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

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

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

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

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

The Christmas Gift of Insurance Fraud The story that follows is fiction based, in part, on a true case worked on by me. Any similarity to real people is unintentional. It is meant only to educate fraud professionals about how some unscrupulous people use the crime of insurance fraud for fun and profit during the Christmas season. I publish this story every year. Post 4692 The Christmas Gift of Insurance Fraud The story that follows is fiction based, in part, on a true case worked on by me. Any similarity to real people is unintentional. It is meant only to educate fraud professionals about how some unscrupulous people use the crime of insurance fraud for fun and profit during the Christmas season. I publish this story every year. Post 4692

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

ZIFL - Volume 27 - Issue 24 Merry Christmas, Happy Hanukah, and May the Winter Solstice be Peaceful & Mild The Resource for the Insurance Claims and Insurance Fraud Professionals This, the 24th issue of the 27th Year of ZIFL includes articles and reports relating to insurance fraud, including: Former Root Marketing Exec Pleads Guilty to Taking Over $10 Million From the Insurer Brinson Caleb “BC” Silver, former chief marketing officer for insurtech Root, has pleaded guilty to stealing more than $10 million from his former employer and violating court orders. According to the U.S. Attorney’s Office for the Southern District of Ohio, Silver, 43, of Culver City, California, pleaded guilty to one count each of wire fraud and contempt of court and has agreed to pay more than $10.2 million in restitution. A prison sentence of 24-51 months has been recommended. Read the full issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-12-15-2023.pdf More McClenny Moseley & Associates Issues This is ZIFL’s twenteeth 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. December 8, 2023 – History of MMA Issues Read the full issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-12-15-2023.pdf The Insurance Examination Under Oath A Tool Available to Insurers to Thoroughly Investigate Claims The insurance Examination Under Oath (“EUO”) is a formal type of interview authorized by an insurance contract. It is taken under the authority provided by a condition of the insurance contract that compels the insured to appear and give sworn testimony on the demand of the insurer or find his, her or its claim rejected for breach of a condition. A notary and a certified shorthand reporter are always present to give the oath to the person interviewed and record the entire conversation. Read the full issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-12-15-2023.pdf Health Insurance Fraud Convictions Doctor and Wife Admit Genetic Testing Kickback and Bribery Scheme Yitzchok “Barry” Kurtzer, 63, and his wife, Robin Kurtzer, 62, both of Monsey, New York, a Pennsylvania doctor, and his wife admitted to their roles in schemes to solicit and receive kickbacks and bribes in exchange for ordering genetic tests. Read the full issue of ZIFL and about dozens of fraud convictions at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-12-15-2023.pdf What is Needed to Deter Insurance Fraud? To do so the insurers must train their staff to recognize the elements of both the crime of insurance fraud and the elements of the civil tort of insurance fraud. If well trained, insurance personnel collecting information about a potential insurance fraud, will know the type and quality of information that either a prosecutor or a civil defense lawyer will need to prove fraud was attempted. Some estimates indicate that more money goes out fighting fraud than is saved. Others show that every dollar spent by insurers to defeat fraud save the insurer as much as seven dollars in fraudulent claims. Although insurance fraud is a crime in almost every jurisdiction in the United States it is seldom prosecuted. Read the full issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-12-15-2023.pdf Other Insurance Fraud Convictions North Carolina Insurance Agent Can’t Appeal Sentence in $700,000 Fraud Glenda Taylor-Sanders, of Charlotte, North Carolina, a former insurance agent who pleaded guilty to defrauding trucking company clients and a premium finance company of hundreds of thousands of dollars cannot challenge her sentence and restitution order, a federal appeals court decided. Read the full issue and dozens of convictions at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-12-15-2023.pdf Fraud After Catastrophes Over the past few decades fraud has become an ever escalating problem. It is part of the CODB equation and quickly becomes just one more cost to be passed on to the insurance buying public. When a catastrophe hits everyone suffers. The victims of the catastrophe suffer. The insurers whose staff is not adequately trained to investigate and adjust claims and recognize fraud compounds the suffering of the victims and costs the insurer. Read the full issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-12-15-2023.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 Over the last 55 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals. Barry Zalma, Inc., 4441 Sepulveda Boulevard, CULVER CITY CA 90230-4847, 310-390-4455; Subscribe to Zalma on Insurance at locals.com https://zalmaoninsurance.local.com/subscribe. Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome. Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; I publish daily articles at https://zalma.substack.com, Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ to consider more than 50 volumes written by Barry Zalma on insurance and insurance claims handling. Go to Zalma’s Insurance Fraud Letter at https://zalma.com/zalmas-insurance-fraud-letter-2/ Follow Mr. Zalma on Twitter at https://twitter.com/bzalma,Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921, Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg,Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ and GTTR at https://gettr.com/@zalma Read the full issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/12/ZIFL-12-15-2023.pdf

When Appraisers Fail to Agree on Umpire Court Must Appoint One When a claim for damages due to a hurricane was disputed the parties demanded appraisal and appointed their respective appraisers. However, the appraisers could not agree on an umpire for reasons unclear and bad faith litigation ensured. Because of the inability of the appraisers to agree on an umpire the parties went to the District Court to appoint an umpire so the appraisal process can proceed. In DORIAN THEODORE v. ALLIED TRUST INSURANCE COMPANY, Civil Action No. 22-951-SDD-RLB, United States District Court, M.D. Louisiana (October 18, 2023) the parties moved the USDC in Louisiana to appoint an Appraisal Umpire. The parties submitted separate lists of proposed umpires and their respective CVs for the Court's consideration. Background The lawsuit involves claims for damage to property located in Gonzales, Louisiana as a result of Hurricane Ida. Dorian Theodore (“Plaintiff”) sought coverage and statutory bad faith damages related to claims made under an insurance policy (the “Policy”) issued by Allied Trust Insurance Company (“Defendant”). The parties represent that the Policy provides the following language with respect to appraisals, including the appointment of an umpire: Appraisal If you and we fail to agree on the amount of loss, either may demand an appraisal of the loss. In this event, each party will choose a competent and impartial appraiser within 20 days after receiving a written request from the other. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 days, you or we may request that the choice be made by a judge of a court of record in the state where the "residence premises" is located. The appraisers will separately set the amount of loss. If the appraisers submit a written report of an agreement to us, the amount agreed upon will be the amount of loss. If they fail to agree, they will submit their differences to the umpire. Any outcome of the appraisal will not be binding on either party. Each party will: 1. Pay its own appraiser; and 2. Bear the other expenses of the appraisal and umpire equally. Prior to the filing of this lawsuit, the parties selected their initial appraisers when Defendant demanded an appraisal of the loss. Plaintiff designated Matthew Addison as Plaintiff's appraiser, and Defendant designated Ronald West as its appraiser. After the filing of this lawsuit, Plaintiff designated Mike Deckelman as Plaintiff's appraiser. The parties' appraisers were unsuccessful in jointly selecting an umpire in accordance with the Policy. As ordered, the parties submitted separate lists of proposed umpires for potential appointment. Law and Analysis There is no dispute between the parties that the appraisal provision in the Policy is enforceable. The parties have jointly sought court appointment of an umpire in accordance with the appraisal provision in the Policy. The District Court appointed Cade Cole as the appraisal umpire for the purposes of the instant insurance claim dispute. Federal courts routinely have appointed Cade Cole as deputy special master and recognized him as a "neutral" in Hurricane Laura and Hurricane Delta cases. The Court took judicial notice of this fact and found that Mr. Cole is well-qualified for the position of umpire and so selects him to fulfill that role in this case. If Mr. Cole declines to serve as umpire in this matter, then the Court selects Joel Moore as umpire. His resume demonstrates that he is well-qualified for the position and would likewise serve as a neutral umpire. As discussed above, although both Mr. Cole and Mr. Moore were proposed by the Plaintiff, the Court has no reason to suggest that both can fulfill this role in a fair, neutral and impartial manner. ZALMA OPINION Insurance claims resulting from hurricanes that have struck Louisiana have become aggressive, unfair and unreasonable. For two appraisers to fail to pick an umpire is an indication of litigation game playing forcing the District Court to appoint an umpire. This litigation requiring a judge to do what insurance appraisers do every day with little or no discussion reflects a desire to make the process more expensive and difficult rather than fulfill its purpose to quickly and fairly resolve the quantum of a loss. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

No Defense for Lawyer/Business Owner Post 4788 Associated Industries Insurance Company (AIIC) sued Howard Kleinhendler and his former law firm, Wachtel Missry LLP, seeking a declaration that it need not provide insurance coverage for either defendant in another lawsuit brought by Allan Applestein. Applestein sought damages for legal malpractice, breach of fiduciary duty, elder abuse, and fraud related to the 2017 sale of land in Virginia, known as the Fones Cliffs Land, to Kleinhendler's company, the Virginia True Corporation. In Associated Industries Insurance Company, Inc. v. Howard Kleinhendler, Defendant-Appellant, Wachtel Missry LLP, No. 23-57, United States Court of Appeals, Second Circuit (December 7, 2023) the Second Circuit resolved the dispute. THE POLICY EXCLUSION The insurance policy contained an explicit exclusion for activities undertaken in the capacity of an officer of another business enterprise. The district court granted judgment on the pleadings to AIIC because it determined the policy exclusion unambiguously excluded coverage due to Kleinhendler's position with Virginia True. CONTENTIONS Kleinhendler contended that AIIC has a duty to defend him in the Applestein lawsuit because the lawsuit alleges some acts that could give rise to claims covered by the insurance policy, namely acts that occurred before the formation of Virgina True and acts related to the Fones Cliffs Land transaction that were unrelated to Kleinhendler's position with Virginia True. AIIC responded that it does not have a duty to defend him because the Applestein complaint squarely centers on the conflicted sale of the Fones Cliffs Land to Kleinhendler's company, and its claims thus arise from Kleinhendler's position with that company. ANALYSIS Under New York law, an insurer's duty to defend is exceedingly broad. To be relieved of its duty based on a policy exclusion, an insurer has a heavy burden of demonstrating that the allegations of the complaint cast the pleadings wholly within that exclusion. The Second Circuit noted that the issue to be resolved is whether the Applestein complaint brings claims that could potentially result in liability not arising out of Kleinhendler's position with Virginia True and concluded that it does not. The complaint does not state any claim for liability that does not arise out of Kleinhendler's position with his company. Therefore, the Second Circuit concluded that AIIC carried its burden to demonstrate the exclusion applied and it has no duty to defend Kleinhendler in the Applestein suit. That each and every claim arises from the sale of the Fones Cliffs Land to Virginia True is confirmed by the damages Applestein seeks-$7,724,200.36, apparently corresponding to the amount he lost as a result of the transaction and a loan he made to HK Consulting Group LLC (another Kleinhendler company) in connection with it, plus interest. In short, all of Kleinhendler's potential liability in the Applestein suit stems at least in part from his position with that company. Therefore, the district court properly concluded that AIIC's policy exclusion applied. AIIC does not have a duty to defend Kleinhendler in the Applestein action. ZALMA OPINION There is no reason why a lawyer cannot be involved in a business outside the practice of law. It only becomes a problem if the business is involved with a client of the lawyer owner. Insurers of lawyers limit the liability coverage to the practice of law and most, like AIIC exclude coverage for actions between a lawyer owner of a non-law business and a client of the lawyer. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

Foreclosure Changes Insurable Interest from Borrower to Lender Post 4787 In this contested residential mortgage foreclosure, defendants Mitchell and Deanna Minchello appealed from the entry of summary judgment. Defendants contended that plaintiff violated the covenant of good faith and fair dealing by "refusing to disburse defendants' insurance proceeds and forcing defendants' home to remain in disrepair" and that the trial court applied an improper standard. In Wilmington Savings Fund Society, FSB, d/b/a Christiana Trust, as owner trustee of the Residential Credit Opportunities Trust V v. Mitchell Minchello and Deanna Minchello, and J Hofert Company, FIA Card Services NA, Schumann Hanlon LLC, Discover Bank, Vanz LLC-December 10 Series01, Mri-West Morris Associates, and State Of New Jersey, No. A-3522-21, Superior Court of New Jersey, Appellate Division (December 8, 2023) the issues were resolved. FACTS The essential facts were undisputed. Defendants borrowed $522,000 in January 2007, secured by a thirty-year purchase money mortgage on their home in Mt. Arlington. Defendants stopped making their loan payments in 2010, and in 2012 they stopped paying the taxes and insurance on the property. In 2014 the lenders asserted its rights by suing for foreclosure in March 2015. Defendants filed a bankruptcy petition under Chapter 13. The following day, December 7, defendant Deanna Minchello drove her car into defendants' home, resulting in structural damage. The only insurance was forced placed insurance in the name of the lender. ANALYSIS The trial judge granted plaintiff's motion for summary judgment. The judge found no dispute over the validity of the note and mortgage, defendants' default in 2010 and plaintiff's standing to foreclose the mortgage. Whether the lender allowed the insurance money to go to repair the structure was irrelevant since the foreclosure put the insurable interest in the lender and the lender was the only person insured. Although the procedural history is long and complicated with the parties' appendices exceeding 800 pages, the legal issues are straightforward, and the Court of Appeals had no hesitation in holding plaintiff established its entitlement to both summary judgment. CONCLUSION The trial court's orders that plaintiff established its right to foreclose the mortgage, that defendants did not succeed in establishing plaintiff should be barred from asserting that equitable remedy, and that final judgment of foreclosure was properly entered against defendants. ZALMA OPINION When borrowers fail to pay mortgage payments, insurance premiums and taxes they have no insurance in their name, only the insurance acquired by the lender to protect its interests. The lendER can apply the insurance to repair or simply apply it to reduce the debt. It took some unmitigated gall to sue the lenders in this after defaulting in every obligation owed by a property owner that pledged the property as security for the loan. The court found it necessary to read and analyze all 800 pages and still found the trial court's judgment in favor of the lender to be appropriate. Why the court did not sanction the borrowers and their attorneys is confusing to me. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

Appraisal Required to Resolve Extent of Loss Post 4786 In an insurance dispute stemming from Hurricane Ian. The parties agree that their case should go to appraisal to determine the extent of the loss. When an insurance policy contains an appraisal provision, “the right to appraisal is not permissiv e but is instead mandatory, so once a demand for appraisal is made, ‘neither party has the right to deny that demand.'” [McGowan v. First Acceptance Ins. Co., Inc., 411 F.Supp.3d 1293, 1296 (M.D. Fla. 2019) (quoting United Cmty. Ins. Co. v. Lewis, 642 So.2d 59, 60 (Fla. 3d DCA 1994)]. Like other stipulations about dispute resolution, the Court enforces contractual appraisal provisions by non-dispositive order. Therefore, in Buena Vista Of Deep Creek Condominium Association, Inc. v. Clear Blue Specialty Insurance Company, No. 2:23-cv-957-SPC-KCD, United States District Court, M.D. Florida (November 27, 2023) the court concluded that because appraisal will not dispose of any claims or defenses, the Court did not treat the motion to compel appraisal as one for summary judgment. Since the parties agreed that appraisal is appropriate, their request was granted. Further, the parties requested a stay during appraisal which was also granted because the Hurricane Ian Scheduling Order contemplates such relief if the parties agree that appraisal is appropriate. Thus, the case will be stayed. All deadlines and events in the Hurricane Ian Scheduling Order are suspended. The parties have agreed that the appraisal panel must itemize the awarded damages by coverage, to be accompanied by a supporting estimate. Though the parties cite no contractual provision that requires such an award, because the parties agree, their request will be granted. According, it is hereby ORDERED: The Joint Stipulation for Appraisal and Stay of the Case was GRANTED, and the appraisal panel must itemize the awarded damages by coverage, to be accompanied by a supporting estimate. This case is STAYED pending appraisal, and the Clerk must add a stay flag to the file and administratively close the case. The parties are DIRECTED to file a joint report on the status of appraisal on or before February 26, 2024, and every ninety days thereafter until appraisal has ended. Within 15 days of a signed appraisal award, the parties are directed to jointly notify the Court of (a) what issues, if any, remain for the Court to resolve; (b) whether the stay needs to be lifted; and (c) how this action should proceed, if at all. ZALMA OPINION The Appraisal condition of a first party property policy is an extra-judicial means of resolving disputes between an insurer and an insured about the amount of loss. Since the parties agreed that appraisal was an appropriate manner of resolving that limited dispute they moved to stay the action in hopes that the appraisal result will allow the parties to resolve all their differences. The court understood and issued orders to fulfill the agreement of the parties. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

No Coverage for Loss After Policy Cancelled Post 4684 In an action for declaratory judgment to determine whether the plaintiffs had a duty to defend and indemnify the defendants under certain insurance policies for injuries sustained in a motor vehicle accident, where the trial court granted the plaintiffs' motion for summary judgment. In Liberty Insurance Corporation et al. v. Theodore Johnson et al., No. AC 45933, Court of Appeals of Connecticut (December 5, 2023) the Court of Appeals resolved the dispute. FACTS The defendants, Theodore Johnson (Theodore) and Kim Johnson (Kim), appealed from the judgment rendered by the trial court following its granting of a motion for summary judgment filed by the plaintiffs, Liberty Insurance et al and Safeco Insurance Company of Illinois (Safeco). The primary issue is duty to defend a separate action that stemmed from a motor vehicle accident in which the defendants' son, Aaron Johnson (Aaron), was driving a motor vehicle owned by Theodore when he lost control of the vehicle and struck a telephone pole, causing serious injuries to a passenger in the vehicle, Jordan Torres. At some point prior to 1:33 a.m. on December 26, 2019, Aaron left the defendants' house and operated a 1997 Audi A4 2.8 Quattro (Audi) owned by Theodore. Torres was a passenger in the Audi at the time. As Aaron attempted to navigate a curve, he lost control of the Audi, crossed into the westbound lane of traffic, and left the roadway, striking a telephone pole. Torres sustained personal injuries in the accident and sued a bar in Newington and its backer, as well as Theodore, Kim and Aaron. In the Torres action, Torres alleged that, on December 25, 2019, Aaron, a minor, consumed alcohol at the bar, after which he went to the defendants' house in Glastonbury, where he was visibly intoxicated and consumed more alcohol. Following the commencement of the Torres action, the defendants sought coverage from the plaintiffs for Torres' claims under three policies of insurance: a homeowners insurance policy issued to the defendants by Liberty Insurance (homeowners policy); an automobile insurance policy issued to the defendants by Safeco (automobile policy); and an umbrella insurance policy issued to the defendants by Liberty Mutual (umbrella policy). Thereafter, the insurer plaintiffs sued seeking a judgment declaring that the plaintiffs are not obligated to defend or indemnify the defendants with respect to Torres’ action. Specifically, the insurers based that argument on an exclusion in the homeowners policy that excludes coverage for" 'bodily injury' or 'property damage' . . . arising out of (1) [t]he ownership, ... of motor vehicles ... operated by or rented or loaned to an 'insured' [motor vehicle exclusion] . . . ." Therefore, according to the plaintiffs, because the claims asserted against the defendants in the Torres action arose out of Theodore's ownership of the Audi, as well as Aaron's negligent operation of that vehicle, the motor vehicle exclusion barred coverage under the homeowners policy. With respect to the automobile policy, the plaintiffs asserted that the policy's coverage for bodily injury for the Audi had been cancelled prior to the date of the accident, at the request of the defendants which, obviously, eliminated the case against the auto insurer. The trial court granted the plaintiffs' entire motion for summary judgment. The Court of Appeal noted that the policy explicitly and unambiguously provided that bodily injury arising out of the use of motor vehicles owned by an insured shall be excluded from policy coverage. On the basis of the record, including comparison of the allegations of the complaint in the Torres action with the language of the homeowners policy and the motor vehicle exclusion contained therein, the Court of Appeal concluded, as a matter of law, that the plaintiffs had no duty to defend the defendants in the Torres action. Because there was no coverage on the auto policy pursuant to an underlying policy, Liberty Mutual had no duty under the umbrella policy to defend or indemnify the defendants with respect to the Torres action. Therefore, the trial court properly granted the plaintiffs' motion for summary judgment and determined, as a matter of law, that the plaintiffs have no duty to defend the defendants in the Torres action. ZALMA OPINION Insurance never covers every possible risk of loss. A homeowners policy with an auto exclusion cannot defend or indemnify an insured who injured someone while operating a motor vehicle. In addition, there can never be coverage on an auto policy that was cancelled, and not in effect, at the time of the loss. Although the opinion and arguments were lengthy, the case was simple on the facts of the policy wording and the facts of the accident. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

Equally Fair Interpretation Favors Insured WCPP Risk Purchasing Group, Inc. ("WCPP") asserted coverage claims under a Commercial General Liability Policy ("Policy") issued by Defendant, Lexington Insurance Company, on behalf of Village of Stoney Run, LLC ("Village of Stoney Run") seeking defense and indemnity from an insurer who claimed a mold exclusion defeated coverage. In WCPP Risk Purchasing Group, Inc. v. Lexington Insurance Company, Civil Action No. CAM-L-1025-22, Superior Court of New Jersey, Law Division, Camden (November 29, 2023) the Superior Court resolved the coverage dispute. BACKGROUND The Underlying Action alleges negligence, breach of the warranty of habitability, and breach of contract, asserting injury and damage claims against Village of Stoney Run due to toxic fungus/mold infestation in Pratt's apartment. It is asserted that the mold caused the death of Pratt and damaged her personal property. Plaintiff purchased the Policy on behalf of Village of Stoney Run as part of a joint purchasing group. WCPP is a risk purchasing group for primarily habitation and commercial real property locations. The Underlying Action was initiated by Brian Pratt and Dawn Pratt ("Underlying Plaintiffs"), the co-administrators of the Estate of Darlene Pratt ("Decedent") against the Village of Stoney Run, an apartment complex owned by a Bleznak Organization. As part of the action, Underlying Plaintiffs asserted claims of negligence, breach of warranty, and breach of contract arising out of allegations that Plaintiff failed to properly maintain and repair Decedent's apartment at the Village of Stoney Run, resulting in dangerous living conditions, including mold. Suit in the underlying action was forwarded to Lexington Insurance Company. AIG Claims, Inc. issued a disclaimer of coverage on behalf of AIG Property Casualty, Inc. That policy of insurance disclaimed coverage based upon the fungus/mold exclusion contained in the insurance policy. ANALYSIS The court must enforce the clear and unambiguous terms of the policy of insurance. A policy of insurance is ambiguous only where reasonably intelligent persons would differ regarding its meaning. The court places the obligation on the insurance carrier to draft clear and unambiguous contracts. Where the policy language will support two interpretations, only one of which will support a finding of coverage, the court will choose the interpretation favoring the insured and find that coverage exists. Lexington asserts that the policy of insurance contains a mold exclusion which precludes coverage for the claims in the underlying suit. Fungus/Mold Bodily injury or property damage or any other loss, cost or expense, including, but not limited to losses, costs or expenses related to, arising from or associated with clean-up, remediation, containment, removal or abatement, caused directly or indirectly, in whole or in part, by: Any fungus(i), molds(s), mildew or yeast; or Any spore(s) or toxins created or produced by or emanating from such fungus(i), mold(s), mildew or yeast; or Any substance, vapor, gas, or other emission or organic or inorganic body substance produced by or arising out of any fungus(i), mold(s), mildew or yeast; or Any material, product, building component, building or structure, or any concentration of moisture, water or other liquid within such material, product, building component, building or structure, that contains, harbors, nurtures or acts as a medium for any fungus(i), mold(s), mildew, yeast or spore(s) or toxins emanating therefrom; regardless of any other cause, event, material, product and/or building component that contributed concurrently or in any sequence to that bodily injury or property damage, loss, cost or expense. The claims in this case arose from water leaks which resulted in the conditions about which plaintiffs decedent in the underlying complaint bases the cause of action. The court concluded that the interpretation of the mold exclusion by plaintiff that the loss was due to the water leaking, not mold per se, is equally reasonable to that interpretation of the defendant insurers. Under the circumstances it is the interpretation most favorable to the insured which controls. Accordingly, the court concluded that coverage exists for the exposure to mold as a result of water leakage. ZALMA OPINION Courts interpret insurance contracts differently than other contracts. If a court finds an ambiguity or, as here, an interpretation of an exclusion by the insured and the insurer are equally reasonable, the interpretation of the insured will be enforced. Paraphrasing George Orwell in his novel Animal Farm, all litigants are equal, some - the insured suing an insurer - are more equal than the insurer. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to my substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

Claim Against State Must be Filed in Accord with Statute In Angela Erika Cantu v. California Department Of Transportation et al., F084601, California Court of Appeals (November 30, 2023) Angela Cantu sued the California Department of Transportation (Caltrans) and James Hinson for alleged injuries sustained in a motor vehicle incident. Because she failed to file a proper and timely claim the trial court granted summary judgment to Caltrans and Hinson and Cantu appealed.. FACTUAL BACKGROUND Angela Cantu and James Hinson, a Caltrans employee, were involved in a motor vehicle collision on State Route 168 in Fresno. Two months later, on August 17, 2018, Caltrans received, via facsimile, a letter from counsel retained by Angela Cantu. Richard Maynard, an analyst with the California Department of General Services, responded to Cantu's "letter of representation dated 8-17-2018," and shortly thereafter informed Cantu's attorneys that he would be "handling this file for the State of California." Maynard advised counsel that "The State of California has a six-month statute of limitation. If your claim is not resolved within six months from the date of loss, California law requires you to file a formal claim with the Government Claims Program (GCP) (Government Code 900, et seq.). Cantu's counsel took no further action until January 8, 2020, over 18 months after the underlying traffic collision. In the meantime, the six month claim period lapsed on December 19, 2018. Eventually, on January 8, 2020, Cantu's counsel filed a Government Claim form, along with the $25 filing fee and an application to file a late claim. Thereafter Cantu filed a complaint in the Fresno County Superior Court. Caltrans and James Hinson filed a motion for summary judgment on grounds that Cantu had failed to file an appropriate claim under the Government Claims Act, a mandatory prerequisite to filing a lawsuit. Judgment was subsequently entered in favor of Caltrans and James Hinson. Cantu appealed. DISCUSSION Trial Court Properly Granted Summary Judgment Based on Cantu's Failure to Comply with the Government Claims Act The trial court found Cantu had not complied with the claim presentation requirement of the Government Claims Act in this matter. Since plaintiff's counsel's letter does not touch on many of the required elements of a claim as specified in Government Code section 910, there was no substantial compliance. Cantu's Claims are Barred Under the Government Claims Act The California Government Claims Act (Gov. Code, § 900 et seq.) requires a plaintiff seeking money damages against public entities and public employees acting within the scope of their employment, to file an initial claim with the relevant public entity. While Cantu's August 17, 2018 letter references a motor vehicle accident, it did not describe the circumstances of the accident nor any alleged injuries. More importantly, the letter does not specify the type of resolution contemplated by Cantu or whether a lawsuit was anticipated. Accordingly, the August 17, 2018 letter did not substantially comply with the Government Claims Act. Here, the August 17, 2018 letter sent to Catrans on behalf of Cantu, was signed by a paralegal at a law firm. There is nothing in the subject letter that makes it readily discernible that appellant was making a compensable claim against the relevant government entity or that the failure to satisfy it would result in litigation nor an explanation why there was no response to the Cal Trans letter advising of the limitations. Therefore, Cantu's letter of August 17, 2018, was not a "claim as presented" and did not trigger the notice-or-waiver provisions of Government Code sections 910.8 and 911. The Court of Appeals was unable to find an error in the trial court's analysis and affirmed it decision. ZALMA OPINION Statutes of limitation prevent stale claims. The paralegal's initial letter was sufficiently prompt and the law firm was advised by the state of the need to comply with the statute. Rather, counsel did nothing for more than two years. The decision of the trial court was easy and obvious. Ms. Cantu is not without a remedy for her injuries, she can sue her lawyer to recover the damages she could have recovered if his sloth and inadequate response had not occurred. (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 Excellence in Claims Handling at locals.com at https://zalmaoninsurance.locals.com/subscribe or at substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

Contractor Needs Permission of Insurer to be Protected by an Owner-Controlled Insurance Program Post 4682 See the full video at and at https://youtu.be/cp5PjEBh2_w Team Industrial Services, Inc. (Team) found it had incurred a $222 million judgment against it in a wrongful-death lawsuit arising out of a steam-turbine failure in June 2018 at a Westar Energy, Inc. (Westar) power plant. Team sought indemnity for the judgment from Westar, Zurich American Insurance Company (Zurich), and two other insurance companies, arguing that it was, or should have been, provided protection by Westar's Owner-Controlled Insurance Program (OCIP) through insurance policies issued by Zurich and the two other insurers. In Team Industrial Services, Inc. v. Zurich American Insurance Company; Westar Energy, Inc.; Endurance American Insurance Company; Westchester Fire Insurance Company, and Kelli Most, individually and as personal representative of the estate of Jesse Henson; Cecilia Henson; Dorian Henson, No. 22-3275, United States Court of Appeals, Tenth Circuit (November 29, 2023) resolved the dispute acknowledging that Team's arguments were well reasoned and creative. BACKGROUND In 2010 Westar entered into separate Master Services Agreements (MSAs) with Furmanite and Team to perform work at the Westar power plant and other sites. Team was to perform "pre-heat and stress relieving" services and Furmanite was to perform "valve maintenance" services. Both MSAs state that Furmanite and Team are independent contractors required to procure their own liability insurance and to name Westar as an additional insured on the policies. They both also state that "Contractor shall not assign or transfer any of its rights or obligations . . . under this Contract without previous written consent of [Westar] which consent shall not unreasonably be withheld." (emphasis added) In 2013 Westar instituted its OCIP, through which contractors and subcontractors could obtain insurance protection for work performed at covered locations. Westar had discretion to decide which contractors would be eligible to enroll in the OCIP. Eligible contractors had to complete enrollment forms to be considered for participation. During the time relevant to this dispute, insurance was provided by a Zurich policy, whose premiums were paid by Westar. According to Zurich's policy, an enrolled contractor's "rights and duties under this policy may not be transferred without [Zurich's] written consent." (emphasis added) With permission from Westar, Furmanite submitted an application seeking enrollment in the OCIP and was enrolled in 2013. Furmanite was required to report payroll hours for each month to the broker, Aon. The payroll hours reported to Aon were used by Zurich to calculate the premium to be paid by Westar for the relevant policy period. Westar never made Team eligible to enroll in the OCIP. Team never submitted an enrollment application, and it was never enrolled. Team's parent company acquired Furmanite's parent company. Although Team and Furmanite became "sister companies," they were distinct legal entities and never merged. Team assumed Furmanite's workload at the power plant. Furmanite's insurance coverage under the Westar OCIP continued even though its service contract had been retired. Furmanite's coverage continued, even after it perhaps should have ended. Team argued to the District Court that it inherited Furmanite's coverage under the OCIP via Change Order No. 2 and was therefore insured for the work it performed at the power plant. It also asserted alternative theories including reformation, and the doctrine of promissory estoppel against Westar and Zurich. The District Court ruled that Change Order No. 2 unambiguously retired Furmanite's MSA and left Team's MSA as the sole governing document. The court declined to reform the Zurich policy and rejected the promissory-estoppel, breach-of-contract, and breach-of-fiduciary-duty claims. DISCUSSION Team ignored that the enrollment in Westar's OCIP was not automatic. Westar alone could designate which contractors were eligible, and eligible contractors must apply to enroll in the program, and then be accepted by Westar, in order to receive coverage. Also, under the express terms of the Zurich insurance policy, coverage cannot be transferred without Zurich's consent. Since Team never enrolled nor was it even invited to enroll in Westar's OCIP, nor did Zurich ever give written approval to a transfer of coverage from Furmanite to Team, coverage did not exist. The Change Order did not contain a mention of insurance coverage or the OCIP. There is no ambiguity in the language of the change order from which one could infer that Team would thereafter be provided insurance coverage through the Westar OCIP or otherwise. It was clear to the Tenth Circuit that the notice is to go only to contractors already covered by the OCIP, not contractors-like Team-who are not enrolled in the program. In sum, no contractual promise, nor even a hint or suggestion by Westar or Zurich entitled Team to coverage under the OCIP. Since Zurich was necessarily one of the parties to the insurance contract, reformation would require proof that Zurich intended to insure Team. Team provided no argument, much less evidence, that Zurich intended to name Team as an insured. The Zurich policy explicitly protects Zurich from such claims by requiring any transfer of coverage to be approved by Zurich in writing. Finally, Team raises a perfunctory claim of promissory estoppel. Since there was no allegation that Westar knew about the reporting it could hardly have expected to induce Team's reliance. Nor was there any evidence of a promise by Zurich to provide insurance coverage to Team. The Tenth Circuit affirmed the judgment. ZALMA OPINION When Team's parent company acquired Furmanites parent company and took over the work originally done by Furmanite it assumed that it was covered under the OCIP but did nothing to confirm the fact, proving that breaking it up into its component part and will cost Team $222 million. Insurance, even a contract as complex as an OCIP, must be fulfilled and to gain the coverage Westar needed to allow them to apply, Team needed to file an application with Zurich and Zurich had to agree. None of those things happened and Team had no coverage. (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 Excellence in Claims Handling at locals.com at https://zalmaoninsurance.locals.com/subscribe or at substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

Claim of Disability Because of Stress of Arrest & Conviction Fails Jason Brand ("Brand") appealed from the judgment of the district court entered on September 30, 2021, challenging the court's dismissal of Brand's counterclaims for breach of contract and breach of the implied covenant of good faith and fair dealing. Brand's claimed Principal Life Insurance Company ("Principal Life") failed to pay him benefits under his disability insurance policy (the "Policy"). In Principal Life Insurance Company v. Jason P. Brand, Nos. 21-2716, 21-2908, United States Court of Appeals, Second Circuit (November 30, 2023) the Second Circuit resolved the dispute. DISCUSSION The words and phrases in a contract of insurance must be given their plain meaning and the contract must be construed to give full meaning and effect to all of its provisions. Straining a contract's language beyond its reasonable and ordinary meaning will not be understood to create an ambiguity. All provisions of a contract should be read together as a harmonious whole. The Criminal Activity Exclusion Applies and Justified Principal Life's Denial of Coverage Courts may enforce an exclusionary clause only when it has a definite and precise meaning, unattended by danger of misconception and concerning which there is no reasonable basis for a difference of opinion. Whenever an insurer wishes to exclude certain coverage from its policy obligations, it must do so in clear and unmistakable language. The Policy issued by Principal contains an exclusion for criminal activity (the "Criminal Activity Exclusion") that states: “This policy does not pay benefits for an injury or sickness which in whole or in part is caused by, contributed to by, or which results from: . . . Your commission of or Your attempt to commit a felony, or Your involvement in an illegal occupation[.]” Principal Life contended that the exclusion entitled it to deny Brand's 2014 claim for coverage. Application of the Criminal Activity Exclusion. As to the applicability of the Criminal Activity Exclusion, Brand premised his November 2014 claim for disability benefits on his assertion that he was "total[ly] disab[led]" by "extreme anxiety" that began in "July 2014, [after] a warrant was served" on him by officers of the New York State Attorney General's Office. The application cites no other cause or type of disability. On February 8, 2016-about fifteen months after filing the application-Brand entered into a plea agreement in which he admitted to committing, in connection with his businesses, and between January 1, 2009, and March 11, 2015, the felony crimes of enterprise corruption, insurance fraud in the first degree, and grand larceny in the second degree. Insured Admits Criminal Conduct Brand stated under oath that he committed enterprise corruption, insurance fraud, and grand larceny in the period before he submitted his disability claim for "extreme anxiety." Brand without merit contended that it was the criminal proceedings brought against him, not his commission of several felonies, that were the proximate cause of his disability. Even if the criminal proceedings triggered his most extreme anxiety, it was Brand's commission of the felonies that led to those criminal proceedings that in turn led to his disabling anxiety Brand's 2014 claim for benefits was barred by the Criminal Activity Exclusion and Principal Life was within its rights to reject the claim. The Court affirmed so much of the judgment as granted Principal Life's motion for summary judgment dismissing, based on the Criminal Activity Exclusion, Brand's counterclaims for breach of contract and breach of the implied covenant of good faith. However, the district court erred in dismissing the remaining claim asserted by Principal Life asking to reconsider Principal's request for rescission. ZALMA OPINION Misrepresenting material facts to an insurer when acquiring a policy allows the insurer to rescind the policy. Principal established that Mr. Brand was a criminal and denied his claim appropriately. It doesn't want him as an insured any more and sought rescission which the Second Circuit was unable to rule on so it returned the case to the trial court to decide whether rescission was appropriate because it appeared that he lied to obtain the policy. (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 Excellence in Claims Handling at locals.com at https://zalmaoninsurance.locals.com/subscribe or at substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

The Resource for the Insurance Claims and Insurance Fraud Professionals This, the 22nd issue of the 27th Year of ZIFL includes articles and reports relating to insurance fraud, including: Some Red Flags of Insurance Fraud Over the last two centuries insurers, insurance investigators, Special Investigative Unit Investigators, insurance lawyers, and insurance management have developed lists of indicators of potential insurance fraud. The indicators are known as the Red Flags of Fraud and are used to determine if it is necessary to begin a thorough investigation of an insurance claim to determine if a fraud is being attempted. To be able to work to deter or defeat attempts at insurance fraud the insurance claims person and the SIU investigators must be conversant in the red flags or indicators of insurance fraud. 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 More McClenny Moseley & Associates Issues This is ZIFL’s nineteenth 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 21 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/11/ZIFL-12-01-2023-1.pdf Litigation Financing Although this report from Texas lawyer Steven Badger deals with the litigation around the MMA debacles it is more important for fraud investigators to understand what is happening in litigation financing. Mr. Badger notes that “litigation financing and other interlopers [are] moving into the first-party claims world trying to line their pockets with insurance claim proceeds.” He concludes, and I agree: “This is a very dangerous trend.” Litigation from an entity called Equal Access Justice Fund, LP loaned to MMA $30,000,000 at 20% per year interest plus an additional 4% in advance, extension, and yearly service fees would require the law firm to pay the lenders more than $600,000.00 a year. Unlike the U.S. government law firms cannot print money. For a normal law firm working on hourly billing that interest rate plus service fees is a scary, if not impossible, obligation to meet. Most law firms will not produce enough net income to pay $600,000 a year interest and be able to even consider paying off the principal. In In Re: MMA a pleading filed in the Western District of Louisiana, by Intervenor Equal Access Justice Fund LP (“EAJF”) sought to recover the interest and principal from MMA and its partners as a result of its multiple hurricane suits that have bee removed from MMA’s control by the courts. Chutzpah! Guess Who's Back, Back Again? MMA's website is back up and running. The team is a bit smaller though. https://www.mma-pllc.com/our-team/ The new website for the MMA law firm states: “We believe that striking a balance between professionalism and self-empowerment is key to fostering a harmonious company culture—one where we are encouraged to build authentic relationships and welcome new opportunities.” 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 ‘I Am Guilty.’ Murdaugh Pleads to 22 State Financial Crimes for 27 Year Sentence Alex Murdaugh pleaded guilty November 17, 2023, to stealing millions of dollars from vulnerable legal clients in schemes lasting over a decade under an agreement that all but ensures more prison time for the longtime lawyer who was convicted of killing his wife and younger son. Murdaugh agreed to plead guilty to 22 total counts, including money laundering, breach of trust and financial fraud, in exchange for a 27-year sentence. Judge Clifton Newman said he intends to officially accept the plea deal during a sentencing hearing set for Nov. 28 so that victims or their families may attend. “I agree that I wrongly took all of that money, your honor, and did all of those crimes,” Murdaugh told Newman. “I am guilty,” he added. 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 Health Insurance Fraud Convictions Psychiatrist Convicted of Billing for Services Never Rendered Gustavo Kinrys, 52, of Wellesley, was convicted of seven counts of wire fraud, six counts of false statements relating to health care matters and one count of obstructing a criminal health care investigation. U.S. District Court Judge Denise J. Casper scheduled sentencing for Jan. 31, 2023. Kinrys was arrested and charged in December 2020. Read the full 21 pages of this issue and dozens more convictions at ZIFL at http://zalma.com/blog/wp-content/uploads/2023/11/ZIFL-12-01-2023-1.pdf Man Bites Dog Story Lawyer Sanction Upheld for Intimidating and Harassing an Insurer In Nguyen v. Aventus Ins. Co., 14-19-00607-CV (Tex. App. Sep 30, 2021) an April 2, 2018, sanctions order, that found that the lawsuit filed by Eric B. Dick, And Dick Law Firm, PLLC..." where the court found that the suit had no basis in fact, that it was brought in bad faith for the improper purpose of intimidating and harassing Aventus Insurance Company and that appellants hindered the litigation process and failed to make reasonable inquiries to ensure that the claims and pleadings were not groundless. 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 Other Insurance Fraud Convictions Former Bail Agent And Torrance Police Officer Sentenced To 27 Years In Prison Rehan Nazir, 51, of Torrance, was sentenced November 29, 2023, to 27 years after an investigation by the Los Angeles County Sheriff Major Crimes Bureau and the California Department of Insurance found he had apprehended bail clients prior to their required court appearances and threatened to return them to jail if they did not pay him money or give him property. Read the full 21 pages of this issue of ZIFL and many more convictions at http://zalma.com/blog/wp-content/uploads/2023/11/ZIFL-12-01-2023-1.pdf It is Expensive to Lie to Your Insurer Fraud in Inception Allows Insurer to Rescind Lamin Fatty appealed the trial court’s order granting summary disposition to Farm Bureau on the basis of finding Fatty’s fraud was grounds for contract rescission and reimbursement of benefits paid. In Lamin Fatty v. Farm Bureau Insurance Company of Michigan, No. 363888, Court of Appeals of Michigan (November 21, 2023). 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

Why an Amateur's Attempt at Fraud Failed See the full video at and at https://youtu.be/-AfnWKClZ-E This is a fictionalized true crime story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is presented to help a reader to 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 insured was a poet. Before immigrating from Soviet Armenia, he was a member in good standing at the Armenian Poets Union. They paid him for his work five hundred rubles a month. He lived in the capital city of Yerevan in the shadow of Mount Ararat. He, like all Soviet citizens, before the fall of the Soviet Union, supplemented his income by buying and selling in the black market. He specialized in jewelry and diamonds. By 1977 he had amassed, off the pain and suffering of others, over 300 carats of diamonds and diamond jewelry. Most of the diamonds were old mine cut, popular in Russia in the 1890’s, but out of date. The wealth he had amassed frightened him. He knew that eventually the Soviet Police would catch him and send him to a Gulag. He was committing the most heinous of Soviet crimes: he was a successful entrepreneur. He went to the American Consulate and got a visa as a refugee. He had convinced the American Consulate the Soviet Government was censoring his poetry. He wanted freedom to write. Poetry is not an essential industry. The Soviet Government agreed to his immigration. He came directly to Los Angeles and settled in the Armenian community in the hills of Glendale, California. He brought with him all but twenty carats of the diamonds. He needed to use some of his 300 carats to bribe Soviet Customs Officials to get safely out of the country. For many years he and his family lived by selling the diamonds at auctions. He continued to write poetry but there was no market for Armenian poetry in the United States. The few Armenian language newspapers would publish his poems but could not pay him. Eventually his inventory of fine jewelry began to shrink. He had learned to enjoy living in the luxury the diamond sales had brought him. He didn’t know how to earn money to support himself in America. He did not want to return to Soviet Armenia to be a salaried poet. At a social gathering at the Armenian church after services he expressed his concerns to an acquaintance who ran an art gallery. The gallery owner had been in the United States longer than the poet. He knew how trusting Americans were. He knew that Americans believed what they were told until proved otherwise. He understood that Americans took seriously their belief that everyone was innocent until proven guilty. He explained to his poet friend how he could easily make enough money to support his family comfortably for the rest of his life. The gallery owner told the poet he would rent him a portion of his art gallery to open a jewelry store. The poet only needed to buy an insurance policy insuring against loss of an inventory of his jewelry. The insurer would not ask him before issuing a policy to prove he had any jewelry but would take his word. The poet was incredulous. “Won’t they want to see the jewelry?” “No. They insured my art gallery without ever sending anyone to look at the paintings. If they do send someone out just tell them the jewelry is in your safety deposit box. Tell them you feared bringing it out until you had insurance. You can put in showcases the jewelry you do have to make it look like a legitimate jewelry store.” The next day Poetry Jewelry was born. The poet immediately applied for insurance. He filled out the application form honestly stating that he had been in the jewelry business for ten years buying and selling jewelry from his home. This was his first attempt at a retail business. He had never had a loss. He had never had an insurance policy canceled. He had over a million dollars in inventory. The insurer took the risk without any questions. The security and safes were proper. The premium would be paid in full since the poet had obtained independent premium financing through his broker and only needed to pay 20% of the annual premium. The insurer issued a policy that requested an immediate inspection of the premises. The inspector visited the premises, saw immediately that it was not as represented and advised the company to cancel. They did. The insured went to a new broker. The new insurer did not require an inspection of the premises by anyone other than the broker. It issued a million dollar policy. Two weeks later, before the insurer could change its mind, the poet’s oldest son locked the poet and his mother, the poet’s wife, and the gallery owner in the small four by four foot bathroom. The son then took home all the inventory of Poetry Jewelers. The three people locked in the bathroom waited ten minutes to make sure the oldest son had driven away and then pushed the holdup button secreted in the bathroom because it is common for thieves to lock jewelry store owners in the bathroom. The three captives also pounded on the wall to gain the attention of the restaurant owner next door. The police were called and broke the door down to free the poet, his wife and the gallery owner. The loss exceeded a million dollars. The poet thanked God that they were insured. Their million dollar fraud would have been successful but for an unusual coincidence. The insurer hired as its adjuster the same firm that had inspected the store for the first insurer. The adjuster remembered the insured. He knew that the prior insurer had canceled. He knew when the poet told him that the policy was his first ever that he was lying. The adjuster knew when the insured told him that his inventory was a million dollars he was lying. The adjuster gathered the evidence together and presented it to the insurer. The insurer decided to rescind the policy and deny the claim. The insured and the gallery owner, his mentor, were shocked. They did not give up. They became more aggressive. They retained a lawyer. The lawyer immediately filed suit in U.S. District Court for breach of the covenant of good faith and fair dealing and made claim for fifty million dollars over the one million dollar claim. The insurer was confident it was right. It would not allow an insurance fraud to go forward. It would fight the poet through trial. It was, unusually for American insurers, dedicated to its cause. The insurance company spared nothing. Its lawyers deposed every person who had any connection with the poet. The deposition of the poet lasted for three days. Each member of the family was deposed. Paralegals poured over every word of the transcripts and found conflicting testimony. The insurer obtained documentary evidence from every possible location except Yerevan, Soviet Armenia. The lawyers spent weeks preparing for trial. The poet was unprepared. His family was unprepared. They expected, regardless of the evidence they presented, that the jury would hate the insurance company and punish it. At trial, although well-rehearsed, the poet’s lies began to compound. The testimony of the inspector established the inventory was not there at the time of the inspection. The insured did not have a safety deposit box and therefore could not even prove the existence of a box to hold the jewelry he claimed he had. Under cross-examination the poet’s son’s testimony became confused. The judge took over the cross- examination and, unable to answer confidently, the poet’s son broke down and cried on the stand. Lies were admitted. After five days of trial with testimony from nine in the morning until six every night, the jury went off to deliberate. The jury returned with its verdict in forty-five minutes after spending thirty minutes to pick a foreman. The verdict was for the defense. The jury was convinced that the poet had presented a fraudulent claim and that the insurance company had properly rescinded the policy. The result was unusual. The cost was enormous. The investigation cost, court costs, expert witness fees and attorneys’ fees exceeded $500,000. The insurer defeated the claim for one million dollars in lost jewelry and fifty million dollars in punitive damages. The word went out. This insurance company fights. Do not insure with them. The insurer saved more than the payment of the poet’s claim. It saved all the other fraudulent claims that would have been presented had they not fought. The poet paid nothing to his lawyer who took the case on a contingency basis. He continued living off the jewelry he brought from Soviet Armenia. The poet’s attempt at insurance fraud failed. He learned a lesson about American jurisprudence. He would only make claims against insurance companies willing to insure him after he honestly reports his earlier attempts at fraud. He would not fake a fraudulent claim. He was lucky he was not referred to the U.S. Attorney by the trial judge. This blog was adapted from my book Insurance Fraud Costs Everyone Amazon.com. (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 Excellence in Claims Handling at locals.com at https://zalmaoninsurance.locals.com/subscribe or at substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

Fraud in Inception Allows Insurer to Rescind Post 4678 Lamin Fatty appealed the trial court's order granting summary disposition to Farm Bureau on the basis of finding Fatty's fraud was grounds for contract rescission and reimbursement of benefits paid. In Lamin Fatty v. Farm Bureau Insurance Company Of Michigan, No. 363888, Court of Appeals of Michigan (November 21, 2023) the Court of Appeals resolved the dispute. FACTS After a motor vehicle accident where Fatty sustained bodily injuries the issue of rescission was raised when it was discovered that at the time of the accident, Fatty was insured by Farm Bureau under the no-fault act. Fatty obtained insurance with Farm Bureau on July 17, 2019. On the application for insurance, Fatty answered the following question in the negative: "Are any vehicles to be insured used to carry persons for a fee?" Fatty received treatment for his injuries at Columbia Clinic among other medical facilities, and indicated to providers that he was "rear-ended as an Uber driver." Uber records indicated that Fatty began working as an Uber driver in early May 2019 (before he applied for the insurance) and drove for Uber on the day of the accident. Fatty's drive log shows he picked up a rider at 6:05 p.m. and dropped them off at 6:30 p.m. Fatty picked up another rider at 6:38 p.m. and dropped them off at their destination at 6:50 p.m. Fatty continued picking up riders and completing trips that night until 8:17 p.m. After this discovery, Farm Bureau filed a counterclaim on the basis of fraud, requesting reimbursement of benefits paid to or on behalf of Fatty with regard to the accident. The trial court granted Farm Bureau's motion for summary disposition of the counterclaim, including its request for reimbursement of $104,730.82 for benefits paid, because the policy was rescinded under the doctrine of fraud in the procurement. The trial court also found Fatty's fraud entitled Farm Bureau to attorney fees under the no-fault act, and costs. Specifically, the trial court found the requested costs of $2,599.50 were reasonable and awarded $10,000 in attorney fees. Fatty appealed. SUMMARY DISPOSITION OF THE CLAIM The trial court properly rescinded the insurance policy because Fatty committed fraud in the procurement of the contract by explicitly denying using his vehicle to carry passengers for a fee. Because of this rescission, summary disposition of Fatty's claims was appropriate, without regard to whether Fatty was driving for Uber at the time of the accident. Fraud in the inducement to enter a contract renders the contract voidable at the option of the party deceived. An insurer has a reasonable right to expect honesty in the application for insurance. Rescission abrogates the contract and restores the parties to their relative positions had the contract never been made. A court must not hold an insurance company liable for a risk that it did not assume. Farm Bureau's evidence in the form of the litigation representative's affidavit that he told the truth the policy would have been refused was unrefuted and it establishes the materiality of the misrepresentation. Fatty's denial of carrying passengers for a fee was determined to be a material representation. SUMMARY DISPOSITION OF THE COUNTERCLAIM Reimbursement of the PIP benefits paid to Fatty was an appropriate remedy following rescission. Because the claim was fraudulent and Farm Bureau was the prevailing party, the award of attorney fees and costs was also proper. The trial court properly awarded attorney fees to Farm Bureau. Farm Bureau was forced to defend against a claim pursued under a policy that was procured by fraud. Therefore, the award is within the range of reasonable and principled outcomes and was not an abuse of discretion. Accordingly, the award of attorney fees and costs to Farm Bureau was proper. The trial court properly rescinded the contract because Fatty committed fraud in the procurement by explicitly denying he used his vehicle to carry passengers for a fee. Because the claim was fraudulent and Farm Bureau was the prevailing party, the award of attorney fees and costs was also proper. ZALMA OPINION Rescission is an equitable remedy that allows a contract to be voided from its inception as a result of fraud in the inception. Farm Bureau was deceived by Fatty who lied about a material fact, that he was carrying passengers as an Uber driver. He received no fault benefits as a result of this fraud and the court properly ordered the policy rescinded, ordered Fatty to repay the benefits he received plus attorneys fees it took to defeat the claim. Fatty learned that fraud does not pay and that he should never lie to a prospective insurer. (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 Excellence in Claims Handling at locals.com at https://zalmaoninsurance.locals.com/subscribe or at substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

Coverage Excluded Cannot be Changed to Coverage Provided An insurance coverage dispute that involved a commercial insurance policy ("the Policy") that plaintiff, Winfire Management, LLC ("Winfire") held with defendant, Massachusetts Bay Insurance Company ("Mass Bay"). The trial court concluded that the Policy covered Winfire's business-income losses that resulted from a sewer backup and entered judgment in Winfire's favor. Mass Bay appealed. In Winfire Management, LLC v. Massachusetts Bay Insurance Company, No. 362960, Court of Appeals of Michigan (November 21, 2023) the Court of Appeals read the policy as written and resolved the dispute. BACKGROUND Winfire's claim for lost rental income following a July 2020 sewer backup at one of Winfire's commercial properties was refused by Mass Bay. Winfire sued Mass. Bay for breach of contract for refusing to cover these business-income losses. Soon after, Mass. Bay moved for summary disposition arguing that the Policy did not provide business-interruption coverage for losses from a sewer backup. Mass Bay conceeded that the Policy covered physical damage from sewer backups it explained that taking together the policy provisions in the Business Income (And Extra Expense) Coverage Form ("the BI Form") and the Causes of Loss -Special Form ("the CL Form"), the Policy excluded coverage for lost business income from a sewer backup. In response, Winfire disputed Mass. Bay's interpretation of the Policy. Winfire argued that, because the Policy covered property damage from sewer backups under the Gold Property Broadening Endorsement ("the GP Endorsement"), a sewer backup was a covered loss triggering business-income loss coverage under the BI form. The trial court agreed with Winfire . Accordingly, the court held, as a matter of law, that the Policy covered Winfire's business-income losses from the July 2020 sewer backup. PRINCIPLES OF LAW The sole issue on appeal is whether the Policy covered Winfire's business-income losses resulting from the sewer backup. When an insurance company argues that a policy exclusion negates coverage, the insurance company has the burden to prove that one of the policy's exclusions applies. Consistent with the rules of interpretation, clear and specific exclusions will be enforced as written so that the insurance company is not held liable for a risk it did not assume. ANALYSIS Winfire's commercial property insurance policy with Mass. Bay provided blanket building coverage, blanket business-income coverage, and blanket personal property coverage. There is no dispute that evaluating Winfire's claim for business-income losses begins with the BI form. The BI form governs business-income coverage and states that a claimed business income loss "must be caused by or result from a Covered Cause of Loss." The BI policy provided that: Exclusions We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss. Water (3) Water that backs up or overflows or is otherwise discharged from a sewer, drain, sump, sump pump or related equipment .... The Policy explicitly excluded coverage for business-income losses from a sewer backup. The CL form controls what constitutes a Covered Cause of Loss to trigger business-income coverage under the Policy. Per the CL form, a Covered Cause of Loss under the BI form excludes losses caused directly or indirectly by water that backs up, overflows, or is discharged from a sewer. The amendment providing property coverage for sewer backup amendment was added to "Additional Coverages" in the "Building and Personal Property Coverage Form." It was not added to the BI form. That change explains why Mass. Bay covered the "direct physical loss or damage" to Winfire's property that resulted from the sewer backup. The GP Endorsement did not amend the sewer backup exclusion referenced in the CL form that precludes coverage for business-income losses. The Policy unambiguously excluded coverage for Winfire's business-income losses stemming from the sewer backup. The Court of Appeals noted that a court must enforce insurance policy exclusions that are clear and specific exclusions. Therefore, the trial court's judgment for Winfire was reversed and remanded for entry of an order granting summary disposition for Mass. Bay. ZALMA OPINION The insured tried to convince the Court of Appeals that when an insurer changes a policy to provide sewer backup coverage for property damage it must also provide similar coverage for BI losses. Although the imaginative and well presented argument convinced the trial court the Court of Appeal read the entire policy and noted that the amendment only applied to property damage and not to BI losses. Failure to read the full policy caused Winfire and the trial court to err and cause the trial court's order to be reversed. (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 Excellence in Claims Handling at locals.com at https://zalmaoninsurance.locals.com/subscribe or at substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

Underwriting Against a Certain Loss and Claim is Appropriate

USDC Should Have Considered the Intentional Act Statute California State Grange ("Grange") brought this action as a judgment creditor of non-party Chico Community Guilds ("Guilds") seeking to recover from Guilds' insurer Carolina Casualty Insurance Company ("Carolina Casualty") damages awarded by the state court. The underlying judgment followed a lawsuit quieting title to real and personal property wrongfully converted by Guilds. Grange appealed the district court's grant of Carolina Casualty's motion to dismiss without leave to amend based on its conclusion that the underlying claims were not covered under the policy. In California State Grange v. Carolina Casualty Insurance Company, No. 22-16169, United States Court of Appeals, Ninth Circuit (November 13, 2023) the Ninth Circuit Agreed to the District Court's ruling in part and sent the case back to the court to another part of the case. FACTS Grange sued Guilds in Butte County Superior Court over the assets of Chico Grange No. 486 in which Grange brought several causes of action including cancellation of deed and quiet title, slander of title, and conversion. On February 25, 2021, the state court entered a ruling granting summary judgment to Grange on all claims. The judgment awarded in relevant part: the cancellation of the unauthorized deed recorded by Guilds in 2017; $23,167.50 in attorney's fees related to the slander of title claim; "damages for conversion" of bank accounts in the amount of $80,697.68 plus $9,307.87 in prejudgment interest; and $1,945.49 in costs. Grange sued Carolina Casualty in the USDC seeking a declaration that Carolina Casualty has a duty to indemnify Guilds under the policy to collect on the judgment for all monies awarded. The district court dismissed Grange's suit without leave to amend. ANALYSIS The district court did not err in dismissing Grange's claim for indemnification as to the conversion damages and prejudgment interest awarded by the Butte County Superior Court as restitution not covered under the policy. In the state court's ruling on summary judgment, the Butte County Superior Court noted that Grange was not seeking title to the other personal property items identified in the complaint, but rather, only sought the converted funds totaling at least $80,697.69 in Guilds' bank accounts, which, in turn was the exact amount awarded. The relevant insurance policy explicitly excepts disgorgement or restitution from the definition of damages covered under the policy. Because the conversion damages and prejudgment interest awarded by the Butte County Superior Court was restitution not covered under the policy, the district court's dismissal as to that claim was affirmed. The USDC failed to consider whether the attorney's fees awarded pursuant to the slander of title claim may have been covered under the policy where a wrongful act is defined as including any "error, misstatement, [or] misleading statement." Slander of title involves the publication of a false statement that could be negligent. The district court also failed to consider whether such coverage would implicate California Insurance Code § 533. Carolina Casualty argued that under such an interpretation – if slander of title is a wrongful act because it includes a misleading statement – coverage is barred under California Insurance Code § 533 because such an action would be purposeful. Despite Carolina Casualty's contention to the contrary, a willful act does not include negligent misrepresentations within the meaning of section 533. Bearnaise Butte County Superior Court made no finding as to whether Guilds' actions were done with the requisite "willfulness" the applicability of section 533 is thus not readily apparent on the face of the record before the Ninth Circuit. Because the district court failed to consider the available, alternative basis for coverage under the policy that may be vulnerable to the argument that coverage was barred by section 533, the district court should reconsider the interpretive question. The district court's dismissal of Grange's claim for attorney's fees was vacated and remanded for reconsideration consistent with the opinion. Because the issue for which the case is now being remanded was not considered by the district court because it would be futile, the district court did not err by denying California State Grange leave to amend. ZALMA OPINION The Ninth Circuit, trying to help a plaintiff to recover from an insurer when coverage is questionable, sent the case back to the District Court to determine if the acts of the Guilds were sufficiently intentional to bring into effect California Insurance Code Section 533 or not. If the USDC finds it willful then Carolina Casualty will owe nothing and if not it will owe a few dollars more. In so doing the Ninth Circuit makes the litigation a punishment of the insurer who was required to deal with a suit and an appeal on a policy that probably owed nothing but it will cost more to succeed than to pay off the plaintiff. (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 Excellence in Claims Handling at locals.com at https://zalmaoninsurance.locals.com/subscribe or at substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

Most Insurers Have Rules Prohibiting their Employees to Get Gifts See the full video at and at https://youtu.be/7qPdaA01t3A When I was a young lawyer I tried to give gifts to the claims personnel who referred cases to me and my law firm. I tried to provide them with gifts that they would enjoy only to be told I was violating the company rules. I talked with management and was allowed to make a gift to the claims offices and would send them a book for their library. It was acceptable and accepted by the claims people with good grace and didn't disappear as would a box of Mrs. Field's cookies. If you or your firm works with insurers and you wish to thank your clients consider sending a gift of a book or books for your clients that include: Everything Needed by the Insurance Claims Professional from Barry Zalma The library contains many books on the subject of insurance. The Books include: A Compact Book on How Judges Read, Understand, Interpret and Rule on Insurance Policy Issues The book is available at Amazon.com as a hardcover here; a paperback here; and as a Kindle Book here. The Compact Book on Ethics How Ethical Doctrines from the Beginning of the Written Word to the Present Resulted in the Incorporation of the Covenant of Good Faith The book is available as a Kindle book, a Paperback or a Hardcover “How to Acquire, Understand, and Make a Successful Claim on a Commercial Property Insurance Policy: Information Needed for Individuals and Insurance Pros to Deal With Commercial Property Insurance” The Book is now available as a Kindle book here, paperback here and as a hardcover here The Tort of Bad Faith Available as a Hardcover Available as a paperback Available as a Kindle Book The Equitable Remedy of Rescission of Insurance Available as: A Kindle book A Paperback or a hardcover . Insurance Fraudsters Deserve No Quarter Book That Explains How to Defeat or Deter Insurance Fraud Available as a paperback here. Available as a hardcover here.Available as a Kindle Book here. The Examination Under Oath to Resolve Insurance Claims Available as a Kindle book Available as a paperback. Available as a hardcover. Insurance Fraud – Volume I & Volume II Second Edition Available as a Kindle book; Available as a Hardcover; Available as a Paperback Available as a Kindle book; Available as a Hardcover; Available as a Paperback The Homeowners Insurance Policy Handbook How To Buy An Appropriate Homeowners Policy And Successfully Make A Claim To The Insurer Available as a Kindle Book here. Available as a paperback here. It’s Time to Abolish The Tort of Bad Faith A book examining the creation, history and effect of the Tort of Bad Faith. Insurance Fraud Costs Everyone Available as a Kindle Book and Available as a Paperback from Amazon.com. California SIU Regulations 2020 Available as a Kindle book here. Available as a paperback here. California Fair Claims Settlement Practices Regulations 2022 Minimum Standards for Adjusting Claims in CaliforniaEvery Claims Person in California Must Read, Understand, or be Trained About the California Fair Claims Settlement Practices Regulations by September 1 of Each Year Available as a Kindle Book. Available as a Paper Back “Zalma’s Mold & Fungi Handbook” Kindle Edition Paperback Edition “Getting the Whole Truth: Interviewing Techniques for the Lawyer” Learn techniques that can help you interact with others and effectively gather the facts you need. Zalma on Insurance Claims – Third Edition Ten Volumes Comprising A Comprehensive Group of Materials on Property & Casualty Insurance Claims Mold Claims The Compact Book of Adjusting Property Insurance Claims – Third Edition A Manual for the First Party Property Insurance Adjuster. Available as a Kindle book. Available as a paperback. The Compact Book on Adjusting Liability Claims, Third Edition A Handbook for the Liability Claims Adjuster available as a Kindle book Available as a paperback. The Little Book on Ethics for the American Lawyer The practice of law demands more than knowledge of statutory and case law. It Available as a Kindle book here. Available as a paperback here. Random Thoughts on Insurance Available as a paperback. Available as a Kindle book. Fictionalized True Insurance Crime Books Insurance Fraud Costs Everyone available as a Kindle Book and Available as a Paperback from Amazon.com. Candy and Abel: Murder for Insurance Money How a young lawyer and wise old investigator defeated an Available as a Kindle Book. Available as a paperback. Murder And Insurance Fraud Don’t Mix Available as a Kindle book. Available as a paperback Murder & Old Lace: Solving Murders Performed for Insurance Money Available as a Kindle book. Available as a paperback. Arson for Terrorism and Profit How an Insurance Investigator and Insurance Lawyer Defeated a Plot to use a Fire to Fund Terrorism Available as a Paperback and as a Kindle book M.O.M. & The Taipei Fraud How an Experienced Adjuster Defeated a $7 Million Fake Burglary Claim Available as a paperback. Available as a Kindle book. Arson-For-Profit Fire at the Cowboy Bar & Grill Available as a paperback. Available as a Kindle book. The Defeat of a Fake $10 Million Jewelry Robbery Insurance Claim Available as a Kindle Book here. Available as a paperback here. New Books from Full Court Press The Insurance Law Deskbook. Paperback, only $95.00 available at https://www.fastcase.com/store/fcp/insurance-law-deskbook-2/ California Insurance Law Deskbook Available at https://www.fastcase.com/store/fcp/california-insurance-law-deskbook/ a paperback for only $95.00. Zalma on Property and Casualty Insurance Insurance Law Deskbook Learn the insurance basics that are essential to every civil practitioner. Available at Fastcase.com bookstore. California Insurance Law Deskbook Fastcase.com bookstore. Insurance Bad Faith and Punitive Damages Deskbook All available at fastcase.com bookstore. From Thomson Reuters Property Investigation Checklists Uncovering Insurance Fraud, 13th Edition Available at https://store.legal.thomsonreuters.com/law-products/Forms/Property-Investigation-Checklists-Uncovering-Insurance-Fraud-13th/p/106702361 and as a THOMSON REUTERS PROVIEW eBOOK EDITION https://store.legal.thomsonreuters.com/law-products/Forms/Property-Investigation-Checklists-Uncovering-Insurance-Fraud-13th/p/106702363 From the American Bar Association The Insurance Fraud Deskbook This book is written for individuals who are focused on the effort to reduce expensive and pervasive occurrences of insurance fraud. Lawyers who represent insurers, claims personnel, prosecutors and their investigators can all benefit from this exhaustive resource Available at http://shop.americanbar.org/eBus/Default.aspx?TabID=251&productId=214624; ororders@americanbar.org, or 800-285-2221. Diminutionin Value Damages How to Determine the Proper Measure ofDamage to Real and Personal Property The Commercial Property Insurance Policy Deskbook How to Acquire a Commercial Property Policy and Present and Collect a First-Party Property Insurance Claim If you buy a book I will add all of your clients to my substack non-subscriber list and as free subscribers to Zalma's Insurance Fraud Letter. (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 Excellence in Claims Handling at locals.com at https://zalmaoninsurance.locals.com/subscribe or at substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.

Breach of Condition Precedent Defeats Policy Blog Post 4673 Plaintiff appealed the trial court's order granting summary disposition in favor of defendant. In 23771 Blackstone, LLC v. Conifer Insurance Company, No. 364333, Court of Appeals of Michigan (November 16, 2023) the Plaintiff sought to avoid the fact it breached the material condition requiring it to maintain a fire sprinkler system as a protective safeguard. FACTS A fire occurred at plaintiff's building in Warren, Michigan. The building housed a marijuana growing operation. Defendant insured the property against fire and other hazards under a commercial property insurance policy that defendant originally issued in 2017 and renewed annually thereafter. The parties did not dispute that defendant's policy included a Protective Safeguards Endorsement (PSE), which provided, in pertinent part that the policy required as a condition precedent that the insured was "required to maintain the protective devices or services listed in the Schedule. The protective safeguards to which the endorsement applied was an Automatic Extinguishing System. After the fire, plaintiff filed a claim under the policy, but defendant denied the claim because the property did not have an automatic extinguishing system (AES). Plaintiff sued alleging that defendant had repeatedly inspected the property and "was aware, or should have been aware, from the inspection and other sources, that the property did not have an automatic sprinkler system." The insurer moved for summary disposition arguing that the policy language was clear and unambiguous, and that because plaintiff did not have an AES on its property, it was precluded from recovering fire protection benefits under the terms of the policy. Plaintiff faced with an obvious failure of a condition responded that that defendant should be estopped from denying coverage for lack of an AES because the PSE was ambiguous since it did not actually define the system. The trial court ruled that the insurer was entitled to summary disposition because the policy unambiguously precluded coverage if the insured property did not have an AES, and it was undisputed that there was no AES on plaintiff's property. AMBIGUITY Initially, plaintiff argued that the language of the policy was ambiguous and that it should be construed against defendant and in favor of coverage because an AES is not defined in the PSE. Finding that the language of the PSE was not ambiguous the Court of Appeals noted that the PSE refers to a definition of an "automatic sprinkler system," stating that it means: “a. any automatic fire protective or extinguishing system, including connected: (1) Sprinklers and discharge nozzles; (2) Ducts, pipes, valves, and fittings; (3) Tanks, their component parts and supports; and (4) Pumps and private fire protection mains. b. When supplied from an automatic fire protective system; (1) Non-automatic fire protective systems; and hydrants, standpipes, and outlets." [Emphasis added.] Accordingly, the court concluded that the PSE is not ambiguous because it adequately explained the meaning of an AES. Plaintiff asserted that the AES requirement should not bar coverage for its fire loss because both it and defendant were fully aware that an AES did not exist at the property. Plaintiff was aware because it owned the property, and defendant was aware because multiple inspections revealed that there was no AES on the property. However, the mere fact that defendant and plaintiff may have been aware that the property did not have an AES does not establish that the parties mutually understood and agreed that an AES was not required as a condition of coverage. The policy unambiguously required that the property have an AES as a condition of coverage, and there was no evidence that defendant ever intended or agreed that an AES was not necessary. There was no evidence of a mutually shared factual mistake by the parties regarding the impact of not having an AES at the property on the availability of coverage. ZALMA OPINION Insurance policies are contracts. They agree to indemnify an insured against multiple risks of loss but never every potential risk faced by the insured. When an insurer requires protective safeguards like fire sprinklers or burglar alarms it reduces its premium because of the fact that the risk of loss is lessened by the protective safeguard. Failure to maintain a protective safeguard, a condition precedent, eliminates coverage because the risk of loss was not as promised. (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 Excellence in Claims Handling at locals.com at https://zalmaoninsurance.locals.com/subscribe or at substack at https://barryzalma.substack.com/publish/post/107007808 Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01 Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.