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INSURANCE POLICY TERMINATED BEFORE LOSSES Plaintiffs lost their days they planned to ski in 2020. They are members of a certified class who purchased ski-pass insurance from Defendant United Specialty Insurance Company ("USIC") for their 2019/2020 season ski passes to Vail Resorts. Vail Resorts shut down all of its resorts on March 15, 2020, because of the COVID-19 pandemic and did not reopen for the rest of the season. In re: United Specialty Insurance Company Ski Pass Insurance Litigation, Ann C. Hoak; et al. v. United Specialty Insurance Company, and American Claims Management; Beecher Carlson Insurance, LLC, No. 21-16986, United States Court of Appeals, Ninth Circuit (November 22, 2022) Plaintiffs attempted to recover for their lost ski days, relying on the "quarantine" provision of their insurance policy, but USIC denied their claims. The district court dismissed the complaint without leave to amend holding that Plaintiffs' allegations did not support that they had been "quarantined" within the meaning of the insurance policy. The Ninth Circuit, believing it found a better reason to rule in favor of USIC reviewed the "effective date of coverage" provision of the insurance policy. Plaintiffs' insurance coverage terminated on March 15, 2020, the "effective date of coverage" provision made clear that coverage terminated on "the date upon which ski operations are ceased due to an unforeseen event" if that date is earlier than the scheduled end of the season, April 15, 2020. Since ski operations ceased for the 2019-2020 season on March 15 when Vail Resorts closed all of its resorts and never reopened for that season. Operations ceased due to the spread of COVID-19, which was clearly an "unforeseen event" under the "ordinary and popular sense" of the term. The "effective date of coverage" provision thus makes plain that Plaintiffs cannot recover for any losses on or after March 15, 2020. Since the loss - the inability to ski at Vail - happened after March 15, 2020, there was no loss when the policy was in effect. Contrary to Plaintiffs' contentions, the separate "termination" provision, which automatically terminates coverage on the last day of the season, does not suggest that coverage could not end earlier under the "effective date of coverage" provision. The Plaintiffs claimed that the policy's "natural disaster" provision was rendered a nullity; it would allow for coverage in instances when all the resorts in a state closed indefinitely for a natural disaster but reopened one month later thus not ceasing ski operations altogether for the season which is not what eliminated the Plaintiffs desire to ski. The trial court’s decision was affirmed. ZALMA OPINION The Ninth Circuit, unlike the Plaintiffs, the lawyers for the Plaintiffs, and the District Court, read the full policy and found that it did not matter whether the Plaintiffs were quarantined because their loss happened after the policy, by its terms, had expired. (c) 2022 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Go to substack at substack.com/refer/barryzalma Consider subscribing to my publications at substack at substack.com/refer/barryzalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://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

Court Refuses to Strain to Find Ambiguity That Did Not Exist Go to substack at substack.com/refer/barryzalma In ERIE INSURANCE EXCHANGE v. DRAGANA PETROVIC, No. 1-21-0628, 2022 IL App (1st) 210628-U, Court of Appeals of Illinois, First District, Second Division (November 15, 2022) the circuit court properly granted summary judgment in favor of the insurer declaring that it had no duty to indemnify or defend the insureds because the underlying accident occurred while the insured was operating his personal vehicle during the scope of employment, triggering the "auto exclusion" provision of the policy. Erie Insurance Exchange (Erie) sued the defendants, Aral Construction Company (Aral) and Arunas Alasevicius (Alasevicius) and Dragana Petrovic (Petrovic), seeking a declaration that Erie was not obligated to defend or indemnify Aral or Alasevicius in the underlying negligence claim brought by Petrovic. In that underlying negligence claim, Petrovic alleged a truck driven by Alasevicius struck her open car door as she was exiting her parked car and knocked her unconscious. Petrovic further alleged that Aral owned or operated the truck that struck her and that Alasevicius was acting in the scope of his employment with Aral at the time of the accident. Both Aral and Alasevicius were insured under a commercial general liability policy with Erie (the insurance policy) at that time. Erie claimed that: (1) Alasevicius failed to provide it with proper notice of the accident; and (2) that coverage was barred under the "auto exclusion" provision of the insurance policy. After discovery, Petrovic and Erie filed cross-motions for summary judgment seeking a declaration regarding Erie's duty to defend Aral and Alasevicius. The circuit court entered judgment in favor of Erie and against Petrovic. BACKGROUND The motor vehicle accident at the heart of the underlying negligence claim occurred on October 25, 2017 in Chicago. Alasevicius was driving a truck when he struck the open car door of Petrovic's parked car, as she was attempting to exit it, rendering Petrovic unconscious. Alasevicius stopped the truck and exited, but when Petrovic regained consciousness, he left. Petrovic sued Alasevicius for negligence. Specifically, the amended complaint alleged that Petrovic suffered a closed head injury with brain damage including numerous side effects, such as vision impairment and headaches. Petrovic incurred $300,000 in medical bills, $75,000 in lost income, and $2085.80 in damage to her car. At the time of the accident, while Aral was insured under the insurance policy with Erie, the Erie policy titled "Fivestar Contractors Policy" is a commercial general liability policy and was issued to Aral with a limit of $1 million. The policy provides liability coverage for bodily injury and property damage arising from Aral's business With respect to the scope of coverage the policy contains numerous exemptions including, relevant to this appeal, the "auto exclusion" provision, which states that the insurance does not apply to: 'Bodily injury' or 'property damage' arising out of the ownership, maintenance, use or entrustment to others of any *** 'auto' *** owned or operated by or rented or loaned to any insured. Use includes operation and 'loading and unloading.' This provision further provides: This exclusion applies even if the claims against any insured allege negligence or other wrongdoing in the supervision, hiring, employment, training or monitoring of others by that insured, if the 'occurrence' which caused the 'bodily injury' or 'property damage' involved the ownership, maintenance, use or entrustment to others of any *** 'auto' *** that is owned or operated by or rented or loaned to any insured. The insurance policy further contains numerous conditions. Relevant to this appeal, the condition titled "Duties in the Event of Occurrence, Offense, Claim or Suit" requires the insured to notify Erie "as soon as practicable of any 'occurrence' or an offense which may result in a claim." Nearly two years after the accident, on September 10, 2019, Alasevicius notified Erie of the accident and the underlying lawsuit. A month later, on October 21, 2019, Erie sued for declaratory judgement seeking a declaration that it was not required to defend or indemnify Alasevicius or Aral under the insurance policy. Only Petrovic participated in the declaratory judgment action. ANALYSIS To ascertain the meaning of the policy, the court must construe the policy as a whole, as well as consider the risks undertaken, the subject matter that is insured, and the purpose of the entire contract. Where the words used in the policy, given their plain and ordinary meaning, are unambiguous, they must be applied as written. However, if the words in the policy are susceptible to more than one reasonable interpretation, they will be considered ambiguous and will be strictly construed in favor of the insured and against the insurer who drafted the policy. To determine whether an insurer has a duty to defend an action against the insured, a reviewing court must compare the allegations of the underlying complaint to the relevant portions of the insurance policy. An insurer may refuse to defend when the underlying complaint considered in light of the entire insurance policy, precludes the possibility of coverage. In the present case, after reviewing the "auto exclusion" provision in the insurance policy and comparing it with the allegations in Petrovic's amended complaint and the pleadings and exhibits offered by the parties the Court of Appeal found that Petrovic failed to state facts which either actually or potentially bring the case within the policy's coverage. The insurance policy to Aral is a commercial general liability policy, which contains an "auto exclusion" provision, explicitly precluding coverage for "bodily injury" or "property damage"" arising out of the ownership, maintenance, use or entrustment to others of any ***' auto' *** owned or operated by *** any insured." Petrovic's amended complaint seeks recovery for bodily injury and property damage "arising out of" "ownership" and "use" of an "auto" "owned and operated" by an insured, namely Alasevicius. Accordingly, comparing the plain language of the "auto exclusion" provision to Petrovic's amended complaint and the evidence offered by Alasevicius' deposition, there can be no dispute that the accident alleged in the underlying complaint arose from the "use" or "operation" of an "auto" "owned and operated" by an insured, namely Alasevicius, so as to bar coverage and absolve Erie from defending Aral and Alasevicius in the underlying lawsuit. Petrovic made numerous judicial admissions that under the insurance policy Alasevicius could be both an executive officer and an employee, and that at the time of the accident he was in fact performing work as an ordinary employee of Aral, so as to trigger the "auto exclusion" provision. A judicial admission is a deliberate, clear, unequivocal statement by a party concerning a concrete fact within that party's knowledge. Since by Petrovic's own admissions Alasevicius was acting as Aral's "employee" at the time of the accident, he was an "insured" under the policy and the "auto exclusion" provision applied to bar coverage of the accident. By its plain and ordinary terms, the "auto exclusion" provision applies to "any insured," and therefore to both Aral's "executive officers" and "employees." Petrovic's interpretation of the insurance policy. to the contrary, would lead to an absurd result. In the present case, Petrovic's interpretation of the policy language is neither reasonable, nor supported by legal authority. Under these circumstances, the court refused to strain to find an ambiguity where none exists. ZALMA OPINION The Illinois Court of Appeals acted as required and interpreted the CGL as written. Petrovic was seriously injured by Erie's insured and if the coverage applied would have responded as, I can only assume, the auto insurer paid the limits of its policy. Erie was the target of Petrovic because she needed some way to gain damages for her serious injury. Not everyone is insured for all risks faced by the person insured. No matter how deserving Ms. Petrovic was; no matter how serious her injury; the court could not create insurance coverage that did not exist. No insurance policy covers every risk of loss. (c) 2022 Barry Zalma & ClaimSchool, Inc. 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.comandzalma@zalma.com. Consider subscribing to my publications at substack at substack.com/refer/barryzalma Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.comhttps://zalmaoninsurance.locals.com/subscribe. Subscribe to Excellence in Claims Handling athttps://barryzalma.substack.com/subscribe? Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://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

CAST IRON PIPES RUST & LEAK Marisol Rosa ("Rosa") appealed a final summary judgment entered in favor of Safepoint Insurance Company ("Safepoint"). In Marisol Rosa v. Safepoint Insurance Company, No. 5D21-3005, Florida Court of Appeals, Fifth District (November 14, 2022) the Court of Appeals interpreted an exclusion for damages caused by an act of nature. The Insurance Policy Safepoint insured Rosa's dwelling pursuant to a homeowners insurance policy. The dwelling was damaged by the overflow of water from the plumbing system. The parties agree that the loss resulted from the deterioration of cast iron pipes that was caused by "rust or other corrosion." After investigating the damage, Safepoint determined the loss was excluded from coverage under the policy's Water Damage Exclusion Endorsement. Rosa then sued seeking to recover the costs she incurred in repairing her dwelling due to the water damage. The Issue The issue in this appeal is whether the policy covers the subject loss, and the answer depends on the meaning of the term "act of nature" in the policy. The introductory paragraph of the policy's Exclusions section states that the policy does "not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss. . . ." The definition of "Water Damage" following that introductory language was replaced by an endorsement to the policy, the Water Damage Exclusion Endorsement, which defines "Water Damage" as including: “d. Accidental or intentional discharge or overflow of water or steam from within a plumbing, heating, air conditioning or automatic fire protective sprinkler system or from within a household appliance; . . . . Caused by or resulting from human or animal, forces or any act of nature.” (emphasis added) Thus, if the rust or other corrosion that caused this loss was an act of nature, Safepoint correctly denied coverage. But, if the rust or other corrosion was not an act of nature, the Water Damage Exclusion Endorsement did not preclude coverage. Policy Interpretation The interpretation of an insurance policy is a question of law reviewed de novo. The guiding principle for insurance policy interpretation is that the policy must be read as a whole, affording words their plain meaning as bargained for by the parties. Florida law provides that insurance contracts are construed in accordance with the plain language of the policies as bargained for by the parties. The insured argued that “act of nature” is synonymous with "act of God" and only occurs when a singular act or external force occurs. However, everyday interpretation of the phrase “act of nature” is not as narrow or technical as the insureds propose but rather is to be given its ordinary meaning as "something that naturally occurs." Read the Full Policy The Court of Appeal found that in the context of this policy the phrase "act of nature" does not require an uncontrollable or unpreventable event. Here, the loss was caused by rust or corrosion. Corrosion, the chemical reaction between iron and moist air, is an act of nature or a naturally occurring force. Thus, the rust or corrosion occurred because of a natural act. As a result, the Water Damage Exclusion endorsement applied to this loss. Such losses are excluded even if they were caused concurrently by a covered peril. In context, "any act of nature" is not limited to natural disasters, i.e., an act of God. The policy at issue references "an Act of God" more than once in its Cancellation and Nonrenewal sections. Where the document has used one term in one place, and a materially different term in another, the presumption is that the different term denotes a different idea. As a general proposition, the use of different language in different contractual provisions strongly implies that a different meaning was intended. In light of the entire policy, the use of "an Act of God" and "any act of nature" separately indicates each phrase has a different meaning for the purpose of this homeowners insurance policy. Relatedly, the choice of the drafters to capitalize "an Act of God" stands in contradiction to the uncapitalized use of "any act of nature" in the exclusion. The distinction further undermines Rosa's argument that the terms "any act of nature" and "an Act of God" are interchangeable within the policy. Because the phrase "any act of nature" is made expressly applicable to the Water Damage Exclusion Endorsement the Court of Appeal concluded, as is required by basic insurance policy rules of interpretation, that the phrase is to be given its ordinary meaning. In sum, the rust or other corrosion that occurred in the pipes in Rosa's dwelling, regardless of whether it was perhaps preventable or controllable, was a naturally occurring force and thus an act of nature. As an act of nature, the loss came within the policy exclusion for "any act of nature." Consequently, the Court of Appeal concluded that Safepoint correctly denied coverage. ZALMA OPINION Insurance policies are always interpreted by reviewing the entire policy to make sense of the intent of the parties. Since the term "act of nature" only appeared with regard to the water damage exclusion and "Act of God" appeared elsewhere it was obvious to the court that the terms had different meanings. Rust is natural when moisture and air meets iron. It exists naturally in hillsides, abandoned autos and in iron pipes. The cause of the loss was the rust that caused the insured's pipes to leak and damage her property. No insurance policy insures against every possible risk of loss and the cause of the loss was clearly and unambiguously excluded. (c) 2022 Barry Zalma & ClaimSchool, Inc. Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant and expert witness 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 at http://www.zalma.comandzalma@zalma.com. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.comhttps://zalmaoninsurance.locals.com/subscribe. Subscribe to Excellence in Claims Handling athttps://barryzalma.substack.com/subscribe? Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/zalma 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

Arson is not Evidence of Love Following a fifteen-day trial, a jury agreed with the State's claims that defendant Terrence L. Strothers' year-long dispute over a woman with another man, Shane Stevens, resulted in defendant assaulting Shane by firing a flare at Shane's car; and later that same day recruiting some friends to aid in his retribution who fired two flares at Shane's family's home, causing its destruction. In STATE OF NEW JERSEY v. TERRENCE L. STROTHERS, No. A-5157-18, Superior Court of New Jersey, Appellate Division (November 15, 2022) he attempted to avoid jail and the convictions that the jury found obvious. JURY VERDICT In reaching its verdict, the jury found defendant guilty of eleven of the State's thirteen charges. Defendant was convicted of: third-degree conspiracy to commit arson as a lesser-included offense of second-degree conspiracy to commit aggravated arson; third-degree arson, as a lesser-included offense of second-degree aggravated arson; third-degree conspiracy to commit criminal mischief; third-degree criminal mischief; third-degree conspiracy to commit aggravated assault as a lesser-included offense of second-degree conspiracy to committed aggravated assault; third-degree aggravated assault as a lesser-included offense of second-degree aggravated assault; second-degree aggravated assault; two counts of third-degree possession of a weapon for unlawful purposes; and three counts of fourth-degree unlawful possession of a weapon. Defendant received an aggregate eleven-year sentence for second-degree aggravated assault subject to the No Early Release Act (NERA), N.J.S.A. 2C:43-7.2, consecutive to a four-year sentence for third-degree arson, third-degree criminal mischief, and the third- and fourth-degree weapons offenses. Defendant was also ordered to pay $50,000 in restitution to the Stevens. CHALLENGES TO CONVICTION Defendant contested the trial judge's: denial of defendant's motion for judgment of acquittal; admission of the State's fire expert testimony; decision not to substitute a deliberating juror; and jury instruction on the conspiracy to commit aggravated arson and aggravated arson charges. Judgment of Acquittal Defendant asserted the use of a flare gun was "a spur of the moment occurrence as no one expected Stevens and his friends to drive past . . . defendant's house." The only "weapons" brought were a bat and a two-by-four in case he and his friends were outnumbered in the fight. In denying defendant's motion for acquittal, the judge reasoned that all the co-conspirators had met earlier at the defendant's residence and at some point, proceeded over to the Stevens' residence, to accompany defendant in his, I guess, vendetta for and retribution for damage to his car. That, in conjunction with the phone conversation where defendant threatened Shane that even though he may be going back to school to California, his house isn't, at least creates the inference that he was going there to do something to the home. And as it turned out, he went there with others who had flare guns and it was obvious to defendant that others had flare guns. Codefendant Joshua Maldonado fired a flare gun. He recruited Barnes to accompany him. Barnes fired a flare gun. To convict defendant of conspiracy to commit a crime, the State had to satisfy N.J.S.A. 2C:5-2(a), which provides in pertinent part: A person is guilty of conspiracy with another person or persons to commit a crime if with the purpose of promoting or facilitating its commission he: Agrees with such other person or persons that they or one or more of them will engage in conduct which constitutes such crime or an attempt or solicitation to commit such crime; or Agrees to aid such other person or persons in the planning or commission of such crime or of an attempt or solicitation to commit such crime. The Appellate Court concluded that the denial of defendant's motion for judgment of acquittal of the arson, assault, and related weapon charges were appropriate. Juror Substitution The defendant invited the juror substitution and should not benefit from the substitution by claiming it was an error. He should not be able to argue that an adverse decision by the trial judge was the product of error, when he urged the judge to adopt the proposition now alleged to be error. Even if the alleged error was not invited, the plain error rule applies because defendant neither objected to the removal of juror number nine nor argued it was too late to reconstitute the jury. Once a jury begins its deliberations, the trial judge may not substitute an alternate juror unless "a juror dies or is discharged by the court because of or other inability to continue." The substitution of juror nine was consistent with Rule 1:8-2(d)(1) and did not violate defendant's due process rights by denying him a fair trial. Jury Instructions Even though "and/or" is repeatedly used in the model jury instructions, and the jury is directed to consider alternative options, defendant fails to show how the phrase was improperly used in this instance. As to defendant's guilt, the State argued he fired the flare gun at Shane's car, and his conspiracy with others directly led to them firing the flare gun at Shane's home. This did not present a reasonable possibility that a juror will find one theory proven and the other not proven but that all of the jurors will not agree on the same theory. SENTENCING AND RESTITUTION Lastly, defendant objected to the judge's order to pay restitution towards the Stevens' expenses of $138,065.27, which were uncompensated by insurance coverage. The judge assessed defendant's ability to pay restitution, considering his wage earnings at the time of sentencing and his anticipated employment after serving his sentence. ZALMA OPINION In ordering restitution the judge ignored and cut out one of the victims of the crime, Shane's insurer. It should have appeared at sentencing and demand restitution. Otherwise, this case proves that jealousy should be limited and by punishing the "other man" the lovelorn will now spend 11 years in prison and when he comes out he must pay his victim $138,065.27 or go back to jail. (c) 2022 Barry Zalma & ClaimSchool, Inc. 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.comandzalma@zalma.com. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.comhttps://zalmaoninsurance.locals.com/subscribe. Subscribe to Excellence in Claims Handling athttps://barryzalma.substack.com/subscribe? Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

Claims Commandment XI Thou Shall Empathize With the Claimant Everyone in a claim situation is unhappy, disturbed, shocked, injured either in body or emotionally and needs help. The adjuster must recognize the difference between sympathy and empathy. Empathy is identification with and understanding of another’s situation, feelings, and motives. It is the ability to understand another person’s circumstances, point of view, thoughts, and feelings. Sympathy, on the other hand, is the sharing of another’s emotions, especially of sorrow or anguish and includes pity and compassion. It is the fact or power of sharing the feelings of another, especially in sorrow or trouble. Sympathy must be limited to the needs of relatives or clergy, not a professional relationship. The adjuster should avoid sympathy and work to convince the insured or claimant that the adjuster empathizes with the claimant’s situation. Empathy can be shown if the adjuster can honestly express one or more of the following similarities between the adjuster and the claimant and simultaneously establish rapport: They have similarities in their families; They practice the same religious denomination; They were also wounded in the war while serving in the US Military; They have children of the same age; They belong to the same club; They engage in the same hobby; They are fans of the same sports team, or They have some interest in common. When the claimant believes that the adjuster empathizes with the problems of the claimant or the insured the two will work together as a team to resolve the claim. With empathy, the adjuster can provide the service promised by the terms and conditions of the insurance policy. The adjuster is the living embodiment of the insurance company. He or she is the person the insured meets when the insured faces a loss and needs help. It is the adjuster, and the help he or she gives the insured, which is the person who fulfills the promise made by the insurer when the policy was issued. Without this service insurance becomes meaningless. The adjuster is the foundation upon which an insurer is built. If the adjuster is not professional and does not provide the service promised by the insurer, the promise made by the policy is broken and the insurer will first lose customers and ultimately fail. Claims that are owed must be paid promptly and with good grace. To do otherwise would be to ignore the purpose for which insurance exists: to provide service, protection, and security to the insureds. The property adjuster has a duty to: help the insured prove the loss to the insurer; help the insured understand the terms and conditions of the policy; investigate thoroughly to determine the cause and origin of the loss; determine that the facts establishing the cause and origin of the loss is due to a peril insured against and not excluded; and conduct a thorough investigation to determine if a third person is responsible for the loss so that subrogation can be instituted to recover, in addition to the money paid by the insurer, the deductible or other non-covered portions of the loss. The liability adjuster represents the insurer and deals directly with the insured. When a claim is made, the insurer provides an adjuster to help the insured understand the policy and comply with its conditions. The role of the liability adjuster is slightly different to that of the property adjuster. The liability insurance adjuster has the following duties: to the insured, to protect him or her against exposure to liability to third parties as a result of an accidental tort that falls within the definition of “occurrence”; to the claimant, to treat him or her fairly and, if liability exists, to resolve the claim promptly without ignoring the duty to the insured; to the insurer, before agreeing to resolve a claim, to establish that coverage exists for the loss under the terms and conditions of the policy, that the insured is liable to the third party, and the most reasonable resolution of the claim has been achieved. Investigate thoroughly the claim made against the insured. Empathize with the insured's situation as a person facing a claim or a lawsuit. If the insured is liable to a third party evaluate the injuries and set the value of the claim. Negotiate a settlement with the third party or his or her counsel. Obtain counsel to defend the insured to the suit against him, her or it. Help counsel with additional investigation required. Set reserves and report in detail to claims management. Insurance Claims Professionals must be 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 all 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. An insurer whose claims staff is made up of people who are less than Insurance Claims Professionals will be destroyed by: Paying claims that are not owed; Paying claims that are false or fraudulent; Refusing to pay claims that are covered; Refusing to pay claims without a ground available in the policy; and Participate in expensive and counter-productive litigation The lesson for every claims person is to have empathy for the insured and the claimant. Those in the claims profession must always recognize that as a result of establishing an empathetic rapport with the insured and the claimant, the claims investigation will be completed with ease, the insured or claimant will assist the adjuster, and the claim will eventually be resolved with both the insurer and the insured satisfied with the result. (c) 2022 Barry Zalma & ClaimSchool, Inc. 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 at http://www.zalma.comandzalma@zalma.com.Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.comhttps://zalmaoninsurance.locals.com/subscribe.Subscribe to Excellence in Claims Handling athttps://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

Claims Commandment X - Thou Shall Not Pretend to be a Lawyer Some experienced and professional claims people know the law in their area of expertise better than most lawyers. Most claims people do not, nor are they capable of pretending, that they know the law. Whether the claims person knows the law of insurance contracts or tort law well, he or she is not a lawyer and should not do anything that even hints that the adjuster is acting as a lawyer. Some insurers have hired people with law degrees as adjusters. Even with a law degree they are still just adjusters and are not hired to practice law. A law degree does not make a person a lawyer. If they are licensed to practice law in the state, if hired as an adjuster, they must still only act as an adjuster and not practice law. Communications with an insured, dealing with coverage issues should be limited to the wording of the policy and the claim against the insured. If the case requires that legal authorities be cited to an insured or claimant to best communicate the position of the insurer the adjuster should retain the services of a competent coverage lawyer to write to the insured as the attorney for the insurer. Many years ago, some disreputable insurance companies rescinded policies of insurance as a matter of policy to avoid legitimate claims. The claims staff was instructed to rescind every policy that generated a large claim. The insurer even provided a rubber stamp for the claim staff to use that said “RESCINDED”. When a competent policyholder’s lawyer sued on behalf of those whose policies were rescinded and took the deposition of the adjuster, he destroyed the insurers’ position with a simple question: “Please spell 'rescission.'” None of the adjusters he deposed could spell it correctly. Those few who could spell the word correctly were stumped by the second question: “What elements must be proved to establish a valid rescission.” A coverage lawyer would have no trouble answering the two questions. An untrained and inexperienced adjuster would not. The insurers who rescinded willy nilly were assessed punitive damages in addition to requiring them to pay the claims. Most went out of business. Adjusters should be adjusters and leave lawyering to lawyers. Similarly, lawyers should be lawyers and never attempt to be adjusters. (c) 2022 Barry Zalma & ClaimSchool, Inc. 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.comandzalma@zalma.com.Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.comhttps://zalmaoninsurance.locals.com/subscribe.Subscribe to Excellence in Claims Handling athttps://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://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

MATERIAL MISREPRESENTATION RESCINDS POLICY Plaintiff Security National Insurance Company's moved for Summary Judgment on its suit for declaratory relief that the insured Salient Landscaping, Inc. misrepresented material facts sufficient to allow the insurer to rescind the policy. In Security National Insurance Company v. Salient Landscaping, Inc., et al., No. 22-10555, United States District Court, E.D. Michigan, Southern Division (October 26, 2022) the USDC resolved the dispute. BACKGROUND O n March 21,2018, Salient, by its owner Chris Fox, applied for general liability insurance coverage from AmTrust North America, an affiliate of Security. The “Underwriting Information” section of the insurance application (the “Application”) described Salient's operations as “Basic landscape/lawn care service, maintenance and gardening - mowing, mulching, planting and/or installation” and identified its work as “Landscaping Gardening.” Salient responded “No” when asked whether it had performed, supervised, or subcontracted snow removal work in the past 10 years. The Application included a letter entitled “Loss Warranty,” which provided that Fox, among others: warranted and represented that he inquired into Salient, and that, when the Application was executed, he did not know any undisclosed claim, fact, proceeding, circumstance, act, error or omission, which had been or might be expected to give rise to a claim; and understood and accepted that the Policy may be cancelled or rescinded should it be determined that Salient violated its representations and warranties. The Application also contained a “WARNING” that “[a]ny person who, with the intent to defraud or knowing that he is facilitating a fraud against an insurer, submits an application or files a claim containing a false or deceptive statement is guilty of insurance fraud.” Fox signed the Application, acknowledging that he had read and understood all the questions asked in the Application and had provided all information required. On March 22, 2018, Security issued the Commercial Lines Policy (the “Policy”) to Salient for the period from March 22, 2018 to March 22, 2019. The Policy required Security to cover and/or defend certain liabilities to bodily injuries or property damages arising out of the conduct of Salient's business. The Policy also provided, under “Commercial General Liability Conditions” section: 6. Representations By accepting this policy, you agree 1. The statement in the Declarations are accurate and complete; 2.Those statements are based upon representations you made to us; and 3. We have issued this policy in reliance upon your representations. On or about February 7, 2022, Security was notified of Hutchinson's lawsuit against Wellesley and Salient in Michigan state court arising out of a November 2018 slip-and-fall on ice incident. This was the first time Security learned of Salient's involvement in snow removal work. DISCUSSION The court was asked only to address whether the Policy should be rescinded because of Salient's misrepresentation in the Application, an issue independent of claims made in the Hutchinson's lawsuit. This federal declaratory action would settle only the legal relations between Security and Defendants, which will not impair or confuse the state court's analysis because: Security is not a party to these proceedings and the state court has dismissed all claims against Salient (thereby halting any further involvement by Security in that case). Additionally, there is no evidence that the declaratory remedy is being used merely for the purpose of “procedural fencing” or “to provide an arena for a race for res judicata,” and the court needs not assume otherwise. This declaratory action would not increase the friction between federal and state courts and improperly encroach upon state jurisdiction, as there are different parties and there is no overlapping factual or legal issue. Finally, there has been no suggestion of a better or more effective alternative remedy. Motion for Summary Judgment Where the moving party has carried its burden of showing that the pleadings, depositions, answers to interrogatories, admissions and affidavits in the record construed favorably to the non-moving party, do not raise a genuine issue of material fact for trial, entry of summary judgment is appropriate. A fact is “material” for purposes of summary judgment when proof of that fact would have the effect of establishing or refuting an essential element of the claim or a defense advanced by either party. Under Michigan law, where an insured makes a material misrepresentation in the application for insurance the insurer is entitled to rescind the policy and declare it void ab initio. A false representation in an application for insurance which materially affects the acceptance of the risk entitles the insurer to cancellation as a matter of law. Rescission is justified without regard to the intentional nature of the misrepresentation, as long as it is relied upon by the insurer. This proposition holds even in cases of ‘innocent misrepresentation,' so long as a party relies upon the misstatement. There is no dispute that Salient made a misrepresentation in the March 21, 2018 Application when it denied having performed, supervised, or subcontracted snow removal work in the previous 10 years. Five months earlier, Fox, the signatory in the Application, signed the “SNOW CONTRACT 2017-2022,” which allowed Salient to perform snow removal and de-icing services for Wellesley. Security has offered unrebutted evidence that the Policy as written would not have been issued but for the misrepresentation of no snow removal operation. Also unrefuted is the fact that Security “does not provide liability coverage to its insureds for snow removal operations and no premium was charged for this liability exposure.” This demonstrated the heightened risk that Security wants to avoid from its insureds' snow removal operation. Accordingly, the USDC concluded that there was no genuine issue of material facts, and Security has the right to rescind the Policy based on the material misrepresentation made by Salient in the March 22, 2018 Application. With the Policy rescinded, the parties must be returned to their respective pre-contract positions. Security must return all premiums paid by Salient to restore it to the pre-contract status quo. On the other hand, Security can recover the reasonable defense costs” expended to defend Salient in Hutchinson's lawsuits. ZALMA OPINION Since Salient had signed a contract to remove snow more than five months before signing the application for insurance it knew that the answer on the application was clearly and intentionally false. Even if the application's signer had forgotten about the contract the innocent misrepresentation is still sufficient to support the rescission because the insurer was deceived and had it known the truth it would not have issued the policy. Therefore, the court returned the parties to the position they were in before the inception date of the policy. (c) 2022 Barry Zalma & ClaimSchool, Inc. 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.comandzalma@zalma.com. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.comhttps://zalmaoninsurance.locals.com/subscribe. Subscribe to Excellence in Claims Handling athttps://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://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 PIP Benefits for Staged Collision An insurer proved that it was faced with claims for injuries from staged accidents. The medical care providers of the fraud perpetrators who claimed to be injured in the staged accidents claimed a right to be paid for their services. The insurer disagreed. In National General Insurance Online, Inc., et al. v. Franklin Blasco, et al., AB Medical Supply, Inc., et al., 2022 NY Slip Op 06252, No. 2019-13906, Index No. 605852/18, Supreme Court of New York, Second Department (November 9, 2022) the New York appellate court dealt with an action for a judgment declaring that the plaintiffs are not obligated to pay certain no-fault claims, to the defendants AB Medical Supply, Inc., AB Quality Health Supply Corp., ACH Chiropractic, P.C., Energy Chiropractic, P.C., FJL Medical Services, P.C., JFL Medical Care, P.C., JPF Medical Services, P.C., Jules Francois Parisien, Kings Rehab Acupuncture, P.C., and Maria Shiela Masigla. The judgment granting that branch of the plaintiffs' motion which was for summary judgment on the complaint insofar as asserted against those defendants declared that the plaintiffs have no duty to provide coverage for the subject no-fault claims. FACTS In April 2017 and June 2017, within days of the defendants Jerry Noland and Franklin Blasco procuring automobile insurance policies, the vehicles for which the policies were issued were involved in two separate automobile collisions when they each came into contact with two separate taxicabs. The insurer was suspicious, investigated and established that the accidents were staged. In or around April 2018, the plaintiffs, National General Insurance Online, Inc., and National General Insurance Company, sued Noland, Blasco and other individuals involved in the collisions, as well as, among others, the defendant medical providers alleging that the collisions were intentional and the insurers owed nothing. After the Supreme Court (trial court) granted the plaintiffs' motion for leave to enter a default judgment against the individuals involved in the two collisions, the plaintiffs moved for summary judgment on the complaint insofar as asserted against the medical provider defendants, arguing that they are not obligated to pay no-fault claims submitted to them by the medical provider defendants in connection with the collisions. The Supreme Court granted that branch of the motion. A judgment was entered November 13, 2019. The medical provider defendants appealed. ANALYSIS The medical provider defendants failed to sustain their burden of demonstrating that the branch of the plaintiffs' motion which was for summary judgment on the complaint insofar as asserted against them was premature. Further, in what should be obvious, an intentional and staged collision caused in furtherance of an insurance fraud scheme is not a covered accident under a policy of insurance under New York law. Here, the plaintiffs established their prima facie entitlement to judgment as a matter of law by demonstrating, through admissible evidence, that the subject collisions were intentionally caused or staged. The medical provider defendants failed to raise a triable issue of fact. Accordingly, the Supreme Court properly granted that branch of the plaintiffs' motion which was for summary judgment on the complaint insofar as asserted against the medical provider defendants. ZALMA OPINION National General has adopted a most effective method of deterring or defeating insurance fraud: they took the profit out of the crime. By suing both the fraud perpetrators and the so-called medical providers who allegedly provided medical services to the fraudsters, they avoided paying anyone who participated in the fraud and made it known to the community of fraudsters that National General is not an insurer worthy of the effort to defraud. (c) 2022 Barry Zalma & ClaimSchool, Inc. 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.comandzalma@zalma.com. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.comhttps://zalmaoninsurance.locals.com/subscribe. Subscribe to Excellence in Claims Handling athttps://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

Claims Commandment X - Thou Shall Not Pretend to be a Lawyer Some experienced and professional claims people know the law in their area of expertise better than most lawyers. Most claims people do not, nor are they capable of pretending, that they know the law. Whether the claims person knows the law of insurance contracts or tort law well, he or she is not a lawyer and should not do anything that even hints that the adjuster is acting as a lawyer. Some insurers have hired people with law degrees as adjusters. Even with a law degree they are still just adjusters and are not hired to practice law. A law degree does not make a person a lawyer. If they are licensed to practice law in the state, if hired as an adjuster, they must still only act as an adjuster and not practice law. Communications with an insured, dealing with coverage issues should be limited to the wording of the policy and the claim against the insured. If the case requires that legal authorities be cited to an insured or claimant to best communicate the position of the insurer the adjuster should retain the services of a competent coverage lawyer to write to the insured as the attorney for the insurer. Many years ago, some disreputable insurance companies rescinded policies of insurance as a matter of policy to avoid legitimate claims. The claims staff was instructed to rescind every policy that generated a large claim. The insurer even provided a rubber stamp for the claim staff to use that said “RESCINDED”. When a competent policyholder’s lawyer sued on behalf of those whose policies were rescinded and took the deposition of the adjuster, he destroyed the insurers’ position with a simple question: “Please spell 'rescission.'” None of the adjusters he deposed could spell it correctly. Those few who could spell the word correctly were stumped by the second question: “What elements must be proved to establish a valid rescission.” A coverage lawyer would have no trouble answering the two questions. An untrained and inexperienced adjuster would not. The insurers who rescinded willy nilly were assessed punitive damages in addition to requiring them to pay the claims. Most went out of business. Adjusters should be adjusters and leave lawyering to lawyers. Similarly, lawyers should be lawyers and never attempt to be adjusters. (c) 2022 Barry Zalma & ClaimSchool, Inc. 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.comandzalma@zalma.com.Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.comhttps://zalmaoninsurance.locals.com/subscribe.Subscribe to Excellence in Claims Handling athttps://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://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 26, Issue 22 In this the twenty sixth year of publication of Zalma's Insurance Fraud Letter, Issue Number 22 will provide articles on the following subjects: A Void Policy May not respond to a Claim Douglas McKenzie and Jeffery Bigsby (collectively, “Plaintiffs”) filed this insurance dispute action against GEICO Marine Insurance Company (“GMIC”) in the Superior Court of Washington for Snohomish County on April 7, 2022. GMIC moved to dismiss the complaint. In Douglas McKenzie and Jeffery Bigsby v. GEICO Marine Insurance Company, Civil Action No. 2:22-cv-00647-BJR, United States District Court, W.D. Washington, Seattle (November 2, 2022) the USDC resolved the dispute. A person who is convicted of insurance fraud in the presentation of a claim must result, a priori, in the voidance of a policy of insurance. Schladetzky's fraud voided the policy. The Plaintiffs, who could not collect from the felon, tried to collect from the insurance policy issued to Schladetzky. Although the court gave consideration to the plaintiffs arguments it had no choice but to grant GMIC's motion since there was no policy to respond to their claims. They have a judgment against the person responsible for their losses and they should spend their efforts to collect from him, not try to bludgeon an insurer who was the victim of a fraud to increase the cost of the fraud imposed on GMIC by the felon. You may read this article in full at ZIFL-11-15-2022 The State Bar of California and Tom Girardi On November 3, 2022 the State Bar of California published an open letter. For those of you who did not read earlier reports about attorney Girardi, he was found to be without funds and was accused of using money belonging to his clients held in trust accounts for his personal use. As a result of the State Bar investigation, he was eventually disbarred. The State Bar was embarrassed by its lack of action and has issued an open letter to explain its position. Everyone involved in the business of insurance should be aware of the contents of the announcement and the letter. GIRARDI WAS DISBARRED AND THE STATE BAR ACCELERATED CLIENT SECURITY FUND PAYMENTS The Chief Trial Counsel sought disbarment of Girardi in 2021; following a default, Girardi was disbarred by the Supreme Court in June 2022. Also in 2021, even before Girardi was disbarred, the State Bar’s Client Security Fund began making payments to his victims on an accelerated basis. On behalf of the entire Board, I’d like to express our appreciation to all who have reached out with their thoughts, concerns, and complaints. We hear you, loud and clear. Your experiences serve as a sober reminder of the importance of our efforts to do better. We are committed to doing so, to fulfill our mission of protecting the public. You may read this article in full at ZIFL-11-15-2022 Double Jeopardy Eliminates Three of Four Convictions In The People of the State of Colorado v. Natasha Earnce Robinson, No. 19CA1768, 2022 COA 124, Court of Appeals of Colorado, Third Division (October 27, 2022) prosecutors found that they overcharged a defendant but her conviction for insurance fraud remained. Natasha Earnce Robinson appealed the judgment of conviction entered on jury verdicts finding her guilty of four counts of insurance fraud and one count of false reporting to authorities. She contended, among other things, that because her four convictions for insurance fraud are based on a single insurance claim, those convictions are multiplicitous in violation of double jeopardy principles. You may read this article in full at ZIFL-11-15-2022 Good News from the Coalition Against Insurance Fraud Read about the following and 18 Convictions at ZIFL-11-15-2022 A pain doc made more than $400K in false claims for steroid injections to Medicare and Medicaid that were neither reasonable nor medically needed in the Pittsburgh area. Patients and employees said Dr. John Keun Sang Lee required patients to get steroid injections — even when patients said the jabs didn’t help but rather caused more pain and other injuries. Lee also told employees to withhold his patients’ meds if they objected to the injections. To justify billing insurers, Lee told staff to use templates lying his patients received 80% relief from prior pain injections. Lee pled federally guilty. Up to 10 years in prison await when Lee is sentenced March 7. You may read this article in full at ZIFL-11-15-2022 How to Add to the Professionalism of Insurance Personnel The insurance industry has been less than effective in training its personnel. Their employees, whether in claims, underwriting or sales, are hungry for education and training to improve their work in the industry. You may read this article in full at ZIFL-11-15-2022 Florida's Attempt to Deter Insurance Fraud On October 19, 2022, Florida Chief Financial Officer (CFO) Jimmy Patronis held a press conference in Cape Coral to highlight fraud prevention efforts in the wake of Hurricane Ian. During the press conference, the CFO announced that he will propose legislation, including cracking down on bad Public Adjusters by curbing their ability to take advantage of Floridians under financial duress, combatting Assignment of Benefits (AOB) abuse by eliminating the use of AOBs altogether, creating a statewide prosecutor focused solely on property insurance fraud to hold fraudsters accountable to the full extent of the law, and lastly, requesting a $3 million anti-fraud public education campaign. You may read this article in full at ZIFL-11-15-2022 Health Insurance Fraud Convictions Home health manager sent to prison for $21M Medicare fraud scheme Felix Amos, 72, Houston, pleaded guilty Dec. 18, 2018, to conspiracy to commit health care fraud. On October 31, 2022 U.S. District Judge Andrew S. Hanen ordered him to serve 30 months in federal prison and three years of supervised release. He was further ordered to pay $21,197,440 in restitution. On March 22, a jury returned guilty verdicts against Fausat Adekunle, 39, Richmond, on 10 counts following a four-day jury trial. Judge Hanen later ordered her to serve 144 months in federal prison to be immediately followed by three years of supervised release. She must also pay restitution of $21,197,440.14. You may read this article including 14 Convictions in full at ZIFL-11-15-2022 Other Insurance Fraud Convictions Former Seal Beach Insurance Agent Sentenced For Theft From Elderly Consumer Vincent Allen LaGrange, 66, of Seal Beach, a formerly licensed insurance agent was sentenced in San Bernardino County Superior Court on one misdemeanor count of grand theft from an elder after an investigation by the Department of Insurance found he was acting as a licensed insurance agent to collect insurance premium payments from consumers but pocketing the premium monies and leaving the consumers uninsured. LaGrange was sentenced to one year probation and has paid back full restitution to his victims. The Department of Insurance revoked LaGrange’s license and his entity license, operating as LaGrange and Associates Inc, and Empire-Valley Insurance Services, in May 2016 after proving that he had overcharged an elderly consumer by collecting earthquake coverage twice and misleading her about the billing. LaGrange even financed her premium with a separate finance company without her knowledge and attempted to re-apply for a new license six months later but was denied. You may read this article including 9 Convictions in full at ZIFL-11-15-2022 (c) 2022 Barry Zalma & ClaimSchool, Inc. 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.comandzalma@zalma.com.Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.comhttps://zalmaoninsurance.locals.com/subscribe.Subscribe to Excellence in Claims Handling athttps://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://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

Void Policy May Not Respond to Claim Douglas McKenzie and Jeffery Bigsby (collectively, “Plaintiffs”) filed this insurance dispute action against GEICO Marine Insurance Company (“GMIC”) in the Superior Court of Washington for Snohomish County on April 7, 2022. GMIC moved to dismiss the complaint. In Douglas McKenzie and Jeffery Bigsby v. GEICO Marine Insurance Company, Civil Action No. 2:22-cv-00647-BJR, United States District Court, W.D. Washington, Seattle (November 2, 2022) the USDC resolved the dispute. BACKGROUND GMIC issued a marine insurance policy that is the subject of this lawsuit to Mike Schladetzky for his boat that was moored at the Port of Everett Marina. A fire occurred on Schladetzky's boat on October 8, 2018, causing extensive damage to the boat and a portion of a boathouse in the immediate vicinity of the boat. Plaintiffs allege that the fire also destroyed personal property and marine equipment that they owned. Schladetzky notified GMIC of the fire and GMIC retained attorney Anthony Gaspich to represent Schladetzky against any liability claims. However, on March 8, 2019, GMIC sued Schladetzky alleging that Schladetzky had breached the insurance contract and requested that the contract be voided due to fraud and misrepresentation. Trial Judge Robart entered default judgment against Schladetzky concluding that the insurance policy was void as a matter of law and Schladetzky was not entitled to coverage. Schladetzky was subsequently criminally charged for submitting a fraudulent insurance claim to GMIC and he ultimately pled guilty and was sentenced to serve jail time of 60 days. Plaintiffs McKenzie and Bigby each submitted claims for damages on May 23, 2019. On August 22, 2019, Gaspich filed a motion to withdraw as attorney for Schladetzky, which Judge Robart granted and Schladetzky proceed pro se thereafter. Judge Robart granted summary judgment to Plaintiffs, awarding McKenzie a judgment against Schladetzky in the amount of $23,360.00 and Bigsby a judgment against Schladetzky in the amount of $12,537.75. Plaintiffs submitted the judgments to GMIC and demanded payment; GMIC refused to pay Plaintiffs' demands because the insurance policy had been voided for fraud nearly two years earlier. Plaintiffs then sued GMIC's claiming it violated the Washington Consumer Protection Act (“WCPA”), the Washington Insurance Fair Conduct Act (“WIFC”), and breached the insurance contract. Thereafter, Plaintiffs voluntarily dismissed the IFCA and breach of contract claims. They also dismissed the per se WCPA claim, but the non-per se WCPA claim remained. GMIC now moves to dismiss the non-per se WCPA claim pursuant to Rule 12(b)(6) for failure to state a claim upon which relief can be granted. DISCUSSION In Washington, a non per se WCPA claim is proved by establishing the following five elements: an unfair or deceptive act or practice, occurring within trade or business, affecting the public interest, injuring the plaintiff's business or property, and a causal relation between the deceptive act and the resulting injury. GMIC argued that the non per se WCPA claim must be dismissed because the complaint has not sufficiently pled facts to support a reasonable inference that GMIC engaged in an unfair or deceptive act. The Plaintiffs alleged that GMIC engaged in unfair or deceptive actions by: having Plaintiffs submit “claims for review and payment and then not responding”, “initiating” the April 2019 exoneration action, “initiating” Attorney Gaspich's withdrawal from the exoneration action “based on secret reasons”, seeking a default order to void the insurance policy due to fraud without notifying Plaintiffs, and obtaining the default order without giving Plaintiffs an opportunity to object. None of these alleged actions constitute an unfair or deceptive act. Plaintiffs complain that GMIC filed the exoneration action “when [it] had no intent to pay any claims established” in that action. First, Schladetzky, not GMIC, filed the limitation of liability lawsuit, GMIC was not a party to the action. Second, it is undisputed that Schladetzky had the legal right to file such an action in an attempt to limit any liability to the value of the vessel. Schladetzky's decision to file a lawsuit he is legally entitled to bring cannot be the basis for an unfair or deceptive act by GMIC. Nor does Attorney Gaspich's withdrawal from the exoneration action constitute an unfair or deceptive act by GMIC. Once again, this is an action between Schladetzky and Gaspich, not GMIC and the Plaintiffs. Moreover, it is difficult to see how Gaspich's withdrawal from the exoneration action harmed Plaintiffs when they each successfully received judgments against Schladetzky for the total of their demands in that action. Plaintiffs' assertion that GMIC acted deceptively when it sought to void the insurance contract for fraud was misplaced. GMIC had the legal right to seek to void the contract between it and its insured based on Schladetzky's fraud, and Plaintiffs certainly had no standing to dispute the fraudulent nature of Schladetzky's actions. Plaintiffs do not cite to any legal authority that gives Plaintiffs the right to receive notice of or object to a contract dispute to which they are not a party. GMIC's failure to give Plaintiffs notice of its lawsuit against its insured cannot be the basis for a CPA claim. Because Plaintiffs failed to allege factual allegations sufficient to establish the first element of a WCPA claim-an unfair or deceptive act or practice by GMIC, the claim must be dismissed. ZALMA OPINION A person who is convicted of insurance fraud in the presentation of a claim must result, a priori, in the voidance of a policy of insurance. Schladetzky's fraud voided the policy. The Plaintiffs, who could not collect from the felon, tried to collect from the insurance policy issued to Schladetzky. Although the court gave consideration to the plaintiffs arguments it had no choice but to grant GMIC's motion since there was no policy to respond to their claims. They have a judgment against the person responsible for their losses and they should spend their efforts to collect from him, not try to bludgeon an insurer who was the victim of a fraud to increase the cost of the fraud imposed on GMIC by the felon. (c) 2022 Barry Zalma & ClaimSchool, Inc. 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.comandzalma@zalma.com. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.comhttps://zalmaoninsurance.locals.com/subscribe. Subscribe to Excellence in Claims Handling athttps://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

Claims Commandment IX - Thou Shall Document the Claim File Insurance claims handling is a person to person business where the claims handler, the insured and the claimant (if there is one) interact with each other. Because the interaction is not always perfect it is essential to document the interaction in the claims file whether hard paper or electronic and paperless. In addition to the fact that such documentation is good claims handling, it is required by most state insurance regulators and most Fair Claims Settlement Practices Regulations. For example every professional claims handler must: Maintain all claim data that are accessible, legible and retrievable for examination so that an insurer shall be able to provide the claim number, line of coverage, date of loss date of payment of the claim, date of acceptance, denial or date closed without payment. This data must be available for all open and closed files for the current year and the four preceding years. Record in the file the date the licensee: received notice of the loss or claim, date(s) the licensee processed the claim and date the licensee transmitted or mailed every material and relevant document in the file; and Maintain hard copy files or maintain claim files that are accessible, legible and capable of duplication to hard copy. [California Fair Claims Settlement Practices Regulations, 10 CCR 2695.3 (a)] Adjusters, claims handlers and any other claims personnel who maintain “working” or “field” files, should be aware that those additional files are part of the file and records required to be kept by the Fair Claims Settlement Practices Regulations and are subject to examination by the Insurance Department. The practice of being less cautious in the maintenance of “working” or “field” files should be discontinued. Every comment and note made in a claims file should be written as if it were addressed to “Dear Commissioner” or Dear Ladies and Gentlemen of the Jury.” Although the claims file must be complete and informative for the Regulator it must also provide information sufficient for claims management to understand and authorize resolution of or denial of a claim. All file destruction practices should be reviewed to ascertain that no file will be destroyed less than five years after it is opened nor less than four years after it is closed. Insurers should also maintain procedures to never destroy a file if litigation has started or is anticipated until after the litigation is resolved. A diary system for the destruction of old files should be established by the insurer and its claims personnel with a requirement to keep the files at least two years longer than the required by the Department of Insurance or the local Fair Claims Settlement Practices Regulation. Litigation, of course, requires extra precaution to protect the files. If the files are scanned into computer media, microfilmed, or recorded in a method other than paper backups off site backup of the files should also be maintained. If date stamps are not in use the insurer should provide a date stamp to each claims person so that the date of each action will be recorded in the file. If the insurer is “paperless” all incoming mail and documents must have imbedded in the image a date showing the date and time when the document was received or issued. A mail log should also be maintained to establish dates of mailing of each document. If the insurer uses computer generated e-mail and logging the computer should be programmed to record the date and time of each entry in such a manner that the employee cannot modify or change the dates of any entry. All e-mail communications must be saved for up to five years in a searchable database or in connection with the electronic claims file. All electronic records must be kept in such a manner that would allow a complete copy of the electronically recorded materials to be printed out in full so that it is available to produce to the Regulator or in discovery if litigation occurs. Every computer record should be kept with on-site and off-site back-ups of the records. Every insurance regulator will usually conduct audits of insurers doing business in their state. Failure to properly document files as required by good claims handling, statutes or regulations will find the insurer facing fines and bad reports on the ability of the insurer to properly complete the promises made by the insurance policy. Unfortunately claims people must also spend a great deal of their time documenting the file because about three percent of all claims result in litigation against the insurer. It is essential to every litigation that the insurer has a record of all investigation, documentation, expert analysis, and evaluation so that the file will establish that the insurance claims personnel acted properly and in good faith to resolve the claim. If the claim is investigated with the utmost good faith and the decisions are made in compliance with the facts and policy wording it will be available to protect the insurer against false allegations of bad faith. The professional claims person will log every telephone call, keep every e-mail and letter in the claims file, and document everything done to deal with the claim. The professional claims person will treat everyone with whom he or she comes in contact with the utmost good faith and fair dealing. For detail about my book California Fair Claims Settlement Practices 2022 and many more by Barry Zalma go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/the book is Available as a Kindle Bookand Available as a Paper Back (c) 2022 Barry Zalma & ClaimSchool, Inc. 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.comandzalma@zalma.com.Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.comhttps://zalmaoninsurance.locals.com/subscribe.Subscribe to Excellence in Claims Handling athttps://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://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

Appraisal Limited to Quantum of Crop Loss In Agrisompo North America, Inc. v. Coldwater Planting Company, M&W Farms, LLC, Brazil Planting Company, Pushen & Pullen Farms, and Webb Farms, No. 3:22cv51-MPM-RP, United States District Court, N.D. Mississippi (November 4, 2022) Coldwater Planting Company, et al moved to dismiss this action. ISSUES Plaintiff Agrisompo asked the USDC to enter an order appointing an “umpire” to decide the underlying crop insurance dispute. The dispute was to determine whether the crop damage suffered by the insureds in June 2021 was caused by a covered wind damage event or a non-covered flood event. The parties were unable to resolve their disagreements regarding this issue, and plaintiff responded to the impasse by suing to appoint an umpire. Plaintiff contended that the court has the authority to make such an appointment based on an appraisal policy provision which states that the appraisal procedure will be used “[i]f you and we fail to agree on the percentage of loss caused by one of the insured perils ....” ANALYSIS There is extensive Mississippi authority holding that, under the law of this state, an appraiser may not determine causation issues under an insurance contract. In Jefferson Davis Cnty. Sch. Dist. v. RSUI Indem. Co., 2009 WL 367688, at *2 (S.D.Miss. Feb. 11, 2009), Judge Parker wrote that: “Defendant argues that appraisal is inappropriate because this case involves ‘coverage and causation questions, not a dispute about the value of an admittedly covered loss.’” Judge Parker also wrote that “it is clear that under Mississippi law the purpose of an appraisal is not to determine the cause of loss or coverage under an insurance policy; rather, it is ‘limited to the function of determining the money value of the property' at issue.” (emphasis added) This authority convinced the USDC as being directly on point, and, in response, plaintiff is only able to offer it precedent from other states, which follow a different interpretation of the law. While plaintiff is able to cite extensive authority from other jurisdictions in this regard, this merely serves to highlight the fact that it is defendants who are able to offer Mississippi precedent on point. Plaintiff did not dispute that the diversity action is governed by Mississippi law, and it therefore seemed clear to the court that the relief which it sought from the court is unavailable to it. The court noted that a civil action is presently pending in the Greenville Division which seeks to litigate the insurance coverage issues. Therefore the court concluded that that case is the proper forum for the parties to resolve their disputes. Defendants' motion to dismiss this action was, therefore, granted. ZALMA OPINION Standard "appraisal" language limits the ability of the appraisers to only determine the amount of loss. Determination of coverage disputes can only be resolved in appropriate breach of contract action. Some jurisdictions have tried to give appraisers more authority than that provided by the policy. The USDC kept to the authority in the policy and followed by the state of Mississippi. (c) 2022 Barry Zalma & ClaimSchool, Inc. 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.comandzalma@zalma.com.Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.comhttps://zalmaoninsurance.locals.com/subscribe.Subscribe to Excellence in Claims Handling athttps://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://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

Private Limitation of Action Provision Enforceable The Hanover Insurance Company, Inc. ("Hanover") and Sportsinsurance.com, Inc. ("Sportsinsurance") each appealed from the District Court's order granting in part and denying in part Hanover's motion to dismiss Sportsinsurance's complaint because it failed to sue within two years after learning of the fact that it was the victim of an embezzlement. In Sportsinsurance.com, Inc. v. The Hanover Insurance Company, Inc., Nos. 21-1967-cv (L), 21-2063-cv (XAP), United States Court of Appeals, Second Circuit (November 4, 2022) Sportsinsurance discovered that Kenza El Baroudi ("Baroudi"), its Chief Financial Officer, was embezzling from the company. Sportsinsurance believed Baroudi's embezzlement constituted a loss under an insurance policy ("Policy") it held with Hanover, and it accordingly submitted a claim under the Policy. Hanover denied the claim. Sportsinsurance did not immediately sue Hanover under the Policy. Instead, Sportsinsurance pursued a legal action against Baroudi in Quebec, Canada. In July 2019, the Canadian court found that Baroudi had "wrongfully misappropriated" money from Sportsinsurance. Armed with this judgment Sportsinsurance submitted a second claim to Hanover. Hanover once again denied it. At that point, in March 2020, Sportsinsurance sued Hanover. Sportsinsurance alleged that Hanover breached both the express terms of the Policy and the implied covenant of good faith and fair dealing. The District Court dismissed Sportsinsurance's breach of contract claim as time-barred by the Policy's contractual limitations provision ("Limitations Provision"), which required Sportsinsurance to bring any action "involving loss" within two years "from the date . . . [it] 'discovered' the loss." The District Court found that, among other things, the implied covenant claim was not subject to the Limitations Provision because it did not "involve loss." THE ISSUES Concluding it has jurisdiction to review the breach of contract claim the Second Circuit found the question became whether it would exercise its discretion to do so and concluded that addressing Sportsinsurance's cross-appeal will promote judicial and litigant efficiency without prejudicing either party. Next issue, the question of whether the breach of contract claim is time-barred and thus subject to dismissal. Because an agreement which modifies the Statute of Limitations by specifying a shorter, but reasonable, period within which to commence an action is enforceable. Language in an insurance policy's contractual limitations period is construed as starting the clock not at the time of the accident itself but only once 'the right to bring an action exists. That default rule gives way if a policy contains "exceptionally clear language" that, for example, "fixes the limitations period to the date of the accident." Importantly, and in relevant part, the Policy defines "discovered" as "the time when [Sportsinsurance] first become[s] aware of facts which would cause a reasonable person to assume that a loss of a type covered by this policy has been or will be incurred." That specific definition fixes the Limitations Provision's commencement to when Sportsinsurance reasonably knew it had or would suffer a loss. This is the type of "especially clear language" which displaces the default rule. Therefore, the contractual limitations period commenced in January 2016 when Sportsinsurance "discovered" Baroudi's "frauds and thefts." The Second Circuit concluded that this Limitations Provision is not unreasonable nor is there is nothing inherently unreasonable about a two-year period of limitation. Sportsinsurance argued that the Limitations Provision here is unreasonable because it requires that Sportsinsurance (1) "compl[y] with the terms" of the Policy and (2) not bring suit until "90 days after it filed its proof of loss," which it had to file within 120 days of discovering the loss. These requirements did not prevent Sportsinsurance from timely suing. Sportsinsurance "discovered" the loss in January 2016. By January 2017, Hanover had investigated and "denied" Sportsinsurance's claim. Sportsinsurance had a full year to bring a legal action against Hanover. It did not. Since the Limitations Provision is fair and reasonable it is enforceable. In a final effort to evade the Limitations Provision, Sportsinsurance argued that Hanover is either estopped from enforcing or waived the Limitations Provision. The bare allegation that Hanover stated it was open to additional information cannot carry Sportsinsurance's estoppel or waiver arguments to forestall affirmance of the District Court's order dismissing the breach of contract claim. The first two breaches "involve" Baroudi's embezzlement because the embezzlement is the basis for the claim under the Policy. The implied covenant claim is thus time-barred. The Second Circuit accordingly reversed and dismissed the claim that Hanover breached the implied covenant of good faith and fair dealing. The declaratory judgment action was dismissed as time-barred because it involves "loss" as Sportsinsurance defined that term. ZALMA OPINION Almost ever policy of insurance contains a private limitation of action provision requiring suit to be filed against the insurer within one or two years of discovering the claim. Some states, like California, by court opinion and regulation require that the private limitation of suit provision start running when the claim is denied rather than when it is discovered. In this case, it didn't matter which, since the plaintiff Sportsinsurance waited more than two years from the denial to file suit proving that he who sits on his rights will lose. (c) 2022 Barry Zalma & ClaimSchool, Inc. 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.comandzalma@zalma.com.Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.comhttps://zalmaoninsurance.locals.com/subscribe.Subscribe to Excellence in Claims Handling athttps://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

Claims Commandment VII - Thou Shall Never Lie to an Insured Insurance is, and has been since the first policy was carved into a clay tablet, considered a business of the utmost good faith. The principle of utmost good faith (uberrimae fide) was, I believe, first stated in the English speaking world, in the British House of Lords by Lord Mansfield in 1766 in a case where he concluded that the duty of good faith rests upon both the insured and the insurer and held the insurer to its knowledge at the time the policy was signed. The insurer, like the insureds, took the premium, knowing the condition of the security provided, and could not upon loss claim the insurer was deceived. [Carter v. Boehm, 3 Burr 1905 (1766)] As the old maxim says: “honesty is the best policy.” There is no excuse for an insurance claims professional to lie to an insured. Not only is a lie to an insured a failure to act with the utmost good faith, but it is also an action fraught with danger for the claims person and the insurer for whom he or she works. Keeping up a consistent lie is almost impossible. All definite statements can be corroborated or proven false by further investigation. If a lie is about a material fact, the falsehood will be proved to the expense of the insurer. Lies to insureds — even when done for what the claims person believes is a good purpose — will invariably cause the insurer problems. Lies created on the run invariably include internal contradictions. A lie told to an insured can be, and most certainly will be, used by the insured to prove that the actions of the insurer were made intentionally and in bad faith such that the insurer will eventually be punished with punitive damages. For example, in Allison v. Fire Insurance Exchange, 98 S.W.3d 227 (Tex.App. Dist.3 12/19/2002) a major punitive damage award was obtained by a plaintiff who presented evidence from the adjuster, who admitted she lied to the plaintiff about the authority to resolve a claim for mold damage. Although the case was reversed because of an excess verdict the lie cost the insurer a great deal of money when the case was eventually settled and started a spate of bad faith cases claiming refusal to pay for mold damage because of the excess and punitive judgment at the trial of the Allison case. Claims people get into trouble when they fail to tell the truth to the insured about, among others, the following: The check is in the mail. There is no problem with coverage. I will pay the fees of the lawyer of your choice. The claim is being reviewed by senior management. I need another 30 days to complete my investigations. I need a copy of your policy. I need you to go to all of the places where you bought the stolen property to get a receipt. I will hire a contractor to rebuild your house. I don’t have authority to settle your claim. I don’t need to do an investigation to know your claim is not covered. I have confirmed coverage. Any other statement that is not true. California Insurance Code Section 790.03(h)(1) provides: Knowingly committing or performing with such frequency as to indicate a general business practice any of the following unfair claims settlement practices: 1. Misrepresenting to claimants pertinent facts or insurance policy provisions relating to any coverages at issue. Similarly, the California Code of Regulations, 10 CFR 2695.4 provides: (b) No insurer shall misrepresent or conceal benefits, coverages, time limits or other provisions of the bond which may apply to the claim presented under a surety bond. This should be self-evident to anyone involved with insurance claims. It is a statement of prudent and common claims handling. Although this Regulation seems to apply only to surety bonds it also applies to any type of insurance. Nothing can be gained by an insurer concealing or misrepresenting information about the policy or the surety bond. Claims staff should be warned that violation of this regulation will be grounds for discipline and certain loss of employment. On the other hand, proving that insurers and insured play the insurance claims game with a different set of rules, a mere oversight or honest mistake will not cost an insured his or her coverage; the lie must be wilful. [Claflin v. Commonwealth Ins. Co., 110 U.S. 81, 95-97, 3 S. Ct. 507, 515-16, 28 L. Ed. 76, 82 (1884)] (c) 2022 Barry Zalma & ClaimSchool, Inc. 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.comandzalma@zalma.com.Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.comhttps://zalmaoninsurance.locals.com/subscribe.Subscribe to Excellence in Claims Handling athttps://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

Claims Commandment VIII - Thou Shall Not Suffer Fraud to Succeed Insurance fraud in the U.S. is epidemic. Insurance fraud continually takes more money each year than it did the last from the insurance buying public. Estimates of the extent of insurance fraud in the United States used to range from $87 billion to $308 billion every year. Recently, the Coalition Against Insurance Fraud changed its long-held estimate of $80 billion a year to $308 billion a year in 2022. In truth no one really knows the extent of insurance fraud because most insurance fraud schemes succeed without the insurer even suspecting that it is being defrauded. Insurers and government backed pseudo-insurers can only estimate the extent they lose to fraudulent claims. No one will ever place an exact number on the amount lost to insurance fraud but everyone who has looked at the issue know – whether based on their heart, their gut or empirical fact of convictions for the crime of insurance fraud – that the number is enormous. When insurers and governments put on a serious effort to reduce the amount of insurance fraud the number of claims presented to insurers and the pseudo-insurers drops logarithmically. What Do The Results of the Effort Against Fraud Really Show? Insurance fraud prosecutions and investigations are anemic. What the reports do not tell is that most of those convicted were sentenced to probation. Few made full restitution and those who served time were few and far between. Insurance criminals are laughing at the insurance industry, the police agencies, the Fraud Divisions and the prosecutors. If they are one of the few criminally convicted, they face an average sentence of only five years’ probation and 60 days in jail. Jail time is usually served on weekends so that the convicted fraud perpetrators can still ply their fraudulent trade on weekdays. For insurance fraud to be prosecuted the insurer must do the work to complete a thorough investigation that can be presented to a prosecutor because police, federal investigators, prosecutors and even Fraud Division investigators will do nothing until the case is presented to them in detail by an insurer. In fact, most states have statutes that compel insurers to maintain a Special Investigative Unit (SIU) to investigate fraud claims and provide the results of that investigation to the state Department of Insurance. Every person involved in the business of insurance must understand that insurance fraud is the orphan child of the criminal justice system. Insurance fraud will never be totally defeated. It will be reduced and may be made unprofitable to the perpetrators when the public and prosecutors recognize that insurance fraud is a serious problem that effects their own financial condition. Everyone involved in the business of insurance and everyone who buys insurance must make it clear that they are angry with what is happening to their insurance premium dollar. When I, and everyone who has ever purchased a policy of insurance, hear that $300 out of every $1,000 we pay in premium goes to a criminal we should all want to scream out the window, as did the character in “Network” — “I’m mad as Hell, and I’m not going to take this anymore!” What is Fraud? Insurance fraud is a tort, a civil wrong and a crime. Black’s Law Dictionary, 6th Edition, defines fraud as: An intentional perversion of the truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or to surrender a legal right; a false representation of a matter of fact, whether by words or by conduct, by false or misleading allegations or by concealment of that which should have been disclosed, which deceives and is intended to deceive another so that he shall act upon it to his legal injury. In simple language, fraud can be defined as a lie told for the purpose of obtaining money from another who believes the lie to be true. Civil insurance fraud exists if an insured makes a representation to the insurer that the insured knows is false; conceals from the insurer a fact he or she knows is material to the insurer; makes a promise he or she does not intend to keep; and makes a misrepresentation on which the insurer relies in issuing the policy, that results in the insurer incurring damage. The claims professional should be aware of the limitations of the criminal statute in the state where he or she practices. Investigating Fraud The beginning of a thorough insurance fraud investigation is the interview. The interview can be informal, it can be recorded with an audio recording device, it can be recorded with a handwritten statement signed by the witness, or it can be recorded by a certified shorthand reporter under oath. The interview is a structured conversation. It is not an interrogation. It is not the stuff of spy films, police investigations, or prisoner of war camps. Interviews are everywhere. Interviewing is an art. Use of methods similar to those used by scientists conducting experiments is a more accurate description of interviewing. Conclusion Whenever fraud is suspected it is the duty of the insurer, its claim staff and its special investigation unit (SIU) to conduct a thorough investigation. If a preponderance of the evidence gathered reveals that a fraud has been committed: that there was a material misrepresentation or a concealment of a material fact, made with the intent to deceive the insurer, that the insurer was actually deceived, and that the insurer was damaged by the deception, the claim must be rejected. If a preponderance of the evidence does not exist or establishes there was no fraud the claim should be paid. If you wish to know everything there is to know about insurance fraud, Barry Zalma has totally rewritten his seminal book on insurance fraud in two volumes. Volume I is Available as a Kindle book; Available as a Hardcover; Available as a Paperback Volume II is Available as a Kindle book; Available as a Hardcover; Available as a Paperback (c) 2022 Barry Zalma & ClaimSchool, Inc. 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.comandzalma@zalma.com.Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.comhttps://zalmaoninsurance.locals.com/subscribe.Subscribe to Excellence in Claims Handling athttps://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://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

Insurance Agent Must Fulfill Requests Made by Insured Donald Isken ("Mr. Isken"), sued Rick Galster III Insurance Agency, Inc. ("Galster Insurance") seeking monetary damages for negligence, fraudulent inducement, and fraudulent misrepresentation. Galster Insurance moved to dismiss the complaint because: (1) Mr. Isken did not allege Galster Insurance owed him a fiduciary duty; (2) Mr. Isken did not plead fraud with particularity; and (3) Mr. Isken relied on representations outside the four corners of the contract. In Donald Isken v. Rick Galster III Insurance Agency, Inc., No. N22C-04-170 FJJ, Superior Court of Delaware (November 3, 2022) the court explained the relationship between insured and insurance agent. FACTUAL BACKGROUND Galster Insurance is a third-party broker agency that sells, solicits, and negotiates insurance on behalf of its clients in exchange for compensation. Mr. Isken owns property in Wilmington, Delaware (the "Insured Premises"). Nationwide Insurance Company covered the Insured Premises via a homeowner insurance policy ("the Nationwide Policy") until September 2018, when Nationwide elected not to renew the policy. Mr. Isken contacted Galster Insurance and instructed its agent broker, Rick Galster III ("Mr. Galster"), to obtain new coverage for the Insured Premises on equivalent terms as the Nationwide Policy. Galster Insurance secured a replacement policy ("the Replacement Policy") through Scottsdale Insurance Company. Nearly two years later two storms hit the Insured Premises. Consequently, the Insured Premises sustained loss of electricity for several days. Without electricity, the Insured Premise's sump pump failed and one foot of water flooded into two fully furnished living spaces in the lower-level living area. All told, the cost of restoring the damaged areas to their previous condition exceeded $100,000. When Mr. Isken informed Galster Insurance of the damage, Mr. Galster advised Mr. Isken to immediately file a claim under the Replacement Policy. Mr. Isken did so. However, through his conversations with the in-house claims adjuster for Scottsdale Insurance Company, Mr. Isken learned the Replacement Policy only provided $5,000 worth of coverage for water damage, instead of the $50,000 he instructed Galster Insurance to obtain. ANALYSIS Galster Insurance's Duty to Mr. Isken Galster Insurance argued that Mr. Isken's professional negligence claim must fail because Mr. Isken did not plead and prove Mr. Galster owed him a fiduciary duty. Ordinarily, an insurance agent assumes only those duties normally found in an agency relationship. This includes the obligation to use reasonable care, diligence, and judgment in procuring the insurance requested by the insured. The agent assumed no duty to advise the insured on the specific insurance matters merely because of the agency relationship. A fiduciary relationship is not a required element in every negligence case between an insured and an agent. Generally, an insurance agent does not have a duty to advise a client with respect to appropriate insurance coverage. This general rule, however, does not apply if the agent voluntarily assumes the responsibility for selecting the appropriate coverage or if the insured makes an ambiguous request for coverage that requires clarification. To the extent there is any doubt in Delaware jurisprudence the Delaware Court will not require a plaintiff to plead the existence of a fiduciary relationship if an agent allegedly fails to follow the specific instructions of the insured. Mr. Iskin has well-pled that he explicitly instructed Mr. Galster to replace the Nationwide Policy with equivalent coverage. Because Mr. Galster owed Mr. Iskin a duty to follow these instructions (even absent a fiduciary relationship between the two), the Court refused to dismiss this count of the complaint. The Negligent Misrepresentation Pleading Requirements Galster Insurance also argued Mr. Isken had not adequately pled the prima facie elements of fraud under Delaware law. The Court disagreed. The three minimum pleading requirements a fraud claim must meet under Superior Court Civil Rule 9(b) to survive dismissal the alleged misrepresentations must: be enumerated; identify the parties to the conversation; and set out the content of the discussions with sufficient particularity to place the party on notice of the precise misconduct with which it is charged. Mr. Isken specifically instructed Mr. Galster to acquire a policy identical to the Nationwide Policy. The Court found the substance of the discussion laid out the elements of fraud with sufficient particularity. The Four Corners of the Contract Finally, Galster Insurance contends Mr. Isken's fraudulent inducement claim must fail because the claim relies on representations made by Mr. Galster outside the four corners of their contract. Mr. Isken's reliance on extra-contractual representations, so claims Galster Insurance, ran afoul of this Court's "bootstrap doctrine". A fraud claim can be based on representations found in a contract, however, "where an action is based entirely on a breach of the terms of a contract between the parties, and not on a violation of an independent duty imposed by law, a plaintiff must sue in contract and not in tort." A plaintiff "cannot bootstrap" a claim for a breach of contract into a claim of fraud merely by alleging that a contracting party never intended to perform its obligations or "simply by adding the term fraudulently induced to a complaint." Essentially, a fraud claim alleged contemporaneously with a breach of contract claim may survive, so long as the claim is based on conduct that is separate and distinct from the conduct constituting breach. Mr. Isken did not allege Galster Insurance breached their contract; rather, his claim was rooted in Mr. Galster's breach of duty owed to him in tort alone and independent of their contract. The Court refused to dismiss the fraudulent inducement claim under that theory. ZALMA OPINION Sometimes a little knowledge can get an insurance agent in trouble with a court. When an insurance agent is given a simple and direct instruction to replace one policy with anther that provides identical coverage, failure to fulfill the request is a breach of the duty imposed on insurance agents and can result in tort liability for the failure. The negligent failure cost the insured, at least, $45,000 and by claiming he had replaced the Nationwide policy with an identical Scottsdale policy is both negligent and appears to be fraudulent. The trial, if not settled, would appear to be interesting. (c) 2022 Barry Zalma & ClaimSchool, Inc. 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.comandzalma@zalma.com.Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.comhttps://zalmaoninsurance.locals.com/subscribe.Subscribe to Excellence in Claims Handling athttps://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

Claims Commandment VI Thou Shall Document The Claims File Most insurance regulators, by Fair Claims Settlement Practices statutes and Regulations, require that every insurer maintain claim files that are subject to examination by the regulator or by his or her duly appointed designees. The regulator requires that the claim files must contain all documents, notes and work papers (including copies of all correspondence) which reasonably pertain to each claim in such detail that pertinent events and the dates of the events can be reconstructed and the insurer’s actions pertaining to the claim can be determined. Insurance company management needs the same ability to determine that the claims people are doing what they are expected to be done to keep the promises made by the insurance policy and resolve all clams fairly and in good faith. In simple language everything the claims person does should be recorded in the claims file, whether kept in a computerized system or a paper file. Every document collected, every photograph taken, every video recorded, every letter written, every e-mail sent, and notes of every telephone conversation should be recorded in the claims file. Because the United States is now considered to be a litigious society, every comment and note made in a claims file should be written in a form the claims professional will be willing to read aloud in a court of law to the Ladies and Gentlemen of the Jury or to an investigator for the state. The information in the claims file must be maintained so that the claim data are accessible, legible and retrievable for examination by claims management and/or the state Department of Insurance. The claims file is also maintained so that an insurer shall be able to provide the claim number, line of coverage, date of loss and date of payment of the claim, date of acceptance, denial or date closed without payment. This data must be available for all open and closed files for the current year and for, at least, the four succeeding years. All file destruction practices should be reviewed to ascertain that no file will be destroyed less than five years after it is opened nor less than four years after it is closed. Insurers should also maintain procedures to never destroy a file if litigation has started or is anticipated until after the litigation is resolved. A diary system for the destruction of old files should be established by the insurer and its claims personnel with a requirement to keep the files at least two years longer than the regulator requires as an extra precaution. If the files are scanned into computer media, microfilmed, or recorded in a method other than paper backups off site backups of the files should also be maintained. The claims person must record in the file the date the claims person received, date(s) the document was processed and date the licensee transmitted or mailed every material and relevant document in the file. Insurers should save and maintain hard copy files or maintain claim files that are accessible, legible and capable of duplication to hard copy from electronic backups. The insurer should provide a date stamp to each claims person so that the date of each action will be recorded in the file if kept on paper. If the insurer is “paperless” all incoming mail and documents must have imbedded in the image a date showing when the document was received. A mail log should also be maintained to establish dates of mailing of each document. If the insurer uses computer generated e-mail and logging the computer should be programmed to record the date and time of each entry in such a manner that the claims person cannot modify or change the dates of any entry. All e-mail communications must be saved for up to five years in a searchable database or in connection with the electronic claims file. All electronic records must be kept in such a manner that would allow a complete copy of the electronically recorded record to be printed out in full so that it is available to produce to the regulator or the insurer’s supervisory personnel or to counsel and an appointed expert, or in discovery if litigation occurs. The key for the claims person is, if in doubt about putting information into a claim file, always put the information in and never fail to record actions that relate in any substantial way to the file, the adjustment of the claim or the investigation conducted by the claims person. (c) 2022 Barry Zalma & ClaimSchool, Inc. 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.comandzalma@zalma.com.Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.comhttps://zalmaoninsurance.locals.com/subscribe.Subscribe to Excellence in Claims Handling athttps://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://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

Single Insurance Fraud Conviction Remains In The People of the State of Colorado v. Natasha Earnce Robinson, No. 19CA1768, 2022 COA 124, Court of Appeals of Colorado, Third Division (October 27, 2022) prosecutors found that they overcharged a defendant but her conviction for insurance fraud remained. Natasha Earnce Robinson appealed the judgment of conviction entered on jury verdicts finding her guilty of four counts of insurance fraud and one count of false reporting to authorities. She contended, among other things, that because her four convictions for insurance fraud are based on a single insurance claim, those convictions are multiplicitous in violation of double jeopardy principles. To resolve her appeal the Court of Appeals addressed an issue of first impression in Colorado and held that, when a defendant is convicted for one count of presenting a fraudulent insurance claim, and for one or more counts of making false statements in support of the same insurance claim, the prohibition against double jeopardy and multiplicity will generally require the conviction (or convictions) to merge. In this case, the insurance fraud statute, the complaint and information filed by the prosecution, and the evidence and argument presented at Robinson's trial all support the conclusion that her three convictions for making false statements must merge into her one conviction for insurance fraud. BACKGROUND According to the prosecution's evidence and theory of guilt, Robinson purchased a car but did not initially buy insurance coverage for it. Two weeks later, Robinson's boyfriend and cousin were driving the uninsured car and knocked over a stop sign, causing heavy damage to the car. Later that day, Robinson bought insurance coverage for the car. A few days later, Robinson reported to police that her car had been stolen and that it had no prior damage. She also filed a claim for insurance coverage based on the alleged theft. During two recorded telephone calls with her insurance company, as well as one recorded telephone call with a police detective, Robinson lied about her car being stolen and not knowing who took it. She repeated those lies in the affidavit she submitted to her insurance company. Following the trial, the jury found Robinson guilty of four counts of insurance fraud and one count of false reporting to authorities. The trial court entered judgment of conviction and sentenced Robinson to concurrent terms of three years' probation. MULTIPLICITY IN VIOLATION OF DOUBLE JEOPARDY Robinson contends that her four convictions for insurance fraud are multiplicitous in violation of double jeopardy principles because they are based on a single insurance claim. The Court of Appeals agreed. Standard of Review, Preservation, and Standard of Reversal Whether convictions must be merged because they are multiplicitous in violation of double jeopardy principles is a question of law. The double jeopardy issue presented here is whether Robinson's multiple insurance fraud convictions are based on alternate ways of committing the same offense. The district court addressed that very issue, concluding that the offenses are "separate," although it ultimately ruled that concurrent sentences were appropriate. General Law Regarding Units of Prosecution, Multiplicity, and Double Jeopardy Unless a statute expressly authorizes otherwise, the Double Jeopardy Clauses of the United States and Colorado Constitutions protect against multiple punishments for the same offense. Multiplicity may implicate double jeopardy principles if a statute creates alternate ways of committing the same offense. In these situations, whether multiple punishments are permissible entails a determination of the legislatively prescribed unit of prosecution. The unit of prosecution is the way a criminal statute permits a defendant's conduct to be divided into discrete acts for purposes of prosecuting multiple offenses. To determine the unit of prosecution for a particular offense, the Court of Appeal looks exclusively to the statute defining the offense. After determining the statutory unit of prosecution, double jeopardy analysis requires the court to consider whether the defendant's conduct constitutes factually distinct offenses, that is, whether the conduct satisfies more than one defined unit of prosecution. Application Robinson's four convictions for insurance fraud are multiplicitous in violation of double jeopardy principles, and that her three convictions for making false statements under section 18-5-211(1)(e) must merge into her one conviction for insurance fraud. The insurance fraud statute requires that when a number of acts are joined as a disjunctive series, in a single sentence, without any attempt to differentiate them by name or other organizational device, a legislative intent to permit separate convictions and sentences for each enumerated act is not so readily apparent. To the contrary, by joining alternatives disjunctively in a single provision of the criminal code, the legislature intended to describe alternate ways of committing a single crime rather than to create separate offenses. Robinson's was based on her presenting an insurance claim that contained false material information. Her three convictions under a different section were based on her presenting three statements containing false material information in support of the insurance claim. Robinson's false statements were part and parcel of her fraudulent insurance claim. Robinson's three convictions were based on two telephone calls with her insurance company and an affidavit she completed for the company. But what if the insurance company had a more exhaustive process that involved more telephone calls and more forms to fill out? All those countless communications could lead to countless convictions while still being based on only one insurance claim. The issue before the appellate court is distinct from a multiplicity issue that arises when a statute defines a crime as a continuous course of conduct. Third, the way the prosecution presented its case at trial supports the decision. Notably, the prosecutor began his closing argument by emphasizing that Robinson made the same false statements "over and over again" on "call after call" "[t]o get [insurance] coverage for her car." The prosecutor added that Robinson told the "same story" in her affidavit. In rebuttal closing, the prosecutor stayed the course, arguing that Robinson's repeated false statements to her insurer. For all these reasons, the appellate court concluded that the district court erred by entering judgment of conviction and sentence on multiple counts of insurance fraud, and that Robinson should stand convicted of just one count of insurance fraud under the statute. Evidentiary Issue The judgment was affirmed in part and reversed in part. Robinson's insurance fraud conviction was affirmed. Robinson's three insurance fraud convictions were reversed, and the case is remanded for the district court to vacate those three convictions and sentences. Although the jury found Robinson guilty of the defense's proposed lesser nonincluded offense of false reporting to authorities, this conviction does not appear on the district court's sentencing order. To the extent Robinson stands convicted of that offense, she does not challenge that conviction on appeal. ZALMA OPINION There was no question that the defendant committed insurance fraud by insuring a car after an accident and then reporting it stolen to collect even though it was damaged before the policy came into effect. She lied to the insurer and the police often and with alacrity. Regardless, she only committed one crime – insurance fraud – and the charge of additional counts for false statements made in the presentation of the false claim was surplusage and duplicitous. Her sentence was for probation and she stood convicted of one crime, not four. (c) 2022 Barry Zalma & ClaimSchool, Inc. 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.comandzalma@zalma.com.Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.comhttps://zalmaoninsurance.locals.com/subscribe.Subscribe to Excellence in Claims Handling athttps://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://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

Insurer Entitled to Notice of Reformation Claim Before Trial At trial on the breach of contract action plaintiffs sought to amend their complaint to include an otherwise untimely reformation claim based on mutual mistake and a preexisting oral agreement. In 34-06 73, LLC, et al. v. Seneca Insurance Company, 2022 NY Slip Op 06029, No. 81, New York Court of Appeals (October 27, 2022) the insurer appealed the reformation of its policy sought for the first time at trial. FACTS Seneca Insurance Company issued plaintiffs 34-06 73, LLC, Bud Media, LLC, and Coors Media, LLC a multi-million dollar, written insurance policy covering several of plaintiffs' vacant commercial properties. The parties do not dispute the contents of the policy, only whether plaintiffs' complaint asserting breach of contract and seeking damages put defendant on notice of the transactions or occurrences underlying plaintiffs' belated claim to reform the policy to eliminate the condition that supported the claim denial. The policy, as issued, included a Protective Safeguards Endorsement ("PSE") that required plaintiffs, among other things, to maintain an automatic sprinkler device on the subject property as a material condition precedent to coverage. Approximately one month after the policy went into effect, defendant's agent conducted an inspection of the premises and issued a report to plaintiffs' principal and sole owner, Mohammad Malik, advising him that there was no compliant sprinkler system on the premises and recommending that plaintiffs notify the insurer defendant of the system's non-operability. Malik did not do as advised. A little more than four months later, there was a fire on the premises and plaintiffs requested payment under the policy for damages incurred. Defendant notified plaintiffs that it was denying the claim under the PSE because plaintiffs did not maintain a working sprinkler system. Plaintiffs sued for breach of contract, seeking over $2.4 million in damages based on defendant's failure to cover the fire loss. At trial, for the first time, plaintiffs argued that the written policy did not reflect the parties' agreement. Malik testified that he told his insurance broker that he did not want the policy to include a protective safeguard endorsement because the properties were vacant buildings or lots, and most did not have sprinklers. However, he admitted that he did not read the insurance policy. Defendant's Vice President of Underwriting, Carol Muller, testified that an underwriting file disclosed during discovery did not contain documents referencing the PSE or the sprinkler system, that the premiums quoted for the Policy were for a non-sprinklered building, and that the inclusion of the PSE may have been a mistake. After plaintiffs rested, they orally moved to amend the complaint to conform the pleadings to the proof by adding a claim for reformation. The court granted plaintiffs' motion, concluding that the claim related back to the complaint because it was "part of the whole thrust of the complaint originally" and the jury should decide whether the PSE's inclusion resulted from a mutual mistake. The jury returned a verdict in favor of plaintiffs on the reformation claim, finding that plaintiffs established by clear and convincing evidence that the parties' true agreement was a policy without a PSE and it was a mutual mistake to include the PSE in the policy. Defendant maintained that the complaint alleged only nonperformance and contained no indication that the contract failed to reflect the parties' intent. Defendant also asserted surprise and prejudice. Regardless, the Appellate Division affirmed the judgment in the plaintiffs' favor, holding that the court providently granted plaintiffs' application to conform the pleadings to the trial evidence to assert a claim for reformation. ANALYSIS Applications to amend pleadings are within the sound discretion of the court and exercise of such discretion may be upset by an appellate court only for abuse as a matter of law. However, the high court concluded that there was no sound basis in law to grant amendment to add an untimely claim. It was undisputed that when plaintiffs sought to amend their complaint the statute of limitations on the reformation claim had expired and was therefore time-barred unless it related back to the original pleading. Plaintiffs' reformation claim will only relate back to the original complaint - and is thus not barred by the statute of limitations – only if the complaint placed defendant on notice of the transactions, occurrences, or series of transactions or occurrences, to be proved in support of that claim. To plead reformation, a plaintiff must allege sufficient facts supporting a claim of mutual mistake, meaning that "the parties have reached an oral agreement and, unknown to either, the signed writing does not express that agreement". New York recognizes a heavy presumption that a deliberately prepared and executed written instrument manifests the true intention of the parties, the proponent of reformation must show in no uncertain terms, not only that mistake or fraud exists, but exactly what was really agreed upon between the parties. In plaintiffs' complaint they failed to give notice to defendant of the transactions or occurrences on which plaintiffs based their reformation claim. In their original complaint, plaintiffs reference a specific written policy which they identified as the parties' agreement and which they allege defendant breached. The complaint further alleged that plaintiffs complied with all of the conditions precedent and subsequent pursuant to the terms of the subject policy. The latter allegation is fatal to plaintiffs' assertion that the complaint provides notice of the transactions or occurrences to be proved in support of a reformation claim. In fact, if anything, it suggests the opposite because, by asserting total compliance with the policy (as issued) and its conditions plaintiffs necessarily disclaimed any challenge to the policy's terms, specifically the PSE. The reformation claim, as advanced by plaintiffs, was based on a purported oral agreement negotiated by Malik with the broker that preceded the contract's formation, whereas the breach of contract claim in the original complaint was based on the written policy which includes the PSE and with which plaintiffs alleged full compliance. Therefore, nothing in the stand-alone breach of contract claim put defendant on notice that there was a prior oral agreement that excluded the PSE and that the PSE's inclusion in the written policy was a mistake. Plaintiffs' complaint foreclosed a factual or inferential basis for notice of mutual mistake notice by unqualifiedly alleging that they "complied with all of the conditions precedent and subsequent pursuant to the terms of the subject policy." The complaint contained no alternate theory of recovery or factual allegations based on pre-formation transactions or occurrences. The complaint therefore only put the defendant on notice of transactions or occurrences related solely to the written policy and plaintiffs' total compliance with that agreement's terms, which include the PSE's sprinkler requirement. As a result the reformation claim cannot relate back to plaintiffs' original pleading because it only alleged compliance with the policy as written and the trial court abused its discretion as a matter of law when it granted plaintiffs' motion to amend to include this time-barred claim. Plaintiffs' motion to amend the complaint to include a reformation cause of action was denied, and the case was remitted to Supreme Court (trial court), New York County, for entry of judgment in accordance with the opinion herein. ZALMA OPINION The plaintiff insured and counsel made a decision at the time the suit was filed to sue only for breach of contract although the plaintiff knew he felt the policy issued was not what he ordered and when he was told of the error - before the fire - did nothing to correct the terms and conditions of the policy. Rather than dispute the PSE as an error he sued claiming he had complied with the condition that he was advised did not exist. Only later, during trial did he seek reformation. The trial court erred allowing reformation because the defendant was not given notice of the equitable claim and was sandbagged and unable to do discovery or bring in evidence to counter the claim. Malik's failure to react to the advice about the condition requiring PSE and that he lacked appropriate PSE defeated his claim. (c) 2022 Barry Zalma & ClaimSchool, Inc. 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.comandzalma@zalma.com.Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.comhttps://zalmaoninsurance.locals.com/subscribe.Subscribe to Excellence in Claims Handling athttps://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://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 26 Issue 21 In this the 21st issue of the 26th year of publication of Zalma's Insurance Fraud Letter you will find articles that discuss the following insurance fraud issues: When an Insured Lies to his Insurer the Claim May Be Denied In Cesar Benitez v. Universal Property And Casualty Insurance Company, No. 4D21-3281, Florida Court of Appeals, Fourth District (October 12, 2022) Cesar Benitez appealed the trial court’s entry of final summary judgment in favor of Universal Property and Casualty Insurance Company (“Insurer”) in a first-party property insurance dispute over a water damage claim. In his application for a policy with the Insurer, Benitez reported no previous losses on his property. However, after Benitez filed a claim for new damage, the Insurer’s inspector found signs of pre-existing damage and repairs. The Insurer denied Benitez’s claim but continued to collect premiums from him for several years. Benitez then sued for breach of contract, and Insurer asserted an affirmative defense based on section 627.409, Florida Statutes (2019). Read the full article and the full issue at: ZIFL-11-01-2022 Chutzpah: Insurance Criminals Conduct on Release Must Stay in Jail Conduct After Post Conviction Relief Requires Jail. In Monnie Villareal v. State Of Mississippi, No. 2021-CP-00440-COA, Court of Appeals of Mississippi (October 11, 2022), the Court of Appeals of Mississippi dealt with a request to avoid jail after conviction for insurance fraud. FACTS In June 2017, Monnie Villareal and two codefendants were indicted for insurance fraud (Count I), conspiracy to commit insurance fraud (Count II), false pretenses (Count III), and conspiracy to commit false pretenses (Count IV). The indictment alleged that the defendants, acting on behalf of a tree service business, conspired to present a fake certificate of insurance to a customer in order to obtain the customer’s business and payment in excess of $500. In May 2018, pursuant to a plea bargain, Villareal pled guilty to Count II, and the remaining counts were nolle prosequied. The court sentenced Villareal to five years in the custody of the Mississippi Department of Corrections (MDOC) with credit for time served and the remainder suspended on post-release supervision (PRS). Read the full article and the full issue at: ZIFL-11-01-2022 Good News From the Coalition Against Insurance Fraud This issue includes information about convictions like: Roshanak Khadem ran clinics that provided beauty and spa services. The Sherman Oaks, Calif. women recruited patients for Botox injections, facials and laser hair removal. Khadem knew the procedures weren’t insured, yet she told some patients to give her their insurance info so she could falsely bill their health plans nearly $8M for fake or unneeded medical procedures. In return, she gave patients free or discounted cosmetic procedures. She deposited the insurance payouts into bank accounts held in the names of docs affiliated with her clinics. They signed off on the fake claims to slide them past the insurers. Khadem then got the deposited money using her check-signing authority on the bank accounts. She also used pre-signed checks she obtained from the docs. Khadem pled guilty and received 72 months in federal prison. Read the full article and the full issue at: ZIFL-11-01-2022 How to Add to the Professionalism of Your Claims Staff The insurance industry has been less than effective in training its personnel. Their employees, whether in claims, underwriting or sales, are hungry for education and training to improve their work in the industry. Insurers without sufficient personnel to make a classroom training program practical have available options. If the insurer desires to honor its employees who wish to improve their knowledge and skills can do so inexpensively by adding to each employee’s library a complete insurance library by internationally recognized insurance coverage, claims handling, fraud, and insurance law expert and author, Barry Zalma, Esq., CFE. Read the full article and the full issue at: ZIFL-11-01-2022 How To Defeat or Deter Insurance Fraud Insurers Must be Proactive Against Insurance Fraud Insurers Must Stop the Logarithmic Growth of Insurance Fraud Fraud is taking more money every year from the insurance buying public. The Coalition Against Insurance Fraud recently revised its estimates from $80 billion a year to announce that insurance fraud takes over $308 billion a year from the insurance industry. The US Department of Justice working with various federal police agencies have taken an active role to investigate, prosecute and convict those who defraud U.S. health programs and federally funded insurance like flood insurance and crop insurance. Yet, the arrests and prosecutions that happen are only creating a small dent in the amount of money stolen from private and federally funded insurance. Read the full article and the full issue at: ZIFL-11-01-2022 Health Insurance Fraud Convictions New York Doctor Settles Improper Billing and Controlled Substance Act Claims Physician Admits Upcoding of Services Ahmad M. Mehdi and his medical practice, Ahmad M. Mehdi, M.D., P.C. (“Mehdi”), agreed to pay a total of $900,000 to resolve civil claims for up-coding billings for some medical services, billing for smoking cessation counseling services that were not adequately documented, and allegedly improper prescribing of opioids, announced United States Attorney Carla B. Freedman. [Plus dozens of other convictions] Read the full article and the full issue at: ZIFL-11-01-2022 A False Statement at EUO Voids Coverage Where a plaintiff admits to making false statements with the intent that his insurer relies on those statements, the issue of whether such false statements were made need not be tried to a judge or jury. Similarly, whether a false statement was made knowingly and with the intent to deceive the insurer is usually a question of fact but may be decided as a matter of law where the insured admits that he made knowingly false statements with the intent that the insurer rely upon them because that is, by definition, fraud. [Ram v. Infinity Select Ins., 807 F. Supp. 2d 843 (N.D. Cal. 2011)] Read the full article and the full issue at: ZIFL-11-01-2022 Other Insurance Fraud Convictions Is a Law Firm Attempting Fraud When it Files 1,642 Suits in two Weeks McClenny, Moseley and Associates, a law firm, was threatened by a federal judge in Louisiana to fine the Houston-based law firm $200 for each duplicate or baseless lawsuit he finds among the 1,642 that the firm has filed against insurers for alleged hurricane damages. US District Court Judge James D. Cain Jr. on Oct. 21 ordered the law firm to submit hard copies of retention or engagement contracts with each of the named plaintiffs in lawsuits that the law firm filed seeking to recover damages allegedly caused by Hurricanes Laura and Delta, which both struck Louisiana in 2020. [Plus many more convictions] Read the full article and the full issue at: ZIFL-11-01-2022 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.

Claims Commandment Number IV Thou Shall Understand The Policy In this the fourth of Fifteen Claims Commandments we deal with the need for every insurance claims professional to read and understand the terms and conditions of the policy that made promises to an insured who is presenting a claim. Insurance Policies are Contracts Insurance policies are contracts. To understand insurance claims the adjuster must understand how all contracts, and specifically insurance contracts, are interpreted. Rules of contract interpretation have developed over the last 300 years and are applied by courts with the intent to fulfill the desires of all parties to the contract. People and judges who are not conversant in insurance and the interpretation of insurance contracts believe that the insurance policy is difficult to read and understand. They are wrong. However, as one court said in Delancy v. Rockingham Farmers Mutual, 52 N.H. 581 (1873): This [policy], if read by an ordinary man, would be an inexplicable riddle, a mere flood of darkness and confusion … should some extremely eccentric person attempt to examine the involved and intricate net in which he was to be entangled, he would find that it is printed in such small type and in lines so long and crowded as to make the perusal of the document physically difficult, painful and possibly injurious. Since 1873 insurance policies are printed in large print and in language, by statute, that anyone with a fourth grade education can understand. Still, there seem to regularly be disputes taken to court about the meaning of terms, conditions and limitations of the policy of insurance. The following rules govern the construction of contracts of insurance: If the terms of a promise are in any respect ambiguous or uncertain, it must be interpreted in the sense in which the promisor believed at the time of making it, that the promisee understood it. If a written contract is so worded that it can be given a definite or certain legal meaning, then it is not ambiguous. However, if the language of a policy or contract is subject to two or more reasonable interpretations, it is ambiguous. When a policy is interpreted, the provisions of an endorsement control the interpretation over the body or declarations of a policy when the two are in conflict. For example, if the language written to limit an insurer’s liability to the appraised value appears on the declarations page, while the valuation condition that provides for an actual cash value adjustment appears on a form endorsed to the contract, the endorsement’s language would control the interpretation of the contradictory language of the policy. However, the fact that the two sentences could have been written more clearly, did not mean that they were ambiguous. Reasonable Expectations Consider the reasonable expectations of the insured but, when doing so, include the understanding that every insurer is presumed to be acquainted with the practice of the trade that the insurer insures. More than 150 years ago the US Supreme Court in Hazard’s Administrator v. New England Marine Insurance Co., 33 U.S. 557 (1834) adopted the rule. The Supreme Court concluded that “no injustice is done if insurers are presumed to know their insureds’ industry because it is part of their ordinary business.” In MacKinnon v. Truck Ins. Exch., 31 Cal.4th 635 (2003), the California Supreme Court first stated the primacy of the “reasonable expectations” test when interpreting insurance policies. It decided that the reasonable expectations of the insured required coverage to exist for an ordinary act of negligence even if it involved pollutants. Where the language of the policy is clear, the language must be read accordingly, and where it is not, it must be read in the sense that satisfies the hypothetical insured’s objectively reasonable expectations. If you find the term is clear and unambiguous there will be no need to apply the reasonable expectations test. If you find any ambiguity, or determine the insured should be paid, the application of the reasonable expectations test will give a court the ability to construe the policy against the insurer and in favor of payment of the insured’s claim. The Plain Meaning Test Most states will apply the plain meaning test. Long-established insurance law supports the conclusion that insurers are presumed to know and be bound by the meaning of the terms used and customs adopted in their insureds’ industries. Insurers, and insurance claims professionals, faced with a need to understand and apply the wording of a policy of insurance must now conduct their investigation to include: a detailed investigation of the facts of the loss and policy acquisition; a determination of the expectations of the insured and the insurer at the time the policy was acquired; a determination of the purposes for which the policy was acquired; and an examination of all communications between the insurer and the insured or their representatives. To conclude a thorough investigation the insurer must at least conduct a detailed interview of the insured, the claimants, the brokers, and the underwriters. When there is a dispute over the meaning of common terms, the court will often find it necessary to inform upon the understanding of persons in the particular business insured so that the judge must consult the opinions of experts. Expert testimony can be helpful in establishing that the insured’s or the insurer’s interpretation of the term at issue is different from that advanced by the other was reasonable. In California, this may be sufficient for a party to prevail because although insureds are treated differently so that even if the insurer’s interpretation is considered reasonable, it would still not prevail, for in order to do so it would have to establish that its interpretation is the only reasonable one. An insurance claims professional can never make, or recommend, a decision with regard to an insurance claim until he or she has read the entire policy as it relates to a loss, interpret the policy wordings in accordance with the rules of interpretation stated above, conduct a complete and thorough investigation to determine the reasonable expectations of the insured, and if unable to decide to seek the advice of competent coverage counsel. (c) 2022 Barry Zalma & ClaimSchool, Inc. 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.comandzalma@zalma.com.Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.comhttps://zalmaoninsurance.locals.com/subscribe.Subscribe to Excellence in Claims Handling athttps://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://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 Coverage if Injuries not Related to Use of MRI In John Fitzpatrick and Colleen Fitzpatrick v. Oradell Animal Hospital, Inc., et. al, No. A-3442-20, Superior Court of New Jersey, Appellate Division (November 1, 2022) Plaintiffs John Fitzpatrick and Colleen Fitzpatrick appealed from a June 17, 2021 order granting summary judgment in favor of defendant Continental Casualty Company (Continental). Plaintiff sustained injuries on March 6, 2015, when a magnetic resonance imaging (MRI) machine installed at defendant Oradell Animal Hospital (Oradell) exploded. Oradell leased the MRI machine from defendant Advanced Veterinary Technologies, Inc. (AVT). On December 17 Oradell and AVT signed an agreement to lease the MRI machine (lease agreement), with a five-year renewal option, beginning on April 1, 2004. The lease agreement required AVT to install the MRI machine at Oradell's facility. At the end of the term, the lease agreement provided "AVT shall deinstall, inspect, test, pack, remove and ship the [MRI machine] at AVT's expense." The lease agreement also stated AVT was responsible for "the repair of any damage to [Oradell's premises] on account of the removal of the [MRI machine] . . . ." Additionally, the lease agreement required Oradell to maintain insurance for "loss or theft of, or damage to, the [MRI machine] in the amount of $550,000, naming AVT as an additional insured and a loss payee . . . ." Oradell complied with this provision by purchasing insurance from Continental. Continental issued a commercial insurance policy (Policy) to Oradell, covering the period September 21, 2014 to September 21, 2015. Under the "Coverages" section of the Policy, Continental agreed to "pay those sums that [Oradell] becomes legally obligated to pay as damages because of 'bodily injury,' 'property damage' or 'personal and advertising injury' to which this insurance applies." While decommissioning the MRI machine, Hogan testified he "pick[ed] something up off the ground" and was surrounded by a "white cloud of helium." A split second later, the MRI machine exploded. The next thing Hogan remembered was "waking up on the ground." Plaintiff and Hogan suffered injuries from the explosion. On August 31, 2017, plaintiffs filed a third amended complaint against Oradell, Helpern, AVT, Hogan, and others. On February 22, 2018, Hogan filed a crossclaim against Continental, seeking insurance coverage under the Policy. After completing discovery, including depositions, Hogan moved for summary judgment, asserting Continental had an obligation to provide him with insurance coverage for plaintiffs' claims. Plaintiffs joined Hogan's motion. Decisions on Summary Judgment The motion judge heard oral argument on November 9, 2018. In an eight-page written decision, the judge found Hogan's "actions did not arise out of Oradell's maintenance, operation or use of the MRI machine," because Hogan was decommissioning the MRI machine on the date of the explosion. Additionally, the judge found "no substantial nexus between the plaintiff's injuries/Hogan's conduct and any negligent maintenance, operation or use of the MRI machine by Oradell." To the contrary, the judge concluded the decommissioning of the MRI machine was "the antithesis of the maintenance, operations and/or use of the MRI." After a proof hearing, the judge entered a June 14, 2021 judgment in favor of plaintiffs and against AVT, awarding damages in the amount of $1,383,555.67 to John Fitzpatrick and $115,296.31 to Colleen Fitzpatrick. Analysis The court concluded that here is no ambiguity regarding the phrase "written contract or agreement" as used in the Policy. The fact that litigants offer conflicting interpretations of policy language does not render the policy language ambiguous. A genuine ambiguity arises only when the phrasing of the policy is so confusing that the average policy holder cannot make out the boundaries of coverage. Moreover, equipment is only decommissioned upon the expiration of the lease term. As stated in the lease agreement, "[a]t the scheduled conclusion of this [lease], . . . AVT shall deinstall, . . . remove, and ship the [MRI machine] . . . ." Under the express terms of the lease agreement, the lease must terminate before decommissioning begins. For Hogan to be eligible for coverage under the Policy, there had to be a substantial nexus between plaintiffs' injuries and Oradell's maintenance, operation, or use of the MRI machine. The uncontroverted evidence demonstrated no Oradell employee was in the room when the MRI machine exploded. Nor had any Oradell employees participated in the two-day decommissioning process prior to the explosion. On this record, there is no evidence Oradell maintained, operated, or used the MRI machine after March 4, 2015. Thus, the judge properly granted summary judgment to Continental. ZALMA OPINION It is always interesting to see a court opinion where the court read every word of the insurance policy, noted that for coverage to apply the entity seeking insurance must maintain, operate or use the exploding MRI machine. Since they were nowhere near the machine, had nothing to do with it being decommissioned, they were not insured at the time of the explosion since it was in the control of the lessor who was working to decommission of the MRI. (c) 2022 Barry Zalma & ClaimSchool, Inc. 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.comandzalma@zalma.com.Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.comhttps://zalmaoninsurance.locals.com/subscribe.Subscribe to Excellence in Claims Handling athttps://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

Claims Commandment Number V In this the fifth of Fifteen Claims Commandments we deal with the need for every insurance claims professional to work with the first party property insured. Thou Shall Work With the First Party Insured The key to resolving insurance claims amicably is constant and substantive communication between the insured and the adjuster. Communication about the claim on a regular basis allows the insured and the adjuster to build rapport. Building rapport is a fundamental aspect of human communication. Being able to build rapport could be viewed as a basic element of social intelligence. The professional should first spend time establishing rapport and the confidence of the person being interviewed. there are four elements of building rapport. People who wish to build rapport should strive to: build trust, such as demonstrating honesty, reliability, and fairness, understanding another person’s views, such as making statements that the professional understands how the other person feels, show respect, that is, be polite and express gratitude, and be the kind of person who others would like by stating a willingness to be empathetic and altruistic. A claims situation where the adjuster fails to establish rapport with the insured is doomed to fail. Rapport is a relationship marked by harmony, conformity, accord, or affinity. Rapport can be established by the professional complimenting the office decor, if possible, to do so honestly. However, if the insured is relegated to a drab cubicle, rapport can be established by the professional commiserating with the difficulty of working in less than comfortable surroundings. The adjuster can gain rapport with the insured might also explain that his employer also forces the adjuster to work in a similar situation. The adjuster, to establish rapport, should delay questioning by trying to find mutual interests and concerns with the person to be interviewed. The task of establishing rapport can take minutes or hours. It is imperative that to complete a successful adjustment sufficient time must be expended establishing rapport before the serious and detailed part of the interview begins. Regardless of the skill of the adjuster, if rapport is not established, the goal of the adjustment will not be reached. Once rapport is established it is essential that the adjuster maintains rapport with the insured by setting up an ability to communicate regularly with the insured. The insured should be provided with the adjuster’s office telephone number, the adjuster’s cell phone number, and an e-mail address where the insured can reach the adjuster to resolve any questions that might come to mind. The adjuster, even if not asked a question by the insured after rapport is established, should mark a diary to communicate with the insured at least once every thirty days even if the communication is nothing more than a telephone call that simply asks how the insured is doing. If possible, the adjuster should also fill in the insured on the progress of the claims investigation and any events happening. Contact in person is preferable but caseloads for most modern insurers does not allow for continuous personal contact. If such contact is not available the contact should be by telephone, mail, or e-mail. For example, if the insured has been sued by a third party, the adjuster should explain what is happening and what will happen in the lawsuit including the appointment of counsel to defend the insured. When defense counsel files an answer to the suit the adjuster should deliver a copy of the answer to the insured, explain the meaning of the language in the answer, and what defense counsel expects to do next to protect the interests of the insured. Each communication should be noted in the file. At least every 30 days some communication must pass between the adjuster and the insured and noted in the adjuster’s file whether the communication is substantive or merely an effort to keep up the rapport between the insured and the adjuster. For example, if the claim relates to a fire at the insured’s home, the adjuster, after establishing rapport should present to the insured a schedule of the time needed to determine the scope of damage, set a time for meeting with the insured, an independent contractor, and the insured’s contractor. The meeting should take place quickly with everyone ready to work. The adjuster, the experts and the insured should then agree on the scope of loss and the adjuster should explain how long it will take the contractors to create an estimate of repair. When the estimates arrive, the adjuster should prepare a comparison of the estimates and meet with the insured to determine the differences between the two or more contractors. The insured and the adjuster should then agree on the contractor whose estimate covers the entire loss and a contract should be agreed to repair the house. As repairs proceed the adjuster should inspect the work and regularly advise the insured of the progress of the repair regularly until the repair is completed. The Fair Claims Settlement Practices Regulations set minimum, not maximum, standards. Adjusters should, and are expected to, exceed the minimum standards set by the Regulations. Insurers now find — in bad faith litigation — that trial lawyers will posit violation of the minimum standards set by the regulations as evidence of bad faith sufficient to allow a trier of fact to assess tort damages against the insurer. Since the Regulations are stated to be minimum claims handling standards, failure to comply will give a judge or jury the opportunity to contend that the failure to comply is evidence of tortious conduct sufficient to support a claim that the insurer committed the tort of bad faith. The adjuster must be familiar with the Fair Claims Settlement Practices statutes and Regulations in his or her state with regard to communications to the insured and work to exceed the requirements. The adjuster who establishes and maintains rapport with the insured will resolve more claims quickly and without difficulty and will never face the wrath of a supervisor or auditor from the state for failure to fulfill the minimum claims handling standards but will always exceed the minimum standards. The adjuster that fails to communicate regularly and substantively with the insured will have difficulty reaching agreement with the insured and will find that he or she is accused of violating the fair claims settlement statutes requirements or the regulations created to enforce the statutes. That failure may also result in litigation between the insured and the insurer. (c) 2022 Barry Zalma & ClaimSchool, Inc. 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 at http://www.zalma.com and zalma@zalma.com.Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.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; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

Claims Commandment III - Thou Shall Communicate Often With The Third Party Insured and the Claimant Insurance claims is a service business. The claims person – whether acting for the insurer or the insured – provides a service to the insured and the insurer. Communication is essential to providing the service promised by the insurance policy. In some states, like California, communications are required by regulation: Every insurer shall disclose to a first party claimant or beneficiary, all benefits, coverage, time limits or other provisions of any insurance policy issued by that insurer that may apply to the claim presented by the claimant. When additional benefits might reasonably be payable under an insured’s policy upon receipt of additional proofs of claim, the insurer shall immediately communicate this fact to the insured and cooperate with and assist the insured in determining the extent of the insurer’s additional liability. [10 CCR 2695.4 (a)] This means that the initial written contact with an insured in a first party property claim should advise the insured of all benefits, coverage, time limits, or other provisions of any insurance policy issued by that insurer that may apply to the claim presented by a first party insured. When a claims person receives any communication from an insured, third party claimant, or a representative of the insured or claimant regarding a claim that reasonably suggests that a response is expected, he or she should immediately after receipt of that communication furnish the claimant with a complete response based on the facts as then known by the claims person. Some regulations allow the claims person up to 20 days to respond. Good claims handling requires an immediate response. If the response is oral rather than written it should be noted in the claims person’s file or log. Upon receiving notice of claim, every insurance claims person should immediately do the following: Acknowledge receipt of such notice to the claimant or insured. If the acknowledgment is not in writing, a notation of acknowledgment must be made in the insurer’s claim file and dated. Provide to the claimant or insured necessary forms, instructions, and reasonable assistance, including but not limited to, specifying the information the claimant must provide for proof of claim; Begin any necessary investigation of the claim. The investigation must be “real.” The claims person or investigator must actually contact the insured, the claimant, the witnesses and start collecting the documents needed to complete the claims investigation. Investigation and must be started immediately after receiving notice of claim. Merely reading a policy wording and notice of claim is not the beginning of an investigation or an investigation at all. Upon receiving proof of claim, every insurance claims person should immediately accept or deny the claim, in whole or in part. Proof of claim is not the proof of loss required as a condition of the policy. A proof of claim is where the insured provides the insurer sufficient information to allow the insurer to determine part or all of the insured’s claim. The amounts accepted or denied shall be clearly documented in the claim file unless the claim has been denied in its entirety. Some states allow up to 40 calendar days to respond to a proof of claim. If more time is required to determine whether a claim should be accepted and/or denied in whole or in part, the claims person should provide the claimant or insured written notice of the need for additional time. The written notice should specify any additional information the insurance claims person requires in order to decide. The written notice should state any continuing reasons for the insurer’s inability to decide. Thereafter, the written notice concerning additional time to complete an investigation, should be provided to the insured at least every thirty calendar days until a determination is made. If the determination cannot be made until some future event occurs, then the claims person should comply with this continuing notice requirement by advising the claimant and/or insured of the situation and providing an estimate as to when the determination can be made. Effective diary systems are essential to professional claims handling or the Regulations will be violated with regularity. Every claims person must conduct and diligently pursue a thorough, fair and objective investigation and should not persist in seeking information not reasonably required for or material to the resolution of a claim dispute. The claims person’s obligation is not limited to communication with the insured or the claimant. In addition, the claims person and the insurer have an obligation to communicate with the state, police agencies, or prosecutors if they suspect that an insured or a claimant is attempting fraud. In California, and most states, such a communication is absolutely immune from suit. Pursuant to section California Civil Code Section 47(b), a privilege is stated that bars a civil action for damages for communications made “[i]n any (1) legislative proceeding, (2) judicial proceeding, (3) in any other official proceeding authorized by law, or (4) in the initiation or course of any other proceeding authorized by law and reviewable pursuant to [statutes governing writs of mandate],” with certain statutory exceptions. The privilege established by this subdivision often is referred to as an “absolute” privilege, and it bars all tort causes of action except a claim for malicious prosecution. “The absolute privilege in section 47 represents a value judgment that facilitating the “utmost freedom of communication between citizens and public authorities whose responsibility is to investigate and remedy wrongdoing” is more important than the “‘occasional harm that might befall a defamed individual.’” (See Imig v. Ferrar (1977) 70 Cal. App. 3d 48, 55-56 [138 Cal. Rptr. 540].)” To fulfill Commandment III the claims person must communicate promptly and often with the insured, the claimant and the insured (if a third party claim) and counsel for each. In doing so the claims person establishes a rapport with the insured and/or claimant and will make resolution of the claim easier. No claims person should ever misrepresent or conceal benefits, coverages, time limits or other provisions of the policy from the insured or the claimant. (c) 2022 Barry Zalma & ClaimSchool, Inc. 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.comandzalma@zalma.com.Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.comhttps://zalmaoninsurance.locals.com/subscribe.Subscribe to Excellence in Claims Handling athttps://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://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