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Routine Business Not Protected Work Product In Aerojet Rocketdyne, Inc. v. Global Aerospace, Inc., et al., No. 2:17-cv-01515-KJM-AC, United States District Court, E.D. California (October 25, 2023) an insurance coverage dispute wastes the time of the court and are admonished by the court. FACTUAL BACKGROUND In a long-running insurance coverage dispute that was prolonged for several years by defendant Global Aerospace Inc.'s refusals to produce evidence in response to requests from plaintiff Aerojet Rocketdyne, Inc. The root of the disagreement was Global's assertion of attorney-client privilege and work-product protections. The Magistrate Judge determined the disputed evidence was not protected by the attorney-client privilege or work product doctrine, and the court denied Global's repeated requests to revisit that decision. In short, although attorneys were involved in the disputed investigation, communications with them were not privileged, and their work product was not protected; the investigation was part of the company's routine business. It was not conducted in anticipation of litigation. Several defendants, including Global, have now moved for summary judgment. Briefing is ongoing. The exhibits are excerpts of transcripts from two depositions marked “confidential” under the terms of a discovery protective order. The witnesses were Katherine Posner and Wendy Grossman, two attorneys at the center of the dispute about privilege and work product. The defendants argued the transcripts are “sensitive” and must be sealed because they “would ordinarily be protected by the attorney-client privilege and work product doctrine.” The courts of this country recognize a general right to inspect and copy public records and documents, including judicial records and documents. Although that right is not absolute, a strong presumption in favor of access is the starting point. This presumption is based on the need for federal courts, although independent-indeed, particularly because they are independent-to have a measure of accountability and for the public to have confidence in the administration of justice. When documents are filed with motions more than tangentially related to the merits of a case, such as alongside a motion for summary judgment, a party who asks to keep them secret must meet the high threshold of showing that compelling reasons that support that request. This standard applies even if the documents have previously been filed under seal or are covered by a generalized protective order, including a discovery-phase only protective order. To decide whether the party requesting sealing has carried its burden, the court balances the requesting party's reasons for secrecy with the public's interests in disclosure. If a court decides to grant a request to seal, it must explain its reasons and may not rely on hypothesis or conjecture. The District Court concluded that the defendants have not justified their request to seal the deposition transcript excerpts in question. They cannot rely on the confidentiality designation now. Once confidential discovery documents are made part of a dispositive motion, such as a motion for summary judgment, they lose their status of being raw fruits of discovery. They no longer enjoy protected status without some overriding interest in favor of keeping the discovery documents under seal. DOCUMENTS UNDER SEAL The District Court concluded that the defendants have no overriding interest in secrecy. They do not claim the testimony was privileged. They do not contend it discloses protected work product. They argue only that the testimony would “ordinarily” be privileged or protected, except that the court had decided they waived the attorney-client privilege with their outside counsel. The argument suffers from two primary faults: The court did not find the defendants waived the protections of any privilege or protection. The Magistrate Judge found the documents were not privileged and not protected, and this court upheld that decision. There was nothing to waive. The defendants' argument proves too much. If an unsuccessful privilege claim could support a motion to seal, then any defendant could keep any document from the public view simply by asserting a meritless privilege claim, waiting for that claim to be rejected, and asking to seal the document because it would “ordinarily” have been privileged. Any evidence could be kept from the public arbitrarily. The deposition testimony may not be kept secret solely because it is specific to the particular claim at issue in the litigation. The argument undermines the motion. If the court were to grant summary judgment, and if the testimony were sealed, then the public could not read and understand the evidence behind the court's decision why there was no genuine dispute as to any material fact. Therefore, the motion to file under seal was denied. In addition, the court ordered that within seven days, defendants must either (1) file a notice withdrawing their reliance on Exhibits AAAA and BBBB in connection with their pending motion for summary judgment, or (2) file copies of Exhibits AAAA and BBBB on the public docket. THE WARNING The court and the parties have already devoted too much time, too much money, and too much effort to arguments about privilege and work product protections. As before, the court warns defendants that “dilatory or evasive tactics may result in an order to show cause why sanctions should not issue.” ZALMA OPINION There is nothing that annoys a trial judge more than repeated motions asserting privileges that do not exist yet wish to use the documents to support a dispositive motion. Insurance disputes should be relatively straightforward based upon clear and unambiguous wording of an insurance policy as applied to the facts supporting the dispute. Years of disputes over discovery of facts that the court repeatedly ruled were not privileged is contumacious and if continued the warning from the court should result in the sanctions predicted. (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

Withholding Coverage for Criminal Acts Disincentivizes Criminal Conduct Safeway Insurance Company sought supervisory writs from the judgment of the lower court which denied its motion for summary judgment. In Damien Harris v. Safeway Insurance Company Of Louisiana And Justin Rossette, No. CW 23-165, Court of Appeals of Louisiana, Third Circuit (October 25, 2023) the Louisiana Court of Appeals resolved an insurance coverage dispute over a criminal acts exclusion. FACTS After a motor vehicle accident which occurred on April 10, 2019 in Abbeville, Louisiana. Plaintiff, Damien Harris, a passenger in a 2009 Toyota Camry being driven by Defendant, Justin Rossette, collided with a pickup truck while the Toyota was running from the polices. The Camry was covered by an automobile insurance policy issued by Safeway. Officers from the Abbeville Police Department were in pursuit of Rossette with sirens and lights on the police cars were activated and the facts establish this was a high-speed pursuit. Rossette ignored a stop sign at the intersection and collided with the vehicle being driven by Aaron T. Durke. Rossette was arrested for aggravated flight from an officer and possession of narcotics at the scene of the accident. Plaintiff sustained multiple injuries. Safeway denied coverage based on a policy exclusion clause included in their standard contracts for criminal acts. Following the denial of coverage, Plaintiff filed suit against Safeway and Rossette for damages arising from the motor vehicle accident. Plaintiff and Safeway filed cross motions for summary judgment on the coverage issues. Both motions were denied. ANALYSIS Safeway argued that at the time of the collision, Rossette was engaged in and/or committing several criminal acts. Safeway noted that before the collision occurred, Rossette had been chased by numerous police cars for several blocks through parts of Abbeville. Safeway also noted that Rossette disregarded several stop signs, was speeding excessively, and the specific cause of the collision was Rossette ignoring another stop sign at the intersection. Therefore, Safeway argued Rossette was in the commission of a crime under La.R.S. 14:108.1. Plaintiff countered that Rossette was not engaging in a criminal act in the moments right before the collision. Although coverage exclusions generally do not comport with the policy of granting protection for injured persons, the exclusions in the Safeway policy served a separate public policy interest of prohibiting persons from insuring themselves against their own intentional or criminal acts. Withholding insurance coverage for intentional or criminal acts helps to disincentivize such conduct, which in turn serves the purpose of eliminating reckless and irresponsible drivers from the highways. Whether Rossette was contemplating discontinuing the flight from police as the trial court implied, the facts are clear that the accident occurred immediately after he again ran through a stop sign and collided with Mr. Durke. There was no question of fact that Rossette ran into Mr. Durke's vehicle while intentionally fleeing from a police officer, which is a crime. The Safeway policy in this case clearly provides that damages arising out of the use of an automobile "while being operated or used in the preparation to commit a crime, commission of a crime, and/or flight from a crime, other than a traffic violation," are excluded from coverage. Safeway's writ application was , therefore, granted and summary judgment in favor of Safeway was ordered. ZALMA OPINION Liability Insurance, by definition, provides coverage for fortuitous or accidental events. Running from the police in a high speed chase while blowing through stop signs and colliding with an innocent driver is a criminal act in Louisiana. That the driver had a subjective intent to avoid the accident was convicted of multiple crimes that resulted in the injuries that were the subject of Mr. Harris's injuries. There was no fortuity and the acts of Mr. Rossette were criminal and excluded. (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

Failure to Plead a Viable Complaint after Four Tries Stops Everything Scott Manley moved the USDC to dismiss the two claims plaintiff Mark Esquibel asserted against him in the Third Amended Complaint (TAC) for wrongful termination in violation of public policy (“Tameney claim”) and for promissory fraud. Because Manley was Esquibel's manager at Kinder Morgan and not his employer, Manley cannot be liable for the Tameney claim as a matter of law. For the same reason, Manley contends that he cannot be liable for promissory fraud resulting from alleged assurances in or around 2008 that Kinder Morgan would provide Esquibel with insurance coverage during his employment. More problematic is that these alleged assurances occurred in 2008 but Manley did not become plaintiff's supervisor until 2017. In Mark Esquibel v. Kinder Morgan, Inc., et al., No. 21-cv-02510-WHO, United States District Court, N.D. California (October 17, 2023) the USDC explained why its patience had been exhausted. ANALYSIS Esquibel asked for leave to amend to assert totally new claims against Manley, including eavesdropping in violation of California Penal Code section 632 and invasion of privacy, harassment under California's Fair Employment and Housing Act (FEHA), and claims for intentional and negligence infliction of emotional distress based on the alleged eavesdropping and harassment. Esquibel did not address the standard for granting leave to amend or explain why – despite the multiple opportunities to amend he was given – he failed to allege these claims in any of his prior four complaints. The claims that he seeks to add now – based on eavesdropping in violation of California Penal Code section 632 and systemic harassment and intimidation based on use of racial slurs – rely on factual allegations that were made in this case at its inception. In the trial judge's June 2023 Order, Esquibel was “given one last chance to amend.” In that Order, the court explained to Esquibel what facts were missing but were necessary in order to state viable claims. He then filed the The Amended Complaint only to find it denied and Kinder Morgan's third motion to dismiss allowing the Tameney claim and the promissory fraud claim to proceed. Given the multiple opportunities Esquibel has had to amend, the “one last chance” warning given, and the significant prejudice caused not only Manley but Kinder Morgan (who repeatedly and successfully moved to dismiss, resulting in the court's narrowing of the claims left at issue) by Esquibel's dilatory tactics and attempts to plead yet more claims based on facts known since the inception of this litigation, further leave to amend was denied. There is simply no excuse for Esquibel sitting on these claims. There has been undue delay and dilatory conduct, causing significant prejudice to defendants. Esquibel’s piecemeal approach to his pleadings and seeming inability or unwillingness to fully plead his claims despite the Court’s Orders and defendants pointing out the multiple deficiencies in his claims is unacceptable. Construing his opposition to the motion to dismiss as a properly noticed motion for leave to file a Fourth Amended Complaint with wholly new claims against Manley (and logically against Kinder Morgan), the motion was denied. Defendant Manley's motion to dismiss was granted and the litigation stopped. ZALMA OPINION Some judges have the patience of Job with litigants and allow them multiple opportunities to find a way to plead a viable cause of action. The judge in this case gave the plaintiff three tries and warned Esquibel that the last order was his "last chance." Ignoring the warning Esquibel tried a new way to allege a case that had nothing to do with his first three tries. His failure ended the court's patience and the order was dismissed. Why the court did not sanction Esquibel under Rule 11 is difficult to understand. Court's need to control their calendar and not be so patient. (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

Speaking to the California Conference of Arson Investigators Learn about CCAI at https://arson.org/ On October 19, 2023 I had the honor to speak to the California Conference of Arson Investigators Annual Seminar in San Louis Obisbo, California on taking the profit out of arson for profit. I learned as much from my audience as they learned from me and firefighters, arson investigators and federal investigators learned about the rights and duties of insurers and arson investigators when fraud - by definition arson-for-profit - is suspected. Part of my talk included: Most structures are Insured against the Peril of Fire. Arson damages property by fire. Arson is not excluded. Few insurance companies are equipped to deal with an arson-for-profit. Arson is a crime involving fire. Damage by fire is indemnified by insurance. There is no “arson defense” in an insurance policy. An arson fire is only a fire - a named peril the risk of loss of which is insured. I explained the Importance of parts of California statutes like: California Penal Code Section 550(a)It is unlawful to do any of the following, or to aid, abet, solicit, or conspire with any person to do any of the following:(1)Knowingly present or cause to be presented any false or fraudulent claim for the payment of a loss or injury…. California Penal Code Section 550(5)Knowingly prepare, make, or subscribe any writing, with the intent to present or use it, or to allow it to be presented, in support of any false or fraudulent claim. (b)It is unlawful to do, or to knowingly assist or conspire with any person to do, any of the following:(1)Present or cause to be presented any written or oral statement as part of, or in support of or opposition to, a claim for payment or other benefit pursuant to an insurance policy, knowing that the statement contains any false or misleading information concerning any material fact.(2)Prepare or make any written or oral statement that is intended to be presented to any insurer … knowing that the statement contains any false or misleading information concerning any material fact. California Insurance Code Section 1871.1 Insurers and their agents, while they are investigating suspected fraud claims, shall have access to all relevant public records … California Insurance Code Section 1875.2 If any insurer has reason to suspect that a fire loss was caused by incendiary means, the insurer shall furnish an authorized agency with all relevant information acquired during its investigation of the fire loss and cooperate in an investigation by an authorized agency. California Insurance Code Section 1875.3 An authorized agency shall notify the insurer, if known, and at the expense of the insurer, whenever it has reason to believe that a fire loss was not accidentally caused. The agency shall also release to the claimant’s insurer specific information regarding the fire loss at the earliest time possible unless it determines that an ongoing investigation would be jeopardized. California Insurance Code Section 1875.4In the absence of fraud or malice, no insurer or person acting in its behalf who (a) furnishes information whether oral or written, pursuant to this article, or (b) assists in any investigation conducted by an authorized agency, shall be liable for damages in a civil action, nor shall any authorized agency which releases information pursuant to this chapter be liable for damages in a civil action.The act of furnishing information required pursuant to this article shall not constitute an act of fraud or malice. I then provided several examples of arson for profit schemes that were defeated by arson investigators working together with insurers and the investigators and claims people working with the insurers. Details are available from some of my books like: Insurance Fraudsters Deserve No Quarter 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 Fictionalized True Insurance Crime Books available at the Insurance Claims Library at http://zalma.com/blog/insurance-claims-l (c) 202 3 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 –

Most Public Adjusters are Honorable Professionals This is a fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The stories help 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. Unfortunately, like Every Profession, Some are not Honorable and This Story is Presented to Warn Insurers and Professional Public Adjusters How to Recognize the Amoral Members of the Profession Public adjusters, like personal injury lawyers, work on a contingency fee. For a percentage of the recovery, they present claims on behalf of insureds to insurance companies. Like personal injury lawyers, some are honest and some are not. The public adjuster who is the subject of this tale is one of the latter. This amoral public adjuster profits from the misery and grief of unfortunate people who suffer loss. His car is equipped with a multi-band scanner turned to all of the fire department frequencies. When he hears of a fire on his scanner he drives directly to the scene. He has been known to arrive before the fire engines. In his briefcase he carries glossy brochures explaining what services he provides and how insurers will take advantage of innocent insureds not represented by amoral public adjusters. While the embers of their house cool, he has the homeowners sign a contingency fee contract promising to take care of all their needs. Because state law requires that the contract have a seventy-two-hour cancellation clause he does nothing for the first three days, except leave the property owner with blank inventory forms upon which he has instructed them to write a description of every item of property in their house. Once the seventy-two hours have expired and the contract can no longer be canceled, he calls in contractors and furniture restorers to prepare estimates for the restoration of the house and its contents. Each of the contractors knows that they will not be called unless they have already agreed to pay the amoral public adjuster, in cash, 15 percent (15%) of the contract amount. Each of the contractors, therefore, bid their work at a price at least twenty-five to thirty percent higher than necessary to restore the damaged property using material of like kind and quality as existed before the fire. The contractors understood that a reasonable profit can only be made if the insurance company pays the inflated estimate. The company adjuster can adjust the estimate downward and they will still have enough profit left over to pay the amoral public adjuster. The amoral public adjuster also has in his office computers a schedule of household goods. Whatever claim he adjusts; the same list of household goods is presented to the insurance company adjuster. The list always contains ten cans of Libby peas, four cans of Libby string beans, five cans of Del Monte tomato sauce, and twenty can of Campbell pea soup. Every schedule prepared by the amoral public adjuster shows a thirteen-inch Sony Trinitron color television with remote control in the kitchen and a 50 inch HD TV in the family room. The living room always contains a complete entertainment center with sixty inch televisions hung on the wall, a TiVo, a stereo and a CD player. The amoral public adjuster does not even attempt to find out what was actually in the insured’s house. Invariably, because of the extent of the list of personal property, the insured’s claim is invariably greater than their policy limit. The amoral public adjuster is happiest when the loss exceeds the policy limit. This gives the adjuster for the insurance company the opportunity to negotiate depreciation off the total value of the claimed lost property without ever reaching a number less than the policy limits. The amoral public adjuster’s success relied on the fact that the company’s adjuster is overworked, underpaid and under-trained. The company adjuster does not have the time to thoroughly investigate each fire loss. He must rely on the honesty of the insured and the contractors bidding on the repair work. If the adjuster doesn’t go out and look, there is no way for the adjuster to know that there was no television in the insureds’ second bedroom. If he doesn’t look, he will never know that the insureds had never purchased Libby products in their life, or that the house was not large enough to hold all of the personal property claimed destroyed in the fire. Since the company adjuster had 200 fire claims pending and a supervisor, who insisted that he close no less than 50 claims a month, the adjuster had no choice but to believe the presentation made by the amoral public adjuster. He depreciated the personal property, eliminated duplications on a construction estimate, and prepared a well-written report establishing that the loss exceeded policy limits. His superiors immediately provided him authority to the insured and the public adjuster. The amoral public adjuster collected 10% of the total amount of the loss from the insured. He added to his profit with an additional 15% from the contractors. The adjuster closed one more file and pleased his supervisor. The insured received enough money to repair his house and replace his personal property. Auditors reviewed the file and found it well documented with two reconstruction estimates, an investigation report prepared by the adjuster, and photographs of the dwelling. On paper the adjustment was excellent. The statement of loss was prepared in the proper format. Drafts were drawn properly; all codes were entered and appropriate reserves were submitted. There was no need for the expensive services of independent adjusters, surveyors, construction consultants, engineers or attorneys. As a result of similar good work, the adjuster was promoted to claims supervisor. If the insurer's adjuster only had 50 fire claims pending and, therefore, the time to make a complete and full investigation of the fire scene, he would have learned the following: More than 40% of the personal property claimed destroyed in the fire was not in the residence. The general contractor’s estimate to repair the building added eighteen inches to every dimension of every room. This additional square footage inflated the fire repair estimate 25 percent. If he had inspected the premises closely and done a complete scope of loss, he would have noted that the hardwood floors throughout the dwelling were actually plywood sub-flooring covered with carpet. He would also have learned that there was no service porch as called for in the repair estimates, nor was there any vinyl wall covering. Had he inspected carefully, he would have noted that a kitchen larder was bare and the refrigerator contained only a quart of milk, two eggs and half a package of bacon. If his company had authorized the purchase of overalls rather than requiring him to wear a business suit on all calls, he would have been able to go into the debris to find that the only remains of a television in the entire house were a single thirteen inch J.C. Penney black and white television. If the adjuster had any training in fire cause investigation, he would have noted the flammable liquid trails on the carpet in the living room, dining room, kitchen and master bath. If his sinuses weren’t plugged, he would have smelled the gasoline still liquid in the bathroom carpet. He didn’t have the time, he didn’t have the training, and he didn’t have the support. He talked to the insured on the telephone who told him he was away from the house when the fire happened. The adjuster had a contractor he knew prepare an estimate which he used as the basis of his adjustment. The contractor was introduced to the adjuster by the amoral public adjuster. The adjuster never saw the dwelling. He trusted his contractor and the amoral public adjuster to do his work for him. The insured got their house fixed and more money than they were entitled to receive. The amoral public adjuster collected 25% of the total payment for a total of five hours work. The contractor, even after paying 15% to the amoral public adjuster, made a profit of 40% and did only the least amount necessary to repair the house rather than the maximum amount specified on the reconstruction estimate. The fraud was perfect. The perpetrators and the victims alike, were satisfied. If the insurance industry believes it is saving money by under staffing, under paying and failing to properly train its adjusters, it is sorely mistaken. I submit that the most effective means of defeating fraudulent insurance claims would be for the insurance industry to recognize that its staff of adjusters must be highly trained professionals who earn the best wage in the insurance company and who are motivated and rewarded for good work. Adjusters must be compensated and rewarded for the quality of their work, not the quantity. Very few public adjusters are amoral. In fact, their national organization, requires they submit to the NAPIA code of ethics. [http://www.napia.com] If the amoral public adjuster followed the NAPIA code he would be the Moral Public Adjuster. This article was adapted from my book Insurance Fraud Costs Everyone (c) 202 3 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-l

UIM Statute Limited Coverage to Same as UM Coverage THE STATUTE CONTROLS Majdoleen A. Khattab, Administratrix of the Estate of Affan Mohamad Khattab, ("Appellant" or "the Estate"), appealed the district court's order granting summary judgment for Berkley Regional Insurance Company and Integon General Insurance (collectively, "the insurers"), and entering an order of declaratory judgment in favor of the insurers. In Majdoleen A. Khattab, Administrator, Estate of Affan Mohamad Khattab v. Berkley Regional Insurance Company; Integon General Insurance Corporation, No. 22-1462, United States Court of Appeals, Fourth Circuit (October 19, 2023) the Fourth Circuit interpreted the clear language of the statute and UM/UIM coverages. ISSUES At issue is an insurance policy issued by Berkley Regional Insurance Company. The policy has a general liability limit of $1,000,000 and an uninsured motorist coverage limit of $70,000. This case solely turns on the legal question of what the relevant coverage limit under the insurance policy is for an accident caused by a motorist whose insurance coverage is less than the amount of claimed damages and less than the amount of the general liability limit, but greater than the amount of the uninsured motorist coverage limit. Virginia mandates that an insurance policy's uninsured motorist coverage limits must match the policy's liability limits unless any one named insured rejects the additional uninsured motorist coverage by notifying the insurer as provided in the statute. There is no dispute that Berkley complied with the notice requirement for "uninsured/underinsured coverage limits" pursuant to the statute. There was no dispute that the insured properly limited the uninsured coverage to $70,000. With respect to underinsured coverage the statute provides that the policy shall also provide underinsured motorist insurance coverage with limits that shall be equal to the uninsured motorist insurance coverage limits and shall obligate the insurer to make payment for bodily injury or property damage caused by the operation or use of an underinsured motor vehicle to the extent the vehicle is underinsured. Appellant argues, the underinsured coverage limit remained at $1,000,000, equal to the policy's general liability limit. However, Appellant did not pay for a UIM coverage of $1 million. Appellant overlooks that the statutory default sets underinsured motorist coverage equal to uninsured motorist coverage, not the policy's general liability limit. Because the uninsured motorist coverage was properly limited to $70,000, and the policy does not provide for underinsured motorist coverage different from the statutory default, the district court correctly concluded that the applicable coverage limit was $70,000. Accordingly, the Fourth Circuit Court of Appeals affirmed. ZALMA OPINION It appears to me to be ridiculous to buy liability insurance with limits of $1 million to protect third parties that might be hurt by the insured but refuse to buy the same limit or more if the insured is injured by an uninsured or underinsured motorist. The insured sought the coverage that was needed, not the coverage ordered. (c) 202 3 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-l

Courts May Never Assume They Must Deal in Facts Grange Insurance Company ("Grange") issued two insurance policies for insureds called Roosters - a Business Owners' Policy ("BOP"), and a Commercial Umbrella Policy ("CUP"). All agree the BOP provides coverage. The BOP specifically covered liquor liability the CUP specifically excluded liquor Liability. In Grange Insurance Company v. Georgetown Chicken Coop, LLC; Anthony Crish; Chad Givens; Cock-A-Doodle-Doo, LLC; Preston Restaurant "A," LLC; and Robert Gauthier all aka "Roosters", No. 2022-CA-0101-MR, Court of Appeals of Kentucky (October 20, 2023) the Court of Appeal read the full CUP and ruled on its unambiguous language. FACTUAL BACKGROUND On the night of January 5, 2019, Joey Lee Bailey ("Bailey"), was served and consumed alcohol at Roosters in Georgetown. After leaving Roosters, Bailey went to another place called "Horseshoes" in Lexington, where Bailey continued to drink. Then, during the early morning hours of January 6, 2019, Bailey was driving the wrong direction on Interstate 75. Bailey's truck hit a vehicle carrying the five-member Abbas family. All six people were killed. The estates sued. Roosters then sued for declaratory judgment against their insurer, Grange. Grange then sought a legal determination concerning their insurance coverage under the CUP. Roosters sought summary judgment, which was granted. Grange appealed. ANALYSIS Even if a court finds an ambiguity in a policy courts may not rewrite the plain language of a policy examined as a whole. The circuit court declared an ambiguity. The circuit found an ambiguity and also made a general observation about umbrella policies. The difficulty with the decision of the circuit court flowed from the following paragraph in the circuit court's Conclusions of Law: “There is no purpose for an umbrella policy if not to supplement the underlying policy if exhausted.” What it ignored was that the purpose is only to supplement underlying policy coverages that the insurer agreed to supplement. The CUP was not a "follow form" umbrella and had different terms and conditions. The primary insurance for Roosters was provided by Grange with the BOP. Liquor liability coverage was provided by an endorsement to the BOP. The parties agreed that liquor liability coverage existed in the BOP. Roosters also purchased the CUP, an umbrella policy with Grange. Umbrella policies are often purchased but, as in a real-life thunderstorm, some umbrellas provide more coverage than others. The Court of Appeals noted that your feet may still get wet with the best umbrella. As a general statement, umbrella policies, as one form of excess coverage, follow the primary policy and provide additional coverage. Such policies often provide additional coverage for some claims not in the primary policy. An umbrella is not necessarily a mirror image of the primary coverage. An umbrella policy may have its own exclusions. The Court of Appeal stated that it was unable to find authority for the proposition that an umbrella cannot exclude additional coverage for certain claims covered by a primary policy since they are two separate contracts. That is why the first paragraph of the CUP states: "Various provisions in this policy restrict coverage. Read the entire policy carefully to determine rights, duties and what is and is not covered." The word replace is not technical. The entire section in the form policy was removed and replaced by the language of the endorsement that eliminated liquor liability coverage. Without ambiguity, the expectations of the insured do not control. Courts are not in the business of assumptions. Rather, a court must apply facts to the law. Refusing to acknowledge and accept the Circuit Court's assumptions that an umbrella policy must provide coverage excess over all of the coverages provided by the BOP, the Court of Appeal reversed the trial court. The Court of Appeals directed a declaratory judgment that the CUP does not provide coverage and thus also does not impose a duty under the CUP to defend the claims in this case. ZALMA OPINION Whenever an insured or a court assumes facts or coverages exist without applying the actual language of the policy they must break the word "assume" into its component parts and Roosters and the trial court's assumption of coverage made an ass out of the insured and the circuit court. Although few actually read an insurance policy that is no excuse for any insured who did not pay someone to read it for them if they were unable to do it personally. The Court of Appeal had no choice, it read the policy and applied it as written. (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-l

Conviction by Plea Manifestly Just Defendant Carlo Amato appealed from a March 24, 2022 order denying his motion to withdraw his guilty plea. In State Of New Jersey v. Carlo Amato, No. A-2788-21, Superior Court of New Jersey, Appellate Division (October 10, 2023) dealt with the intent to withdraw Amato's guilty plea. FACTUAL BACKGROUND In October 2017, Amato was indicted by a Grand Jury for four counts of second-degree healthcare claim fraud; two counts of third-degree theft by deception; third-degree possession of a controlled dangerous substance; five counts of second-degree theft by deception; second-degree insurance fraud; and two counts of first-degree financial facilitation of criminal activity. Two months later, defendant was charged with second-degree financial facilitation of criminal activity; second-degree theft by deception; and fourth degree making a false written statement. These additional charges stemmed from defendant allegedly filing false disability claims. Following issuance of an arrest warrant and execution of a search warrant at defendant's residence in December 2017, he was charged with second-degree financial facilitation of criminal activity and fourth-degree possession of a fictitious driver's license prompting the State to move for his pretrial detention. After the state multiplied the charges against Amato for multiple crimes, knowing he was guilty and had no chance of a defense verdict, in April 2018, Amato accepted a plea offer from the State to plead guilty to one count of first-degree financial facilitation of criminal activity and one count of second-degree theft by deception under Accusation, a small part of the charges in the indictments. Before he entered his guilty pleas, the State outlined the terms of the plea offer on the record, stating that in exchange for defendant's guilty pleas, it would: dismiss all other pending charges; allow defendant to exculpate his wife; recommend a ten-year prison term with a five-year parole disqualifier on the first-degree offense, to run consecutive to a flat five-year term on the second-degree theft charge; recommend that defendant's aggregate sentence run concurrent to a sentence due to be imposed on his pending federal charges; and consent to delay defendant's sentencing on state charges until after his sentencing on federal charges. SECOND THOUGHTS In April 2020 Amato moved to withdraw his guilty pleas to the two state charges, contending his reasonable sentence credit. Defendant argued he was denied effective assistance of counsel because plea counsel failed to advise him duplicate jail credits could not be awarded on his consecutive state sentences. Defendant certified that if plea counsel had advised him that he was not entitled to a duplicate award of 511 credits, he would not have accepted the plea offer from the State and would have insisted on going to trial. THE TRIAL JUDGE Additionally, the judge determined "[d]efendant received a host of benefits" when he accepted the State's plea offer and none of those benefits "w[ere] affected by the number of jail credits awarded for his state sentences." Therefore, he concluded there was no "reasonable likelihood [d]efendant would have insisted on going to trial, even if his claim that he was misadvised as to the award of jail credits had merit." When a motion to withdraw a guilty plea is filed after sentencing, a trial court may only vacate a guilty plea to correct a manifest injustice. The judge properly denied defendant's motion after finding the rules were followed at the time of defendant's plea hearing. Here, the judge carefully considered the argument and not one of the proposed errors supported withdrawal of defendant's pleas under the "manifest injustice" standard. Under these circumstances, and aware the judge chose to - but was not obliged to - revisit defendant's aggregate sentence before directing defendant's state sentences to run concurrently, we perceive no reason to disturb the judge's finding. ZALMA OPINION It is annoying to me, and to the trial and appellate court, when the state puts together a case to charge a person with fraud when the state provides an offer of a plea to lesser charges only to have the defendant, like Mr. Amato, to change his plea. If the judge agreed he could have forced Amato to trial and if convicted a much greater prison term or, what the court did here, was to deny the attempt to withdraw the appeal. People who commit insurance fraud and have no qualms, even after admitting to the crime, to try to get out of the jail sentence. Mr. Amato's attempt failed. (c) 202 3 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-l

What to Do When Faced With Auto Insurance Fraud This blog post is a True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is posted to help 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. See the full video at and at https://youtu.be/CmUOiqJWg-A The Auto Fraud To a person intent on perpetrating an insurance fraud two maxims become immediately clear: Insurers don’t care. most adjusters and investigators wouldn’t know a fraud if it presented itself to them wearing a sign saying: “I am a fraud.” Very successful, multimillion-dollar businesses were set up with those maxims in mind. The most successful is the automobile personal injury fraud. It exists in almost every metropolitan community. Each perpetrator of an automobile personal injury fraud varies the methodology slightly. Rather than isolated instances of fraud they are run like a large corporate entity. The following are the categories of individuals involved in the automobile personal injury fraud ring: THE RECRUITER This is a person who worked in the community to recruit two different types of people: the victims and the insureds. They recruit victims from the ranks of the unemployed, individuals on welfare or anyone in need of quick cash. The same sources provide insureds who may even include wealthy, or well-off people, who need cash to support their purchase of illicit drugs. The recruiting techniques are simple and straightforward. A victim is offered $300 to $500 cash to allow his name to be used in a report of an automobile accident. Sometimes they must actually sit in a car that is then struck by one of the recruited insureds. Sometimes they only sell the use of their names. In fact, depending on the insurer involved and the reputation it has for investigation of such claims, living persons are not necessary to play the role of victim. In such situations, the insured merely runs his vehicle into a stationary object such as a garage wall or telephone phone to create damage to his vehicle. He reports that he struck the victim’s vehicle in a private parking lot and that the victim and four of his passengers are reporting personal injuries. All of the victims hire counsel. Almost always the victims hire the same lawyer who refers them all to the same physician or chiropractor. THE DISHONEST LAWYER Depending on his experience, the lawyer either recruits the recruiter or is recruited by the recruiter. The recruiters usually watch the results of the bar examination and then make contact with a newly admitted lawyer. They advise the lawyer that, for a small share of the proceeds, they can provide him with ten to twenty new personal injury plaintiff cases every month. They claim that they have this source of business because they work as an administrator for a local chiropractic clinic or in a body shop. The young, gullible lawyer, either not realizing that it is a crime to pay a person for a case, or is so hungry for work that he or she ignores the law, agrees. The young lawye r never meets his or her client. He or she gets contingency fee agreements from the recruiter and medical reports reflecting the injuries. He then makes demand on the insurer who has already received a report from its insured (who was paid to do so) advising that the accident was the insured’s fault. The lawyer makes demands on the insurer for settlement. After a few telephone calls and copies of the medical reports he settles with the insurer for between $5,000 and $10,000 a plaintiff. The lawyer keeps all of the money less the fees of the recruiter, the victim and the insured. The lawyer makes an excellent living earning more money than he ever would on salary for any law firm. He learns the trade and recruits his own recruiters to keep more of the money. Greed and the Dishonest Lawyer The people involved in staged automobile accident claims are usually successful until they get greedy. In 2011, Robert Belshaw, 56, a Marina del Rey, California attorney was sentenced to seven years and eight months in prison for his role in an auto insurance fraud ring that stole about $3 million. Belshaw was found guilty in March of five counts of money laundering and three counts of state income tax evasion. A co-defendant and ring leader, Solomon Morris Davis, 61, of Rancho Palos Verdes, also was convicted on 20 counts of insurance fraud and conspiracy. He was sentenced in April to 12 years in state prison. The ring staged accidents to defraud insurance companies. Prosecutors told the press that Davis set up Total Medical Healthcare in the mid-Wilshire area of Los Angeles under the name of his wife, Dr. Jody Hunter-Davis, as part of the scam. She, however, did not practice medicine at the clinic and was not a suspect in the case. As part of the fraud scheme, the signatures of doctors who worked part-time at the clinic were forged for inflated billings. Davis recruited Belshaw to run a sham law practice that negotiated the fraudulent billings with insurance companies from September 1999 to April 2003. Belshaw failed to claim any of his earning on state income tax returns from 1999 to 2001, officials with the state Franchise Tax Board said. Belshaw owes the tax board more than $31,600 in unpaid taxes, penalties, interest and the cost of the investigation. Had Mr. Belshaw limited the number and extent of fraudulent claims he would probably still be presenting fraudulent claim and earning a good living. Because he got greedy, because he failed to report the money he earned from his criminal activity, he is now residing in the grey bar hotel operated by the state of California and can only wear an orange jump suit. This post was adapted from my book, Insurance Fraud Costs Everyone Available as a Kindle Book and Available as a Paperback from Amazon.com. (c) 202 3 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-l

False Lightning Strike Claim Results in Fraud Conviction Sara Weisbeck appealed her convictions for insurance fraud: false material information and identity theft over $1500 and under $10,000, both class "D" felonies. In State Of Iowa v. Sara Jo Weisbeck, No. 22-1068, Court of Appeals of Iowa (October 11, 2023) considered her pleas for mercy. FACTS In spring 2019, Weisbeck was renting a house from Lisa Smith in LeClaire. The house did not come with appliances, so Weisbeck provided her own refrigerator, stove, microwave, washer, and dryer. The night of June 30, there was a severe storm in the area. The following morning, Weisbeck sent Smith this text message: I don't want to sound sketchy, but the house totally got struck [b]y lightening [sic] last night, and there are trees like splitting down the middle .... I don't know if you want to call your insurance and report it as part of the damage or not, but it would be good timing to do so if you did! That evening, Smith and her son went over to the house. Weisbeck was in the back yard and showed Smith the splitting tree at the back of the large lot. But Smith did not see or smell any scorching. Weisbeck then told Smith that lightning had struck the roof of the house and knocked a window out of its frame. Smith saw a window frame lying on the ground with one pane missing, but no shattered glass was around it. Weisbeck also said, because of the lightning strike, all of her appliances got "fried." Weisbeck would not, however, let Smith into the house to inspect the damage to the window. She only allowed Smith in several days later. Smith ultimately did not file any claim with State Farm, her property insurer. Weisbeck reported to her insurer, Nationwide Insurance, that lightning struck a tree on her lawn, and the electricity traveled into her house, damaging her appliances. She gave a list of the damaged items. She was also asked for and provided photographs of the items. The claims adjuster reported advising Weisbeck to keep her damaged property for inspection. Weisbeck's claim was referred to Nationwide's Special Investigations Unit for raising several "red flags." Joe Martinez, a special investigator with Nationwide, took over the case and asked to inspect the interior of the home, Weisbeck would not let him in. He explained that they needed to inspect the home and conduct an interview to collect additional information on the claim. Martinez photographed the tree and the house exterior, noting that the electrical meter was still functioning and there appeared to be no electrical or fire damage to the house. At that point, Weisbeck came out again and told Martinez to leave. Weisbeck was deemed to have refused to cooperate with the investigation, and Nationwide ultimately denied her loss claim. LeClaire police forwarded the complaint to the Iowa Insurance Division Fraud Bureau. The State ultimately charged Weisbeck with two criminal counts: insurance fraud: false material information a class "D" felony; and identity theft over $1500 and under $10,000 also a class "D" felony. A jury convicted Weisbeck as charged. The court sentenced her to indeterminate terms of five years for each conviction but suspended the terms and imposed two years of probation. She appealed her convictions and sentence. ANALYSIS Weisbeck argued there was insufficient evidence to prove she intended to defraud Nationwide or that she provided materially false information. The Court of Appeals agreed with the State that there was ample evidence to support both jury findings. The state established that several of the appliances, including the PlayStation and the Samsung Blu-ray player, appeared to have functioning lights, suggesting those electronics did not get "fried" as Weisbeck claimed. Another photograph depicted a monitor and printer with functioning blue lights next to the HP computer claimed as damaged. The court of appeals concluded that the jury reasonably believed that Weisbeck invented a fake email address to stand in as her landlord and falsely represent that her claim was valid. The evidence was enough to convince the jury that Weisbeck did so with the specific intent to defraud Nationwide. The jury was entitled to reject this defense and to disbelieve Weisbeck's story about the shifting appliances, and did so. There was substantial evidence to support its conclusion and a jury could conclude beyond a reasonable doubt that Weisbeck engaged in a pattern of deceptive behavior intended to get her claim approved, depriving Nationwide of those funds through deceit. SENTENCING Finally, Weisbeck contested her sentence to two five-year prison terms, suspended, instead of the deferred judgment she requested. At sentencing, Weisbeck argued that a felony conviction on her record would preclude her from jobs in her field as an elementary school resource teacher. The court of appeals noted that protection of the community from further offenses is an important and relevant sentencing factor and agreed with the trial court that found the criminal thinking involved warranted future employers being warned as to the defendant's past conduct. Therefore, there was no abuse of discretion in the trial court considering this as a relevant factor in sentencing. (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-l

How Insurance Fraud Can Succeed "This blog post is a fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is posted to help 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." Wo Ping Chen was trained as a physician in Hong Kong. Until Hong Kong was returned by the United Kingdom to the Peoples Republic of China, he was the best known Orthopedist in the Crown Colony. Fearing problems with the new government he emigrated to Vancouver, British Columbia, Canada as a citizen of the commonwealth. He worked as an employee of the National Health Service for a year and then obtained a work visa to the U.S. and crossed the border into the U.S. only to find he could not work as a physician without a license from a U.S. state and attended a U.S. based medical school. After one year of medical school, one year of internship in a Seattle hospital and one year as a resident Chen was able to restart his life. His first effort upon receiving a license was to apply to the U.S. Government’s Medicare and Medicaid systems for a medical provider number which would give the government the ability to deposit funds electronically into his bank account without having to wait for a check to be received and collected. Dr. Wo was a very good doctor and his practice grew rapidly. He found most of his patients were poor and could only pay through one of the government programs. He was not, as in Canada, an employee. He had to live on the small amounts that Medicare or Medicaid considered proper for the work he did. Each of his invoices was scrutinized and he was never paid what he billed even though he knew, from meetings with other physicians in Seattle, he was billing reasonable and proper amounts for the services rendered. Frustrated and earning less every year than the year before, although he was working harder and longer hours, he told his tale of woe to a colleague over a hospital lunch. “Wo, my friend” the colleague responded “don’t be upset and frustrated – it is time you used the system to your benefit.” “How?” “You know the people that review your billing are not physicians, they are key punch operators. If what you bill fits within the requirements of their computer software money goes into your account in the amounts required by their computer.” “Yes,” Wo replied, “when I speak with them to challenge their decisions they speak like complete idiots.” “Use their stupidity to your benefit.” “How?” “The CPT codes.” “They just describe services.” “Yes, so if you do something for a patient that is listed as a point two raise it to a point three.” “But that would be dishonest.” “No, because they base their payment on the code and the payments are not realistic so raising the code up one level will get you paid the correct amount for the services actually rendered.” Wo took the conversation to heart and found payments deposited into his bank increased to amounts reasonable for the services he was actually rendering even if it was not as described. His billings were never questioned. The information went from Chen’s office computer to a government agency computer that automatically sent money to his account. His youngest daughter had found a husband and he was facing an expense of over $100,000 to pay for a traditional Chinese wedding and reception. He did not have the cash. He did, however, have a large list of Medicare and Medicaid patients in his data base. He knew, from experience, that no one in the US Government or their agents would check his billing. He had served the public at low rates for many years. He decided to obtain the cost of his daughter’s wedding by using his computer. He created invoices for 300 of his male Medicare patients for an office visit and complete blood test at $250 each. He dated the service carefully so he showed only ten of the 300 each day for 30 days. He did the same for 300 female patients for an office visit, a pelvic exam, and an x-ray to check for a potential broken hip, each for only $250. By the end of the month $150,000 was deposited into his account without question. He had the money for his daughter’s wedding and did not have to work for it. "This is a great country," Wo thought, they send me money when I need it without requiring that I work for it. Dr. Wo knew that the practice of Medicine is hard work. The earnings of physicians were continuously being reduced by insurers and government agencies. He was getting old. He attended two medical schools and was still borrowing money to pay off loans he took to finish school. It was time he considered funding his retirement. As part of his practice, he spent half his time at the local hospital. He had problems with his office computers and hired the Information Technology person at the hospital to fix his system on a weekend. They had become friends. The IT man finished his work at the office and sat down for some coffee with Wo. “So, how is the practice treating you, Dr. Wo?” “Not bad, but the insurance companies and government keep cutting what I receive.” “It is tough. I wish I could help you.” “You can.” Chen replied. “I will pay you $100,000 more than your fee if you give me a CD ROM with the identification information of 100,000 hospital patients who are Medicare or Medicaid recipients.” “I’m not sure I can do that Dr. Wo. I could lose my job.” “Okay, I’ll give you $150,000.” The IT man delivered the disk the next day and received $15,000 in cash from Dr. Wo as a down payment. He used the disk to submit billing for each of the 100,000 patients for the same office examination, x-rays, and a complete blood count. Two weeks later $25,000,000 appeared in his account, Dr. Wo Ping Chen paid the IT man $135,000 to complete the fee, transferred the remaining money to his bank in Hong Kong, closed his office and moved back to Hong Kong where he retired a very wealthy man. No one questioned his billing. No investigator checked on how one doctor could treat 100,000 patients in one month. It seemed no one cared. Dr. Wo did not consider himself a criminal nor did the United States Government. He just played the system knowing that it was operated by people who did not care as long as the correct boxes in the computer were checked. His crime succeeded because he was not greedy. He only did the major crime once. The computer operators at the Medicare payment offices never noticed that he did a cervical exam on an eighty-three-year-old man named Louis Jones. Insurance fraud is often successful, as it was for Dr. Wo, because the governmental entities have little incentive to even look for fraud, investigate criminal conduct, or even try to do the job for which the government employees were charged. Dr. Wo was correct, this is a great country, and it gives away other people's money to anyone with the gumption to ask. That includes my money and yours and Dr. Wo's success offends me and should offend you. (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-l

Reference to Defendant's Need to Pay is not Inappropriate Mention of Insurance When I was a young adjuster 55 years ago California and every state allowed a plaintiff's contributory negligence - no matter how small - to defeat a negligence claims. In 1975 Li v. Yellow Cab Co., 13 Cal.3d 804, 119 Cal.Rptr. 858, 532 P.2d 1226, 78 A.L.R.3d 393 (Cal. 1975) established the system of contributory negligence that has been followed in most states. Maryland, however, still applied contributory negligence and has refused to adopt comparative negligence. In Michael Lewis v. Pedro Romero, No. 1932-2022, Court of Special Appeals of Maryland (October 10, 2023) Mr. Lewis lost his negligence action against Mr. Romero whose vehicle struck pedestrian Mr. Lewis in a bank parking lot. Michael Lewis ("Lewis") sued Pedro Romero ("Romero") for negligence. Ultimately, the jury found that while Romero was negligent, Lewis was contributorily negligent, barring Lewis from recovering damages. FACTUAL BACKGROUND The incident occurred on October 9, 2019, outside of the Capital One Bank (the "bank") in Frederick, Maryland. The bank has two points of access for vehicles. There is a one-way, single lane road spanning the perimeter of the bank with painted one-way arrows. This road does not have any crosswalks. Both parties agreed that on the date of the incident, Romero was driving a pickup truck on the one-way road around the perimeter of the bank when he struck Lewis, a pedestrian, who was exiting the bank. Lewis testified that he walked on foot from a nearby hotel where he was staying to the bank in order to withdraw money. Lewis admitted that at the time of the impact, his cell phone was in his hand. However, Lewis denied that he was talking on the phone at the time he was struck by Romero's vehicle. ANALYSIS On the issue of contributory negligence when measuring contributory negligence, the standard of care is the conduct of an ordinarily prudent person under circumstances ordinarily. The court found that Romero met their burden of production regarding contributory negligence and that is that Romero has introduced more than a mere scintilla of evidence meaning more than a surmised possibility or conjecture that Lewis has been guilty of negligence and that Romero generated a jury issue. During closing argument, after discussing Lewis' alleged damages, Romero's counsel stated, "[Lewis] is asking you to award him [money] for the choices he has made. He wants Mr. Romero to pay him for some of these choices." The court denied Lewis' motion for mistrial. The jury returned a verdict, finding that while Romero was negligent, Lewis was contributorily negligent, barring Lewis from any recovery. DISCUSSION Maryland follows the majority rule that evidence of insurance on the part of a defendant is generally inadmissible. The Supreme Court of Maryland has also held that a mere inference that there may be insurance would not necessarily require a termination of the trial. Romero's counsel made an ambiguous comment during closing argument that Lewis wanted "Romero to pay him for some of [his] choices." There is nothing in the record to suggest that the comment surpassed the threshold of being an improper statement that warranted further consideration. WHAT IS CONTRIBUTORY NEGLIGENCE? Contributory negligence occurs whenever the injured person acts or fails to act in a manner consistent with the knowledge or appreciation, actual or implied, of the danger or injury that his or her conduct involves. Contributory negligence is defined as the doing of something that a person of ordinary prudence would not do, or the failure to do something that a person of ordinary prudence would do, under the circumstances. The question of whether the plaintiff has been contributorily negligent is ordinarily for the jury to decide. To find contributory negligence as a matter of law, the injured party's action must be distinctive, prominent, and decisive from which reasonable minds would not differ as to the negligent character. The case was properly submitted to the jury because, even when viewing the facts in the light most favorable to Lewis, the evidence establishing his contributory negligence amounted to more than surmise, possibility, or conjecture. Lewis' decision to leave the sidewalk and walk mid-way into the road while only glancing for oncoming traffic constituted a distinctive, prominent, and decisive decision from which the jury could find that Lewis was contributorily negligent. Notably, Lewis' testimony that he was "hit from behind" on a one-way road indicates that he was facing away from oncoming traffic and not looking for vehicles coming in his direction. Upon these facts, the appellate court concluded that the trial court properly submitted the question of contributory negligence to the jury. ZALMA OPINION The application of Contributory Negligence as an absolute defense to a negligence cause of action is considered, in most states, to be Draconian and that comparative negligence is fair and reasonable. Maryland is in the minority. That Maryland continues to apply the common law is appropriate and since the jury found both parties to be negligent Mr. Lewis recovered nothing from his suit. (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-l

Using Sexy Pictures Without Consent Resulted in Coverage Dispute An insurance coverage dispute arising out of litigation in Texas state court. Two insurance policies are at issue, and the district court concluded that both provided the insureds coverage. The insurer appealed in The Princeton Excess and Surplus Lines Insurance Company v. A.H.D. Houston, Incorporated, doing business as Centerfolds; et al, No. 22-20473, United Stat es Court of Appeals, Fifth Circuit (October 6, 2023) FACTS This comparatively pedestrian contract dispute stems from a much more salacious lawsuit filed in Texas in 2017. Sixteen professional models (the Models) sued three Texas strip clubs (the Clubs) following the Clubs' use of the Models' likeness for advertising campaigns without the Models' consent. The Clubs' advertising material was manipulated to give the impression that the Models endorsed the Clubs or worked as strippers in the Clubs. The Models claimed they were depicted in various sexually charged social media and Internet posts encouraging patrons to visit the Clubs. According to the Models, the Clubs participated in the selection, creation, and dissemination of these advertisements. The state trial court granted summary judgment for the Models and awarded $1,405,000 in damages. The Clubs appealed. That appeal has not yet been finally adjudicated on the merits. Meanwhile, Princeton Excess and Surplus Lines Insurance Company (PESLIC) filed a declaratory judgment action. PESLIC issued two commercial liability insurance policies to the Clubs that have identical coverage provisions but contain slightly different exclusions The 01 Policy contains a "Field of Entertainment Exclusion." The 02 Policy contains an "Exhibitions and Related Marketing Exclusion" that curtails coverage for Personal and Advertising Injury subsections d. through g. As to the 01 Policy, the district court found that "the Models' pleadings in the underlying lawsuit sufficiently allege[d] that that the Clubs used [the] Models' images (i.e., their 'advertising ideas') and placed them in their own 'advertisements.'" Consequently, the district court held that PESLIC had a duty to defend and indemnify the Clubs under the 01 Policy. As to the 02 Policy, the parties disputed whether that policy's Exhibitions and Related Marketing Exclusion rendered illusory the Personal and Advertising Injury coverage. The district court agreed with the Models and the Clubs that it did and "decline[d] to give effect to PESLIC's 'Exhibition and Related Marketing' exclusion." The trial court thus held that PESLIC had a duty to defend the Clubs. The district court also held that PESLIC had a duty to indemnify the Clubs under the 02 Policy. DISCUSSION In Texas, insurance policies are interpreted by the same principles as contract construction. The words of the policy are given their ordinary and generally accepted meaning unless the policy shows the words were meant in a technical or different sense. An insurance contract is ambiguous if it is subject to more than one reasonable interpretation. Under Texas's well-established eight-corners rule, an insurer's duty to defend is determined by the claims alleged in the petition and coverage provided in the policy. The 01 policy includes coverage for Personal and Advertising Injury. But it also includes a Field of Entertainment Exclusion, which narrows the scope of that coverage. An insurance policy is not illusory merely because it does not provide coverage for a claim the policyholder thought it would cover. By its terms, the Field of Entertainment Exclusion eliminates coverage for most of the "advertising injuries" included in the 01 Policy's Coverage B-Personal and Advertising Injury Liability. But it expressly excepts injuries encompassed by subsection f., for the use of another's "advertising idea." The exclusion does not render coverage illusory and therefore is binding on the parties. To sum up, the Field of Entertainment Exclusion is enforceable, as the 01 Policy nonetheless will provide coverage for other claims. Coverage under the policy is thus not illusory. The Clubs took those products and used them without permission. Without more, taking and then advertising another's product is different from taking another's 'advertising idea. PESLIC, therefore, has no duty to defend the Clubs based on the 01 Policy's "advertising idea" coverage, and the district court erred in concluding otherwise. The 02 Policy, which applies to most of the Models' claims turns on the policy's Exhibition and Related Marketing Exclusion, which eliminates coverage for Personal and Advertising Injury subsections d. through g. (pertaining to advertising injuries), to the extent "such activities arise out of or are part of 'exhibitions and related marketing.'" The 02 Policy, is not illusory merely because it does not provide coverage for a claim the policyholders thought it would cover. Instead, the text of the 02 Policy is not ambiguous, and Texas law presumes that the party knows and accepts the contract terms. A lack of duty to indemnify can be inferred from a lack of duty to defend when the reasons that negate the duty to defend also negate any possibility the insurer will ever have a duty to indemnify. PESLIC does not have a duty to defend the Clubs under the 01 Policy. Its duty to indemnify under the 01 Policy depends on final resolution of the state case. As for the 02 Policy, PESLIC does not have a duty to defend or indemnify under it because the 02 Policy does not provide coverage for the claims alleged by the Models. The district court erred by concluding otherwise. ZALMA OPINION The Eight Corners Rule limits the court coverage determination to the allegations of the complaint and the wording of the policies. Since the policies clearly excluded the claims of the models there was no coverage for a defense and as to one policy the results of the appeal of the Texas state curt action can determine the duty to indemnify while the other policy does not allow coverage for defense or indemnity. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to 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/

No Insurance Policy Covers Every Possible Risk of Loss Defendant Timed Out, LLC appealed a summary judgment declaring plaintiff AIX Specialty Insurance Company had no duty to defend, and thus no duty to indemnify, its insured in an action Timed Out brought against the insured. The trial court concluded a policy exclusion for personal and advertising injuries "arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights" eliminated AIX's coverage obligations in the underlying lawsuit. In AIX Specialty Insurance Company v. Timed Out, LLC, B320255, California Court of Appeals, Second District, Third Division (October 5, 2023) the Court of Appeals interpreted the meaning of the exclusion. BACKGROUND The Policy Godtti Entertainment, the AIX insured operated a bar and nightclub where its patrons can "dance," see "live DJ performances," and attend "an assortment of events." In February 2019, AIX issued a commercial general liability (CGL) insurance policy to Godtti. The policy insures against liability for damages stemming from, among other things, certain "personal and advertising injury" offenses. The policy excluded coverage for "'Personal and advertising injury' arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights" (the IP exclusion). Timed Out's Lawsuit Against Godtti Timed Out filed a three-count complaint against Godtti for statutory misappropriation of likeness; common law misappropriation of likeness; and negligent hiring, supervision, and/or retention of employees. According to the complaint's allegations, between 2017 and 2019, Godtti knowingly used the models' "image and likeness" in "various marketing, advertising, and promotional material[s]" without the models' consent and in violation of their statutory and common law right of publicity. Godtti also allegedly failed to train and supervise its employees who "stole the [m]odels' [i]mages and used the [i]mages without [the models'] permission." AIX's Declaratory Relief Action Against Godtti and Timed Out AIX filed a declaratory relief action against Godtti and Timed Out seeking a declaration that it had no duty to defend or indemnify. AIX moved for summary judgment asserting the IP exclusion precluded any potential for coverage for the claims asserted in Timed Out's complaint. Specifically, AIX argued all claimed injuries arose out of Godtti's alleged infringement of the models' right of publicity-an "other intellectual property right[ ]" subject to the IP exclusion. The Order Granting Summary Judgment The trial court granted AIX's summary judgment motion, concluding the IP exclusion precluded coverage for Timed Out's misappropriation of likeness claims. The court entered judgment in favor of AIX. Timed Out filed a timely notice of appeal. DISCUSSION In determining whether a claim creates the potential for coverage under an insurance policy appellate courts are guided by the principle that interpretation of an insurance policy is a question of law. Under statutory rules of contract interpretation, the mutual intention of the parties at the time the contract is formed governs interpretation. The IP Exclusion Precludes Coverage for Timed Out's Claims Based on Godtti's Alleged Misappropriation of the Models' Likenesses Specifically, the court determined Timed Out's claimed injuries all stemmed from Godtti's alleged misappropriation of the models' likenesses and the IP exclusion unambiguously precluded coverage for those claims. Godtti's policy expressly excludes coverage for "'[p]ersonal and advertising injury' arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights." (Italics added by the court) As the California Supreme Court explained in Hameid v. National Fire Ins. of Hartford (2003) 31 Cal.4th 16, only a "widespread promotional" campaign using the image constitutes "advertising" under a CGL policy like the one AIX issued to Godtti. Timed Out's complaint alleges only that Godtti misappropriated the models' likenesses as they appeared in digital images-not that Godtti misappropriated an advertisement or advertising idea using those likenesses or images. The Court of Appeals agreed with the trial court's conclusion that Timed Out's claims arise out of an alleged infringement of the models' right of publicity and the IP exclusion therefore unambiguously precludes coverage. The IP Exclusion Does Not Render Coverage for Personal and Advertising Injury Illusory The Court of Appeals construed the IP exclusion according to its plain terms to give effect to the exclusion and AIX's obligation to provide coverage for personal and advertising injuries. Simply put, because the IP exclusion applies only to injuries "arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights," and claims such as disparagement and false light do not necessarily arise out of intellectual property rights, the exclusion does not render illusory AIX's promise to cover personal and advertising injuries under the CGL policy issued to Godtti. The judgment was affirmed. Plaintiff AIX Specialty Insurance Company is entitled to costs. ZALMA OPINION Appellate courts must interpret insurance contracts as a matter of law. The AIX IP exclusion was clear and unambiguous and fit clearly the wording and intent of the IP exclusion. The Court of Appeals had no choice, based on the facts, precedent and interpretation of clear policy wording but to affirm the trial court. (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/

Insurance Fraudster Tries Multiple Bases for Appeal & Still Goes to Jail Brian Higgins diverted for personal use funds he received from his mortgage servicer to repair damage to his home caused by a broken fish tank. He also filed a lawsuit against two witnesses for the prosecution, accusing them of misdirecting the funds instead of himself. For his conduct, a jury convicted Higgins on three counts of mail fraud under 18 U.S.C. §§ 1341-42 and two counts of retaliating against a witness, victim, or an informant under 18 U.S.C. § 1513(e). He appealed. In United States Of America v. Brian Higgins, No. 22-3538, United States Court of Appeals, Sixth Circuit (October 6, 2023) affirmed his conviction but gave him a win by requiring the District Court to reconsider the amount of restitution he must pay. FACTS In 2007, Higgins bought a house in Dayton, Ohio, which he financed with a $900,000 mortgage. By April 2010, Higgins had defaulted on his mortgage payments and, as of October 2016, still owed almost all that he had borrowed ($891,335.37). On top of that, the house was encumbered with about $815,000 in liens, including for federal taxes over the years. Higgins's 1,000-gallon fish tank sprang a leak and caused significant damage to the home. Higgins commissioned Michael Marshall and Scott Waters, contractors and owners of United Demolition, to do the work. But during their initial consultation, Higgins detailed his plan to divert the home repair funds for his own personal use. Higgins asked the contractors to help him with his plan by falsifying documents to procure the insurance monies. Unbeknownst to Higgins, however, the contractors were confidential informants for the FBI on an unrelated matter. Higgins was initially indicted for mail fraud, wire fraud and aiding and abetting. But after learning of the contractors' roles in the government's investigation, Higgins, while under arrest, filed a pro se lawsuit against them both, highlighting their roles as informants and alleging that they were the ones who defrauded Nationstar and the insurance company. The jury found Higgins guilty of three counts of mail fraud and two counts of retaliating against a government witness. The court sentenced him to an aggregate of 3 years' imprisonment and ordered him to pay $84,113.04 in restitution. ANALYSIS The Sixth Circuit noted that the trial court did not abuse its discretion when it denied Higgins's motion for additional Funds to hire an expert accountant and argued the district court erred when it admitted evidence of about $815,000 in liens that were on his residence when he filed his insurance claim. Higgins placed both his general and specific intent at issue when he pleaded not guilty to the mail fraud charges. Evidence of a defendant's financial condition was relevant and admissible for the proper purpose of establishing motive or intent in cases involving financial crimes. Higgins's significant financial woes revealed an incentive for him to use insurance monies for his own purposes rather than their intended purposes. Trial testimony bore this out; the contractors explained how Higgins misappropriated the insurance funds for personal business ventures. The government moved to introduce the recordings to prove retaliatory intent and common plan in relation to the witness retaliation charges. The parallel between Higgins's earlier advice to another person to flip and reverse allegations of wrongdoing against an accuser of that person and his later actions in accusing witnesses in his own case of the very crimes for which he stood trial was striking. The Sixth Circuit explained that any reasonable juror would understand that his statements were not confessions to any of the crimes charged. Rather, they would grasp that this evidence might shed light on Higgins's possible intent in filing suit against the contractors. Restitution Higgins's final challenge was to the district court's May 25, 2022, order of restitution. The recommended amount equaled the total funds Higgins diverted from the insurance disbursements. The Mandatory Victims Restitution Act of 1996 ("MVRA"), 18 U.S.C. § 3663A, requires the district court to award restitution to victims of fraud. Restitution must be awarded in the full amount of each victim's losses. That said, restitution is intended to compensate victims only for losses caused by the conduct underlying the offense of conviction. The Sixth Circuit affirmed Higgins's convictions and ordered the trial court to inquire further as to the appropriate amount of restitution due to Nationstar. ZALMA OPINION People who commit insurance fraud and are caught have chutzpah without limitation. This appeal, with dozens of pages of opinion to resolve the multiple complaints about his conviction that Higgins filed, the Sixth Circuit did away with all his arguments and threw him a bone by requiring the Circuit Court to reconsider the amount of restitution even though it will probably never be collected considering the debts that may have caused him to attempt insurance fraud. (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/

Insurer Not Required to Disclose How it Selects Limits and Premium Ira Trocki sued Pennsylvania National Mutual Casualty Insurance Company ("Penn National") for fraud related to certain insurance policies. The District Court granted summary judgment for Penn National. In Ira Trocki, trading as Jack Trocki Development, LLC v. Penn National Mutual Casualty Insurance Company, No. 22-1483, United States Court of Appeals, Third Circuit (September 13, 2023) the Third Circuit explained what is needed to prove fraud. FACTS Trocki, the owner of a real estate development and management company, purchased and renewed commercial insurance policies with Penn National through an insurance broker from 2006 to 2014. Prior to each annual renewal, Penn National provided Trocki's agent and Trocki with the renewal policy limit and premium to review. Trocki sued Penn National in federal court, bringing two claims for fraud, one for common law fraud and one for consumer fraud under the New Jersey Consumer Fraud Act ("NJCFA"). Trocki alleged that Penn National annually increased its coverage limits and insurance premiums without notice and that it was doing so to account for inflation. Trocki initially referred to this practice as "Inflation Guard," but now contends that he meant to refer to the practice of applying an automatic inflationary increase. The parties agree that "Inflation Guard," an optional coverage benefit that an insured must purchase separately, was not applied to Trocki's policies. The District Court concluded that Trocki fell short of making a prima facie case for either fraud claim. DISCUSSION Summary judgment is appropriate only if the movant shows that there is no genuine dispute as to any material fact. There is a genuine factual dispute if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. All facts are to be viewed in the light most favorable to the nonmoving party. Trocki argued that the District Court improperly granted judgment for Penn National on his claims under the NJCFA and for common law fraud. The NJCFA prohibits certain deceptive commercial behavior. For a claim under the NJCFA, a plaintiff must demonstrate: unlawful conduct by a defendant, an ascertainable loss, and a causal relationship between the defendant's unlawful conduct and the plaintiff's loss. A cause of action for common law fraud in New Jersey has five elements: a material misrepresentation of a presently existing or past fact; knowledge or belief by the defendant of its falsity; an intention that the other person rely on it; reasonable reliance thereon by the other person; and resulting damages. Trocki's argument was that Penn National applied some undisclosed inflation factor to increase the values of the properties covered by the Penn National policies. Trocki argued that the increase in building limit due to an automatic inflation increase is misleading and unclear in that it does not apprise the insured of why the building limit (and the premium) is being increased. The Third Circuit concluded that the District Court correctly found Trocki could not make a prima facie claim of common law fraud or consumer fraud under the NJCFA. To start, prior to the renewal of each policy, Penn National presented Trocki with what the new policy limit and premium would be, and Trocki had the opportunity to review, and then paid the new premium. Under New Jersey law there is no "duty to disclose" in a business transaction. Trocki was fully informed of the price and policy limits, and Penn National is not required to disclose precisely how it reached those numbers. Trocki failed to show, at a minimum, either a material misrepresentation, as required for a claim of common law fraud, or unlawful conduct, as required by the NJCFA. Judgment was affirmed. ZALMA OPINION Some people appear to believe that suing an insurance company is a perfect way to profit. Mr. Trocki renewed his policies annually, accepted the policy limits and premiums charged him, paid the premium and then after a few years decided to sue his insurers because Penn National failed to explain the methods it used to set the policy limits and premium. If he had a loss I doubt he would complain about the higher limits. The Third Circuit should have applied Rule 11 to this suit. (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/

Other Insurance Clause Only Applies to Concurrent Policies After the trial court granted the Travelers Indemnity Company and The Travelers Indemnity Company of Connecticut's (collectively Travelers) motion for partial summary judgment finding that indemnity costs incurred by Travelers in connection with the asbestos liabilities of defendants' subsidiary should be allocated on a pro-rata time-on-the-risk basis. In The Travelers Indemnity Company et al. v. Fishbach, L.L.C., et al., 2023 NY Slip Op 04741, Appeal No. 608, Index No. 657060/21 Case No. 2023-00815, Supreme Court of New York, First Department (September 26, 2023) resolved the dispute. DECISION The appellate court agreed with Travelers that it was not liable to cover costs incurred by the insured that occurred outside of the policy period and that any costs it was entitled to cover should be allocated pro rata over the entire period during which damages (personal injuries) occurred. Finding that the appeal was controlled by Keyspan Gas E. Corp. v Munich Reins. Am., Inc. (31 N.Y.3d 51, 61 [2018]), where the Court of Appeals found that the so-called "unavailability rule," which would require insurers to bear the risk for periods when applicable insurance coverage was not available in the marketplace, was inconsistent with the contract language that provides the foundation for the pro rata approach-namely, the during the policy period limitation-and that to allocate risk to the insurer for years outside the policy period would be to ignore the very premise underlying pro rata allocation Thus, with respect to insurance policy language like issued by Travelers, which limited indemnification to losses and occurrences during the policy period the insured, and not the insurer, bore the risk for those years during which such coverage was unavailable. Defendants' contention that Supreme Court (trial court in New York) erred by failing to give effect to the "other insurance" provisions in the Travelers policies was unavailing. New York law is clear that other insurance clauses do not apply to successive insurance policies thus, despite the fact that the subject provision contains no temporal or policy period limitation, when harmonized with the definition of bodily injury, the "other insurance" provision within the Travelers policies pertains to concurrent policies that named defendants (or their subsidiaries) as additional insureds. Defendants provided no evidence that the 1990 settlement with Travelers had anything to do with litigation commenced four years later the Supreme Court correctly determined that, as "the release explicitly limits itself to current and future obligations and liabilities for premiums," it was irrelevant to the allocation of indemnity costs. ZALMA OPINION New York ignored spurious claims and applied the clear and unambiguous language of the Travelers' policies to find that there can be no coverage applied as a result of an "other insurance" clause to other insurance in effect after the termination of the Travelers' policies. Sharing only occurs when policies in effect at the same time for the same loss both have other insurance clauses that require pro-rata sharing of losses not sharing four years after settlement for a different claim after expiration of 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/

No Right to UM Coverage if You are not an Insured WRIT PRACTICE OFTEN UNSUCCESSFUL BUT NOT ALWAYS The Louisiana Court of Appeals was asked to do what it normally would not do: determine if the trial court erred in denying a motion for summary judgment filed by Employers Mutual Casualty Company ("Employers Mutual"). In Lee Mallahan, III v. Employers Mutual Casualty Co., et al, No. 55,136-CW, Court of Appeals of Louisiana, Second Circuit (September 27, 2023) Employers received its request. FACTS On June 1, 2020, Erick Guevara ("Guevara"), drove to Mallahan’s house who was standing in the driveway picking up worms from the pavement and throwing them into the grass, only to strike Mallahan with Guevera’s truck. Mallahan alleged the pickup truck knocked him into the air and caused him to lose consciousness. Mallahan sued on April 21, 2021 and named as defendants Guevera and Employers Mutual. As the managing member and an employee of Tadpole, LLC ("Tadpole"), Mallahan alleged that Employers Mutual provided "insurance coverage, excess coverage, umbrella coverage, or other coverage" for Mallahan's damages. Employers Mutual filed a motion for summary judgment and urged no uninsured/underinsured ("UM") coverage existed for Mallahan's injuries under the terms of the commercial auto policy or the commercial umbrella policy issued to Tadpole. The trial court ordered that Mallahan raised genuine issues of material fact and denied the motion. Employers Mutual Sought a writ from the Court of Appeals to order the trial court to grant its motion for summary judgment. DISCUSSION Employers Mutual urged that, because it made a showing that Mallahan was not an insured under the policies issued to Tadpole there was no genuine issue of material fact to preclude the granting of summary judgment. A genuine issue is one about which reasonable people could disagree. A material fact is one that potentially ensures or precludes recovery, affects the ultimate success of the litigant, or determines the outcome of the dispute. Because it is the applicable substantive law that determines materiality, whether a particular fact in dispute is material for summary judgment purposes can be seen only in light of the substantive law applicable to the case. Summary judgment declaring a lack of coverage under an insurance policy may not be rendered unless there is no reasonable interpretation of the policy, when applied to the undisputed material facts shown by the evidence supporting the motion, under which coverage could be afforded. The extent of coverage is determined from the intent of the parties as reflected by the words of the insurance policy. For Mallahan to be insured under the commercial auto policy, he must be using Tadpole's covered vehicle that Tadpole owned, hired, or borrowed with Tadpole's permission. The undisputed facts established that Mallahan was not using any automobile at the time of the accident. As a result, Mallahan is not entitled to UM benefits as he would not be considered an insured for purposes of Tadpole's Employers Mutual commercial auto policy. Tadpole's Employers Mutual commercial umbrella policy required that to be considered an insured under this policy, Mallahan must use, with permission, one of Tadpole's covered autos that he did not personally own. The policies were clear: Mallahan was not qualified as an insured; Tadpole was the named insured. Furthermore, Mallahan was not using a covered auto with Tadpole's permission when the accident occurred. In fact, no use of a vehicle was involved on Mallahan's part. Instead, Mallahan was standing in his driveway throwing worms into the grass when Guevara's Chevy truck came into contact with Mallahan's person. Employers Mutual's policies clearly define who is considered an "insured" under the policies and who is entitled to UM coverage. A contrary interpretation of the policy language would be unreasonable. The Court of Appeals concluded that the policies must be enforced as written. As a result of its analysis the Court of Appeals concluded that Employers Mutual's writ application needed to be, and was, granted. The trial court was ordered to grant Employers Mutual's summary judgment motion and to dismiss Mallahan's claims against Employers Mutual. ZALMA OPINION Contracts of insurance are interesting documents. They tell the parties to the contract what will happen in the event of injury to an insured, who is insured, and what benefits were available. Mr. Mallahan was severely injured when he - as a pedestrian standing in his own driveway - was not an insured of the Employers Mutual policy and was not entitled to UM/UIM 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/

Duty to Defend and Indemnify Inviolate Four insurers (collectively, the appellants) appealed the district court's order finding they are required to provide insurance coverage for an incident at Hampton Inn-Albany, a hotel owned by Albany Downtown Hotel Partners, LCC (Albany), and managed by Banyan Tree Management, LCC (Banyan). The four insurance companies-Citizens Insurance Company of America and Massachusetts Bay Insurance Company (collectively, Hanover), Westfield Insurance Company (Westfield), and Starr Indemnity &Liability Company (Starr)-issued commercial general liability insurance to Banyan and Albany. In Citizens Insurance Company Of America, Massachusetts Bay Insurance Company, Westfield Insurance Company, Intervenor v. Banyan Tree Management, LLC, Albany Downtown Hotel Partners, LLC, Jane Doe, Starr Indemnity &Liability Company, No. 22-13581, United States Court of Appeals, Eleventh Circuit (September 28, 2023) the Eleventh Circuit affirmed. FACTS In 2015, an employee of Hampton Inn-Albany secretly recorded a hotel guest while she was showering in the hotel bathroom. Years later, the video was circulated, and the guest sued Banyan and Albany for negligence, premises liability, and vicarious liability, alleging she suffered emotional and subsequent physical injury (Underlying Complaint). Banyan and Albany subsequently sought coverage from their insurance providers, who disputed their duty to cover this injury, primarily arguing that the Underlying Complaint did not include allegations of "personal and advertising injury" arising out of Albany's "legitimate business," and that their policy exclusions precluded coverage. DISCUSSION Georgia law makes clear that ambiguities are to be resolved in favor of the insured noting that if the policy exclusions are ambiguous, the purported reservation of rights must be construed strictly against the insurer and liberally in favor of the insured. The appellants failed to even make a showing of ambiguity, let alone definitively establish that the Underlying Complaint falls outside their policies or that an exclusion precludes coverage. The Eleventh Circuit found unpersuasive the arguments that the hotel guest's right to privacy was not violated, and that the recording did not arise out of Banyan and Albany's business. While filming a showering guest is clearly not a "legitimate" hotel practice, when a hotel employee-who would not have had access to the room but for his authority-places the camera in the bathroom and circulates the video, the injury was undoubtedly imputed to the hotel. Accordingly, the Eleventh Circuit affirmed the district court's decision. ZALMA OPINION Hotel employees should not have the access to film a guest while she showered and then distribute the video to the world as she, believing she was taking a private shower, was clearly an illegitimate hotel practice performed by an employee who was given access by the hotel to include a camera where the victim showered. No exclusion applied and coverage was clearly applicable. (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/

Insurer Should Get Premium for Waiver of Subrogation Evanston Insurance appealed from a judgment entered after the trial court granted summary judgment in favor of Southern California Edison Company (SCE) and against Evanston Insurance Company (Evanston) as to Evanston's claims for equitable subrogation, equitable indemnity, restitution, and declaratory relief. In Evanston Insurance Company v. Southern California Edison Company, B320392, California Court of Appeals, (September 29, 2023) Evanston contributed $25 million to settle claims by property owners against its insured, The Original Mowbray's Tree Service, Inc. (Mowbray's), which was a subcontractor of Utility Tree Service, Inc. (UTS) under UTS's contract with SCE to manage certain vegetation proximate to SCE's equipment. According to Evanston, the property owners' claims arose out of a wildfire they alleged was caused by a tree hitting power lines that were owned and operated by SCE. Evanston asserted that the wildfire resulted solely from SCE's negligence. In its motion for summary judgment, SCE argued that the following waiver provision in Mowbray's subcontract with UTS barred Evanston's claims: "Subcontractor [(Mowbray's)] waives and will require all of its insurers to waive all rights of recovery against Contractor [(UTS)] or the Owner [(SCE)], their affiliates, their directors, officers and employees, whether in contract, tort (including negligence and strict liability) or otherwise." The trial court agreed and entered judgment in SCE's favor. On appeal, Evanston contended the waiver provision is ambiguous and that the trial court erred in failing to analyze separately whether SCE's waiver defense applied to Evanston's equitable indemnity and restitution causes of action. Regardless, the Court of Appeals concluded that the plain language and context of the waiver provision demonstrated that the provision unambiguously precludes Evanston's equitable subrogation claim against SCE. FACTUAL BACKGROUND In February 2015, a wildland fire ignited in Bishop, California on property owned by the Los Angeles Department of Water and Power (Round Fire). Evanston alleged that property owners and their subrogated insurers filed at least 10 lawsuits in the aftermath of the Round Fire to recover damages. Evanston asserts that the plaintiffs in the lead action (underlying action) alleged that the fire was caused by a tree (subject tree) that contacted power lines owned and operated by SCE. The subcontractor agreement included the obligation to carry $41 million per occurrence in insurance coverage. Evanston alleged that during the underlying action, SCE, which claimed to be an additional insured under the policy, repeatedly threatened to bring a bad faith action if Evanston did not pay the full amount of the policy and it under pressure agreed to contribute the $25 million policy limit to a settlement and reserved its rights to pursue full recovery from SCE ignoring the waiver provision of the contract and Evanston's policy wording. The trial court heard and granted SCE's motion for summary judgment. APPLICABLE INSURANCE LAW A judgment or order of a lower court is presumed to be correct on appeal, and all intendments and presumptions are indulged in favor of its correctness. Evanston bore the burden of rebutting the presumption of correctness accorded to the trial court's decision, regardless of the applicable standard of review APPLICABLE SUBROGATION PRINCIPLES In the case of insurance, subrogation takes the form of an insurer's right to be put in the position of the insured in order to pursue recovery from third parties legally responsible to the insured for a loss which the insurer has both insured and paid. An insured's contractual waiver defeats an insurer's subrogation claim. DISCUSSION The waiver provision at issue appears in exhibit B of the agreement, which is a two-page document entitled "Insurance." On the first page and under the subheading "Subcontractor's Insurance" (boldface & underscoring omitted), the subcontract required the "Subcontractor" to "obtain and maintain" certain specified "policies of insurance ...." It provided that the subcontractor waived all of its rights against SCE and that its insurer agreed to the waiver. The context of the waiver provision supports the conclusion that it encompasses claims against SCE that Mowbray's would otherwise have been able to transfer to its insurers. In sum the plain language of the waiver provision unambiguously foreclosed Evanston's equitable subrogation claim against SCE. The waiver provision was presumably available for Evanston's review when it underwrote the insurance policy for Mowbray's and it agreed to support the waiver. Because The Waiver Provision Is Unambiguous, The Court Rejected Evanston’s Arguments Supporting Its Construction Of The Provision When a dispute arises over the meaning of contract language, the first question to be decided is whether the language is "reasonably susceptible" to the interpretation urged by the party. If it is not, the case is over. Because the Court of Appeals concluded for the reasons set forth above that the waiver provision's reference to “all rights of recovery against Contractor or the Owner" unambiguously included Evanston's equitable subrogation rights against SCE. The judgment was affirmed. Respondent Southern California Edison Company is awarded its costs on appeal. ZALMA OPINION Insurers like Evanston issuing general liability policies often, if not invariably, agree to waive the insurer's right to subrogation. Evanston's policy allowed for the waiver and had no more rights than its insured who had waived the right by a clear and unambiguous contract and caused its insurer, Evanston, to include the waiver. Evanston tried to change the meaning of the contract on appeal but was unable to explain why it had agreed to the waiver before the issuance of 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

Don't Ty to Defraud GEICO It Bites Back GEICO (collectively, “GEICO” or “Plaintiffs”) sued Defendants ALP Supply, Inc. (“ALP”), PV Supply, Inc. (“PV”), and Pal Vakula, alleging common law fraud and unjust enrichment claims. In Government Employees Insurance Company, GEICO Indemnity Company, Geico General Insurance Company, and GEICO Casualty Company v. ALP Supply, Inc.; PV Supply, Inc.; and Pal Vakula, No. 22-CV-79 (LDH)(MMH), United States District Court, E.D. New York (September 29, 2023) GEICO sought, and obtained, default judgments against health care fraud perpetrators. The GEICO Plaintiffs' moved the USDC for default judgment pursuant to Federal Rule of Civil Procedure 55(b)(2). For the reasons set forth below, the Magistrate Judge recommended that Plaintiffs' motion should be granted as to their common law fraud claims. The Court further recommended that Plaintiffs should be awarded damage. BACKGROUND In sum, the allegations focus on Defendants' multi-faceted scheme to defraud GEICO by falsely representing material information to collect benefits under New York's “no-fault” insurance laws. Healthcare service providers that do not comply with state or city licensing requirements are ineligible to collect no-fault benefits. Further, the relevant laws prohibit licensed providers from paying or accepting kickbacks for referrals. The Fraudulent Scheme ALP and PV, both New York corporations based in Brooklyn, are retailers of Durable Medical Equipment (DME) and OD. Vakula, a New York resident, owns and operates both businesses, but is not and has never been a licensed healthcare provider. From July 2019, Vakula used ALP and PV to submit and cause to be submitted to GEICO thousands of fraudulent no-fault insurance claims for medically unnecessary, illusory, and otherwise non-reimbursable DME and OD. GEICO relied on this false information to process Defendants' claims promptly pursuant to statutory and contractual obligations, resulting in payments of over $267,000. Defendants not only submitted claims to GEICO knowing that they included materially false information but also hired law firms to pursue collection of the fraudulent claims from GEICO, which resulted in expensive and time-consuming litigation against GEICO if the charges were not promptly paid in full. JOINT AND SEVERAL LIABILITY GEICO seek to hold ALP and Vakula jointly and severally liable and PV and Vakula jointly and severally liable. Here, GEICO sufficiently alleged Vakula's joint and several liability as to PV and ALP. According to the Complaint, Vakula owns and controls both PV and ALP and was directly involved in submitting fraudulent claims to GEICO through those entities. The alleged harm to GEICO is indivisible between Vakula as the owner and operator of each corporate defendant. Accordingly, the Magistrate found that joint and several liability is appropriate as to (1) ALP and Vakula and (2) PV and Vakula. COMMON LAW FRAUD In the Second and Fourth Causes of Action in the Complaint, GEICO alleges that Defendants committed common law fraud. Under New York law, a plaintiff asserting a claim of common law fraud must plausibly allege: a material misrepresentation or omission of fact made by defendant with knowledge of its falsity intent to defraud; reasonable reliance on the part of the plaintiff; and resulting damage to the plaintiff. DECLARATORY JUDGMENT Here, GEICO established that an actual controversy exists and that a declaratory judgment would afford specific and conclusive relief as to pending claims with respect to all Defendants. GEICO alleges that ALP and PV have pending bills submitted to GEICO that GEICO has no obligation to pay. Additionally, GEICO has submitted documentation of pending collections actions that ALP and PV are actively prosecuting against GEICO in New York state courts. GEICO has provided a list of the actions, including the amounts involved, the claim numbers, and the status of each action. CONCLUSION In sum, Plaintiffs established liability on their common law fraud claims only. The Magistrate judge recommended: a default judgment should be entered against Defendants for common law fraud; Plaintiffs should be awarded compensatory damages in the amounts of $112,201.74 jointly and severally against ALP Supply, Inc. and Vakula and $188,799.94 jointly and severally against PV Supply, Inc. and Vakula, with prejudgment interest to accrue at an annual rate of nine percent until entry of judgment, with revised calculations to be provided to the Court to determine the specific amount due; and a declaratory judgment should be entered that Plaintiffs have no obligation to pay any pending claims submitted by ALP Supply, Inc. and PV Supply, Inc. ZALMA OPINION GEICO seems to have given up on Departments of Insurance and prosecutors to defeat insurance fraud by proactively suing fraudsters and taking the profit out of the crime of insurance fraud. Its success in this case and others should be emulated by the insurance industry who sits back and allows fraudsters to profit from claims. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe to 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/

Chutzpah: Plead Guilty to Fraud, Receive Probation and Appeal the Conditions Raymundo Gonzalez appeals the condition of probation imposed after he pled no contest to one felony count of insurance fraud. Specifically, when defendant was placed on probation by the trial court, one of the conditions of probation permitted searches of computers, and hand-held electronic and cellular devices (electronic devices). No objection was raised to this condition when it was announced. In The People v. Raymundo Gonzalez, F084950, California Court of Appeals (September 25, 2023) Gonzalez sought removal of the search of electronics equipment. FACTS In the claim, defendant alleged he was injured on September 5, 2013, after pulling irrigation lines when the tire of a tractor hit him on the right foot, causing him to fall. The injury was documented, and defendant saw a doctor at the end of the day. A worker's compensation claim form was also completed by defendant and his employer's safety officer. In March 2016, defendant was examined by Dr. Stephen Choi regarding his ongoing claim. Defendant told Choi he had not suffered any prior injuries. Following a clinical exam, Choi was unable to make any specific findings regarding defendant's left arm and right foot. Choi concluded, however, that defendant had full range of motion in both shoulders, elbows, hands, and joints. Choi reevaluated defendant in November 2016. Choi ultimately apportioned 25 percent of defendant's injury to a preexisting degenerative disc disease, which was nonindustrial, and 75 percent to the injury incurred in September 2013. The Effect of Surveillance A new evaluation was completed in February 2018, after surveillance footage from November 2013, April 2015, June 2015, and September 2015 was considered. Choi asked for this reevaluation after seeing the footage, which showed defendant walking and moving as if he was injury free. Choi observed defendant working hard, picking things up from the ground, and bending and twisting his body without trouble. Choi concluded these movements should not have been possible if he truly had lower back and shoulder pain. This new evaluation determined defendant did not have any impairment or disability and did not require future medical care. A further investigation revealed defendant filed various claims for injuries while employed with other companies between 2001 and 2011. Defendant claimed he was not able to stand or walk for long periods of time and could not lift anything or bend. Defendant further stated he had never filed a worker's compensation injury claim and never suffered an on-the-job injury. All these statements were in direct conflict with what was depicted in the video footage. Defendant was charged with three counts of insurance fraud and one count of perjury. Defendant entered a plea of no contest on count 1 and counts 2 through 4 were then dismissed under the plea agreement. On August 3, 2022, the trial court sentenced defendant to probation following the plea. A condition of probation, which was imposed without discussion or objection, was an electronic search condition requiring defendant to submit to a search of his electronic devices with or without a warrant. DISCUSSION A trial court may impose and require any or all of the terms of imprisonment, fine, and conditions as it determines are fitting and appropriate. A condition of probation will not be held invalid unless it has no relationship to the crime of which the offender was convicted, relates to conduct which is not in itself criminal, and requires or forbids conduct which is not reasonably related to future criminality. Because defendant's trial counsel did not object Gonzalez claimed ineffective assistance of counsel. The Claim of Ineffective Assistance of Counsel To establish ineffective assistance of counsel defendant must show counsel's representation fell below an objective standard of reasonableness under prevailing professional norms, and counsel's deficient performance was prejudicial Unless a defendant establishes the contrary, the court will presume that counsel's performance fell within the wide range of professional competence and that counsel's actions and inactions can be explained as a matter of sound trial strategy. The court’s review of the record revealed that defendant asked the court to be allowed to travel to Mexico during his probation to visit his grandchildren, who he apparently visited often. The court allowed such travel as long as permission was obtained from probation first. It is not unreasonable to conclude evidence of travel not cleared by probation could be found on a computer or other electronic or cellular device. Was the Condition Overbroad? The possible reasons discussed provide a satisfactory explanation for trial counsel's decision not to object here. The type of evidence that might be found on a computer or other electronic devices would support the condition. Defendant's intent to travel outside the jurisdiction while on probation could also be monitored through those devices, if probation had reason to suspect he traveled or was planning to travel without obtaining permission first. Moreover the decision not to object to the electronic devices condition could be related to the decision by the trial court not to impose a jail sentence. ZALMA OPINION The facts established that Mr. Gonzalez was serial workers' compensation fraudster who was not injured but had successfully defrauded multiple employers only to be caught and prosecuted on his last attempt because investigators acquired video proving he had lied about his condition and work history that, when his doctor saw the video, was offended and cut him off. To complain about the terms of probation and take up the time of the court of appeals was unmitigated gall (Chutzpah!) and should have resulted in more than a loss of the appeal but show a violation of probation sufficient to cause him to serve jail time. (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

Zalma’s Insurance Fraud Letter – October 1, 2023 Posted on September 29, 2023 by Barry Zalma ZIFL – Volume 27, Issue 19, October 1, 2023 This, the nineteenth issue of the 27th year of publication Zalma’s Insurance Fraud Letter provides multiple articles on how to deal with insurance fraud in the United States. See the full video at https://youtu.be/ROKxfEaFpTk October 1, 2023 Another Anniversary Forty-four years ago, today I left the world of the employed and became an entrepreneur by opening my own law firm. The law practice was incorporated shortly thereafter as Barry Zalma, Inc. When I opened for business on October 1, 1979, I had no clients and no certainty that I would have any in the future. I borrowed money from the bank to carry me through the first six months, rented a small office with my wife’s grandmother’s dining room table as my first desk and my secretary brought her own typewriter. I was concerned about my ability to pay the loan with my third child about to be born. Much to my surprise, and pleasure, on October 1, 1979, at 8:10 a.m., the best claims handler in the London market, Alan Warboys, called from London and provided me with my first case as an independent lawyer to represent Certain Underwriters at Lloyd’s, London. He, and the Lloyd’s Underwriters he represented, showed faith in me as a lawyer and insurance expert. Alan is now retired but will forever be, my law firm’s first client and a good friend. Read the full article and the full 22 pages of ZIFL at https://zalma.com/blog/wp-content/uploads/2023/09/ZIFL-10-01-2023.pdf More McClenny Moseley & Associates Issues This is ZIFL’s Fifteenth 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 article and the full 22 pages of ZIFL at https://zalma.com/blog/wp-content/uploads/2023/09/ZIFL-10-01-2023.pdf Good News From the When committing fraud, it is usually good practice not to do it right in front of a camera. However, this Colorado hail contractor just couldn’t help himself. The sales manager for a Colorado construction company says he may have been “too aggressive” after a surveillance camera caught him appearing to fabricate hail damage during a recent damage inspection of a home in Parker. Witnesses say David Kuntz was trying to drum up business in the Newlin Meadows neighborhood of Parker, offering to inspect homes for hail damage. He said he was unaware of a surveillance camera that was rolling as he inspected one home. Read the full article and the full 22 pages of ZIFL at https://zalma.com/blog/wp-content/uploads/2023/09/ZIFL-10-01-2023.pdf California Conference of Arson Investigators Training Seminar OCTOBER 16 – 19, 2023 How Insurers and Arson Investigators Have Taken the Profit from Arson-for-Profit by Barry Zalma on October 19, 2023 = https://netforumpro.com/eweb/Shopping/Shopping.aspx?Site=CCAI&WebCode=Shopping&msm=3263b039-c041-4cdb-84e3-5baf00e8cf8b&cst=fc9ef053-3ef4-41d3-b71a-d6a58cce08eb&ent=e8c4c8e2-68c3-479a-a942-95c2beeae6e1 Read the full article and the full 22 pages of ZIFL at https://zalma.com/blog/wp-content/uploads/2023/09/ZIFL-10-01-2023.pdf Health Insurance Fraud Convictions Caretaker Sentenced in Case of First-Degree Assault and Vulnerable Adult Abuse Obiageriaku Iheanacho, 36, of Baltimore, pleaded guilty and was sentenced according to Maryland Attorney General Anthony G. Brown on September 19, 2023, announced the plea and sentencing for the death of 75-year-old Ellsworth Johnson-Bey. Iheanacho pleaded guilty to first degree assault and abuse of a vulnerable adult in the first degree for her role in the assault and subsequent death of Mr. Johnson-Bey. Read the full article and the full 22 pages of ZIFL at https://zalma.com/blog/wp-content/uploads/2023/09/ZIFL-10-01-2023.pdf Other Insurance Fraud Convictions Boston Employment Agency Owner Sentenced for Tax and Workers’ Compensation Fraud Dam Ngoc Luong, 70, a Dorchester woman was sentenced in federal court in Boston for tax and workers’ compensation fraud offenses in connection with her operation of a temporary employment agency, according to officials. Read the full article and the full 22 pages of ZIFL at https://zalma.com/blog/wp-content/uploads/2023/09/ZIFL-10-01-2023.pdf Fraud Can Defeat Life Insurance Non-Contestability Law in New Jersey In Nickie Vlado v. CMFG Life Insurance Company, No. 23-CV-3234 (JGLC), United States District Court, S.D. New York (August 29, 2023) the much heralded non-contestability clause in life insurance policies that prohibit an insurer from rescinding a policy because of fraud in the application for insurance is not limited by state law. Read the full article and the full 22 pages of ZIFL at https://zalma.com/blog/wp-content/uploads/2023/09/ZIFL-10-01-2023.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

Refusal to Buy Coverage Defeats Suit In Texas Windstorm Insurance Association v. Kevin Kelly and Tiffany Kelly, No. 09-22-00173-CV, Court of Appeals of Texas (September 21, 2023) the Texas Windstorm Insurance Association's (TWIA) appealed from an order granting Plaintiffs' summary judgment and denying TWIA's summary judgment motion. THE STATUTE Section 2210.208 of the Texas Insurance Code requires an offer of Windstorm and Hail Insurance policies issued by TWIA to include coverage for wind-driven rain. Coverage may be made available through an endorsement that requires the insured to pay an additional premium to the carrier to compensate the carrier for insuring against the additional risk of covering the property against the casualty of being damaged by wind-driven rain. BACKGROUND The Kellys live in Port Arthur, Texas. In 2017, the Kellys purchased a windstorm and hail insurance policy from TWIA through their insurance agent to cover their residential property. The policy insures the property against direct loss resulting from the perils of Windstorm and Hail only. The policy specifically excluded the following loss to the covered property: “6. Rain. We do not cover loss or damage caused by or resulting from rain, whether driven by wind or not, unless direct force of wind or hail makes an opening in a roof or wall and rain enters through this opening and causes the damage.” The Kellys' home was damaged by Hurricane Harvey on or about August 29, 2017. On September 1, the Kellys’ filed a notice of claim with TWIA. The adjuster hired by TWIA made the following findings: the Kellys' property sustained covered damage to the garage door tracks, damage to the roof was not caused by wind or hail, and water damage to the interior of the property did not result from a wind or hail created opening in the roof or walls, as required for coverage under the policy. TWIA issued a Notice of Claim Acceptance in Part and Denial in Part, accepting coverage for damage to the tracks on the detached garage but denying coverage from rainwater intrusion. TWIA filed an unsuccessful motion for summary judgment. The dispute centered on whether the "must include coverage for" clause is satisfied by TWIA's offering their insureds the opportunity to purchase a Department of Insurance approved endorsement, which extends the basic coverage in TWIA's windstorm and hail policy to damages caused by wind-driven rain. The trial court found that the TWIA policy issued to the Kellys improperly and ineffectively omits coverage for wind driven rain damage. ANALYSIS The Court of Appeal construes statutory language to determine and give effect to the Legislature's intent. The Court must not interpret the statute in a manner that renders any part of the statute meaningless or superfluous. TWIA argued that it complied with the Act by offering to cover losses caused by wind-driven rain through an endorsement to the basic windstorm and hail policy that it issued to the Kellys, an endorsement the Kellys did not obtain. The Act imposes no non-compliance penalty on TWIA but instead allows it to comply with the statute by offering its insureds the opportunity to obtain an endorsement that covers damage caused by wind-driven rain by paying an additional premium approved by the commissioner when purchasing a windstorm and hail policy. The Court of Appeals' reading of the statute supports the policy that led to the enactment of the windstorm statute. Under well-established rules of statutory interpretation, an appellate court may not interpret one portion of a statute so as to render another portion of the statute meaningless. Accordingly, the Court of Appeals concluded that TWIA complied with the requirements of the statute by offering the Kellys the opportunity to obtain coverage for damage caused by wind-driven rain through the purchase of an endorsement that, if purchased, would have provided coverage for losses caused by wind-driven rain. The Court of Appeals reversed the trial court's Order granting summary judgment in favor of the Kellys and reversed the trial court's Order denying TWIA's summary judgment. ZALMA OPINION Statutes requiring insurers to provide various types of insurance must be read in a manner to provide the desires of the Legislature and not provide less or more than that required by the statute. TWIA followed the statute by offering an endorsement providing wind driven rain coverage, which it offered to the Kellys' only to have them refuse the coverage and then, when damaged by wind driven rain, attempted to cure their error by litigation misinterpreting the statute. They received the coverage they paid for and did not receive the additional coverage for which they refused to pay. (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/

When an Obvious Arson is Just an Accident This is a Fictionalized True Crime Story of Suspected Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The stories help 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. See the full video at and at https://youtu.be/QVhXxFvk7aQhttps://youtu.be/QVhXxFvk7aQ THE FIRE Sometimes, what looks like an obvious arson for profit turns out to be an accidental fire. The insured lived near the ocean within the city limits of San Luis Obispo. Recently divorced she lived alone for many months. The divorce had caused her much emotional trauma. After twenty-five years of marriage, her husband announced he could not live with her anymore and moved out. She sought treatment for her depression. She visited with multiple psychiatrists and psychologists, who only made her life more miserable. Shortly before the divorce became final, walking aimlessly through an older part of town, she happened upon an occult bookstore. She bought a book on the power of the mind. The good book gave her a life purpose. She began to apply the principles stated in the book and found peace for the first time since her divorce. She became a regular customer of the book store. A friendship grew between her and the owner, who introduced her to others in San Luis Obispo interested in the occult and powers of the mind. She applied for, and received, a divinity degree from the Universal Life Church. She bought her first crystal ball that she used to concentrate her psychic energies after receiving the divinity degree. The occult, the powers of the mind and magic were the center of her life. She had a purpose and was no longer distressed by the loss of her husband. When the divorce was final and she gained absolute title to the land and house the book store owner moved into the house with her. As they, and their friends, concentrated their psychic energies, they became convinced that a major earthquake would strike California and destroy all who lived in San Luis Obispo. Her concentrated energies, directed through several different crystal balls, convinced her that the only safe place was a small community in Northern Tennessee. She put her house on the market and accepted the first reasonable offer of sale. Shortly before escrow closed, while the insured and her book store owner lover, slept in the master bedroom, a fire broke out in the second bedroom of the house. Awakened by a sound like a heavy rainstorm, they discovered the fire and escaped naked through the bedroom window into their backyard. Neighbors called the fire department who quickly extinguished the fire after all its contents and most of the structure were destroyed. Claim was made by the insured to her insurer and by the buyer, separately, to its insurer. They had never considered establishing who would have the risk of loss during escrow and, therefore, both maintained separate insurance policies with separate insurers. THE INVESTIGATION The investigation by the fire department revealed that the fire was suspicious. No specific cause could be found for the fire. It did burn very hot. There were marks on the floor in the second bedroom that seemed to show a flammable liquid was spread. The insurer was concerned. It demanded the examinations under oath of the insured and her book store owner lover. Both testified clearly, concisely and honestly that they had no idea why the fire occurred. Both testified, with vigor, concerning their belief in their psychic powers. Both denied adamantly any knowledge of the cause of the fire and explained why they sold the house because of what they believed was the oncoming major earthquake. They explained that they had purchased a house near Nashville because of the low taxes and the stable land below all of Tennessee. The claim made by them was unusual. Neither the adjuster nor counsel had ever received a claim for the loss by fire of three crystal balls. The value of the psychic paraphernalia was difficult to show. The fire department was convinced that an arson had taken place, but could not understand why the insured and her lover had started the fire nude. The insurer conducted a thorough investigation and retained the services of an experienced fire cause and origin investigator. He sifted through the debris and found in the debris an electrically operated bed, equipped with a polyurethane foam mattress. The investigator advised the insurer that, after examining the bed and after reviewing the testimony of the insured and her lover at the examination under oath, it was his conclusion that the fire was the result of a short circuit in the bed motor which ignited the highly flammable (and now banned) polyurethane foam mattress. He explained that polyurethane foam, when heat is applied to it, liquefies and burns vigorously. The liquefied polyurethane foam flows on floor surfaces and leaves a trail similar to that left by the spreading of a flammable petrochemical accelerant. The mystery solved; the insurer paid the insured the loss she incurred to her personal property. The two insurers split the cost of rebuilding the structure. The insured and her lover used the proceeds of the sale of the house and the insurance claim to move to the house they had found in Tennessee. They now live in a large home on ten acres of land where they have gathered with them other believers in the occult and the power of the mind. Since both the insured and her lover were ministers of the Universal Life Church, they performed their own wedding and are living content, spreading the word of the power of the mind. Their wedding ceremony was interrupted by an earthquake from the New Madrid fault registering 3.2 on the Richter scale. Since they were Californian’s the two slept through, and never felt, the minor earthquake. What appeared to be an obvious arson claim, with insureds who were far from average, turned out to be an accidental fire that resulted in an effective subrogation action by the insurer against the manufacturer of the bed. The insureds settled down to avoid a California earthquake on the cusp of the New Madrid fault. Adapted from my book "Insurance Fraud Costs Everyone" available from Amazon.com as a paperback or a Kindle book http://zalma.com/blog/wp-admin/post.php?post=292813&action=edit&classic-editor&classic-editor__forget (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/