutting off the insurer's right of subrogation prohibited the insured from further proceeding against the insurer for a claim under the insurance policy. DISCUSSION Farm Bureau argued that the Agreement executed between Peteet, Bland and Mountain Laurel cut off its subrogation rights-which it is entitled to statutorily and contractually-and barred Peteet from proceeding against Farm Bureau for damages under the UM coverage. Aside from the contractual requirements to give consent to any settlement of claims and to be subrogated to an insured's right to recover, Mississippi Code Section 83-11-107 provides that an insurer has a right to subrogation. The law has long been established in the state of Mississippi the insurer is prohibited from proceeding against the tortfeasor, the insured has no further rights to proceed against the insurer. The Supreme Court has stated that an insured who executes a settlement and release agreement with an uninsured motorist-effectively cutting off their own insurer's right of subrogation-cannot then proceed against their own insurer. Subrogation is the substitution of one person in place of another. He who is substituted succeeds to the rights of the other in relation to the debt or claim, and to its rights, remedies, or securities. CONCLUSION Farm Bureau had a right of subrogation by statute and contract. The execution of the Agreement between Peteet, Bland and Mountain Laurel cut off Farm Bureau's right of subrogation without Farm Bureau's consent. Farm Bureau, therefore, has no duty to pay for Peteet's claim under the UM provision. The Supreme Court reversed the trial court's denial of the motion to dismiss and rendered judgment in favor of Farm Bureau. ZALMA OPINION Farm Bureau's policy required the insured to protect its right of subrogation as did a Mississippi statute. Peteet released the person responsible and, in so doing, deprived his insurer of its right of subrogation and, by so doing, destroyed his right to seek indemnity for underinsured motorist coverage. Failing to protect the rights of his insurer cost Mr. Peteet $25,000. He may not be without a remedy if the agreement to the release was based on the advice of counsel that violated the policy terms and the state statute. (c) 2023 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

How an Insurer Can Succeed With Professional Claims Handlers See the full article at EXCELLENCE http://zalma.com/blog/wp-content/uploads/2023/04/EXCELLENCE.pdf In search of profit, insurers have decimated their professional claims staff. They laid off experienced personnel and replaced them with young, untrained, unprepared people. A virtual clerk replaced the old professional claims handler. Process and computers replaced hands-on human skill, empathy and judgment. Money was saved by paying lower salaries. Within three months of firing the experienced claims people gross profit increased. Insurance is a business. Corporate insurers must show their shareholders a profit that pays dividends and increases the share price of the insurer. For centuries insurers understood that catastrophes, firestorms, windstorms, hurricanes and tornados could not be predicted. Some years the insurer will make profits and some years it will incur a loss. The prudent insurer recognizes, because of the impossibility of predicting all possible losses, they measured profitability over a decade or several decades. No insurer can measure its profitability for periods of a quarter of a year. Insurance is a service business. The insurance contract is a collection of promises made by the insurer to those persons or entities who face risks of loss pay for an insurance contract that promises to protect the insured against the risks of loss the insured faces. The person or entity insured relies on the professionalism of the employees of the insurer who are called upon to resolve the claims of the insured and provide the protection promised by the policy. Insurance Claims Professionals Insurers have developed over the last few centuries professional claims personnel who they trained to interpret the terms and conditions of the policy of insurance, investigate every claim thoroughly and assist the insured in the presentation and resolution of claims made by or against the insured. The promises are kept by the professional claims person: the adjuster or claims representative. The prudent insurer understands that keeping a professional claims staff dedicated to excellence in claims handling is cost-effective over long periods of time. A professional and experienced adjuster will save the insurer millions by resolving disputes, paying claims owed promptly and fairly, and by so doing avoiding litigation. The professional claims person exists to resolve claims to the satisfaction of the insured and the insurer. When the claims person does so the person insured will be satisfied that the promises made by the insurance policy were kept both the insured and insurer are satisfied with the interaction. Satisfying an insured that the promises made by the policy were fairly and completely kept is the key fulfillment of the insurer’s desire to avoid the expense and bad publicity of litigation. There will never be a suit for breach of contract or the tort of bad faith. Only when claims professionals resolve more claims for no less than is necessary to satisfy the insured neither party will need to involve counsel. A happy insured or claimant satisfied with the results of his or her claim will never find a need to sue the insurer. On the other hand, barely competent, incompetent or inadequate claims personnel will seldom resolve claims fairly and to the satisfaction of the insured or claimant. Inadequate claims personnel will often force insureds and claimants to public insurance adjusters and lawyers. It is axiomatic that every study performed on claims establishes that claims with an insured or claimant represented by counsel or a public insurance adjuster, cost more to resolve than those where counsel or a public adjuster is not involved. Prompt, effective, professional claims handling is cost effective for both the insured, the claimant and the insurer, and saves money for because there is no need to pay the fees of a lawyer or public adjuster. When the insurer fulfills the promises made by the policy to the satisfaction of the insured when the insured acquired the policy. Insurers who believe they can handle first or third party claims with young, inexpensive, inexperienced and untrained claims handlers should be accosted by angry stockholders whose dividends have plummeted or will plummet as a result. When an insurer compromises on staff, profits, thin as they may have been previously, will move rapidly into negative territory. Tort and punitive damages will deplete reserves. Insurers will quickly question why they are writing insurance. Those who stay in the business of insurance will either adopt a program requiring excellence in claims handling from every member of their claims staff or they will fail. The Need for Change The insurance business must change—this time for the better—if it is to survive. Insurers must rethink the firing of experienced claims staff and reductions in training to save “expenses” recognizing that the expense to train, educate and maintain a staff of professional claims handlers, is a small part of the money that flows out of an insurer’s coffers. The major expense is the cost to pay claims. When inadequate or inexperienced adjusters pay claims the insurer did not owe, refuse to pay claims it did owe, or pays more than is appropriate, the potential for an insurer to make a profit is reduced much more than is saved by reducing the expense incurred by paying a professional claims staff. Insurers should, if they wish to succeed, adopt a program to promote excellence in claims handling. Only with a staff of claims handlers dedicated to excellence in claims handling can insurers promptly, fairly and in good faith keep the promises made by the insurance policy and avoid charges of breach of contract and the tort of bad faith in both first and third party claims. Insurers must understand that they cannot adequately fulfill the promises they make to their insureds and their obligations under fair claims practices acts without a professional, well trained and experienced claims staff. An insurer must work vigorously and intelligently to create a professional claims department or recognize it will lose its market and any hope of profit. Insurance claims professionals are people who: can read and understand the insurance policies issued by the insurer. understand the promises made by the policy and their obligation, as an insurer’s claims staff, to fulfill the promises made. are competent investigators. have empathy and recognize the difference between empathy and sympathy. understand medicine relating to traumatic injuries and are sufficiently versed in tort law to deal with lawyers as equals. understand how to repair damage to real and personal property and the value of the repairs or the property. A Proposal to Create Claims Professionals To avoid claims of breach of contract, bad faith, punitive damages, unresolved losses, and to make a profit, insurers must, in my opinion, maintain a claims staff dedicated to excellence in claims handling. They must recognize that they, as representatives of the insurer, are obligated to assist the policyholder and the insurer to fulfill all the promises made by the insurer in the wording of the policy. An insurer can create a claims staff dedicated to excellence in claims handling by, at least: Hiring well trained, educated and empathetic insurance claims professionals. If professionals are not available, train all members of the existing claims staff to be insurance claims professionals. Train each member of the claims staff annually on the local fair claims settlement practices regulations. Supervise each claims handler closely to confirm all claims are handled professionally and in good faith. Explain to each member of the claims staff the meaning of the covenant of good faith and fair dealing from its inception in the 18th Century to the present. Require that staff treat every insured with good faith and fair dealing. Demand excellence in claims handling from the claims staff on every claim whether small or major, whether an individual or a corporate insured. Explain to the claims staff that the insurer is ready to immediately dismiss any claims handler who fails to treat every insured with good faith and fair dealing. If any experienced claims professionals exist on the insurer’s staff, the insurer must cherish and nurture them and use their experience and professionalism to train new claims people. If none are available, the insurer has no option but to train its people from scratch using available materials produced by the National Association of Insurance Commissioners, the State’s Department of Insurance, Insurance associations, and professionals who have – for a reasonable fee – the ability to properly and effectively train claims personnel. When the claims staff is made up of claims people who treat all insureds and claimants with good faith and fair dealing and provide excellence in claims handling litigation between the insurer and its insureds will be reduced exponentially. To keep the professional claims staff operating efficiently and in good faith they must be honored with increases in earnings and perquisites. Conversely, those who do not treat all insureds and claimants with good faith and fair dealing should be counseled and given detailed training if they are willing to learn. If less than professional claims persons continue with less than professional conduct they must be fired. The insurer must make clear to all employees that it is committed to immediately eliminating staff members who do not provide excellence in claims handling and must be ready to fire publicly and quickly those who cannot or do not provide excellence in claims handling. HOW TO CREATE AN EXCELLENCE IN CLAIMS HANDLING PROGRAM An excellence in claims handling program begins with a statement in the insurer’s claims manual or statement of professionalism, that it is dedicated to provide excellence in claims handling to every insured who presents a claim. The excellence in claims handling program should include, at a minimum: A series of lectures supported by text materials explaining: A definition of insurance. How to read and understand an insurance policy. How to interview an insured, witness, or claimant. How to assist an insured in the insured’s obligation to prove a claim. How to repair or replace damaged real or personal property. How to repair or replace damaged vehicles. How to identify causes of loss. How to recognize the red flags of fraud. The duty of the claims person who suspects attempted fraud. How to negotiate with an insured, claimant, public adjuster or lawyer to resolve a claim. How to recognize when retaining counsel to represent the insurer is necessary. How to retain counsel to represent the insured. How to read and understand the contract that is the basis of every adjustment, including but not limited to: The formation of the insurance policy. The rules of contract interpretation. Tort law: including negligence, strict liability in tort, and intentional torts. Contract law including: the insurance contract, the commercial or residential lease agreement, the bill of lading, nonwaiver agreements, proofs of loss, releases and other claims related contracts or documents. In addition the claims professional needs to understand: The duties and obligations of the insured in a personal injury claim. The duties and obligations of the insurer in a personal injury claim. The duties and obligations of the insured in a first party property claim. The duties and obligations of the insurer in a first party property claim. The Fair Claims Practices Act and the regulations that enforce it. The thorough investigation: Basic investigation of an auto accident claim. Investigation of a construction defect claim. Investigation of a nonauto negligence claim. Investigation of a strict liability claim. Investigation of the first party property claim. The recorded statement of the first party property claimant. The recorded statement or interview of a third party claimant. The recorded statement of the insured. The red flags of fraud. The SIU and the obligation of the claims representative when fraud is suspected. Claims report writing. The evaluation and settlement of the personal injury claim. How to retain coverage counsel to aid when a coverage issue is detected. How to control coverage counsel. How to instruct coverage counsel on the issue to be resolved. Instruction, by lecture, documents, webinars on: Dealing with a plaintiff’s lawyer. Dealing with personal injury defense counsel. The evaluation and settlement of the property damage claim. The Appraisal process. Arbitration and mediation and the claims representative. Claims handling without excellence is both dangerous and expensive. Insurers should develop a professional claims staff and provide excellence in claims handling because by so doing they will profit more than if they keep an inadequate and unprofessional claims staff. The training lectures must be supplemented by meetings between supervisors and claims staff on a regular basis to reinforce the information learned in the lectures. To guarantee that the training and requirement for excellence in claims handling is effective the insurer must also institute a regular program of auditing claims files to establish compliance with the requirement to deal fairly and in good faith to the insured. The insurer’s management must support the training and repeat it regularly. The insurer’s management must audit claims files to determine the training has taken and is being applied to each claim. There is no quick and easy solution. Training takes time; learning takes longer. If the insurer does not have personnel with the ability to train its staff it should use outside vendors who can do so effectively. Many such sources are available from professional associations, independent claims adjuster firms, independent counsel, insurance related publications, insurance related podcasts, and continuing education providers. I have created, to assist those who wish to create a professional claims staff dedicated to provide excellence in claims handling, a series of publications at my Locals community and at Substack.com. In addition, at Illumeo.com I produced a short Excellence in Claims Handling program available at https://www.illumeo.com/courses/introduction-excellence-claims-handling and multiple insurance claims related programs. I have published at Rumble.com more than 660 videos dealing with insurance, insurance coverage, insurance claims handling, insurance law, and investigation of claims with similar videos at YouTube.com. I have also published more than 4450 blog posts digesting appellate decisions modified from the actual language of the court decisions, condensed for ease of reading, and convey the opinions of the author regarding each case on insurance, insurance coverage, insurance claims handling, insurance law, and investigation of claims available for no cost to anyone who watches. Barry Zalma, Esq., CFE is available at http://www.zalma.com and zalma@zalma.com. Over the last 55 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals. Assistance in creating an excellence in claims handling program can be obtained from the following: Go to the Insurance Claims Libraryat https://zalma.com/blog/insurance-claims-library/ Subscribe to e-mail Version of Zalma’s Insurance Fraud Letter (ZIFL), it’s Free at https://visitor.r20.constantcontact.com/manage/optin?v=001Gb86hroKqEYVdo-PWnMUkV7pkuOtkiv6oakpgK33CNlNAYW-WBlLCOZFtgvpSdcL7R-tsWKfMVqG6fEuvmM7Hh7gUEJ7yKOdgHDbGl_cGAU%3D Read last two issues of ZIFL at https://zalma.com/zalmas-insurance-fraud-letter-2/ Go to the Barry Zalma, Inc. web site at https://www.zalma.com Go to the blog at https://zalma.com/blog

Failure to Report, Acknowledge and Make Claim to Your Client's Insurer is Legal Malpractice David Quaknine and several of his companies sued their former attorney and his law firm for alleged malpractice connected to a 2014 suit. The district court granted the defendants' motion to dismiss. It ruled that the two-year limitations period, which at the latest began to run in September 2019, expired before the plaintiffs sued in December 2021. In Concepts Design Furniture, Inc., et al. v. Fisherbroyles, LLP and Alastair J. Warr, No. 22-2303, United States Court of Appeals, Seventh Circuit (March 31, 2023) the Seventh Circuit resolved the dispute. FACTS The parties called Comptoir, which did business from Quebec, Canada, were sued for intellectual-property infringement in 2014. Over a year later, Comptoir hired Alastair Warr and his law firm to negotiate a settlement or, failing that, represent Comptoir in court. Comptoir told Warr that it had a policy with Intact Insurance Company that potentially could cover defense costs and indemnify it for claims. Warr did not advise Comptoir to submit a claim to Intact nor did it do so on its own. The lawsuit did not go well and the disclosures in the suit stated that Comptoir had "no insurance agreement." A jury eventually found against Comptoir with a judgment over three million dollars in damages. In February 2018, Comptoir-through other counsel-told Intact about the attorney's fees. The notice, four years after the suit, was the first time Intact learned of the intellectual-property suit. Comptoir reorganized after the adverse judgment. The bankruptcy court declared Comptoir bankrupt and discharged the judgment debt from the 2014 litigation. Intact denied coverage on September 10, 2019. When it demanded coverage, Comptoir sent to Intact (apparently for the first time) a copy of the complaint in the 2014 suit. In denying Comptoir's demand in September 2019, Intact gave three reasons: the suit against Comptoir was not covered under the policy. because Comptoir "failed to promptly notify Intact of the [2014] Complaint and to immediately upon receipt thereof, deliver to Intact a copy of the Complaint," it violated the policy and forfeited its right to and was "time barred" from reimbursement. Comptoir listed its defense fees "as amounts due to creditors," which implied that only the bankruptcy trustee could collect them. Intact sued seeking a declaration in Cook County Circuit Court that it was not obligated to pay defense fees or indemnify Comptoir. Comptoir made its defense-fees claim outside the three-year statute of limitations applicable under Quebec law. Thus, Comptoir's complaint and subsequent demand for reimbursement of fees was time barred. On December 17, 2021, refusing to admit is errors and failure to promptly act, Comptoir sued Warr and FisherBroyles for legal malpractice. The district court granted Warr and FisherBroyles's motion to dismiss the suit as untimely under Illinois law. Both parties accept that Illinois's two-year statute of limitations for malpractice suits applies to this case. They also do not dispute that the Illinois statute of limitations incorporates the so-called "discovery" rule, which delays the commencement of the relevant statute of limitations until the plaintiff knows or reasonably should know that he has been injured and that his injury was wrongfully caused. Comptoir's claim is not based on the mishandling of litigation. Rather, its claim arises out of the defendants' alleged failure to advise Comptoir to file a timely claim with its insurer. These damages existed before-and regardless of- the outcome of the declaratory-judgment suit. It is undisputed that one explicit reason for Intact's denial was that Comptoir failed to promptly notify Intact of the Complaint and to immediately upon receipt thereof, deliver to Intact a copy of the complaint, and that the policy stated that failure to notify meant a forfeiture of rights to compensation. Once a malpractice plaintiff is aware of injury the plaintiff is not required to wait for a court's judgment certifying that the plaintiff's attorneys erred. Thus, the limitations clock for Comptoir started when it reasonably should have known of the alleged malpractice and that occurred, at the latest, when Intact sent its letter in September 2019 denying coverage to Comptoir. The statute of limitations is an affirmative defense, and Comptoir was not required to anticipate the defense in its complaint. Comptoir accepts that Intact denied coverage in September 2019, starting the two-year clock that expired before it sued in December 2021. ZALMA OPINION Lawyers, like people not trained in the law, like their clients, all have an uncanny ability to avoid reading an insurance policy. The defense lawyer, with knowledge of the existence of a policy that could provide a defense to Comptoir, ignored the fact, answered discovery reporting no insurance, and defended the suit on its merits, only to impose a multi-million dollar verdict on Comptoir. After the judgment and a bankruptcy action Comptoir made claim for its attorneys fees only to lose because the claim was time barred. Waiting even longer it sued its lawyers for failing to advise it to report its claim to its insurer, only to lose again because it was time barred. (c) 2023 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

Insurers Must Demand & Prove Restitution Required to Make Them Whole Defendants Alfredo Ayala and Juan Luis Ayala owned farm labor contracting businesses and shared business offices and office staff. Defendants were charged with insurance and tax fraud by underreporting their payroll amounts. Alfredo and Juan pleaded no contest to workers' compensation insurance fraud and tax fraud, agreed to pay restitution to the Employment Development Department (EDD), and requested a restitution hearing to determine restitution owed to their workers' compensation insurance companies. After a hearing, the trial court awarded restitution to the insurance companies measured by the amount of lost premiums caused by defendants' false payroll reporting. In The People v. Alfredo Ayala, The People v. Juan Luis Ayala, F083941, F083974, California Court of Appeals, Fifth District (March 16, 2023) a lengthy opinion reviewing facts in detail and evidence from the defrauded workers' compensation insurers affirmed the restitution orders based on the evidence presented by the insurers. FACTUAL BACKGROUND Defendants stipulated to a factual basis for their pleas based on police reports and grand jury proceedings. Juan pleaded no contest to workers' compensation fraud and tax evasion by false statement, Alfredo pleaded no contest to tax evasion by false statement. Alfredo waived time for sentencing, and the trial court reduced count 21 to a misdemeanor and ordered Alfredo to serve a three-year term of probation with conditions that Alfredo obey all laws, pay restitution to EDD, and return for a restitution hearing. The trial court held a restitution hearing as to both defendants on July 9, 2021, and announced its decision on August 24, 2021. The trial court denied defendants' subsequently filed motion for reconsideration on December 17, 2021, and sentenced Juan to three years in prison, suspended execution of that sentence, and placed him on probation for two years. PREMIUM FRAUD Typical workers' compensation insurance policies are based on estimates. The experience modification is determined by comparing a specific employer's payroll and losses to other similar employers. The experience modification can lower the premium if the employer has good safety practices but can result in a higher premium if the employer has a negative history of accidents. TRIAL COURT RULING The trial court stated that restitution should make the victims whole and not entitle them to profit but, in this case, the trial court used the findings of the insurance company auditors whom "[q]uite frankly, [it] just felt ... were more credible." DISCUSSION California crime victims have a constitutional and statutory right to receive full restitution for economic losses suffered as a result of a defendant's criminal conduct. When a defendant is convicted and sentenced to state prison, section 1202.4 limits restitution to losses caused by the criminal conduct for which the defendant was convicted. The Trial Court Did Not Abuse Its Discretion In Determining that Defendants' Criminal Conduct Was Responsible for the Insurance Companies' Lost Premiums and the Amounts of those Losses. At a restitution hearing, the prosecution is required to establish the amount of the victim's economic loss, not the criminal conduct underlying the charges. Restitution hearings are intended to be informal and do not require any particular kind of proof. The trial court may accept a property owner's statement made in the probation report about the value of stolen or damaged property as prima facie evidence of loss. Defendants argued that the trial court could not award restitution unless the prosecution presented direct evidence that defendants intentionally falsified payroll and submitted falsified payroll to generate lower premiums. Defendants' pleas of no contest and accompanying waivers were sufficient to support the trial court's award of restitution based upon defendants' massive underreporting of payroll to the insurers to reduce their policy premiums. The Trial Court Did Not Abuse Its Discretion Ordering Restitution Because It Used a Rational Method to Determine the Insurance Companies' Economic Losses Defendants' pleas of no contest established that defendants intentionally and falsely underreported their monthly payroll to the insurers to pay lower premiums. Furthermore, the willful underpayment of insurance premiums constitutes an economic loss. The methodology adopted by the trial court appeared rational to the Court of Appeals and it concluded did not produce an arbitrary result. By the plain language of the statute, the victim's economic loss must come as a result of the defendant's conduct. Victims are only entitled to an amount of restitution so as to make them whole, but nothing more, from their actual losses arising out of the defendants' criminal behavior. The Court of Appeals concluded that the trial court did not abuse its discretion in awarding restitution for the total amount of unreported payroll as opposed to limiting the award to the payroll amounts reflected in the voided payroll check register even if it had not rejected defendants' evidence. To the extent the scope and nature of defendants' misconduct precludes an exact determination of the insurers' losses, the equities favor the insurers as far as calculating the amount of restitution that is due. After reviewing all the relevant considerations, the Court of Appeals was satisfied there was a factual and rational basis for the trial court's restitution order. No abuse of discretion or other ground for reversal has been shown. The Court of Appeals, therefore, concluded that the trial court did not abuse its discretion in calculating restitution in this case and affirm the judgments. ZALMA OPINION Insurance fraud convictions, especially workers' compensation insurance fraud convictions are rare. The fraudsters often get away with their crime. When there is a conviction, like that of the Ayala brothers, must make restitution to the workers' compensation insurers who they admitted they defrauded. The court reviewed the testimony of each insurer and ordered restitution based upon the evidence from the insurers about the premiums they should have received. Those insurers should be emulated by every insurer that is the victim of insurance fraud and provide evidence and demand full restitution, as did the insurers who were defrauded by the Ayalas. Restitution is often paid because failure to pay defeats probation and the defendants go directly to jail. (c) 2023 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

Fraud by any Other Name is Still Fraud Pursuant to the New Jersey Code of Criminal Justice (Code), one can be charged with the offense of insurance fraud for knowingly making a false or misleading statement of material fact in connection with an insurance claim. That third-degree offense may be elevated to the second degree by aggregating five "acts" of insurance fraud, the total value of which exceeds $1,000. In State Of New Jersey v. Randi Fleischman, A-4 September Term 2006, Supreme Court of New Jersey (March 26, 2007) the Supreme Court of New Jersey was provided with its first opportunity to construe N.J.S.A. 2C:21-4.6's penalizing of a false "statement" as an "act of insurance fraud" that can be accumulated to elevate insurance fraud to a second-degree offense. The State indicted defendant Randi Fleischman for second-degree insurance fraud. The factual underpinnings for the charge were based on various items of false information contained in defendant's statements to the police and to her automobile insurer in connection with a stolen car claim. FACTS On December 4, 2003, after she made arrangements for a friend to dispose of her 2000 Chrysler Sebring, the defendant contacted the Edison Police to report that her car had been stolen. Defendant also telephoned her automobile insurer, Liberty Mutual Insurance Company (Liberty Mutual), to report that her car had been stolen. In response to questioning about the claim, she told her insurer that she still possessed the automobile's keys and that she had not been trying to sell her car. On December 12, 2003, defendant filed with Liberty Mutual an Automobile Theft Affidavit, in which she swore that the automobile had been stolen from the Menlo Park Mall parking lot, and that she had no information about the car's whereabouts. Fleischman's affidavit also stated that she did not own any other automobile and that her car had not been for sale. Fleischman subsequently confessed that her car had not been stolen and withdrew her insurance claim. She was later indicted for insurance fraud. She moved to dismiss the second-degree insurance fraud count (Count One). The motion court found that the State presented only three acts of insurance fraud: defendant's fraudulent report to Liberty Mutual; the false affidavit that she submitted to Liberty Mutual; and defendant's fraudulent police report. Accordingly, the court dismissed Count One, leaving intact the remaining charges. The Appellate Division affirmed Count One's dismissal, holding that each lie told in support of one fraudulent claim in a single document cannot reasonably be seen as a separate act of insurance fraud, but rather only as a component of the one fraudulent claim. Pursuant to the statute a person commits "insurance fraud" when one knowingly makes, or causes to be made, a false, fictitious, fraudulent, or misleading statement of material fact in . . . any record, bill, claim or other document, in writing, electronically, orally or in any other form, that a person attempts to submit, ... a claim for payment, reimbursement or other benefit pursuant to an insurance policy . . . [(Emphasis added).] The offense is elevated from the third to the second degree when a person commits five or more acts of insurance fraud and the aggregate value of "property, services or other benefits obtained or sought" exceeds $1,000. N.J.S.A. 2C:21-4.6(b). The statute further provides: Each act of insurance fraud shall constitute an additional, separate and distinct offense, except that five or more separate acts may be aggregated for the purpose of establishing liability pursuant to this subsection. Multiple acts of insurance fraud which are contained in a single record, bill, claim, application, payment, affidavit, certification or other document shall each constitute an additional, separate and distinct offense for purposes of this subsection. [Ibid. (emphasis added).] Thus, the breadth of the phrase "act of insurance fraud" for grading purposes depends, in part, on the breadth of the term "statement," in subsection a. of the Act. No definition of "statement" answers the question posed by this appeal. The statute's reference to a "statement" is, to the New Jersey Supreme Court, ambiguous. Although it is evident that the Legislature intended to curb insurance fraud, the Supreme Court could not ignore that the Legislature created two separate offenses of different degrees. The Supreme Court rejected the argument that more than five "acts" of insurance fraud were perpetrated by defendant when she made three statements in support of her fraudulent insurance claim. Therefore, the Supreme Court held that when a defendant provides to officials in connection with a fraudulent claim a document or oral narrative that contains a material fact or facts relating to the claim, each such document or narration is a "statement" equating to an "act" of insurance fraud. Although there can be multiple "statements" in a single document the Supreme Court rejected the assertion that the Legislature intended every discrete fact within a narrative assertion about a single claim would amount to an "act" of insurance fraud. Because defendant's oral and written statements related to a single claim of a stolen automobile, the State presented three "acts" of insurance fraud to the grand jury: defendant's report to the police, defendant's oral report of the alleged theft to Liberty Mutual, and defendant's affidavit submitted to Liberty Mutual in support of her claim. ZALMA OPINION To me, insurance fraud, is a single crime. Adding grades of fraud is an attempt by the Legislature to make some types of insurance fraud more criminal than other types of fraud. As silly as this grading system is, it is the law of New Jersey, and the defendant could not be charged with a higher degree of fraud because she only made three fraudulent statements. This was a "hard fraud" that was premeditated. The Legislature should do what other states do: declare insurance fraud of any degree or amount a felony subject to five years in state prison. (c) 2023 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

Obesity, Diabetes, and Covid Not Basis for Compassionate Release The US Congress, feeling sorry for federal prisoners amended the law to create The First Step Act to allow a District Court to shorten a sentence when there exists extraordinary and compelling reasons to release the Prisoner. In United States Of America v. Earl Lee Planck, Jr., Criminal No. 5:20-CR-24-KKC-MAS-1, United States District Court, E.D. Kentucky, Central Division, Lexington (March 1, 2023) Earl Lee Planck, Jr moved the USDC for compassionate release under the statute. Planck was originally sentenced Planck to a prison term of 56 months after he pleaded guilty to conspiring to defraud the United States Crop Insurance Fund, and tax evasion. He is scheduled for release on March 4, 2025. The First Step Act allows the court to grant a motion for compassionate release filed by the defendant himself after the defendant has fully exhausted all administrative rights to appeal a failure of the Bureau of Prisons to bring a motion on the defendant's behalf or the lapse of 30 days from the receipt of such a request by the warden of the defendant's facility, whichever is earlier. The compassionate release statute permits the Court to “reduce the term of imprisonment” and “impose a term of probation or supervised release with or without conditions that does not exceed the unserved portion of the original term of imprisonment.” The Court may grant this relief only if it finds that “extraordinary and compelling reasons" warrant such a reduction, and the reduction is consistent with applicable policy statements issued by the Sentencing Commission. Planck did not set forth any circumstances that the Court could find extraordinary and compelling. He stated he has various medical conditions that put him at an increased risk of serious complications if he contracts COVID-19, including heart disease, high blood pressure, sleep apnea, diabetes, and obesity. The USDC noted that the Court sentenced Planck below the advisory guideline range of 78 to 97 months. He has not yet served even half of the sentence imposed by the Court and he has available treatment for his conditions and the availability of vaccines. Therefore the Court ordered that Planck's motion for compassionate release was denied. ZALMA OPINION Defrauding the government's crop insurance program takes money out the U.S. Treasury and is taken more seriously by federal judges than defrauding private insurers. The fact that Mr. Planck got fat, couldn't sleep, and has created heart disease and high blood pressure does not create a ground for compassionate release. Fraudsters, whether they defraud private insurers or the federal government insurance plans, deserve prison and should stay for their full sentence. The USDC had no compassion for a prisoner who got fat in jail and ruined his health. (c) 2023 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

After Rescission an Insurer May be Required Only to Pay an Innocent Injured Person Insurers Should Carefully Avoid Suing Another Insurer On rare occasions bus accidents create a temptation to passengers to claim injuries as soon as it looks like insurance may apply. When the passengers on a bus insured by West Bend Mutual Insurance Company (West Bend), their injuries appeared like magic. As a result of its attempted investigation of a bus accident, West Bend moved for summary judgment and defendant Citizens Insurance Company of the Midwest's (Citizens) responded and filed a counter motion for summary judgment. In West Bend Mutual Insurance Company v. Affiliated Diagnostic Of Oakland, LLC, et al., Civil Action No. 21-cv-11007, United States District Court, E.D. Michigan, Southern Division (February 21, 2023) the USDC weighed the equities and resolved the dispute between two insurers. BACKGROUND West Bend's amended complaint states that multiple individuals (“claimants”) allege that they were involved in an automobile accident on February 3, 2020. West Bend insured Kristy's Early Childhood Development Center, Inc. (Kristy's), pursuant to which West Bend undertook to insure Kristy's solely against risks associated with the childcare business. At the time of the accident, West Bend alleged that the vehicle was not being used for the childcare business but was instead being used by a separate business entity, DLB Transportation LLC, which had held the vehicle out for hire to the claimants. West Bend determined that Kristy's had made material misrepresentations or concealed material facts when the policy was issued in so far as DLB would be using the vehicle in connection with its business. West Bend sought rescission of the policy and a declaration that the policy was void ab initio. Only one defendant appeared in this matter and now remains: Citizens is the assigned claims plan insurer for the claims arising out of the underlying accident. In its motion for summary judgment, West Bend seeks to extend rescission of the policy as to 16 natural person defendants and certain medical providers who allegedly provided services to natural person defendants. ANALYSIS Rescission Of An Insurance Policy As To Innocent Third Parties Under Michigan Law Requires A Balancing Of The Equities Rescission as to innocent third parties is not an absolute right. When two equally innocent parties are affected, the court is required, in the exercise of its equitable powers, to determine which blameless party should assume the loss. West Bend demonstrated that it did not have any notice or opportunity to discover the true use of the vehicle. Citizens' argued that with some additional investigation West Bend could have figured out that the bus was not being used by Kristy's in the manner indicated in the insurance policy. Citizens offered no indication of some previous malfeasance, irregularity in the application, or other information that would have made it imprudent for West Bend to take Kristy's at its word that the vehicle was going to be used by the childcare center for transporting children. An insurer has a reasonable right to expect honesty in the application for insurance. WEST BEND'S ADDITIONAL FACTORS WEIGH IN FAVOR OF RESCISSION West Bend offers two additional arguments in support of rescission. As Citizens acknowledges: West Bend urged that natural person defendants have repeatedly stonewalled and thwarted West Bend's efforts to investigate their claims and alleged injuries and that their failure to participate in this litigation has resulted in a substantial increase in time and cost for West Bend to prosecute this case. Because there was no evidence that West Bend engaged in any wrongdoing in connection with Natural Person Defendants' claims, West Bend urged that Natural Person Defendants' conduct in pursuing their claims also weighs in favor of rescission. In particular, the natural person defendants refused to appear for examination under oath and that six individuals refused to appear for depositions in a related state-court lawsuit. West Bend urged that although natural person defendants did not directly cause the accident, testimony was offered that the Natural Person Defendants acted as though they were injured only after a police officer entered the bus. The bus passengers' refusal to participate in litigation regarding rescission of the policy as against them suggests either ambivalence or acquiescence in the relief sought by West Bend. The Court assumed that both West Bend and the bus passengers were innocent with regard to the perpetration of the fraud. But the passengers' conduct immediately following the accident and during the course of the litigation is not entirely blameless and tips the scales in favor of rescission. The Court was persuaded that the two additional considerations offered by West Bend regarding the bus passengers' conduct following the accident shed further light onto the true innocence of the parties. The defrauded insurer bears the burden of establishing that rescission is warranted. Given the availability of benefits through the assigned claims program and the bus passengers' conduct after the accident which has had the effect of obscuring and complicating the litigation related to processing of their claims, the Court found that the equities favor rescission of the policy as to the natural person and provider defendants. West Bend's motion for summary judgment was granted. ZALMA OPINION It was clear that the insured lied on the application and rescission was appropriate. Whether the injured and the insurer who paid their no-fault benefits - innocent of the misrepresentation - were entitled to recover. Their default and refusal to submit to an examination under oath placed the equities in favor of West Bend who had been defrauded and the 14 people on the bus who claimed injuries only after a police officer arrived made the case a classic bus jumping case that protected West Bend. (c) 2023 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

No Contract Compelling Arbitration Between Insurer and Insured No Arbitration In Alex Weingarten v. Certain Underwriters At Lloyd's, London Subscribing To Policy Number IML-0114N0-190029, B321148, California Court of Appeals, Second District, Fourth Division (March 23, 2023) Certain Underwriters at Lloyd's, London (Lloyd's Underwriters) appealed from the trial court's order denying their motion to compel arbitration of plaintiff Alex Weingarten's complaint for breach of implied covenant of good faith and fair dealing, intentional infliction of emotional distress, and negligent misrepresentation. FACTUAL BACKGROUND The Underlying Malpractice Action In 2013, Adam Levin, Tristen Lazareff, and Criterion Capital Partners, LLC, retained Weingarten Brown LLP to defend them in the case entitled MXB Holdings LP, et al. v. Adam Levin, et al (the MXB action). The retainer agreement (the Levin/Weingarten retainer agreement) contained an arbitration provision. Adam Levin and Criterion Capital Partners, LLC, filed an action in the Los Angeles Superior Court for legal malpractice and breach of fiduciary duty against Weingarten et al (the malpractice action). The complaint alleged Weingarten negligently represented the defendants in the MXB action. The parties later stipulated to arbitration before JAMS based on the arbitration provision in the retainer agreement. Weingarten notified Lloyd's Underwriters about the malpractice action, and Lloyd's Underwriters accepted the defense of the Weingarten defendants. The arbitrator found in favor of Adam Levin and Criterion Capital Partners, LLC, and issued an award that exceeded Weingarten's insurance coverage. The Bad Faith Action Weingarten sued Lloyd's Underwriters for breach of the implied covenant of good faith and fair dealing, intentional infliction of emotional distress, and negligent misrepresentation. In the operative complaint (the SAC) Weingarten alleged Lloyd's Underwriters acted in bad faith in the malpractice action by, among other things, "[r]ejecting settlement within the policy limits..." On January 31, 2022, Lloyd's Underwriters filed a motion to compel arbitration of the SAC based on the arbitration provision in the Levin/Weingarten retainer agreement. Weingarten opposed the motion, arguing: the insurance policy issued by Lloyd's Underwriters does not contain an arbitration provision; Lloyd's Underwriters are not intended, or third party, beneficiaries of the Levin/Weingarten retainer agreement; and the doctrine of equitable estoppel is inapplicable. After a hearing on the motion to compel arbitration, the trial court denied the motion. DISCUSSION Motion to Compel Arbitration Lloyd's Underwriters contended that the trial court erred by denying their motion to compel arbitration based on the arbitration clause in the Weingarten/Levin retainer agreement. A third party beneficiary is someone who may enforce a contract because the contract is made expressly for his or her benefit. The terms of the contract must demonstrate the express intent to confer the benefit. The Court of Appeal concluded that Lloyd's Underwriters were not third party beneficiaries of the Levin/Weingarten retainer agreement. The retainer agreement describes the scope of legal services to be provided by Weingarten's law firm to the defendants in the MXB action. Nothing in the retainer agreement demonstrates an express intent to benefit a third party-whether Lloyd's Underwriters specifically or any other insurance company generally. The FAC does not assert claims against Lloyd's Underwriters that are based on the Levin/Weingarten retainer agreement; the claims are based on the insurance policy provided to Weingarten by Lloyd's Underwriters. The FAC, therefore, does not rely on or use any terms of the Levin/Weingarten retainer agreement as a foundation for its claims. Accordingly, the Court of Appeals concluded there was no basis in law or equity for preventing Weingarten from suing Lloyd's Underwriters in court. Before referring a dispute to an arbitrator, the court determines whether a valid arbitration agreement exists. Thus, the trial court properly determined the threshold issue of whether the nonsignatory defendants (Lloyd's Underwriters) could compel the signatory plaintiff (Weingarten) to arbitrate his claims. ZALMA OPINION If the Lloyd's Underwriters wished to arbitrate disputes between themselves and their insureds it would have been easy to include in the contract of insurance an arbitration agreement like the agreement in the Weingarten retainer agreement. Although the Lloyd's Underwriters provided a defense to the malpractice agreement they refused a proposed settlement within the policy limits. Weingarten claims it was harmed because Lloyds' Underwriters failed to accept the settlement, a common bad faith claim. The attempt to compel arbitration was designed to avoid trial on the bad faith issue and, although creative, it did not have a basis in fact or law that the Court of Appeal was willing to accept. (c) 2023 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

ZIFL Volume 27, Issue 7 - http://zalma.com/blog/wp-content/uploads/2023/03/ZIFL-04-01-2023.pdf The Source For Insurance Fraud Professionals Louisiana and Texas Charge Public Adjuster Not an April Fools Story Andrew Joseph Mitchell, was indicted by a grand jury in Kimble County, Texas on a second-degree forgery charge for allegedly signing the names of property owners on settlement checks so he could keep the funds for himself. Mitchell is currently jailed in Louisiana after being charged with running a similar scheme in Louisiana. Read the full article and the full issue at http://zalma.com/blog/wp-content/uploads/2023/03/ZIFL-04-01-2023.pdf The Victims of Fraud Virtually anyone can fall prey to fraudulent crimes. Con artists do not pass over anyone due to such factors as a person’s age, finances, educational level, gender, race, culture, ability, or geographic location. In fact, fraud perpetrators often target certain groups based on these factors. Very often insurers are the victims of fraud. Read the full article and the full issue at http://zalma.com/blog/wp-content/uploads/2023/03/ZIFL-04-01-2023.pdf More McClenny Moseley & Associates Issues This is ZIFL’s third installment of the saga of McClenny, Moseley & Associates and its problems with the federal courts in the State of Louisiana and what appears to be an effort to profit from what some Magistrate and District judges indicate may be criminal conduct to profit from insurance claims relating to hurricane damage to the public of the state of Louisiana. The article will include details on the Suspension of Richard William Huye III by the Louisiana Supreme Court; The order of Judge James D. Cain, Jr. Suspending MMA from practice in the federal court; Two class action lawsuits filed against MMA and it lawyers; an order from Judge North regarding violation of Rule 11 that started out: "When ego and greed become lawyers’ guiding principles, we get cases like Franatovich versus Allied Trust.” You can read the full 28 page report at https://www.linkedin.com/in/matthewdmonson/recent-activity/all/; a race discrimination suit filed against MMA; the order of Judge Brian K. Abels restraining MMA from spending any fees collected; the disappearance of MMA from Louisiana; a suit by Apex Roofing against Huye for malpractice; and Huye's filing of withdrawal as counsel in multiple suits using MMA letterhead. Read the full article and the full issue at http://zalma.com/blog/wp-content/uploads/2023/03/ZIFL-04-01-2023.pdf Free Insurance Videos See the more than 500 videos at https://www.rumble.com/zalma. Good News from the Coalition Against Insurance Fraud Multiple reports of insurance fraud convictions including the following: Estranged from his wife, Scott Lee Smith shot her for $1M of life insurance in Littleton, Colo. He filed for divorce from Nok just 11 days before shooting her in the basement of her home. Smith called 911 after shooting Nok in the face, lying she attacked him with a butcher knife. Yet he had no visible injuries, nor were there signs of a struggle. All three security cameras — which would’ve shown the shooting — were missing. Smith had called his mother after being taken into custody, asking her to recover the cams. Officials also found Smith and his father moving belongings from the house into two vehicles after he was released from custody. And inside the home, they found a duffel bag that was packed for a move elsewhere. Smith also showed “concerning behavior” in the months before shooting Nok. He surveilled her, set odd calendar reminders and obsessed over what would happen to her money once their pending divorce was finalized. Nok told family and friends that she was afraid of Smith and was trying to escape him. She allowed him to live in the basement of the home while she stayed upstairs. Smith received 30 years in prison. His mother is charged as an accessory, plus other crimes. Read the full article and the full issue at http://zalma.com/blog/wp-content/uploads/2023/03/ZIFL-04-01-2023.pdf How to Add to the Professionalism of Insurance Claims Personnel Every insurer, insurance syndicate, insurance brokerage, insurance sales agency, insurer branch office, and vendors to the insurance industry should add to the libraries of their various offices or employees. See “Excellence in Claims Handling” at https://barryzalma.substack.com/welcome. Read the full article and the full issue at http://zalma.com/blog/wp-content/uploads/2023/03/ZIFL-04-01-2023.pdf What is Insurance Fraud? Insurance fraud is the most popular and perpetrated crime in the world next to, perhaps, tax fraud. The possibility of a tax-free profit, coupled with the commonly held belief (supported by actual arrest and conviction records) that criminal prosecution will probably not occur, is sometimes too difficult for normally honest people to resist. Read the full article and the full issue at http://zalma.com/blog/wp-content/uploads/2023/03/ZIFL-04-01-2023.pdf Health Insurance Fraud Convictions Hundreds Of Millions of Potential Liability Result from Federal Jury False Claims Act Verdict Cameron-Ehlen Group, Inc., which does business as “Precision Lens,” and its owner, revealing a prime example of the significant interplay between the Anti-Kickback Statute (“AKS”) and the False Claims Act (“FCA”), a federal jury has returned a verdict of more than $43 million in damages against the Cameron-Ehlen Group, Inc. The verdict in this long-running and closely watched fraud case out of the U.S. District Court for the District of Minnesota comes after a six-week trial, with the jury ultimately finding that the defendants paid kickbacks to ophthalmic surgeons to induce their use of defendants’ products in cataract surgeries reimbursed by Medicare, resulting in the submission of 64,575 false claims between 2006 and 2015. Read the full article including dozens of convictions and the full issue at http://zalma.com/blog/wp-content/uploads/2023/03/ZIFL-04-01-2023.pdf Other Insurance Fraud Convictions Sady Ribeiro, 72, was sentenced to 36 months in prison for his participation in a scheme to obtain fraudulent insurance reimbursements and other compensation from fraudulent trip-and-fall accidents, by U.S. District Judge Sidney H. Stein. During the course of the fraud scheme, Ribeiro and others attempted to defraud their victims of more than $31 million. Riberio, a New York-licensed pain management was also sentenced to three years of supervised release. Ribeiro pleaded guilty last October before Judge Stein. Four other co-conspirators also previously pleaded guilty for their involvement in the same scheme, and three were convicted at trial in May 2019 for their participation and sentenced in May 2020. Read the full article including dozens of convictions and the full issue at http://zalma.com/blog/wp-content/uploads/2023/03/ZIFL-04-01-2023.pdf It’s Time to Subscribe to Locals or Substack For Subscribers Only I Have Published Special Insurance Videos I publish on Locals.com more than 30 videos and two webinars of the Excellence in Claims Handling program. I also publish on Substack.com videos and webinars of the Excellence in Claims Handling Program available only to Subscribers. The subscribers have access to all the videos and a webinar on “The Examination Under Oath A Tool Available to Insurers to Thoroughly Investigate Claims and Work to Defeat Fraud” among others. The videos start with the history of insurance and work their way through various types of insurance and how to obtain and deal with insurance claims. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe.Subscribe to my publications at substack at substack.com/refer/barryzalmaGo to substack at substack.com/refer/barryzalma Barry Zalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com Over the last 54 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals. Barry Zalma, Inc., 4441 Sepulveda Boulevard, CULVER CITY CA 90230-4847, 310-390-4455; Subscribe to Zalma on Insurance at locals.com https://zalmaoninsurance.local.com/subscribe. Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; I publish daily articles at https://zalma.substack.com, Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ to consider more than 50 volumes written by Barry Zalma on insurance and insurance claims handling.

Intoxicated Driving Not in the Course and Scope of Employment In Gerard Loftus, et al. v. Three Palms Crocker Park, LLC, et al., Appeal by Robert Sotka, 2023-Ohio-927, No. 111639, Court of Appeals of Ohio, Eighth District, Cuyahoga (March 23, 2023) an intoxicated person injures a passenger when he lost control of a vehicle at 120 miles per hour and crashed. Robert Sotka appealed the trial court's grant of summary judgment in favor of his employer, Three Palms Crocker Park, LLC ("Three Palms") and its insurer, State Auto Mutual Insurance Company ("State Auto"). FACTUAL OVERVIEW Plaintiff Gerard Loftus was severely injured as a passenger in a single-car accident in which Sotka was the driver. Sotka was the manager at the Three Palms pizzeria restaurant. Sotka had discussions with Loftus about potentially purchasing a restaurant with him. Sotka left the restaurant at 5:15 p.m. and traveled over 60 miles to the Canoe Club to meet Loftus and a group of Loftus's friends. At around 10:15 p.m., Sotka was driving exceeding a speed of 120 m.p.h. The car left the road and hit a guardrail, causing extensive damage. Sotka's passenger, Loftus, suffered extensive and permanent injuries. Sotka was later convicted of the crimes of Operating Vehicle Under the Influence of Alcohol or Drugs - OVI, a misdemeanor of the first degree, and Vehicular Assault, a felony of the fourth degree in the Ottawa County Court of Common Pleas. Loftus sued Sotka and Three Palms, Sotka's employer. State Auto, who had issued Three Palms a business insurance policy, intervened in the lawsuit and sought a declaratory judgment action that it need not provide a defense or coverage because the accident that resulted in Loftus' injuries was not covered by the insurance policy because Sotka was not conducting or furthering its business when he crashed his car injuring Loftus. The trial court granted summary judgment to both Three Palms and State Auto. LAW AND ARGUMENT An employer may be subject to respondeat superior liability for an employee's accident when that employee is acting within the scope of employment. Conduct is within the scope of a servant's employment if it is of the kind which he is employed to perform, occurs substantially within the authorized limits of time and space, and is actuated, at least in part, by a purpose to serve the employer. State Auto's insurance policy provides liability coverage to Three Palms pursuant to the Commercial General Liability Coverage ("CGL policy"). The parties agreed that the CGL policy specifically excludes damages from motor vehicle accidents pursuant to exclusion. The Auto Endorsement provides CGL coverage for damages arising out of the use of any “non-owned auto” in the business by any person. There was no dispute that Sotka was driving a non-owned auto as defined by the Auto Endorsement. However, the Auto Endorsement only provides coverage while the non-owned auto is being used in Three Palms' business. The trial court determined that neither condition was present upon the record and specifically found that there are no genuine issues of material fact that defendant Sotka was not within the course and scope of his employment with defendant Three Palms Crocker Park, LLC at the time of the subject accident. The court noted that Sotka left the restaurant at 5:15 p.m., traveled a distance of over 60 miles, and admitted the purpose of his trip was to meet with his friend and soon to be new business partner, Loftus. There was no evidence Sotka went to Catawba for any business purpose to benefit Three Palms. Traveling 60 miles and socializing to pursue personal business unrelated to his employer cannot be deemed to be in the service of Three Palms. Considering Sotka's conduct in total, assuming he contacted employees and spoke with others about the general aspects of the operation of a restaurant, those actions are merely incidental to the purpose of his evening: socializing with Loftus and furthering a personal business venture. Moreover, the restaurant employees present on the evening of the accident closed the restaurant without Sotka's direction or input. The record reflects that Sotka's purpose in going to Catawba that evening was to socialize and further his own personal business opportunities. Arguing that the accident occurred while Sotka was acting within the scope of his employment or in furtherance of Three Palms' business, was unbelievable. Sotka committed the offenses of operating a vehicle under impairment, and vehicular assault, a felony. This conduct cannot fairly and reasonably be deemed to be an ordinary and natural incident or attribute of the service to be rendered, or a natural, direct, and logical result of the pizzeria. ZALMA OPINION After spending an evening drinking and reviewing potential opportunities to obtain a new, and personal business with an acquaintance, and then (while intoxicated) starting a return ride at more than 120 miles per hour to take his acquaintance home or to the restaurant owned by Sotka's employer, Sotka was convicted of a felony as a result of his driving and the injuries of the plaintiff. The conduct was obviously not part of Sotka's employment as the manager of a Pizzeria and, therefore, no coverage from the employer or the employer's insurer. (c) 2023 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

Satisfaction of Mortgage Eliminates Right of Mortgagee to Recover from Homeowners Policy In Thomas P. Williams, Sr. v. Nationwide Insurance a/k/a Nationwide Mutual Insurance Company, Civil Action No. 22-1090, United States District Court, E.D. Pennsylvania (March 24, 2023) Nationwide denied the claim of its insured because they failed to comply with the Policy's post-loss duties by failing to appear for scheduled examinations, not producing requested documents, making material misrepresentations to Nationwide and because Nationwide's investigation of the fire revealed that it was “intentionally set.” The homeowners sold the fire-damaged property to the plaintiff. The money from the sale was used to satisfy the entirety of the homeowners' outstanding mortgage with a bank. The plaintiff requested that the insurer reimburse him for the amount he claims he paid toward satisfying the homeowners' mortgage. He based his request on a standard mortgage clause in the homeowners' insurance policy, which stated that a denial of the homeowners' claim would not preclude payment to a valid claim of the mortgagee. PNC Bank was the original mortgagee. The plaintiff claims that he stepped into the shoes of the bank once he allegedly paid the balance of the mortgage. Thus, the plaintiff claims that he is entitled to the same payment the insurer would have had to pay to the bank, namely the amount it would cost to repair the property. The insurer refused to pay the plaintiff's claim and the plaintiff sued. PROCEDURAL HISTORY The plaintiff Thomas P. Williams alleged that he had purchased a fire-damaged property and paid off the mortgage encumbering the property. FACTUAL BACKGROUND The Ruchs owned property located in Albrightsville, PA (“the Property”). They had insured the Property for property damage under a policy with Nationwide (“the Policy”) and had a mortgage on the Property with PNC Bank NA (“PNC”). A fire caused damage to the Property. The Ruchs submitted a claim to Nationwide under the Policy, and Nationwide eventually determined that the amount of the adjusted claim was $103,000.00. However, Nationwide later denied the claim because of breach of condition and fraud. The Policy contained a mortgage clause allowed payment to the bank upon receipt of a proof of loss. Williams purchased an assignment of the proceeds of the Policy from the Ruchs but not the bank. At the time of the sale, the Ruchs owed $135,490.13 on the mortgage to PNC and used the funds from the sale to satisfy the outstanding balance. At that time, Nationwide had not made any payment to PNC pursuant to the mortgage clause. After receiving the payment, PNC filed a Satisfaction of Mortgage with the Carbon County Recorder of Deeds. DISCUSSION Williams argued that because his funds paid to the Rauch's satisfied the mortgage on the Property and because Nationwide would have had to pay PNC if it fulfilled the policy conditions, he stepped into the shoes of PNC. Nationwide argued that it had no obligation to pay under the mortgage clause because the mortgage was satisfied. Further, Nationwide contended that Williams misconstrues his property interest because he stepped into the shoes of the mortgagor (the Ruchs), not the mortgagee (PNC). When he bought the property Williams’ interest in the property became that of owner, not mortgagee. He had no rights under Nationwide's Policy.” The court concluded that Nationwide was correct on both points. There was no evidence demonstrating Williams assumed any legal rights under the mortgage. While Williams novel argument demonstrates a logical creativity, he cites no case law, and the court found none to support his contention that a purchaser of a property steps into the shoes of the mortgagee when the funds from the purchase are used to satisfy an outstanding mortgage. Duty to Pay Pursuant to the Mortgage Clause Nationwide averred that Williams had no cognizable claim because the Ruchs satisfied the mortgage at closing and there was no present obligation to pay. Because the law permits a mortgagee to recover the amount necessary to satisfy the mortgage but no more, the court found that because the mortgage was satisfied and there is no evidence of a new mortgage, the mortgagee is not entitled to any further payment under the Policy's standard mortgage clause. The fire damaged the Property and after the loss, Williams obtained his interest in the Property. The insured mortgage was fully satisfied and neither party presented any evidence that once Williams obtained his interest, there was any outstanding mortgage on the Property. Therefore, any further recovery under the Policy would constitute an unjust enrichment for the mortgagee. At bottom, the mortgagee cannot seek further payment under the Policy and Nationwide had no obligation to pay. The court granted Nationwide's motion for summary judgment and denied Williams' cross-motion for summary judgment. ZALMA OPINION Nationwide had two contracts: first with the Rauch's as named insured and second with PNC Bank as mortgagee. Once Nationwide denied the claim of the named insureds it had the obligation to pay PNC if it presented a sworn proof of loss. Before PNC even attempted to protect its rights under the policy Williams purchased the property and the money he paid to the owners was used to satisfy the mortgage, thereby eliminating the right of PNC to make a claim to Nationwide. Had Williams obtained an assignment from PNC rather than the Rauch's he would have a claim. He did not and his "creative" argument failed. (c) 2023 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

WILFUL ACT EXCLUDED BY CALIFORNIA STATUTE Markel American Insurance Company (“Markel”) issued a management liability policy to United Talent Agency (“UTA”). UTA was sued by a competitor, Creative Artists Agency (“CAA”) for allegedly stealing its clients and employees. Markel declined coverage for the action, based on the policy's professional liability exclusion and California Insurance Code § 533, which provides that “[a]n insurer is not liable for a loss caused by the wilful act of the insured.” UTA sued Markel for breach of contract and bad faith. The district court held that § 533 did not apply but concluded that coverage was precluded by the policy's professional liability exclusion, and entered judgment in favor of Markel. United Talent Agency, LLC, a Delaware limited liability company v. Markel American Insurance Company, a Virginia company, Nos. 22-55205, 22-55357, United States Court of Appeals, Ninth Circuit (March 15, 2023) The Ninth Circuit disagreed with the district court's conclusion that CAA's allegations that UTA illegally stole clients and agents from CAA come within the purview of the policy's professional liability exclusion. The allegations by CAA that UTA stole clients and agents from CAA does not bring the conduct within the meaning of rendering professional services. Application of § 533 is a matter of statutory construction, not of contract interpretation. Section 533 reflects a fundamental public policy of denying coverage for willful wrongs and discouraging willful torts. Liability arising from intentional and inherently or predictably harmful conduct cannot be covered by liability insurance. The Ninth Circuit concluded that the legislative purpose is both clear and unequivocal. It is to deny insurance coverage for wilful wrongs. Section 533 creates a statutory exclusion which is read into every insurance policy. The policy's requirement of a judgment establishing a wilful act for the exclusion to apply is not pertinent to the § 533 analysis. A wilful act for purposes of § 533 means either an act deliberately done for the express purpose of causing damage or intentionally performed with knowledge that damage is highly probable or substantially certain to result. A wilful act also includes an intentional and wrongful act in which the harm is inherent in the act itself. Section 533 precludes coverage of litigation when the allegations of the underlying complaint can be established only by showing wilful misconduct. The court must examine the allegations in the underlying complaint to determine whether those allegations necessarily involve a wilful act within the meaning of § 533. The district court did not do so. The Ninth Circuit, therefore remanded the case for the district court to make a determination that § 533 applies to the allegations of wilful misconduct. In light of the remand, the Ninth Circuit declined to consider the parties' other contentions on appeal and reversed the grant of Markel's summary judgment motion on the professional liability exclusion, reversed the denial of Markel's summary judgment motion as to § 533, and remanded the case for the district court to make the appropriate determination on Markel's summary judgment motion as to the application of § 533 because the allegations of the underlying complaint could only be proved if CAA proves the conduct of UTA was wilful. ZALMA OPINION Liability insurance protects the insured from suits seeking damages for its liability due to the insured's negligent acts. Most liability insurance policies exclude intentional acts like assault or battery. California, by statute, compels the existence of an exclusion not written in the policy that states the is no coverage for a: "loss caused by the wilful act of the insured." That section applies and cannot be changed by the wording of the policy even if the insured and the insurer wish to insure against such wilful acts, they cannot do so in California although other states that do not have a similar statute may require coverage. (c) 2023 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

Occupancy Provision Prevents Coverage for Insured Injured as a Pedestrian George Mims was injured when he was struck by an automobile while walking toward his own vehicle. At the time of the accident Mims had no contact with his vehicle, either before or after the accident, and there was no causal connection between his vehicle and the injuries he suffered. In George Mims; Cecilia Mims v. USAA Casualty Insurance Company, No. 21-1654, United States Court of Appeals, Fourth Circuit (March 21, 2023), George and Cecilia Mims appealed the district court's orders granting USAA Casualty Insurance Company's motion for summary judgment and denying the Mimses' subsequent motion to alter or amend the judgment or for certification of questions to the South Carolina Supreme Court on the Mimses' declaratory judgment action related to the stacking of underinsured motorist coverage under their insurance policy with USAA. SOUTH CAROLINA LAW Summary judgment is only warranted if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Under South Carolina law, stacking allows an insured motorist to recover damages under more than one policy until he satisfies all of his damages or exhausts the limits of his available policies. An insured may stack unless limited by statute or a valid provision in his insurance policy. South Carolina law limits stacking of underinsured motorist coverage if none of the insured's or named insured's vehicles is involved in the accident. Instead, coverage is available only to the extent of coverage on any one of the vehicles with excess or underinsured coverage. THE RECORD The record made clear that Mims had no contact with his vehicle, either before or after the accident, and established that there was no causal connection between his vehicle and the injuries he suffered. Mims was walking to his vehicle at the time he was struck but, according to his own testimony, he had not yet reached his vehicle or physically engaged with it besides unlocking it remotely from across the parking lot. ANALYSIS Regardless of whether the Mims' policy provision broadens or narrows the circumstances in which stacking is allowed, the circumstances here are not encompassed by the provision, as Mims was not "in, on, getting into or out of" his vehicle at the time of the accident. Under South Carolina law, act of getting to or approaching a vehicle is beyond terms of insurance policy with occupancy provision. ZALMA OPINION Although stacking is important to a person injured by an uninsured or underinsured motorist, when there is a policy that requires the insured to occupy his vehicle for there to be coverage, the right to stacking becomes irrelevant. since Mr. Mims was not "in, on, getting into or out of his vehicle" at the time of the accident. When there is no coverage at all there is no need to stack coverages. (c) 2023 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.