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How to Put Fear of Insolvency Into a Defendant Post 4725 For more than fifty six years I have personally seen the fear in the faces of corporate executives faced with a suit claiming wrongful conduct and punitive damages. Even those who knew that they had acted properly and fairly and that the allegations of the suit were totally spurious, the fear and trembling engendered by a suit seeking punitive damages is patent. The defendant who should be leading a charge like General Patton acts more like Prime Minister Neville Chamberlain. Defendants seem to prefer to appease a plaintiff rather than litigate good and viable defenses. Unless counsel advises a 100% chance of total victory – a statement no trial lawyer will ever make – the defendant does not want to go to trial and is willing to pay more than it owes to avoid the potential of a serious punitive damage judgment. Contrary to common belief the chances of a suit seeking punitive damages actually obtaining an award of punitive damages is very small. Defendants often, incorrectly, concentrate on trial verdicts and overlook that almost all civil litigation matters result in out-of-court settlements. Verdicts are important but punitive damage verdicts are more like the tip of the proverbial iceberg than evidence of a trend. Practical evidence indicates that the small number of trials affect decisions in the vast majority of lawsuits that do not proceed to trial. Verdicts are taken as important signals to the litigants. It is important to first understand the basic dynamics of a lawsuit. Most of the work in pre-trial litigation is designed to provide the litigants with enough information to allow them to reach an amicable settlement. A large punitive damages verdict skews the evidence available to the litigants and causes plaintiffs to demand more than their cases are truly worth and defendants to pay more than they should to resolve a suit seeking punitive damages. Under basic American litigation practice the plaintiff has the opening strategic advantage. A plaintiff with a weak case places the defendant in the position of having to defend himself (and therefore incurring legal costs), or else the defendant will be liable for the full claim on a default judgment. Even a defendant facing a suit that has no merit and no chance of success before a court will often be willing to pay an amount that is less than his prospective defense costs to settle the case and “make it go away.” Appeasement of the plaintiff is, to a corporate defendant, seen to be economically the best solution. According to various studies, the cost of defense in an average tort lawsuit ranges from $6000 to $10,000, depending on the kind of suit. A litigant with even a mildly plausible basis for an average suit can often expect a nuisance settlement value within this range. Most often a defendant is willing to pay a settlement up to the amount of his defense costs in order to avoid having to respond to the plaintiff's complaint. The main determining factor of whether a filed lawsuit will yield a settlement to the plaintiff is the credibility of the threat made by the suit. The defendant and counsel determines the probability of a verdict favorable to the plaintiff if the case goes to trial. If the probability is that the plaintiff will succeed the defendant then analyzes the likely amount of damages that the plaintiff could obtain from a trier of fact in the jurisdiction where the suit is filed. In frivolous or marginal lawsuits, or lawsuits with a doubtful chance of success at a trial, settlements often occur because the defendant rarely knows the merits of the claim with any level of certainty. Since refusing to take a valid claim seriously can be quite costly, a frivolous plaintiff may be able to take advantage of the defendant's uncertainty regarding the claim's validity to extract a substantial settlement. The Supreme Court's rulings inState Farm Mutual Automobile Insurance Co. v. Campbell, 123 S.Ct. 1513, 155 L.Ed.2d 585 (U.S. 2003) limits, by due process, the multipliers that can be applied when setting punitive damages. In addition, the uncertainty posed by the prospect of unlimited punitive damages, combined with the relative probability of a punitive damage award if a case goes to jury trial, provide litigants who demand punitive damages with potent leverage against risk-averse defendants, like insurance companies or candidates for the presidency, and tip the balance in settlement bargains in favor of litigants with weak or even frivolous cases. The California Supreme Court, in a concurring and dissenting opinion by Justice Clark, stated the reality of punitive damages: Punitive damages are an anomaly in our civil jurisprudence. The civil law is concerned with vindicating rights and compensating persons for harm suffered as a result of infringement upon those rights. A plaintiff is customarily made whole for infringement by compensatory damages; punitive damages awarded to him rather than to the government constitute a windfall or unjust enrichment for plaintiff. (See, e.g., Carsey, The Case Against Punitive Damages (1975) 11 The Forum 57, 60; Note, Insurance Coverage of Punitive Damages (1974) 10 Idaho L.Rev. 263, 268.) [Egan v. Mutual of Omaha Insurance Co., 24 Cal. 3d 809, 620 P.2d 141, 169 Cal. Rptr. 691 (Cal. 08/14/1979)] The windfall about which Justice Clark spoke is impossible to resist the temptation to sue for punitive damages and why, California has been subject to thousands of insurance bad faith cases claiming punitive damages. The principal criticism to the concept of punitive damage, recognized by Justice Clark, is that standards are so vague that the determination whether to award is left to absolute and unguided jury discretion. Punitive damage demands, especially if other litigants had obtained a successful punitive damage judgment, will provide the plaintiff with strong bargaining power even with a weak or frivolous case. It does so in two ways: By increasing the size of a prospective jury award (by an unpredictable and potentially enormous amount) if the case is taken to trial, and By increasing the legal costs that a defendant will have to incur to fight the suit at trial. The presence of a punitive damage demand provides leverage for the plaintiff to force a higher settlement value from a suit. The presence of a punitive damage demand often requires a more extensive, costlier, and more time-consuming defense by the defendants. Defending against such extraordinary claims usually requires a more expensive discovery process than ordinary damage claims. Lawyers representing clients faced with a suit seeking punitive damages must do a serious analysis of the facts and the law and advise the client in accordance with the potential for the plaintiff obtaining an award of punitive damages. If there is a potential equal or better than 50% settlement negotiations should be entered with advice to the plaintiff that punitive damages are taxable to the plaintiff. If, on the other hand, the case seeking punitive damages is spurious the client should tell its counsel to defend through trial and any possible appeals and refuse to pay tribute to the plaintiff. For further detail see my book Insurance Bad Faith and Punitive Damages Deskbook availble from Full Court Press at the Fastcase bookstore at http://fastcase.com/ (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Go to X @bzalma; Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

Liability Insurance & the Need for Fortuity Liability insurance requires that the loss or damage that needs defense or indemnity from an insurer, must be contingent or unknown at the time the policy was acquired. For insurance to apply, on a third party policy, the risk of loss insured against must be fortuitous. Simply stated fortuitous means the loss happened by chance. The doctrine of fortuity (accidental or unintended acts causing injury) requires it be established that the event was a chance event beyond the control of the insured. [Martin/Elias Props., 544 S.W.3d at 643 & Blakeley v. Consol. Ins. Co. (Ky. Ct. App. 2021)] A "fortuitous event" is defined as: "[A]ny occurrence or failure to occur which is, or is assumed by the parties to be, to a substantial extent beyond the control of either party." Thus, the requirement of a fortuitous loss is a necessary element of insurance policies based on either an "accident" or "occurrence." The insured has the initial burden of proving that the damage was the result of an "accident" or "occurrence" to establish coverage where it would not otherwise exist [Northville Indus., 89 N.Y.2d at 634).] Once coverage is established, the insurer bears the burden of proving that an exclusion applies. [Consolidated Edison Co. v. Allstate Ins., 774 N.E.2d 687, 746 N.Y.S.2d 623, 98 N.Y.2d 208 (N.Y. 2002)] Insurance is designed to protect against unknown, fortuitous risks, and fortuity is a requirement of all policies of insurance. [Burlington Ins. Co. v. Tex. Krishnas, Inc., 143 S.W.3d 226, 230 (Tex. App.-Eastland 2004, no pet.); Scottsdale Ins. Co. v. Travis, 68 S.W.3d 72, 75 (Tex. App.-Dallas 2001, pet. denied); Two Pesos, Inc. v. Gulf Ins. Co., 901 S.W.2d 495, 502 (Tex.App.-Houston [14th Dist.] 1995, no writ) (op. on reh'g).] An insured cannot insure against something that has already begun and which is known to have begun. [Summers v. Harris, 573 F.2d 869, 872 (5th Cir.1978).] The fortuity doctrine precludes coverage for two categories of losses: known losses and losses in progress. A "known loss" is one that the insured knew had occurred before the insured entered into the contract for insurance. [Burch v. Commonwealth County Mut. Ins. Co., 450 S.W.2d 838, 840-41 (Tex.1970)] A "loss in progress" involves those situations in which the insured knows, or should know, of a loss that is ongoing at the time the policy is issued. [Warrantech Corp. v. Steadfast Ins. Co., 210 S.W.3d 760 (Tex. App. 2006)] When a trial court determined that the plaintiffs’ complaint did not allege any bodily injury or property damage caused by an "occurrence." In reaching this conclusion, it relied on Cincinnati Insurance Company v. Motorists Mutual Insurance Company, 306 S.W.3d 69, 73-74 (Ky. 2010), as corrected July 19, 2011. In Cincinnati Insurance Company, the Kentucky Supreme Court held that "accident" and "occurrence" are unambiguous, and that they embody the principle of "fortuity" inherent in all liability insurance policies. In determining whether an event constitutes an accident courts must analyze this issue according to the doctrine of fortuity: whether the insured intended the event to occur; and whether the event was a chance event beyond the control of the insured. Policy language insuring against accidents applies only if the insured did not intend the event or result to occur. [Blakeley v. Consol. Ins. Co. (Ky. Ct. App. 2021)] Wisconsin caselaw provides several alternative definitions, all of which attempt to capture the fortuity principle central to liability insurance. [Lucterhand v. Granite Microsystems, Inc., 564 F.3d 809, 812-13 (7th Cir.2009).] An "accident" for purposes of liability insurance coverage is "[a]n unexpected, undesirable event or an unforeseen incident which is characterized by a lack of intention." [Everson v. Lorenz, 2005 WI 51, ¶ 15, 280 Wis.2d 1, 15, 695 N.W.2d 298, 15 (2005) (internal quotation marks omitted).] The word "accident," in accident policies, means an event which takes place without one's foresight or expectation. A result, though unexpected, is not an accident; the means or cause must be accidental. [Am. Family Mut. Ins. Co. v. Am. Girl, Inc., 2004 WI 2, ¶ 37, 268 Wis.2d 16, ¶ 37, 673 N.W.2d 65, ¶ 37 (2004) (quoting BLACK'S LAW DICTIONARY 15 (7th ed.1999); and Eberts v. Goderstad, 569 F.3d 757 (7th Cir. 2009)] Faulty workmanship is not included in the standard definition of “property damage” because “a failure of workmanship does not involve the fortuity required to constitute an accident.” [9A Couch on Insurance 3d § 129:4.] Liability insurance is not intended to act as a performance bond. [W. World Ins. Co. v. Carrington, 90 N.C.App. 520, 523, 369 S.E.2d 128, 130 (1988)] Since the quality of the insured's work is a “business risk” which is solely within his own control, liability insurance generally does not provide coverage for claims arising out of the failure of the insured's product or work to meet the quality or specifications for which the insured may be liable as a matter of contract. [Builders Mut. Ins. Co. v. Mitchell, 709 S.E.2d 528 (N.C. App. 2011)] Insurance policies generally require "fortuity" and thus implicitly exclude coverage for intended or expected harms. New York Insurance Law § 1101(a)(1) itself defines "insurance contract" as: "any agreement * * * whereby one party, the `insurer', is obligated to confer benefit of pecuniary value upon another party, the Insured', * * * dependent upon the happening of a fortuitous event * * *." A "fortuitous event" is defined as: "[A]ny occurrence or failure to occur which is, or is assumed by the parties to be, to a substantial extent beyond the control of either party." (§ 1101[a][2].) Thus, the requirement of a fortuitous loss is a necessary element of insurance policies based on either an "accident" or "occurrence." [Consolidated Edison Co. of Ny v. Allstate, 774 N.E.2d 687, 98 N.Y.2d 208, 746 N.Y.S.2d 622 (N.Y. 2002)] Fortuity must be judged using a subjective standard, because requiring this knowledge element best serves the overall principle of insurance law. [Aetna Cas. & Sur. Co. v. Dow Chemical Co., 10 F.Supp.2d 771, 789 (E.D.Mich.1998)] The crucial issue is whether the insured was aware of an immediate threat of the injury for which it was ultimately held responsible and for which it now seeks coverage, not the insured's awareness of its legal liability for that injury. [Aetna Cas. & Sur. Co. v. Com., 179 S.W.3d 830 (Ky. 2005)] The term "probability" indicates the presence of contingency and fortuity, the lack of which is the very essence of the known loss doctrine. Even if there is a probability of loss, there is some insurable risk, and the known loss doctrine should not apply. [Sentinel Ins. Co., Ltd. v. First Ins. Co. of Hawai'i, Ltd. (1994), 76 Hawai'i 277, 875 P.2d 894, 920.] "Certainty," on the other hand, refers not to the likelihood of an occurrence, but rather to the inevitability of an occurrence. Therefore, a "substantially certain" loss is one that is not only likely to occur, but is virtually inevitable. [General Housewares Corp. v. National Surety Corp., 741 N.E.2d 408 (Ind. App. 2000)] The "fortuity" and "accident" concepts require that first party insurance does not protect against losses which are certain to occur and third party liability insurance does not protect against nonaccidental harm inflicted by the insured. [Commercial Union Ins. Co. v. Superior Court (1987) 196 Cal.App.3d 1205, 1207-1209, 242 Cal.Rptr. 454.); Chu v. Canadian Indemnity Co., 274 Cal.Rptr. 20, 224 Cal.App.3d 86 (Cal. App. 1990)] Faulty workmanship is not included in the standard definition of 'property damage' because 'a failure of workmanship does not involve the fortuity required to constitute an accident. [Builders Mut. Ins. Co. v. Mitchell (N.C. App. 2011)] The principle of fortuity is central to the notion of what constitutes insurance. [Cincinnati Ins. Co. v. Motorists Mut. Ins. Co., 306 S.W.3d 69, 74 (Ky.2010), quoting 46 Corpus Juris Secundum, Insurance, Section 1235 (2009).] The parties to an insurance agreement in effect, wager against the occurrence or non-occurrence of a specified event; the carrier insures against a risk, not a certainty. [Bartholomew v. Appalachian Ins. Co., 655 F.2d 27, 29 (1st Cir.1981).] Given this, courts have recognized that the principle of fortuity can be both an inherent requirement of every insurance contract and a specified requirement reflected in particular terms agreed to by the parties. [ 3 Peritz, Law and Practice of Insurance Coverage Litigation, Section 35:3 (July 2021), quoting Robert Keeton, Insurance Law, Section 5.4(a), at 288 (1971)] A requirement that loss be accidental in some sense in order to qualify as the occasion for liability of an insurer is implicit, when not express, because of the very nature of insurance. [Motorists Mut. Ins. Co. v. Ironics, Inc., 2022 Ohio 841 (Ohio 2022)] Adapted from my book Insurance Fraudsters Deserve No QuarterAvailable as a paperback here. Available as a hardcover here.Available as a Kindle Book here. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Go to X @bzalma; Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

What is Required of a Claims Department After a Claim is Presented When Faced With Loss Report Every claim begins with receipt of the Notice Of Loss A Notice of Loss is a written or oral report to the insurer that the insured has incurred a loss. It advises the insurer that it has incurred a loss due, with respect to the insured, a wildfire to one or more properties the risk of loss of which was insured. The loss notice will advise the insurer: The name, address and telephone number and/or email address of the person most knowledgeable. The date and time of the loss. The location(s) of the loss The cause of the loss e.g., wildfire, flood, earthquake, vandalism, or major theft. After the insurer receives a Notice of Loss the insurer is required by the custom and practice of professional claims handling and the requirements of the California Fair Claims Settlement Practices statute and Regulations to enforce the statute, the insurer must acknowledge receipt of the Notice of Loss in writing immediately but in no event more than 15 calendar days. The acknowledgement letter must also include advice to the insured on the coverage available. To properly acknowledge the notice of loss the claims person must obtain a complete copy of the policy, read and analyze the policy and create a summary of the coverages available. California Fair Claims Settlement Practice Regulations Section 2695.4, for example, provides “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.” The letter should include, as a bare minimum, information like: the limits of liability of the policy, any deductibles or self-insured retentions, advice concerning any specific exclusions or conditions that apply to the facts established by the notice of loss, a written notice that a proof of loss is required within 60-days of the letter with an attached proof of loss form, a requirement for the production of necessary documents, a reservation of rights (if called for), and any other information the insured needs to fulfill the conditions of the policy. The letter should include, because a wildfire’s damages are almost always serious, and realize that to an individual any claim is serious, and should include confirmation by the claims person of an appointment to meet with the insured to view the damaged property(ies). The inspection should be as soon as possible but no later than 15 calendar days after the notice of loss. The inspection should include the creation of a scope of loss. The scope of loss the claims person prepares should be written in the same form as a professional contractor that the claims person has determined is acceptable to a professional contractor. The adjuster should contact several reconstruction contractors who are willing to do reconstruction work for detail on the claims person’s scope. The adjuster must understand that standard prices in software like Xactimate will change in a catastrophe situation because of the shortage of people and materials available to repair structures. The agreed scope of loss should include all damages incurred by the insured to real and personal property, equipment, stock, merchandise, inventory, appurtenant property, plants, trees, shrubs, etc. The Scope of Loss The scope of a major loss will often be recorded and later transcribed especially when there is major damage and multiple properties and types of property. The scope of a major loss can be multiple pages and supplemented with photos and videos of the loss location(s). The scope is not an estimate nor is it an adjustment, it is an outline of the damages that the insured and the adjuster agree the items that need to reach a later agreement after a thorough investigation the full amount of loss can be determined. The Scope of Loss is the beginning of the thorough investigation of the claim that is required to be commenced immediately but in no event more than 15 calendar days after the receipt of a notice of loss. The Thorough Investigation A thorough investigation is a thorough investigation is conducted for each claim sufficient to allow a determination of coverage, the liability of the insured, the nature and extent of damages, or the obligations of the insurer or surety. An investigation is not sufficient if the work of the claims handler is limited to a mere reading the policy and comparing it to a loss notice. Once a scope of loss is agreed it is the obligation of the insurer to obtain estimates from: contractors construction experts to put a dollar amount on the structure losses. If personal property is involved the scope details the property damaged or destroyed and once agreed obtain estimates from: personal property or equipment experts personal property values. If there are time element losses once the scope of the loss is agreed the insured and insurer will work together with: CPA or forensic accountants to establish the extent to which time element losses have occurred. Depending on the extent of the loss it is essential that the claims department work, preferably in person, in establishing a scope of loss. The Proof of Claim The claims person must then work closely with the insured to reach agreement as to the amount of loss and damage. Once the insured presents a “proof of claim” as defined in the California Fair Claims Practices Regulations: “’Proof of claim’ means any evidence or documentation in the possession of the insurer, whether as a result of its having been submitted by the claimant or obtained by the insurer in the course of its investigation, that provides any evidence of the claim and that reasonably supports the magnitude or the amount of the claimed loss.” [Regulations, Section 2695.2 (s)] A “proof of claim” is not a sworn statement in proof of loss required by almost all first-party property insurance policies as a condition precedent to indemnity. Rather, it is something less than a proof of loss and, if the insurer wants a proof of loss, it must demand it in writing in accordance with the policy wording. The insurer must still respond promptly (within the time limits set by the Regulations) to the proof of claim. Failure to do so would be an obvious and clear violation of the Regulations. The claims person is not required to accept or reject the claim within 40 calendar days but must respond to the presentation of the proof of claim either accepting, rejecting or advising the insured/claimant that the insurer needs further investigation and time to respond to the proof of claim. If investigation is needed to respond to the proof of claim it is necessary to repeat, every 30 days, an explanation why the insurer is unable to respond to the proof of claim and when it expects to be able to properly respond. If the insurer agrees to the “proof of claim” the amount stated becomes undisputed and payment is required immediately but in no event more than 40 calendar days from the date the “proof of claim” becomes undisputed. It is the obligation of the claims personnel to work to resolve the claim promptly and as soon as reasonably practicable. The “proof of claim” is a starting point from which the insurer and the insured can get a total resolution. If they cannot agree the insured and the insurer have options to assist: The insurer must advise the insured what additional information it needs to conclude the claim. The Regulations require that the insurer advise the insured what is needed and how much time it will take them to resolve the claim(s). The insurer is obligated to do so every 30 calendar days. The Poof of Loss Unlike the “proof of claim” the policy requires a proof of loss to resolve a claim. A “proof of loss” is usually a means of reciting the agreement between the insured and the insurer as to the amount of loss. If an agreement cannot be reached, once demanded, the insured must submit its proof of loss. After the insured’s proof of loss is received the insurer must, immediately but no later than 30 calendar days after receipt, its agreement, disagreement, acceptance, or refusal of the proof of loss explaining in detail the reason why the proof of loss is not acceptable, what is needed to be acceptable, and how much time the insurer needs to resolve the claim(s). The insurer can require, as part of the proof of loss that the insured or its employees submit to an examination under oath. Once the transcripts are signed and delivered to the insurer it must respond to the full proof of loss immediately but in no event more than 30 calendar days. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Go to X @bzalma; Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

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

Fraudulently Submitting Fake Application Violates Licensing Statutes Post 4721 Paul B. Kumar appealed a final agency decision of Commissioner of the Department of Banking and Insurance (Commissioner or Department) revoking his insurance producer license and imposing $60,774.25 in civil penalties, surcharge, attorney's fees and costs of investigation, for violations of the New Jersey Insurance Producer Licensing Act of 2001 and the New Jersey Insurance Fraud Prevention Act (Fraud Act). In Marlene Caride, Commissioner, New Jersey Department Of Banking And Insurance v. Paul B. Kumar, No. A-2627-21, Superior Court of New Jersey, Appellate Division (December 29, 2023) the Appellate Division spent dozens of pages to resolve appeal. FACTS On August 3, 2015, Kumar entered into an employment contract with Combined Insurance Company (Combined) as an insurance agent. For any insurance policy to be written, Combined required: the producer to meet, face to face, with the insurance applicant; the applicant to sign the application; and the producer to witness the applicant's signature on the application. Kumar submitted multiple insurance applications to Combined where the proposed insureds never met Kumar, never applied for insurance with Combined and never signed the applications in Kumar's presence. ORDER TO SHOW CAUSE The Department issued a two-count Order to Show Cause (OSC) to Kumar concerning the insurance applications. In the first count, the Department alleged violations of the Producer's Act and violations of the Fraud Act because Kumar "submitted . . . insurance policy applications to Combined . . . for the purpose of obtaining an insurance policy, knowing that each of these applications contained a forged signature of the prospective insured, and other false or misleading information concerning any fact or thing material to the application or contract .... " The OSC was tried before an Administrative Law Judge (ALJ) who found the testimony of Kumar was not credible. The ALJ concluded Kumar demonstrated throughout the proceedings that his inconsistent, evasive and confusing testimony, could not be believed. The ALJ concluded, the Department met its burden by demonstrating that Kumar submitted eight fraudulent applications for insurance and concluded that Kumar's actions warranted revocation of his producer license; the imposition of statutory monetary penalties; reimbursement of investigation costs; and attorney's fees. The Commissioner adopted the ALJ's finding that the Department established Kumar violated the Fraud Act, because he knowingly failed to disclose that the proposed insureds did not sign their applications and because he submitted insurance applications that he knew contained false or misleading information regarding material facts. ANALYSIS The language of the regulation empowers the insurer to control the requirements for insurance applications. The Commissioner determined that Kumar submitted six applications for three separate individuals without the applicants' knowledge or consent. The Commissioner adopted the ALJ's determination that the Department proved the violations. The Commissioner determined that Kumar violated the Fraud Act. After detailing her duty to protect the public welfare and to instill public confidence in both insurance producers and the industry as a whole, the Commissioner found the record was more than sufficient to support license revocation. The statute specifically authorizes the Commissioner to revoke the insurance producer's license. The appellate court concluded that Commissioner's decision is entitled to deference and will not be disturbed. ZALMA OPINION Insurance companies rely on the honesty of those who represent them to the public and expect the state to protect them from representatives who fail to fulfill the obligations imposed on the insurance agent's license. Mr. Kumar, for several years, attempted to profit from submitting multiple fraudulent applications for insurance never ordered by the persons who allegedly signed the applications. It took seven years from the first fraud to the OSC, the proceedings before an ALJ and an appeal to take away the license and obtain a monetary judgment against the fraudulent agent. It is time to improve the process. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Go to X @bzalma; Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

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

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

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

Insured Must Fulfill Policy Conditions Post 4718 Pharmacia Corporation appealed the District Court's order granting summary judgment declaring that one of its excess insurers, Twin City Fire Insurance Company, did not owe a duty to pay Pharmacia's settlement and defense costs from a shareholder class action. In Pharmacia Corporation n/k/a Pfizer, Inc. v. Arch Specialty Insurance Company; Twin City Fire Insurance Company; Liberty Mutual Insurance Company, No. 22-2586, United States Court of Appeals, Third Circuit (January 19, 2024) the conditions were applied. FACTS Pharmacia, a pharmaceutical drug manufacturer, purchased a $200 million directors and officers insurance tower from thirteen companies through an insurance broker. The first layer of the tower consisted of a $25 million primary policy issued by National Union Fire Insurance Company of Pittsburgh, Pa (the "Primary Policy"). The next twelve policies provided excess insurance totaling $175 million. Twin City sold Pharmacia the eighth-layer excess policy (the "Policy"), which provided $10 million in coverage and specified that "liability for any loss shall attach to [Twin City] only after the Primary and Underlying Excess Insurers shall have [(1)] duly admitted liability and [(2)] . . . paid the full amount of their respective liability." Pharmacia shareholders sued seeking class action qualification against the company, alleging that it artificially inflated its stock by misrepresenting the results of a clinical drug study. After ten years of litigation, the case settled, and Pharmacia incurred approximately $207 million in defense and indemnity costs. Pharmacia then provided Twin City proof that the excess carriers ahead of it in the insurance tower paid their policy limits and asked Twin City to provide coverage. Twin City declined. Pharmacia sued Twin City. The District Court granted Twin City's motion for summary judgment and dismissed the case with prejudice. The Court found that: (1) the plain language of the Policy required the other excess insurers to admit liability as a condition precedent for coverage to attach; (2) six of them had disclaimed liability, and (3) as a result, a condition for coverage was not satisfied. Pharmacia appealed. POLICY INTERPRETATION The Third Circuit concluded that no conflict exists here. Specifically, courts: Give effect to the intent of the parties as expressed in the clear language of the contract, and the plain language of the contract is the cornerstone of the interpretive inquiry. May not make a different or better contract than the parties themselves saw fit to enter into. Courts should refrain from rewriting the agreement to accomplish their notions of abstract justice or moral obligation. May avoid a literal construction of the words of a contract only if that interpretation defies all bounds of common sense. ANALYSIS When the intent of the parties is plain and the language is clear and unambiguous, a court must enforce the agreement as written, unless doing so would lead to an absurd result. Applying these principles, the Policy unambiguously imposed two distinct conditions precedent for coverage to attach. Specifically, Pharmacia must show both that the insurers ahead of Twin City in the tower have: duly admitted liability and paid the full amount of their respective liability. Pharmacia failed to show that both conditions to trigger Twin City's coverage were met since six insurers refused to admit liability. Regardless of whether the other insurers in the tower paid their policy limits, the record does not demonstrate that all of those insurers admitted liability and the court is not required to accept the error of the six insurers refusing to admit liability who still paid. Because Pharmacia failed to establish at least one condition precedent, the District Court correctly declined to declare that Twin City owes Pharmacia coverage. The trial court was affirmed. ZALMA OPINION Conditions precedent in an insurance policy must be met or the insurer has no obligation to provide defense or indemnity under the policy. Twin City established that six insurers in Pharmacia's tower below Twin City did not admit liability and that, therefore, it failed to prove compliance with the condition precedent. Pharmacia luckily received contributions from insurers accepting coverage and insurers who did not but decided not to litigate. After reading this case, if the six had the same condition, they have explanations to make to their shareholders. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. 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Public Policy Argument Fails for Lack of Evidence of Statute or Judicial Statement Post 4716 Following a car accident, Kenan Watkins ("Watkins") filed a diminished value claim with his insurer, Allstate Property and Casualty Insurance Company ("Allstate"). Allstate denied his claim. The district court held that Allstate's policy did not violate Mississippi law and that Watkins failed to state a plausible claim. Consequently, the district court granted Allstate's motion to dismiss and Watkins appealed. In Kenan Watkins, individually and on behalf of all others similarly situated v. Allstate Property & Casualty Insurance Company, No. 23-60141, United States Court of Appeals, Fifth Circuit (January 12, 2024) the Fifth Circuit resolved the dispute. BACKGROUND Kimberly Jones ("Jones") crashed her vehicle into Watkins' 2021 Chevrolet Tahoe in Baldwyn, Mississippi. Watkins' vehicle sustained substantial damage. Watkins had an insurance policy with Allstate that provided coverage for his 2021 Chevrolet Tahoe. Jones' insurer, Safeway Insurance Company, paid $24,314.25 to Watkins for his damage claim. Watkins alleged that his car sustained an additional $13,545.00 in diminished value. Safeway Insurance Company offered the remaining $685.75 of Jones' policy limit to Watkins. Because Jones' policy limit did not cover the diminished value of Watkins' vehicle, Watkins filed an uninsured motorist claim with his insurer, Allstate. Allstate denied Watkins' diminished value claim, relying upon a provision in its policy that excludes "any decrease in the property's value, however measured, resulting from the loss and/or repair or replacement." Watkins sued. Specifically, Watkins alleged that Allstate's automobile insurance policies impermissibly deny insurance coverage that is required by law without establishing which law required Allstate to pay for the diminished value of his truck. The district court concluded that Watkins failed to plausibly allege that Jones' vehicle was an "uninsured motor vehicle." The district court also concluded that Allstate's diminished value exclusion is valid under Mississippi law. Because Watkins failed to state a claim upon which relief could be granted the district court granted Allstate's motion to dismiss with prejudice. An appeal followed. DISCUSSION In his Complaint, Watkins alleged that "[p]ursuant to Miss. Code. Ann. § 83-11-101(2), Kimberly Jones was underinsured, and [that he] is entitled to recover from the uninsured motorist coverage provided by the Policy." Watkins' mere assertions, however, re insufficient to establish that Jones' vehicle qualified as an "uninsured motor vehicle." The Complaint only alleges that Jones was underinsured, which is a legal conclusion. No court will accept legal conclusions as true. Thus, the district court correctly concluded that Watkins failed to make a plausible claim for relief because a reasonable inference that Allstate was liable for misconduct could not be drawn from the factual content in the Complaint and legal conclusions alone are never accepted as true. The Fifth Circuit concluded that Allstate's diminished value exclusion was valid under Mississippi law. Watkins claim that the diminished value exclusion violates public policy failed because Watkins did not point to a pronouncement, either legislative or judicial, requiring that diminished value be a part of all automobile insurance policies. Only an affirmative expression of an overriding public policy by the legislature or judiciary prompts a Court to rule that an insurance policy's plain meaning does not control. Since neither the legislature nor the judiciary have pronounced that insurers must provide for payment of diminished value in all issued automobile policies the plain meaning of Allstate's policy controls and Allstate's diminished value exclusion is valid under Mississippi law. ZALMA OPINION Claims for diminished value of a vehicle after an accident were popular ten years ago because auto material damage policies did not deal with the issue. Insurers, like Allstate, recognized it had no intent to cover diminished value of a vehicle after an accident, did not charge a premium for the claim, and eventually wrote a clear and unambiguous exclusion to avoid paying for a loss for which it had not charged a premium. Absent some showing of a public policy requiring that coverage, the exclusion is enforceable. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Go to X @bzalma; Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

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

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

ZIFL Volume 28, Issue 2 See the full video here and here https://youtu.be/xs4PPJ3NPDg Subscribe here: https://visitor.r20.constantcontact.com/manage/optin?v=001Gb86hroKqEYVdo-PWnMUkcitKvwMc3HNWiyrn6jw8ERzpnmgU_oNjTrm1U1YGZ7_ay4AZ7_mCLQBKsXokYWFyD_Xo_zMFYUMovVTCgTAs7liC1eR4LsDBrk2zBNDMBPp7Bq0VeAA-SNvk6xgrgl8dNR0BjCMTm_gE7bAycDEHwRXFAoyVjSABkXPPaG2Jb3SEvkeZXRXPDs%3D Zalma’s Insurance Fraud Letter (ZIFL) continues its 28th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ The current issue includes the following articles: GEICO Takes a Bite Out of Fraud NO FAULT INSURANCE IS A FORMULA FOR INSURANCE FRAUD GEICO, as a pro-active victim of insurance fraud, sued Jean-Pierre Barakat, M.D., et al, alleging that Defendants defrauded GEICO in violation of the Racketeering Influenced and Corrupt Organizations Act (“RICO,” 18 U.S.C. § 1962(c), (d)), by submitting hundreds of fraudulent bills for no-fault insurance charges. Plaintiffs also allege common law fraud and unjust enrichment and seek a declaratory judgment as to all pending bills. In Government Employees Insurance Company, et al v. Jean-Pierre Barakat, M.D.et al No. 22-CV-07532 (NGG) (RML), United States District Court, E.D. New York (January 2, 2024) the USDC provided an injunction. Read the full January 15, 2024 issue of ZIFL here. More McClenny Moseley & Associates Issues This is ZIFL’s twenty first installment of the saga of McClenny, Moseley & Associates and its problems with the federal courts in the State of Louisiana and what appears to be an effort to profit from what some Magistrate and District judges indicate may be criminal conduct to profit from insurance claims relating to hurricane damage to the public of the state of Louisiana. Read the full January 15, 2024 issue of ZIFL here. Florida Residential Property Claims and Litigation Report Closed Claims Data for Calendar Year 2022 as of 11/1/2023 The full report is available at https://www.floir.com/docs-sf/default-source/property-and-casualty/other-property-casualty-reports/january-2024-pclr.pdf?sfvrsn=d8c92a4f_4 The report was prepared Pursuant to Section 624.424(11), Florida Statutes, each authorized insurer or insurer group issuing personal lines or commercial lines residential property insurance policies in Florida is required to annually file a supplemental report on an individual and group basis for closed claims with the Florida Office of Insurance Regulation (OIR). The first year of data collected was for 2022 and the information below compiles aggregated information stemming from that data. Various elements of this data have been released by the Office in other reports and presentations throughout the 2023 calendar year. Read the full January 15, 2024 issue of ZIFL here. Now Available The Compact Book of Adjusting Property Claims – Fourth Edition On January 2, 2024, in Kindle, paperback and hardback formats, The Compact Book of Adjusting Property Claims, Fourth Edition is now available for purchase here.and here. The Fourth Edition contains updates and clarifications from the first three editions plus additional material for the working adjuster and the insurance coverage lawyer. Read the full January 15, 2023 issue of ZIFL here. ALLSTATE TAKES A BITE OUT OF CRIME Another Proactive Insurer Works to Take the Profit Out of Insurance Fraud In Allstate Insurance Company, Allstate Indemnity Company, Allstate Fire & Casualty Insurance Company, and Allstate Property & Casualty Insurance Company v. Bradley Pierre, Medical Reimbursement Consultants Inc., Marvin Moy, M.D., Rutland Medical P.C. D/B/A Medicalnow, William A. Weiner, D.O., and Nexray Medical Imaging, P.C. d/b/a Soul Radiology Medical Imaging, No. 23-CV-06572 (NGG) (LB), United States District Court, E.D. New York (January 8, 2024) Allstate joins GEICO and other insurers taking a proactive effort against no-fault insurance fraud perpetrators. Insurance Fraud Next to tax fraud, insurance fraud is the most practiced crime in the world. It is perpetrated by members of every race, religion, and nationality. It is found in every profession. The possibility of a tax-free profit when coupled with the commonly held belief that criminal prosecution will probably not occur, is sometimes too difficult for normally honest people to resist. Read the full January 15, 2024 issue of ZIFL here. Health Insurance Fraud Convictions New Jersey Laboratory and Its Owner and CEO Agree to Pay Over $13 Million to Settle Allegations of Kickbacks Clinical laboratory RDx Bioscience Inc. (RDx), of Kenilworth, New Jersey, and its owner and Chief Executive Officer Eric Leykin, of Brooklyn, New York, agreed to pay to the United States $10,315,023 to resolve False Claims Act allegations involving illegal kickbacks and medically unnecessary laboratory testing. RDx and Leykin will pay an additional $2,934,977 to the State of New Jersey, which jointly funded claims paid by the New Jersey Medicaid program. RDx and Leykin have agreed to cooperate with the Justice Department’s investigations of, and litigation against, other participants in the alleged schemes. Read the full January 15, 2024 issue of ZIFL here. It’s Time to Subscribe to Substack or Locals For Subscribers Only I Have Published Special Insurance Articles and Videos I published on Locals.com more than 25 videos and two webinars of the Excellence in Claims Handling program. I also published on Substack.com videos and webinars of the Excellence in Claims Handling Program available only to Subscribers. The subscribers have access to all the videos and a webinar on “The Examination Under Oath A Tool Available to Insurers to Thoroughly Investigate Claims and Work to Defeat Fraud” among others. The videos start with the history of insurance and work their way through various types of insurance and how to obtain and deal with insurance claims. Subscribe and receive videos and articles available only to subscribers to the Excellence in Claims Handling at locals.com and to articles and videos also available to subscribers at Substack.com for a small fee of only $50 a year. You can Subscribe to “Zalma on Insurance” at https://zalmaoninsurance.locals.com/subscribe and to “Excellence in Claims Handling” at https://barryzalma.substack.com/welcome. Read the full January 15, 2024 issue of ZIFL here. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Go to X @bzalma; Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

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

Another Proactive Insurer Works to Take the Profit Out of Insurance Fraud Post 4709 In Allstate Insurance Company, Allstate Indemnity Company, Allstate Fire & Casualty Insurance Company, and Allstate Property & Casualty Insurance Company v. Bradley Pierre, Medical Reimbursement Consultants Inc., Marvin Moy, M.D., Rutland Medical P.C. D/B/A Medicalnow, William A. Weiner, D.O., and Nexray Medical Imaging, P.C. d/b/a Soul Radiology Medical Imaging, No. 23-CV-06572 (NGG) (LB), United States District Court, E.D. New York (January 8, 2024) Allstate joins GEICO and other insurers taking a proactive effort against no-fault insurance fraud perpetrators. Plaintiffs Allstate Insurance Company sued Bradley Pierre, et al, alleging that Defendants defrauded Allstate in violation of the Racketeering Influenced and Corrupt Organizations Act ("RICO," 18 U.S.C. § 1962(c), (d)), by submitting hundreds of fraudulent bills for no-fault insurance payments. (See Compl. (Dkt. 1) ¶¶ 459-542.) Plaintiffs also allege common law fraud and unjust enrichment and seek a declaratory judgment as to all past, present, or future bills. Allstate moved for a preliminary injunction to stay all pending no-fault insurance collection arbitrations commenced against Allstate by Defendants and Plaintiffs requested waive their obligation to post security for the injunction. BACKGROUND Operation of the Alleged Scheme The USDC concluded that the "allegations reviewing the fraudulent scheme in Allstate's Complaint are overwhelming." Defendant Marvin Moy, M.D., a licensed physician, purported to be the sole officer, director, and shareholder of Rutland but was merely a nominal owner. In reality, Moy ceded actual control over Rutland to Defendant Bradley Pierre, a layperson who does not hold a medical license and therefore is not authorized to own, control, or manage a medical professional corporation. As a result of this extensive scheme, Allstate has paid in excess of $2,749,000.00 for no-fault claims submitted by the PC Defendants. Moreover, Defendants Pierre, Moy, and Weiner are currently facing criminal charges related to the scheme and the very allegations at issue in this case. See United States v. Pierre, No. 1:22-CR-00019 (PGG) (S.D.N.Y.) (hereinafter, the "Criminal Action"). Evidence of the Alleged Scheme In support of its fraud claims, Allstate has submitted an abundance of evidence. Accordingly, Allstate seeks reimbursement of the more than $2,749,000.00 it has paid Defendants and in addition to a declaration that it is under no obligation to pay any pending or future no-fault insurance claims. DISCUSSION When seeking an injunction a party must establish that without the injunction the plaintiff will suffer irreparable harm. To establish irreparable harm, a party seeking preliminary injunctive relief must show that there is a continuing harm which cannot be adequately redressed by final relief on the merits and for which money damages cannot provide adequate compensation. The harm must be shown to be actual and imminent, not remote or speculative. Allstate argued that it will suffer irreparable harm because (1) there is significant risk of inconsistent results in the arbitration proceedings, (2) the time, effort, and money spent litigating these proceedings cannot be cured by money damages, and (3) arbitrations continue to be filed and adjudicated despite Defendant Moy, the sole official shareholder of Rutland, disappearing in October 2022. The risk of inconsistent judgments is in addition to the expenditure of time, effort, and money that Allstate will exhaust dealing with a morass of litigation in the absence of relief that will not be cured by money damages. Here, Allstate has sufficiently alleged that there is a serious question going to the merits of its declaratory judgment claim against Defendant Rutland and others. In its 102-page Complaint supported by numerous exhibits totaling thousands of pages, Allstate details an extensive and complex scheme centered around the fraudulent operation and control of Rutland, among other PCs, by non-physician Pierre for his own personal financial gain; unlawful patient referrals to the PC Defendants pursuant to improper agreements and kickback schemes; and fraudulent billing for unnecessary and excessive services yielding hundreds of false claims submitted to Allstate in violation of various New York state licensing laws. CONCLUSION Allstate's motion for preliminary injunctive relief was GRANTED. Consequently: all pending no-fault collection arbitrations by Rutland (or its agents) against Plaintiffs are stayed. Rutland is enjoined from filing any further no-fault collection arbitrations or lawsuits against Allstate pending resolution of the instant federal action. Allstate's request that the court waive their obligation to post security was also GRANTED. ZALMA OPINION Allstate, like many other insurers writing no-fault auto insurance in New York state find that they are victims of fraudulent schemes like the one described by Allstate in its lengthy and well documented law suit. The court faced with overwhelming evidence, including the fact that one of the defendants is under indictment by the federal Department of Justice. This lawsuit indicates a complete failure of the no-fault insurance system and the inability of the state of New York to police the crime. Allstate, like GEICO, should be honored and emulated for their action in an attempt to take the profit out of insurance fraud. (c) 2024 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Go to X @bzalma; Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

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

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

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

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

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

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

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

ZIFL - Volume 28 Issue 1 The Resource for the Insurance Claims and Insurance Fraud Professionals This, the first issue of the 28th Year of ZIFL includes articles and reports relating to insurance fraud, including: False Swearing & Insurance Fraud In common language the “false swearing” provision of an insurance policy merely means that if the insured lies under oath the policy is void whether the lie is in a proof of loss or at an examination under oath. In Texas and Oklahoma, false swearing is explained this way: where an insured knowingly and willfully overestimates the value of property destroyed or damaged, the policy is voided and the insured’s right to recover is defeated. Read the full 22 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-01-01-2024-1.pdf More McClenny Moseley & Associates Issues This is ZIFL’s twenty first installment of the saga of McClenny, Moseley & Associates and its problems with the federal courts in the State of Louisiana and what appears to be an effort to profit from what some Magistrate and District judges indicate may be criminal conduct to profit from insurance claims relating to hurricane damage to the public of the state of Louisiana. Louisiana State Police Open Criminal Investigation Into McClenny Moseley Louisiana State Police have opened a criminal investigation into efforts by McClenny Moseley & Associates and Apex Roofing to solicit customers after receiving a complaint by the state Insurance Department about “suspected fraudulent actions” related to insurance claims. Read the full 22 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-01-01-2024-1.pdf Waiver of Right to Appeal Effective Insurance Agent Defrauded Clients by Taking Premium Money and Keeping it for Personal Expenses When a criminal defendant’s valid guilty plea includes a waiver of the right to appeal, the Fourth Circuit Court of Appeals generally enforces the waiver by dismissing any subsequent appeal that raises issues within the scope of the waiver. However, even if an appeal waiver is valid and applicable, the Fourth Circuit will review a claim that a district court’s sentence or restitution order exceeded the court’s statutory authority. In United States Of America v. Glenda Taylor-Sanders, Nos. 21-4136, 20-4604, United States Court of Appeals, Fourth Circuit (December 12, 2023) the Defendant sought a change of the sentence and restitution order. Read the full 22 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-01-01-2024-1.pdf Now Available The Compact Book of Adjusting Property Claims – Fourth Edition On January 2, 2024, in Kindle, paperback and hardback formats, The Compact Book of Adjusting Property Claims, Fourth Edition is now available for purchase here and here. The Fourth Edition contains updates and clarifications from the first three editions plus additional material for the working adjuster and the insurance coverage lawyer. Read the full 22 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-01-01-2024-1.pdf Fictionalized True Crime The Largest Residential Burglary of All Time This is a Fictionalized True Crime Stories of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help Everyone to Understand How Insurance Fraud in America is Costing Those who Buy Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ­­­Perpetrators than any Other Crime. After twelve months trying to get insurance on over $3,000,000 in jewelry and a like amount of fine arts, a Taiwanese man who was a wanted criminal in his own country convinced two American insurers to agree to insure him against the risk of loss to the contents of his home. Read the full 22 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-01-01-2024-1.pdf Health Insurance Fraud Convictions Guilty Verdict of Physician Who Subjected Patients to Unnecessary and Invasive Tests Payam Toobian, M.D. Paid Kickbacks to Physicians for Patient Referrals and Defrauded Medicaid by Subjecting Patients to Unnecessary Radiological Tests. Read the full 22 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-01-01-2024-1.pdf Fraudster Must Serve Time and Lose His Residence to Pay Restitution Armando Valdes appealed his 60-month sentence for health care fraud after he pleaded guilty. Valdes's conviction and sentence arose out of his scheme to submit millions of dollars in fraudulent medical claims to United Healthcare and Blue Cross Blue Shield for intravenous infusions of Infliximab, an expensive immunosuppressive drug. These infusions, purportedly given to patients at Valdes's medical clinic, Gasiel Medical Services ("Gasiel"), were either not provided or were medically unnecessary. In United States Of America v. Armando Valdes, No. 22-12837, United States Court of Appeals, Eleventh Circuit (December 19, 2023) the Eleventh Circuit disposed of the arguments asserted by Valdes. Read the full 22 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-01-01-2024-1.pdf Other Insurance Fraud Convictions Prison Sentences In Multi-Million Dollar Insurance Fraud; Returns $7.75M to NYSIF SADAF BHATTI, 40 and his company, ANAAR CONSTRUCTION & CONTRACTING CORP., pleaded guilty November 2, 2023, in New York State Supreme Court to Insurance Fraud in the First Degree for their role in Certified Public Accountant STEVEN LYON’s scheme to defraud the New York State Insurance Fund (“NYSIF”) of more than $18 million. BHATTI was sentenced to 1-to-3 years in state prison and ANAAR CONSTRUCTION & CONTRACTING CORP. was sentenced to a three-year conditional discharge. Read the full 22 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-01-01-2024-1.pdf The Role of the Insurer’s Attorney After Ending the EUO A well-executed Examination Under Oath (EUO) is not only one of the insurer’s most effective weapons against fraud. It can also be highly instructive for the adjuster. If an attorney is responsible for performing the examination, the adjuster must make clear that it is his or her obligation to provide sufficient factual information supported by legal authority for the insurer to make a decision on the claim. The adjuster should also, if possible, attend the EUO to help the attorney and to study questioning techniques. Attorneys, whose job it is to ask questions, will usually do a more thorough job of EUO than will insurance claims staff. After the EUO, the attorney will usually suggest additional investigation and can also give the adjuster legal advice as to the insurer’s rights, duties, and obligations. Read the full 22 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-01-01-2024-1.pdf Barry Zalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com and read the full 21 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/11/ZIFL-12-01-2023-1.pdf Read the full 22 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-01-01-2024-1.pdf

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

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