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Bad Men Must Serve the Time for Crimes from Insurance Fraud to Murder After a multiple-count indictment against dozens of members of the Gangster Disciples five of them, Alonzo Walton, Kevin Clayton, Donald Glass, Antarious Caldwell, and Vancito Gumbs, appealed their convictions and sentences following a joint trial. Each raised several grounds for reversal contending they were overcharged and over-sentenced. Some argued that the Racketeer Influenced and Corrupt Organizations Act violated the Sixth Amendment because the jury failed to find that the conspiracy involved murder. In United States Of America v. Antarious Caldwell, a.k.a. Fat, a.k.a. Phat, Kevin Clayton, Alonzo Walton, a.k.a. Spike, Vancito Gumbs, Donald Glass, a.k.a. Smurf, a.k.a. Dred, No. 19-15024, United States Court of Appeals, Eleventh Circuit (August 16, 2023) the Eleventh Circuit Affirmed all but one sentence and all convictions. BACKGROUND The Gangster Disciples began as a loosely affiliated network of street gangs in Chicago but later became a hierarchical national criminal organization. Its hierarchy consisted of a "Chairman" and "national board" for the country, "Governors of Governors" in charge of multi-state regions, "Governors" in charge of each state, "Regents" in charge of counties, and "Coordinators" in charge of municipal-level divisions or, in larger cities, subdivisions called "counts" or "decks." The "Chief Enforcer" managed a team of "Enforcers" who exacted punishments for violations of the gang's rules, such as the prohibition against cooperating with the police. Relevant Crimes The indictment charged an array of criminal activities including carjacking and insurance fraud, attempted robbery of Eric Wilder, murder of DeMarco Franklin, Stone Mountain Inn and Central Avenue Shootings, murder of Robert Dixon, the last crime relevant to the appeal was Glass's killing of Robert "Rampage" Dixon in August 2015. Pretrial and Trial Proceedings The principal charge against all the defendants was count one, which charged that the defendants conspired to conduct and participate directly and indirectly in the conduct of the Gangster Disciples through a pattern of racketeering activity in violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(c). The indictment named 34 defendants, and this appeal concerns the joint trial of Alonzo Walton, Kevin Clayton, Donald Glass, Antarious Caldwell, and Vancito Gumbs, who were convicted, and Perry Green, who was acquitted. The district court ordered that all the defendants be secured with ankle restraints throughout the trial. Walton was convicted of racketeering conspiracy, carjacking Frederick, and using a firearm during that carjacking. Clayton was convicted of the racketeering conspiracy only. Glass was convicted of the racketeering conspiracy, acquitted of the murder of Robert Dixon, convicted of carrying a firearm during a crime of violence, namely the killing of Robert Dixon, convicted of causing the death of Robert Dixon with a firearm and acquitted of two marijuana possession charges. Caldwell was convicted of the racketeering conspiracy, the attempted Hobbs Act robbery of Eric Wilder, and carrying a firearm during a crime of violence, the attempted robbery. Vancito Gumbs was convicted of the racketeering conspiracy. For each of the convicted defendants, the jury found that "the RICO conspiracy involve[d] murder." The jury acquitted a sixth codefendant, Perry Green. DISCUSSION The Eleventh Circuit concluded that the district court did not abuse its discretion in its pretrial and trial procedural decisions and that the district court also did not abuse its discretion when it declined to ask questions during voir dire about unconscious bias. Although not in effect when the trial occurred in 2019, the revised Rules require that notice of expert opinion testimony come "sufficiently before trial" for adequate preparation and does not measure timeliness based on the expected date of the testimony. The Ankle Restraints Did Not Violate the Defendants' Rights. Gumbs, Glass, and Caldwell argued that the district court abused its discretion when it ordered them to be restrained at the ankles throughout trial. The common-law rule against shackling prevents creating an unfair impression of guilt for the jury and is limited to contexts that implicate that danger. However, the record makes clear that the ankle restraints were not perceptible to the jury and no defendant alleges that he lacked access to counsel. The district court ordered that the restraints be placed on the defendants' legs only, that they be muffled to prevent clanking, that a curtain around the defense table conceal them from the jury, and that the defendants enter and exit the courtroom outside the presence of the jury. The District Court Did Not Impermissibly Depart from Neutrality When It Questioned a Witness. The trial judge is more than a referee to an adversarial proceeding. Consistent with the common-law tradition, the judge may comment on the evidence and question witnesses and elicit facts not yet adduced or clarify those previously presented. This questioning is limited only by the principle that a judge must maintain neutrality between the parties. The district judge stayed well within these bounds. He asked a single question without commenting on the veracity or relevance of the witness's testimony. The district court did not err, let alone clearly err, when it asked a witness for that information. The jury found that the conspiracy included actual, not inchoate, murder as part of its racketeering activities. He instructed the jury that "acts involving murder" for the purposes of finding the two racketeering activities needed for conviction extended to Georgia-law conspiracy to commit murder and attempted murder. But the district court never said that the jury should read the phrase "involve murder" to mean "involve acts involving murder." Sufficient Evidence Supports the Finding that Walton Intended to Cause Death or Serious Bodily Harm in the Frederick Carjacking. Pointing a gun at someone and demanding money is the kind of evidence on which prosecutors may rely to prove the mens rea for carjacking. Caldwell's Conviction Under the Armed Career Criminal Act and His Sentence Must Be Vacated. The Supreme Court recently held that attempted Hobbs Act robbery is not a "crime of violence" under section 924(c). 142 S.Ct. at 2020. So, the Eleventh Circuit must vacate Caldwell's conviction and it remand for the district court to re-sentence Caldwell for his remaining counts of conviction. All the other convictions and sentences were affirmed. ZALMA OPINION Insurance fraud is a serious crime. It is not as serious as murder. But when a group of men work together to commit murder and insurance fraud they are acting beyond reason and deserve as serious a sentence as the court can provide in accordance with the law. The appeal was their right and the Eleventh Circuit had the obligation and right to disavow them of their arguments and only changed a sentence because of a change in the law. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 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; 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\

False Medical History Defeats No Fault Claim This case arose out of an accident that occurred in 2019. Plaintiff was hit by a car at around 8:15 p.m. while riding a bicycle in Flint, Michigan. Plaintiff sustained serious injuries, including multiple broken bones and lacerations, blunt force trauma to the chest and abdomen, and a traumatic brain injury. However he submitted a claim with false representations about his past medical history and his suit was dismissed. Ronnie Fields appealed the trial court's order granting summary disposition to defendant, Nationwide Mutual Fire Insurance Company. In Ronnie Fields and Anderson Medical Supplies v. National General Insurance Company, Integon National Insurance Company, Garlando Doxie, Kanesha Marzette, and Michigan Automobile Insurance, Defendants, and Nationwide Mutual Fire Insurance Company, No. 361959, Court of Appeals of Michigan (August 17, 2023) the Court of Appeals gave effect to the allegations of fraud. FACTUAL BACKGROUND In relation to the accident, plaintiff submitted two applications for personal protection insurance (PIP) benefits through the Michigan Automobile Insurance Placement Facility (MAIPF). The applications stated that plaintiff did not have any of the same injuries prior to the accident, that he had no preexisting medical conditions, and that he had not applied for social security benefits before or after the accident. However, his second application noted that plaintiff was eligible for social security benefits, contrary to the information from the October 4, 2019 application. Each of the applications contained a fraud warning. Plaintiff sued in February 2020 the MAIPF was required to assign his claim to an insurer. The MAIPF eventually assigned his claim to Nationwide, and Nationwide was substituted as a defendant. Nationwide ultimately filed a motion for summary disposition and alleged that plaintiff committed fraud by submitting false information in support of his claim for PIP benefits, and that he was, therefore, ineligible to receive benefits. Nationwide also alleged that plaintiff failed to disclose that he had eye surgery prior to the accident and that he is legally blind. Nationwide claimed that plaintiff violated the statute by knowingly submitting false statements in support of his claim for benefits. The trial court entered an order granting Nationwide's motion for summary disposition. FRAUD A person commits a fraudulent insurance act when: (1) the person presents or causes to be presented an oral or written statement, (2) the statement is part of or in support of a claim for no-fault benefits, and (3) the claim for benefits was submitted to the MAIPF. Further, (4) the person must have known that the statement contained false information, and (5) the statement concerned a fact or thing material to the claim. THE LIES Finding no dispute that the two applications for benefits erroneously indicated that plaintiff had no preexisting medical conditions and had not sustained any prior injuries that might be relevant to his claim for benefits, Plaintiff's deposition testimony and medical records ultimately revealed that between 2012 and 2019, he was treated for complications arising from the dog bite and for injuries sustained after someone struck him with a baseball bat, including a leg fracture. Additionally, it is undisputed that plaintiff is legally blind, which was not disclosed on either application. The October 4, 2019 application also noted that plaintiff was not eligible for social security benefits, which was ultimately determined to be a false statement. ANALYSIS Plaintiff's medical records could be considered as evidence of fraud even though the medical records were obtained by Nationwide during discovery, the information contained in them concerned incidents that occurred well before plaintiff applied for PIP benefits through the MAIPF. Although such evidence would not directly show that plaintiff engaged in fraud, the medical records pertain to incidents that happened well before litigation commenced. Consequently, they were properly considered by the trial court as documentary evidence in support of Nationwide's fraud assertion. Plaintiff signed the applications, suggesting that they must be considered his own. He argued that it is unclear whether he knew what he was signing, as he was legally blind at the time and would have needed someone to read the document to him. Plaintiff's medical records were not improperly considered as evidence of fraud. Moreover, since plaintiff signed the applications-particularly the November 4, 2019 application-and has provided no evidentiary proof to support the argument that he lacked the capacity to do so, that he did so by mistake, or that he was coerced or defrauded in this case, the trial court's ruling was affirmed. ZALMA OPINION Even no-fault insurance statutes remove the right to benefits if the person seeking the benefits commits fraud in seeking the benefits. There is no question that the Plaintiff filed two applications for benefits that contained false statements. As a result, even though he was seriously injured, his fraudulent statements defeated his claim, proving that liars in Michigan will never prosper from the no-fault system. (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 https://zalmaoninsurance.locals.com/subscribe. Subscribing to my publications 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 – https://zalma.com/blog/insurance-claims-library

Insurers, Agents and Brokers Sophisticated Relationships Expensive Three sophisticated commercial parties in the insurance industry entered into what appears, in hindsight, to be a somewhat unsophisticated business arrangement. That arrangement led to complex litigation, which generally isn't a good thing for a business arrangement to lead to. In American Builders Insurance Company v. Keystone Insurers Group and Ebensburg Insurance Agency, No. 4:19-CV-01497, United States District Court, M.D. Pennsylvania (August 4, 2023) plaintiff American Builders Insurance Company (“ABIC”) sued Defendant Ebensburg Insurance Company (“Ebensburg”) for its allegedly tortious misrepresentations in an application to ABIC for workers' compensation insurance coverage on behalf of Ebensburg's customer, Custom Installations Contracting Services, Inc. (“Custom”). The misrepresentations at issue involve whether Custom was engaged in roofing work and the maximum height of its operations. On Custom's application, Ebensburg indicated that Custom didn't engage in roofing work and only operated at fifteen feet above the ground or lower. On that basis, ABIC issued Custom a workers' compensation insurance policy. Later, a Custom employee fell twenty-five feet from a rooftop while working on a commercial roofing job. The employee filed for workers' compensation benefits, which ABIC unsuccessfully opposed. In this action, ABIC brings several tort claims against Ebensburg. Ebensburg now moves for summary judgment on ABIC's claims, arguing in part that they're time barred. BACKGROUND ABIC is a Georgia-based insurance company that issues workers compensation insurance in the Commonwealth of Pennsylvania. Ebensburg is an independent insurance agency operating in Pennsylvania owned by Carl DeYulis, and managed in part by Carl's son, Kurtis “Kurt” DeYulis. ABIC and Ebensburg have a relationship with Keystone Insurers Group (“Keystone”), a third insurance company. Keystone essentially operated as a sort of “matchmaker,” connecting ABIC to its network of Retail Agencies. Ebensburg is one of the Retail Agencies that is part of the Keystone association. Its relationship with Keystone is governed by a Franchise Agreement. ABIC Changes Its Underwriting Guidelines ABIC could change its underwriting guidelines from time to time. In 2011, ABIC revised its prior underwriting guidelines to require that all roofing risks be pre-inspected prior to the release of a quote from the underwriting department. The new guidelines (the “2011 Roofing Underwriting Guidelines”), provided that all roofing risks would “require pre-inspection prior to release of a quote from [ABIC].” Custom's Relationship with Ebensburg Because Custom had never sought workers' compensation insurance before, it obtained a policy through the Commonwealth's State Workers' Insurance Fund (“SWIF”). The SWIF ACORD application indicated that: Custom engaged in commercial and residential carpentry; Custom didn't perform any work over fifteen feet above the ground; approximately 90% of Custom's work was residential and the remaining 10% was commercial; and Custom used “basic hand tools” for its remodeling projects and to install replacement windows. Custom Applies for Insurance from ABIC In 2015, Custom approached Ebensburg again to inquire about switching to a private workers' compensation insurer for more favorable rates Kurt DeYulis primarily relied on the SWIF ACORD and its “classification of [Custom's] business” through Custom's “class codes,” as provided by the PCRB. Kurt DeYulis indicated that Custom engaged in commercial remodeling, didn't work at heights higher than fifteen feet, and wasn't engaged in any other business other than commercial remodeling. Kurt DeYulis also applied to several other insurance carriers on Custom's behalf. As he did with the ABIC application, Kurt DeYulis didn't indicate that Custom did roofing work on the other applications. The James Scott Injury In September 2015, Custom was engaged in a commercial roofing job in New Galilee, Pennsylvania. James Scott had just began working for Custom. He stepped through a skylight and fell from over twenty feet to the ground, incurring serious injuries. The Western District Litigation and Workers' Compensation Proceeding In September 2015, ABIC sued Custom in the Western District of Pennsylvania, seeking rescission of the insurance policy and alleging that Custom committed insurance fraud. The trial court concluded it did not have jurisdiction over ABIC's claim for rescission because ABIC could obtain relief in the workers' compensation litigation and dismissed the case. Following Judge Gibson's order dismissing ABIC's federal claims, the workers' compensation litigation continued. Judge Gallishen ultimately denied ABIC's petitions. The Pennsylvania Workers' Compensation Appeals Board later affirmed Judge Gallishen's decision. LAW Under Federal Rule of Civil Procedure 56, summary judgment is appropriate where the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. ANALYSIS ABIC argued that the limitations period on its claims should be tolled under either the fraudulent concealment or inherent fraud doctrine. The parties follow: Custom was the principal, Ebensburg was Custom's legal agent, and ABIC was a third party that was harmed by actions Ebensburg took on Custom's behalf. When an agent like Ebensburg commits tortious acts in the scope of its agency, both the agent and principal are equally liable in tort. ABIC was aware (or should have been) of the principal-agent relationship between Custom and Ebensburg because the only way for a customer like Custom to obtain ABIC's insurance was to go through a Retail Agency (like Ebensburg) that had powers of representation with ABIC and access to eQuotes. On the day Scott was injured ABIC was aware that Scott “fell through a roof.” On September 14, 2015, ABIC became aware of the misrepresentations in Custom's application. Therefore, by September 14, 2015, ABIC was aware that: someone submitted false information to it via eQuotes and only Ebensburg, and not Custom, had access to the eQuotes system. The Court concluded that those facts are sufficient to give ABIC inquiry notice of its potential claims against Ebensburg because it knew that Ebensburg had sole access to the mechanism that caused its injury. The common thread in these elements is that ABIC knew that the alleged misrepresentation negligently or fraudulently came from two potential sources, Custom or Ebensburg (or both), and it knew that Ebensburg had access to eQuotes, the mechanism that caused its injury. Rather than pursuing both potential sources, ABIC assumed that the misrepresentation originated with Custom rather than Ebensburg. ABIC eventually learned that its assumption was incorrect, but not until after the statute of limitations expired on its claims in September 2017. CONCLUSION Complicated business arrangements lead to complicated litigation. The Court acknowledged that litigators in these circumstances must toe a difficult line. ABIC appears to have fallen on the wrong side of that line. By failing to act on its knowledge that Ebensburg had access to eQuotes, the mechanism by which ABIC was injured, ABIC ran afoul of the statute of limitations. That error required Ebensburg's motion for summary judgment to be granted. ZALMA OPINION It is axiomatic that when a litigant assumes a fact rather than obtaining and working on actual evidence the litigant becomes its own worst enemy and forgot that making an assumption should first break the word assume into its component parts. In this case the assumption let the statute of limitations run and left the insurer holding the cost of a workers' compensation policy it did not owe. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 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; 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\

Man Bites Dog Story = Allstate May Sue on Behalf of State for Insurance Fraud Qui Tam Actions May Proceed to Trial Allstate Insurance Company and several of its affiliates (collectively, Allstate) brought qui tam actions on behalf of the State of California alleging insurance fraud under the California Insurance Frauds Prevention Act (IFPA) (Ins. Code, § 1871 et seq.) and the Unfair Competition Law (UCL) (Bus. &Prof. Code, § 17000 et seq.) against three medical corporations, a medical management company and its parent company, four physicians, and Sattar Mir, an individual. In the People ex rel. Allstate Insurance Company et al. v. Discovery Radiology Physicians, P.C., et al., and v. Onesource Medical Diagnostics, LLC, et al., B315264, California Court of Appeals, Second District, Third Division (August 15, 2023) the operative complaints allege that while the medical corporations hold themselves out as providers of radiology services, they in fact act as radiology "brokers," sending patients to radiology facilities and radiologists with which the purported medical corporations have contracted. The trial court found the complaints failed to state causes of action under the IFPA and the UCL because they were not pled with requisite specificity. FACTUAL BACKGROUND Allstate's Fraud Actions; The Initial Demurrers. Allstate Insurance Company is an insurance company licensed to issue automobile insurance policies in California. In 2020, Allstate filed two qui tam actions alleging insurance fraud in violation of the IFPA and the UCL. The complaints alleged that the three medical corporations were formed and controlled by Mir, who is not a physician, to broker radiology services. The resulting bills falsely identified the technical and professional services as having been provided by one of the three defendant medical corporations and grossly inflated the fees for the services provided. Allstate alleged it would not have paid the claims for services purportedly rendered by the three professional corporations had it known of the false statements and fraudulent markups. The trial court sustained the demurrer to the first amended complaints. The trial court entered judgments of dismissal in the Discovery and OneSource actions on August 16, 2021. Allstate timely appealed. DISCUSSION This appeal presents four basic issues: Are the business models alleged in the amended complaints unlawful? If the alleged business models are unlawful, do they give rise to causes of action under the IFPA and the UCL? Do the amended complaints plead fraud with sufficient particularity? Does the Discovery action adequately allege delayed discovery to survive demurrer on statute of limitations grounds? The Court of Appeals answered each question in the affirmative. ANALYSIS A nonlicensed individual need not examine a patient or render a medical diagnosis to engage in the unlicensed practice of medicine-to the contrary, a non-physician unlawfully practices medicine if he or she exercises undue control over a medical practice. A non-physician undoubtedly exercises undue control by owning a medical practice but may also exercise such control in a variety of other ways, including by choosing physicians to provide medical services, selecting medical equipment, determining the parameters of physicians' employment, including case load and compensation, and making billing decisions. Overview of the IFPA. The IFPA was enacted to prevent automobile and workers' compensation insurance fraud in order to, among other things, "significantly reduce the incidence or severity and automobile insurance claim payments and . . . therefore produce a commensurate reduction in automobile insurance premiums." A claim need not contain an express misstatement of fact to be actionable under Penal Code section 550 and Insurance Code section 1871.7, subdivision (b). Instead, these sections require only that a person knowingly, and with intent to defraud: present a claim that is false or fraudulent in some respect, present, prepare, or make a statement containing false or misleading information about a material fact, or conceal an event that affects a person's right or entitlement to insurance benefits. In other words, "[a]n insurance claim is fraudulent under [Penal Code] section 550 and [Insurance Code] section 1871.7, subdivision (b), when it is characterized in any way by deceit or results from deceit or conduct that is done with an intention to gain unfair or dishonest advantage." ANALYSIS. The present case is a fraud action brought in the name of, and on behalf of, the state of California. Nor does Allstate seek to "avoid paying for" services rendered under an insurance contract, as defendants suggest; Allstate has already paid for those services and seeks through this action to recover a statutory penalty that, if recovered, will be shared by the state. For all of these reasons, the Court of Appeals concluded that the complaints allege claims under the IFPA. The Operative Complaints State Claims Under The UCL. The UCL prohibits "any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising." (§ 17200.)" All parties agree that Allstate's UCL claims are derivative of its IFPA claims, and thus that the UCL claims rise or fall with the IFPA claims. Because the complaints adequately plead violations of the IFPA, they also adequately plead violations of the UCL. The Amended Complaints Were Pled With Adequate Specificity. Because Allstate has not only pled an allegedly fraudulent practice, but also identified each of the allegedly false claims submitted as a result of that practice it has adequately pled its complaint with adequate specificity. DISPOSITION The judgments of dismissal were reversed with directions to the trial court to vacate the orders sustaining the demurrers, enter new orders overruling the demurrers, and reinstate the amended complaints. Allstate shall recover its appellate costs. ZALMA OPINION The qui tam provision of the IFPA is an effective means of reducing insurance fraud by taking the profit out of the procedure without taking on the need for proof beyond a reasonable doubt in a criminal proceeding. If there is no profit in fraud and because the IFPA can assess serious damages on the perpetrators Allstate, and all the Amici who supported it on this appeal, should be honored in the work to defeat fraud and should be emulated by other insurers who are the victims of fraud providers, whether medical, auto body shops, contractors, roofers, public insurance adjusters and lawyers. (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 https://zalmaoninsurance.locals.com/subscribe. Subscribing to my publications 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 – https://zalma.com/blog/insurance-claims-library

Waiver of Sovereign Immunity Does Not Apply to Federal Statutory Claims The doctrine of sovereign immunity is an "ancient" concept. It is the long-established view that a sovereign, such as a state, is "infallible," and, thus, immune from suit "absent the State's consent." The General Assembly provided such consent in the Maryland Tort Claims Act which waives the State's immunity. In Michele Williams v. Morgan State University, et al., No. 9-2022, Maryland Supreme Court (August 14, 2023) the Supreme Court advised the Fourth Circuit of its evaluation of the states statute waiving the State's immunity to a tort action in a court of the State. The original state court action was moved to federal court. Michele Williams sued her former employer, Morgan State University ("MSU"), and her former supervisor, Dean DeWayne Wickham, in his personal capacity regarding her termination from the University. In an amended complaint, Appellant added claims alleging retaliation in violation of the National Defense Authorization Act ("NDAA"), 41 U.S.C. § 4712, and the American Recovery and Reinvestment Act ("ARRA"). As to her federal claims against MSU, Appellant alleges that her termination by MSU was impermissible retaliation for disclosing that the University, primarily Dean Wickham, had overstated "the University's operating costs to the Corporation for Public Broadcasting and the United States Department of Education and . . . attempted to influence the 2016 Baltimore mayoral race by violating FCC regulation[s]." Eventually, the Fourth Circuit certified a question of law to the Supreme Court: “Does Maryland's waiver of sovereign immunity for ‘a tort action’ under the MTCA extend to federal statutory claims?” BACKGROUND Appellant worked from 2014 to 2017 as MSU's Director of Broadcast Operations where she oversaw and managed MSU's radio and television stations. Appellant complained to MSU that she believed Dean Wickham's actions violated various federal and state laws and regulations. She also complained that MSU intentionally was inflating expenses in reports submitted to state and federal agencies to secure larger grants. She alleged that her complaints resulted in her improper termination in 2017. The MTCA's Statutory Framework Under the MTCA, a party injured by the negligent act or omission of a state officer or employee within the scope of the officer's or employee's public duties may obtain compensation for that injury from the State. By its plain terms, the statute provides that the scope of the State's waiver of sovereign immunity is not waived for, among other things, "[a]ny tortious act or omission of State personnel that: (i) [i]s not within the scope of the public duties of the State personnel; or (ii) [i]s made with malice or gross negligence[.]" The other central component of the MTCA, in addition to its waiver of the State's sovereign immunity for tortious acts or omissions by State personnel, is a corresponding immunity from suit and from liability in tort for State personnel. The MTCA also contains certain limitations on the scope of the waiver of the State's sovereign immunity beyond those that are dependent on the actions of the State personnel. ANALYSIS The Supreme Court concluded, and so advised the USCA that the MTCA does not waive the State's sovereign immunity for federal statutory claims. There is no question that MSU is an instrumentality of the State, sharing in its sovereign immunity. Although the Supreme Court concluded that the text of the MTCA is unambiguous, it noted that its interpretation of the waiver provision is consistent with the Act's purpose and historical context. The MTCA states that it "shall be construed broadly, to ensure that injured parties have a remedy." SG § 12-102. But a broad construction of the MTCA is not necessarily an open invitation for any injured party to file a claim. Concluding that the General Assembly did not intend for "a tort action" under the MTCA to include federal statutory causes of action the Supreme Court noted that the MTCA's waiver provision contains no express language indicating such a result, and the General Assembly knows how to effectively waive the State's immunity, if that is its goal. Furthermore, extending the scope of the waiver provision to federal statutory claims is inconsistent with both the key, neighboring provisions concerning the interplay between the State and a State employee's immunity in certain suits, as well as the MTCA's role as a gap-filler scheme. The certified question posed by the Fourth Circuit, and slightly rephrased by the Supreme Court is whether "a tort action" under the MTCA includes federal statutory claims. The Supreme Court's answer was "no." It so held because, after assessing the plain language of the MTCA, there is no evidence that the General Assembly intended to include federal statutory claims within the scope of the MTCA. ZALMA OPINION Every person dealing with insurance for public entities, the MSU, must understand the application of sovereign immunity that limits the need of such public entities to secure insurance to protect the governmental entity from charges that have not been waived. Insurance calculations should be limited to the needs of the entity to protect against those things where the state has waived sovereign immunity and not where sovereign immunity was not waived. (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 https://zalmaoninsurance.locals.com/subscribe. Subscribing to my publications 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 – https://zalma.com/blog/insurance-claims-library

INTENTIONAL MISCONDUCT EXPOSED INSURER TO PUNITIVE DAMAGES Susanne Cook ("Appellant") appealed the trial court's denial of her motion for leave to amend her complaint to assert a claim for punitive damages against Florida Peninsula Insurance Company ("the Insurance Company"). In Susanne Cook v. Florida Peninsula Insurance Company, No. 5D22-2334, Florida Court of Appeals, Fifth District (August 11, 2023) the Court of Appeals resolved the dispute. BACKGROUND Following the conclusion of a first-party lawsuit for windstorm insurance benefits, Appellant filed a motion for leave to amend to assert a claim for punitive damages, and a proposed amended complaint alleging bad faith by the Insurance Company. The Insurance Company allegedly ignored information in its own file confirming coverage for her claim, used faulty data when it denied the claim, failed to conduct a proper investigation of the claim, misrepresented the policy and coverages afforded under the policy, and refused to issue payment for coverage under the policy to restore the property to its pre-loss condition. Appellant claimed she suffered actual damages including but not limited to attorney's fees, public adjuster's fees, expert fees, loss of use and decrease in value of her property, loss of enjoyment of her property, damaged credit, and general damages. She supported her claim because the Insurance Company-as a business practice-misrepresented pertinent facts or insurance policy provisions relating to coverages at issue, intentionally omitted language to mislead insureds and avoid paying claims and failed to properly investigate claims. Appellant provided examples of three other similar claims. Appellant presented copies of letters from the Insurance Company to two other insureds that were similar in substance to that which it sent to Appellant-denying coverage and misrepresenting the terms of their policies by changing and omitting the language that would trigger coverage. In the third example, Appellant presented excerpts from the deposition testimony of a corporate representative of the Insurance Company stating it did not retain an engineer to properly inspect reported damage on another claim prior to denying coverage. The trial court found there had to be a showing of frequency of a general business practice of more than three other claims for punitive damages to be asserted and that the Insurance Company's misrepresentation was a mistake. The trial court denied Appellant's motion for leave to amend her complaint to assert a claim for punitive damages. ANALYSIS A rigorous standard is applied to a motion for leave to amend a complaint to assert a punitive damages claim. Before allowing a punitive damages claim to satisfy his initial burden by means of a proffer, the statute contemplates that a claimant might obtain admissible evidence or cure existing admissibility issues through subsequent discovery. Punitive damage amendments by statute the burden of proof at trial and provides that a defendant may be held liable for punitive damages only if the trier of fact, based on clear and convincing evidence, finds that the defendant was personally guilty of intentional misconduct or gross negligence. It is not whether the wrongful business practice has already been proven, but whether the plaintiff made a sufficient showing by evidence in the record or proffer to establish a reasonable basis for it to ultimately be found that the defendant engaged in the wrongful conduct as a business practice. What is required is a reasonable showing by evidence in the record or proffered by the claimant which would provide a reasonable basis for recovery of such damages. The appellate court concluded that Appellant's actual evidence and proffered evidence reasonably demonstrated an indication that the Insurance Company misrepresented coverage and failed to properly investigate claims as a general practice, in reckless disregard for the rights of its insureds. "Intentional misconduct" means that the defendant had actual knowledge of the wrongfulness of the conduct and the high probability that injury or damage to the claimant would result and, despite that knowledge, intentionally pursued that course of conduct, resulting in injury or damage. The Court of Appeals concluded that there were reasonable inferences and sufficient circumstances submitted to plead intentional misconduct. The trial court was required to determine whether Appellant offered reasonable evidence of a misrepresentation, not whether the mistake was intentional. The trial court erroneously made a factual determination at the pleading stage. The trial court's order was reversed. ZALMA OPINION There is no excuse for an insurer to lie to the insured. If, as alleged, the insurer intentionally lied to the insured about available coverages and did so as part of a normal business practice to at least three more insureds, it can be subject to punitive damages in Florida. If the Appellant proves her allegations the insurer will be punished for its wrongdoing. (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 https://zalmaoninsurance.locals.com/subscribe. Subscribing to my publications 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 – https://zalma.com/blog/insurance-claims-library

No Right to Change After Agreeing to a Settlement INSURER'S INSTIGATION OF SETTLEMENT IS EVIDENCE OF GOOD FAITH After parties to a suit resolved the suit by settlement one or more of the parties tried to renege on the agreement and appealed the trial court's order to enforce the parties' settlement agreement. The parties' settlement agreement required them to dismiss all claims, counterclaims, and crossclaims with prejudice. In Shorewood Forest Utilities, Inc. v. Rex Properties, LLC and Don Blum, No. 22A-PL-2345, Court of Appeals of Indiana (August 11, 2023) the Court of Appeals resolved the claims concerning the Settlement Agreement. FACTS AND PROCEDURAL HISTORY Shorewood is a nonprofit corporation that provides sewer service to more than 1000 residents in Porter County. Rex Properties is a property developer, and Blum is the sole managing member of Rex Properties. In 2017, Shorewood and Rex Properties entered into an agreement for Shorewood to expand into a new Rex Properties development and service the homes there according to certain terms, rates, and fees. Not long thereafter, Shorewood concluded that its agreement with Rex Properties was not enforceable, and Shorewood declined to participate in the project. By mid-2019, the only claim remaining in the instant cause was Rex Properties' approximately sixteen-million-dollar counterclaim against Shorewood for breach of contract. Shorewood sought to amend its complaint to allege claims of fraud, fraud in the inducement, unjust enrichment, and criminal deception against Rex Properties. In March 2020, the trial court permitted Shorewood's requested amendment. In the spring and summer of 2020, the parties attempted to settle out of court. On June 8, counsel for Shorewood sent counsel for Rex Properties an email stating that Shorewood's insurance carrier, Stratford Insurance, had agreed to pay Rex Properties $950,000 for Shorewood and Rex Properties to settle and dismiss all claims, counterclaims, and crossclaims in this cause. Mr. Blum approved the settlement with the terms set forth in the offer email. Over the next several weeks, the parties' attorneys worked on drafting a Settlement Agreement. Counsel drafted an agreement but Shorewood refused to sign it. Accordingly, Rex Properties filed a Motion to Enforce Settlement Agreement on the ground that the June 8 email exchange represented an enforceable agreement between the parties whereby Stratford Insurance would pay Rex Properties $950,000 and, in exchange, Shorewood and Rex Properties would dismiss all claims in this cause with prejudice. THE ISSUES The central issue in this appeal is whether the email exchange between the parties on June 8 represented the offer and acceptance of an enforceable settlement agreement. The trial court concluded that the parties' June 8 email exchange created an enforceable settlement agreement. Shorewood had made an offer, Rex Properties accepted the offer, there was more than ample consideration between them and Stratford Insurance, and all parties had a meeting of the minds over definite and certain essential terms. Shorewood claims that Stratford Insurance colluded with Rex Properties and somehow kept Shorewood "in the dark and uninformed" about the "terms, conditions, requirements, and payments" to be made to Rex Properties. The trial court's denial of Rex Properties' motion for judgment on the pleadings and its motion for summary judgment resulted in a settlement agreement between Shorewood and Rex Properties, and their settlement rendered the trial court's prior judgments moot. The trial court’s judgment was affirmed. ZALMA OPINION Courts invariably prefer settlement agreements. Insurers, like Stratford, prefer settlements. In this case Stratford put up almost $1 million to settle, the parties agreed by e-mail and an agreement to memorialize the agreement with a formalized agreement. The contract was made by the e-mail exchange of offer, acceptance and consideration. The formalized agreement was not necessary and the good work of the insurer resulted in a solution to an extensive case and protected its insured. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 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; 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\

Issue 27 Number 16: ZIFL-08-15-2023 Lawyer Paying for Clients Guilty Experienced Lawyer Claiming Ignorance of Law Is No Defense Robert Irving Slater was a practicing worker’s compensation attorney when he entered into an agreement with the owner of USA Photocopy who paid a third party to perform intake interviews with clients of defendant’s practice, saving a significant amount of his lawyer’s own employees time and money. In exchange, defendant used USA Photocopy’s services during all workers’ compensation proceedings on those cases. Read the full article and the full ZIFL at http://zalma.com/blog/wp-content/uploads/2023/08/ZIFL-08-15-2023-1.pdf More McClenny Moseley & Associates Issues This is ZIFL’s Twelfth 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 ZIFL at http://zalma.com/blog/wp-content/uploads/2023/08/ZIFL-08-15-2023-1.pdf Free Insurance Videos Barry Zalma, Esq., CFE has published five days a week videos on insurance claims, insurance claims law, insurance fraud and insurance coverage matters at https://www.rumble.com/zalma.https://rumble.com/c/c-262921. Good News From the Alex Murdaugh accomplice Russell Laffitte gets 7 years for fraud. He will spend seven years in federal prison for helping convicted murderer Alex Murdaugh steal nearly $2M from clients’ legal settlements. Laffitte was sentenced Tuesday after a jury found him guilty of six charges related to wire and bank fraud back in November. The ex-CEO of Palmetto State Bank became the first of the disgraced former attorney’s accomplices to face prison following the June 2021 shooting deaths that stemmed from sprawling investigations into the Murdaugh family finances. He used the role to elaborately pocket tens of thousands of dollars and collected as much as $450K in non-taxable fees. The position also allowed him to send large chunks toward Murdaugh, who had grown desperate to repay mounting loans as an opioid addiction further depleted his accounts. Despite his conviction, Laffitte continued to maintain his innocence. He has insisted for months that he didn’t know he was committing crimes and was manipulated by a major customer. Read the full article plus many more convictions and the full ZIFL at http://zalma.com/blog/wp-content/uploads/2023/08/ZIFL-08-15-2023-1.pdf Moral Hazard Every insurance fraud investigator must understand what a moral hazard is and why it is important to insurance underwriters. The moral hazard is the increase in uncertainty caused by personal acts of individuals. These acts may contribute to the probability or severity of loss. The individual creating the problem may be the policyholder or another person. In either case the chance of loss is increased. A moral hazard may be present in every line of insurance. No underwriter can ignore it without incurring an increased risk of substantial loss. The moral hazard is very difficult to detect and therefore very dangerous to the insurer. Read the full article and the full ZIFL at http://zalma.com/blog/wp-content/uploads/2023/08/ZIFL-08-15-2023-1.pdf Health Insurance Fraud Convictions Former CEO of Whittier Clinic Pleads Guilty to Defrauding Medi-Cal Family Planning Program Through Multimillion-Dollar Scheme Vincenzo Rubino, 58, of Valencia, the former president and CEO of a Whittier medical clinic pleaded guilty August 3, 2023, to submitting fraudulent billings to a Medi-Cal health care program and two counts of aggravated identity theft. According to evidence presented at trial, Rubino founded, owned, and operated Santa Maria’s Children and Family Center, a Whittier-based medical clinic based registered as a non-profit public benefit corporation and enrolled as a Family Planning, Access, Care and Treatment (Family PACT) provider run through Medi-Cal. Read the full article and the full ZIFL at http://zalma.com/blog/wp-content/uploads/2023/08/ZIFL-08-15-2023-1.pdf Another Insurer Bites the Dust Missouri’s Cameron Mutual Placed into Rehabilitation Cameron Mutual Insurance Company and its wholly owned subsidiary, Cameron National Insurance Company, were placed into rehabilitation in the second week of August 2023 by the Circuit Court of Cole County, Missouri. Missouri Department of Commerce and Insurance (DCI) Director Chlora Lindley-Myer was named rehabilitator for both companies. Read the full article and the full ZIFL at http://zalma.com/blog/wp-content/uploads/2023/08/ZIFL-08-15-2023-1.pdf Other Insurance Fraud Convictions Nassau County, NY, Collision Repair Shops Owner Convicted of Tax Fraud Jose Cardona, 45, of Oceanside, NY, was sentenced August 2, 2023, for felony tax fraud related to his ownership and operation of two Nassau County collision repair shops, New York State officials announced. In Nassau County State Supreme Court, Cardona was sentenced to six months in jail and five years of probation, after having already paid more than $700,000in restitution. Read the full article and the full ZIFL at http://zalma.com/blog/wp-content/uploads/2023/08/ZIFL-08-15-2023-1.pdf It’s Time to Subscribe to Locals or Substack For Subscribers Only I Have Published Special Insurance Articles and Videos I published on Locals.com more than 25 videos and two webinars of the Excellence in Claims Handling program. I also published on Substack.com videos and webinars of the Excellence in Claims Handling Program available only to Subscribers. Read the full article and the full ZIFL at http://zalma.com/blog/wp-content/uploads/2023/08/ZIFL-08-15-2023-1.pdf Barry Zalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com 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/bzalmaGo to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0ExpgGo to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ and GTTR at https://gettr.com/@zalma Read the full article and the full ZIFL at http://zalma.com/blog/wp-content/uploads/2023/08/ZIFL-08-15-2023-1.pdf

Promissory Warranty Must Be Fulfilled Ralph Young owned and lived on a seventy-four-foot motor operated vessel named the SUMMER STAR (“the vessel”). Mr. Young insured the vessel with Yachtinsure Services, Inc. from 2013 through 2019. On August 28, 2019, the vessel ran aground and was destroyed when Hurricane Dorian hit St. Thomas in the United States Virgin Islands, where the vessel was moored. Yachtinsure rejected the abandonment and denied Mr. Young's claim, based on what it considered his material misrepresentations in his April 2019 policy renewal application. As a result the USDC was asked to resolve an issue of the voidability of a marine insurance policy under principles of federal maritime law. The Insured pursued a claim for breach of contract against the Insurer, based on the insurer's refusal to pay for damage sustained by Plaintiff's insured vessel during a hurricane in August of 2019. In Transpac Marine, LLC v. Yachtinsure Services, Inc., Civil Action No. 20-10115-DPW, United States District Court, D. Massachusetts (February 13, 2023) followed the precedent establishing the inviolability of a promissory warranty. BACKGROUND Yachtinsure asserts counterclaims for declaratory judgment seeking judgment that Mr. Young's insurance policy was void as a matter of law and that Yachtinsure had no obligation to pay damages or the benefits promised by the policy. Mr. Young's Renewal Application On April 16, 2019, Mr. Young applied for the renewal of his marine insurance policy to Yachtinsure to renew his existing policy, Mr. Young was obligated to submit an updated application form and a Hurricane Plan for review by Yachtinsure's underwriters. The Hurricane Plan included a warranty by Mr. Young that the vessel will be secured with “10 lines, 3/4 inch Nylon braid.” The applicant was warned that the Hurricane Plan contains “statements upon which underwriters will rely in deciding to accept this insurance” and that the Hurricane Plan “will form the basis of” any insurance contract between the parties. The declaration also stated that misrepresentation or nondisclosure of material facts “may entitle underwriters to void the insurance.” After an inquiry from the insurer Mr. Young confirmed that in the event of a named/numbered storm, mooring lines will be doubled. Mr. Young's email representation that he would double the mooring lines on the vessel in the event of a named windstorm was incorporated into his policy agreement with Yachtinsure. Events Preceding the Destruction of the Vessel During an examination under oath conducted by Yachtinsure Mr. Young testified he decided to sail to Crown Bay in St. Thomas, U.S. Virgin Islands where the storm was expected to pass with windspeeds below thirty-miles-per-hour. Mr. Young resolved to wait out the storm. On August 26, he purchased two, new, one-inch diameter mooring lines from the local chandlery in preparation for the storm. Beyond securing the vessel with those two additional mooring lines and moving upholstery below deck, Mr. Young made no further safety preparations. On August 28, 2019, the storm, by then named Hurricane Dorian, changed its trajectory and struck the Virgin Islands. By the time he learned that the storm would hit the Virgin Islands Mr. Young determined sailing away from the Virgin Islands to be unsafe. Instead, he decided to remain moored to a single mooring in Crown Bay, secured by six lines, four of unspecified diameter and two of a one-inch diameter. Just after noon, high winds from Hurricane Dorian parted Mr. Young's mooring lines, causing the vessel to drift out to sea. However, the anchor's chain became entangled with a sailboat operated by a third-party mariner, Dan Radulewicz. Thereafter, as alleged, Mr. Radulewicz disconnected Mr. Young's anchor gear causing the SUMMER STAR to be swept up in the storm. The vessel eventually ran aground on the lee shore about four miles from Crown Bay. Mr. Young was airlifted from the wreck by the United States Coast Guard. Plaintiff's Claim and Defendant's Denial Mr. Young filed a claim declaration with Yachtinsure on September 3, 2019. DISCUSSION The Supreme Court held in Norfolk S. Ry. Co. v. Kirby, that “federal law controls the contract interpretation” of a marine insurance policy when the contractual dispute at issue “is not inherently local,” observe that the First Circuit has held that there is a judicially established federal rule governing the particular area of marine insurance contract interpretation relevant: whether an insured's representations in the policy constitute unambiguous, promissory warranties which, if breached, excuse the insurer from coverage. The court found the Hurricane Plan to be unambiguous. The plain language of Mr. Young's answer to Question 15 cannot be reasonably read to convey anything other than that Mr. Young would use ten lines of 3/4 inch Nylon braid to secure the vessel. Mr. Young's response to Question 15 of the Hurricane Plan states unambiguously that he will secure the vessel with the configuration of mooring lines he specified in his response. Mr. Young responded to the Hurricane Plan with what is, in essence, a stipulation that he would secure the SUMMER STAR with the mooring configuration he identified when the policy took effect and during its continuance. Thus, this provision of the Hurricane Plan constitutes an unambiguous promissory warranty to secure the SUMMER STAR with ten nylon mooring lines that were 3/4 inch diameter in normal circumstances (i.e., in the absence of a named or numbered storm) and with 20 in a named and numbered storm. Consequences of Breach of Promissory Warranties Under both federal law and New York law, a breach of a promissory warranty will permit the insurer to void a marine insurance contract. Simply material compliance will not satisfy the insured's obligations. The weight of authority holds this strict compliance requirement applicable even to “collateral” warranties unrelated to the insured's claims for damages. Plaintiff's Breach The court concluded that Yachtinsure established beyond reasonable factual dispute that Mr. Young failed to meet his obligation of strict compliance with his warranties under the Hurricane Plan. Mr. Young's admission that he did not use twenty 3/4 inch nylon braid lines to secure his boat during Hurricane Dorian - and thereby satisfy a prophylactic condition the policy called for - is sufficient to prevent him from recovering under the policy. Summary judgment granted to Yachtinsure. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 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; 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\

Private Limitations of Action Provision of Policy Defeats Late Law Suit Knox Mediterranean Foods, Inc. (Knox) appealed the trial court's grant of Appellee Amtrust Financial Services (Amtrust)'s motion for traditional summary judgment on Amtrust's affirmative defense of limitations. In one issue, Knox contends that summary judgment was improper because there was a genuine issue of material fact as to when its claim accrued. In Knox Mediterranean Foods, Inc. v. Amtrust Financial Services, No. 05-21-00296-CV, Court of Appeals of Texas, Fifth District, Dallas (July 28, 2022) the Court of Appeals interpreted the private limitations of action provision in the Amtrust policy. BACKGROUND Knox owns and operates a restaurant in Dallas, Texas. Knox purchased an insurance policy from Amtrust that covered various losses, including theft. The policy provides that any claim for breach of the policy must be brought "within two years and one day from the date the cause of action accrues." The policy defines accrual of a cause of action as "the date of the initial breach of [Amtrust's] contractual duties as alleged in the action." On June 16, 2016, Knox was burgled. Knox submitted a claim to Amtrust under the policy and provided a list of damaged and stolen property. On March 15, 2017, Amtrust issued a check to Knox in the amount of $8,547.65, along with a letter from an Amtrust claim adjuster stating that the check covered stolen camera equipment. On June 13, 2017, Amtrust sent a follow-up letter. This letter states, in relevant part: “We have requested supporting documentation for the other items you claimed multiple times. At this time, it has become apparent you do not intend to provide any additional documentation. Pursuant to my letter of 3/15/2017 we are closing this claim for possible contents damage with no additional payment.” On May 20, 2020, almost three years later, Knox filed suit against Amtrust. Amtrust defended claiming that Knox's claims were barred by the private limitations of action provision set forth in the policy. Amtrust argued that Knox's cause of action accrued on June 13, 2017 when Amtrust notified Knox that it was "closing this claim for possible contents damage with no additional payment." The trial court entered a written order granting summary judgment and ordering that Knox take nothing on its claims. DISCUSSION While Knox's brief wholly fails to cite the record, the record comprises 425 pages, roughly 300 of which is the insurance policy. The sole issue in this appeal required the Court of Appeals to consider whether Amtrust's June 13 letter constituted a denial of Knox's claim. That letter is a little over a page long and easily located in the record. LIMITATIONS The time in which a plaintiff must file suit is defined, as the name suggests, by statute. Parties may contract for a shorter limitations period, provided that the contractual limitations period is not shorter than two years. A cause of action accrues, and the limitations period begins to run when facts come into existence that authorize a party to seek a judicial remedy. In first-party insurance actions, the insured's cause of action accrues when the insurer denies a claim. There is no dispute that the insurance policy at issue sets a limitations period of two years and one day from the date of accrual. Although an insurer's denial must be in writing to trigger the statute of limitations, there are no magic words that must be used to deny a claim. Any statements or activity on the part of the insurance company after the fact involving the claim do not forestall or renew the limitations period. When an insurer denies a claim, its mere willingness to reconsider that denial does not restart the limitations period. Therefore, Amtrust's June 13 letter to Knox unequivocally communicated a decision to deny coverage. Amtrust established as a matter of law that Knox's claim accrued-and the contractual limitations period began to run-on June 13, 2017. Because Knox filed this lawsuit on May 20, 2020, nearly three years after its claim accrued, its claim was time-barred. ZALMA OPINION The covenant of good faith and fair dealing applies to the insurer and the insured equally. When an insured fails or refuses to prove its loss it leaves the insurer no choice but to deny the claim rather than continue to beg the insured to fulfill its promises. Since Knox did nothing for almost three years after it was told Amtrust would pay no more its suit was time barred. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 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; 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\

Sexual Abuse of a Child is, by Definition, an Intentional Act Gustavo Beltran, Alma Beltran, and child A.B. appealed the district court's pretrial adjudication of their counterclaims against Farmers Insurance Exchange (Farmers). In. A.B., Gustavo Beltran, and Alma Beltran v. Agave Health, Inc.; et. al.; Farmers Insurance Exchange, et al., No. A-1-CA-39620, Court of Appeals of New Mexico (August 1, 2023) the Court of Appeals resolved the dispute by considering whether the acts alleged were fortuitous. BACKGROUND The Appellants sued Manuel and Delfina Preciado (the Preciados) alleging that Manuel sexually abused A.B. and that Delfina negligently failed to supervise A.B. while he was in the Preciados' foster care service. The Preciados stipulated to the entry of money judgments, and Farmers- which insured the Preciados with a homeowner's insurance policy-filed a complaint in intervention for declaratory judgment seeking a determination of no indemnity coverage under the policy for the claims against the Preciados. The district court granted the summary judgment motion, finding that the insurance policy did not cover the claims based on Manuel's intentional conduct. DISCUSSION The district court granted Farmers' motion to dismiss for failure to state a claim pursuant to the finding that Appellants lacked standing to bring their countercomplaint against Farmers and that the acts complained of were intentional. The Court of Appeal concluded that Farmers had a right to refuse the insurance claim without exposure to a bad faith claim because it successfully challenged the coverage of Appellants' claim in its motion for summary judgment. In the order granting summary judgment, the district court found that the policy at issue was "an occurrence policy, which applies, for coverage purposes, only to accident and non-intentional behavior." The insurance policy had an unambiguous exclusion to the insurance policy. The exclusion stated that the policy does not cover "bodily injury, property damage, or personal injury arising from, during the course of or in connection with the actual, alleged, or threatened molestation, abuse or corporal punishment of any person by anyone, including . . . any insured." Any injuries or damages arising from Delfina's negligent supervision stemmed from the uninsured risk of sexual misconduct, and thus there was no duty to defend a claim for negligent supervision. The district court properly found that the policy's unambiguous exclusion precluded coverage for claims against the Preciados, including for the acts of Manuel and the negligent supervision against Delfina, thus Farmers had the right to refuse to settle the claim without exposure to a bad faith claim. ZALMA OPINION Liability insurance is, by definition, a contract of indemnity for unintentional and fortuitous acts. Allowing coverage for intentional conduct, like the abuse of a child, would encourage people to commit such evil conduct because there would be no financial effect to the abuser. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 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; 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-libra

No Right to Insurance Proceeds After Sale of Property NO INSURABLE INTEREST Thomas Spoon and Maria Spoon appealed from the Pulaski County Circuit Court order granting summary judgment in favor of Chester Lee Bolds and Linda Bolds in the Boldses' civil suit for damages related to insurance proceeds because the Spoons did not own the damaged house at the time of the alleged loss. In Thomas Spoon And Maria Spoon v. Chester Lee Bolds And Linda Bolds, 2023 Ark.App. 244, No. CV-22-277, Court of Appeals of Arkansas, Division II (April 26, 2023) the Spoons' claimed entitlement to insurance proceeds paid on an insurance claim on a house after the Spoons sold the house to the Boldses. The Boldses purchased the Spoons' house by warranty deed on July 2, 2020. In November 2020, the Boldses filed an insurance claim because they discovered the roof was leaking. The Boldses' insurance coverage would not pay because there was preexisting damage to the roof. The Boldses then filed a claim against the Spoons' homeowner's insurance. That insurer accepted the claim but paid the money in dispute ($5,219.48) to the Spoons. When the Spoons failed to turn the money paid on the insurance claim over to the Boldses they sued raising claims of breach of contract, declaratory judgment, and unjust enrichment. The Spoons also contended they were entitled to the money because they were the owners of the property at the time of loss. They claim that unjust enrichment cannot equitably apply because the Boldses did not pay for the insurance policy. The court's order found that any and all interest the Spoons may have had in the house was terminated and extinguished upon the sale of the house to the Boldses, and it ordered the Spoons to reimburse the Boldses for the roof repairs. ANALYSIS Arkansas law is well settled that summary judgment is to be granted by a circuit court only when there are no genuine issues of material fact to be litigated, and the party is entitled to judgment as a matter of law. If one has money belonging to another, which, in equity and good conscience, he ought not to retain, it can be recovered although there is no privity between the parties. It was undisputed that the Spoons received the insurance money that was distributed for repair of the roof of a house they no longer have an interest. Unjust enrichment amounted to an alternative, independent basis for the circuit court's ruling, which has gone unchallenged by the Spoons. Accordingly the Boldses were entitled to the reimbursement. ZALMA OPINION It is axiomatic that to obtain benefits from an insurer the person insured must have an insurable interest in the property at the time of the loss. Since the loss occurred after the Spoons sold the property to the Boldses their insurable interest was eliminated. They should have recovered nothing, but they were paid by their insurer who decided it was better to pay than fight over a small claim. The Spoons had no right to the money and since the Boldses suffered the loss it was allowed to recover the money paid by the insurer to the Spoons since it would be wrong to profit from the error of the insurer because the Spoons incurred no loss. (c) 2023 Barry Zalma & ClaimSchool, Inc. Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 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; 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\

A Lawyer is not a Super Adjuster I became a lawyer in 1972. Before that I was an insurance adjuster and investigator. Since 1972 I have never been, nor acted as, an adjuster or an investigator. Of course, part of being a lawyer requires some investigation because failing to do so would be a breach of the fiduciary duty of a lawyer to his or her client. I learned immediately upon entering law school and later in the practice of law, that an attorney’s failure to investigate potential defenses constitutes a denial of effective assistance of counsel. [Owsley v. Peyton, 368 F.2d 1002, 1003 (4th Cir. 1966); Kibert v. Peyton, 383 F.2d 566, 569 (4th Cir. 1967); McLaughlin v. Royster, 346 F.Supp. 297 (E.D.Va.1972); Cf. Caudill v. Peyton, 368 F.2d 563 (4th Cir. 1966); Wood v. Zahradnick, 430 F.Supp. 107 (E.D. Va. 1977). In fact, as the Supreme Court of Oregon stated: “To fulfill the role assigned to defense counsel under our adversarial system of criminal justice, a lawyer must investigate the facts and inform himself or herself with respect to the law ‘to the extent appropriate to the nature and complexity of the case[.]’ Krummacher v. Gierloff, 290 Or. 867, 875, 627 P.2d 458 (1981),” [Burdge v. Palmateer, 338 Or. 490, 112 P.3d 320 (Or. 2005)] The attorney-client privilege protects the client from disclosure of private communications with counsel. Communications from a lawyer to his client conveying legal advice and giving information to the lawyer to enable him to give sound and informed advice is always privileged. [Upjohn Co. v. United States, 449 U.S. 383, 390 (1981); M&T Bank Corp. v. State Nat’l Ins. Co. (W.D. N.Y. 2020). The investigation conducted by a lawyer as part of his or her duty to properly represent a client is the work of a lawyer and is and should always be protected by the attorney client privilege and the work product protection. Some Privileges are More Equal Than Others With regard to insurance matters some courts have ignored the duties owed by a lawyer to the client and have eliminated the attorney client privilege and the work product protection for most documents created by those lawyers who provide advice to insurers. For most of the more than 45 years I have been involved providing legal advice to insurers I have been accused of being a “super adjuster” rather than a lawyer to allow insureds to gain an advantage against an insurer, and gain access to the private legal advice given to the represented insurer. The attorney client privilege belongs to the client, not the lawyer, and can be waived but not eliminated. In Cadaret Grant & Co. v. Great American Insurance Company, No. CV 21-6665 (GRB)(AYS), United States District Court, E.D. New York (July 25, 2023) the USDC has decided to compel an insurer to produce documents that include the legal advice provided by a lawyer to an insurer since it concluded that the lawyer involved with the requested documents was acting as an investigator or adjuster rather than as a lawyer. The documents at issue reveaedl that as early as April of 2019, GAIC had retained outside counsel Graziano to discuss claims under the Bond. The USDC outlined the issue before it as follows: “New York courts are often faced with deciding claims of attorney-client privilege in the context of insurance coverage disputes. Central to such privilege decisions is the issue of whether outside counsel is performing the role of a claims investigator, or that of an attorney offering legal advice. Documents reflecting claims investigation activities are subject to discovery even if those activities were performed by an attorney.” The Work Product Doctrine The work product protection is the lawyer’s unlike the attorney client privilege that applies to the client. Protection does not exist for documents that are prepared in the ordinary course of business or that would have been created in essentially similar form irrespective of the litigation. The Decision The Cadaret Grant & Co court refused to provide the attorney client privilege to documents created by the lawyer except a document that showed the lawyer, Graziano’s, legal analysis and opinions. It contains legal advice and the court concluded is therefore primarily legal, rather than investigatory in nature. It, and only it, was determined to covered by the attorney client privilege. The court was wrong and should be reversed if the insurer is able to seek appellate relief. ZALMA OPINION A lawyer giving legal advice to an insurer faced with a claim is required, to properly serve his or her client, to conduct a thorough legal investigation into the issues presented by the insurer for assistance and legal advice. That advice can include many different things, but none changes the lawyer into an investigator or a claims adjuster. Had counsel sat silent and only wrote a coverage opinion without using his or her skill, legal knowledge and skill to obtain, directly or by asking for additional information, to prepare the coverage opinion that the court found was privileged but all other documents were not, is in error. The Cadaret opinion is an insult to the lawyer who acted as a coverage lawyer. The lawyer needed to obtain sufficient information from the insurer client so that he or she could provide a thorough, well-reasoned and researched coverage opinion that was not within the ken of the insurance adjuster who had enough knowledge and experience to recognize that he or she needed the assistance and legal analysis of an experienced insurance coverage lawyer. The “super adjuster” theory that no investigative work of a lawyer can be part of the lawyer’s analysis that is protected by the attorney client privilege and/or the work product protection is simply in error and a false conclusion. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 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; 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\

"The Hello Dolly" Was Not Where the Owner Promised it Would be When it Sunk in Breach of Warranty Great Lakes Insurance, S.E. insured the Hello Dolly VI, a boat owned by Gray Group Investments, L.L.C. The Hello Dolly sank in Pensacola, Florida, during a hurricane. Gray Group filed a claim under the insurance policy, Great Lakes denied coverage, and Great Lakes then sought a declaratory judgment that it properly did so. In Great Lakes Insurance, S.E. v. Gray Group Investments, L.L.C., No. 22-30041, United States Court of Appeals, Fifth Circuit (August 1, 2023) Hurricane Sally struck the Gulf Coast in September 2020. In its path lay the Hello Dolly VI (hereafter, the Vessel), which was moored behind Gray Group's eponymous member Michael Gray's house in Pensacola, Florida. The Vessel sustained damage during the storm and sank at its mooring. Great Lakes denied coverage, asserting that Gray Group had breached several warranties. The Warranties Great Lakes contended that Gray Group breached the "hurricane protection plan" (the HPP) that Gray Group had submitted in response to Great Lakes's "hurricane questionnaire" (the HQ). The HQ requested the Vessel's location during hurricane season and asked a series of questions regarding Gray Group's contingency plans in the event of a hurricane. In the HPP, Gray Group stated that the Vessel would be located at the Orleans Marina in New Orleans, Louisiana, and detailed the protective measures Gray Group would take when a hurricane approached. At the time the Vessel sank it was not even near Louisiana nor did Gray Group comply with the HPP. Gray Group moved for judgment on the pleadings. The district court denied the motion, holding that the phrase application for insurance was ambiguous because it could refer solely to the Application Form, or to a broader set of documents inclusive of the HQ and the HPP. The district court found that evidence outside the pleadings was necessary to determine the meaning of "application for insurance." The district court agreed with Great Lakes and granted it summary judgment. Specifically, the district court held that the phrase "application for insurance" was ambiguous but that extrinsic evidence showed that the parties intended "application for insurance" to encompass the HPP. Continuing the analysis, the court concluded that Gray Group's statement in the HPP that the Vessel was to be located at the Orleans Marina during hurricane season was also ambiguous. Resorting to extrinsic evidence, the court found that the HPP meant that the Vessel would be moored at the Orleans Marina for the majority of hurricane season. The court determined that the HPP's "marina or residence" location constituted a warranty by Gray Group and found that the Vessel had not in fact been moored at the Orleans Marina for the majority of hurricane season. Gray Group had thus breached its warranty, justifying Great Lakes's denial of coverage. ANALYSIS The Great Lakes insurance policy at issue incorporated in full the application form signed by Gray Group. The policy also incorporated in full Gray Group's application for insurance. The Court of Appeals of New York has long recognized the concept of incorporation by reference. For nearly as long as New York has recognized incorporation by reference, its Court of Appeals has allowed parol evidence to prove the identity of the paper that the parties attempted to incorporate. Gray Group's HPP, with its representation that the Vessel's "marina or residence" location during hurricane season was the Orleans Marina, was included in the policy's ambiguous incorporation of Gray Group's application for insurance. Under a bolded header labeled "WARNING," the HQ, which prompted Gray Group's submission of the HPP, advised that "this declaration and warranty shall be incorporated in its entirety into any relevant policy of insurance." Therefore, the district court did not err in holding that the extrinsic evidence was "so one-sided that no reasonable person could decide" that the HPP was not incorporated into the policy. The district court concluded that the HPP's representation regarding the Vessel's "marina or residence" location meant "the place where the [V]essel [was] to be moored the majority of hurricane season." The district court concluded that the HPP's representation regarding the Vessel's "marina or residence" location was a warranty such that Gray Group's breach of it voided the policy. The Hello Dolly VI never got to where she belonged. Gray Group's representations to the contrary were validly incorporated into the policy as warranties, and Gray Group's breach of its warranties justified Great Lakes's denial of coverage when the Hello Dolly sank. ZALMA OPINION A warranty is a promise made by an insured that must be kept in its entirety for the policy to be effective. When, during hurricane season the Vessel was docked in Florida rather than the promised marina in Louisiana with special protections from hurricanes, the promise was not kept and the warranty was breached, Not only did the vessel sink, the breach of warranty sunk the claim. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 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; 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\

Delivery of Policy Starts the Running of the Statute of Limitations Wooten purchased seven Northwestern Mutual insurance policies. Three are disability income policies. Four are various whole-life policies. Wooten purchased and reviewed the last of the policies in December 2005. He sued claiming he was deceived about what he bought ten years before the suit. In Wrenn Wooten v. The Northwestern Mutual Life Insurance Company, Jimzara, And Patrick Matthews, No. 05-20-00798-CV, Court of Appeals of Texas, Fifth District, Dallas (July 31, 2023) the Court of Appeals resolved Wooten's complaint that the trial court's grant of summary judgments in favor of appelees, was wrong. BACKGROUND On April 17, 2018 Wooten sued. He alleged he was sold policies based on misrepresentations on coverage and benefits, wrongfully advised him, and concealed misrepresentations. Wooten bought the disability policies to provide income if he became disabled and unable to work in his present capacity of MRI radiologist. Wooten alleged Zara misrepresented that the policy would provide disability income even if he were able to work in another field. Wooten also alleged the disability policies were unsuitable because they did not contain a waiver-of-premium term, contrary to Zara's misrepresentations "and/or" omissions. He alleged a waiver-of-premium term would have allowed him to receive disability income without paying premiums. Wooten has not filed a disability claim under the policies. The suit alleged claims for fraud, negligent misrepresentation, breach of fiduciary duty, and violations of the Texas Insurance Code and the Texas Deceptive Trade Practices-Consumer Protection Act (DTPA). Wooten alleged he did not discover the injury "and/or" misconduct that forms the basis of this lawsuit until within two years of his filing the lawsuit. The trial court granted Northwestern Mutual's traditional motion for summary judgment. The trial court did not state a ground upon which it granted the traditional motions STATUTE OF LIMITATIONS Wooten alleged causes of action with two- and four-year periods of limitation. The statute of limitations for Wooten's claims for negligent misrepresentation and for violation of the Texas Insurance Code and the DTPA is two years. The court concluded that the appellees carried their summary judgment burden of conclusively proving Wooten's claims for violations of the Insurance Code and DTPA, negligent misrepresentation, and fraud accrued at the time Wooten purchased each policy. Much to the surprise of Mr. Wooten and most insureds, an insured has a duty to read the policy, and failing to do so, is charged with knowledge of the policy's terms and conditions. When the insured receives the written policy, it has sufficient facts in its possession to seek a legal remedy based on an alleged misrepresentation about policy terms by the insurer. Appellees conclusively demonstrated Wooten purchased his last Northwestern Mutual policy in December 2005. The longest applicable statute of limitations for his claims on that policy-and all his policies-is four years. Wooten's claims for fraud, negligent misrepresentation, breach of fiduciary duty, and violations of the Texas Insurance Code and the DTPA are barred by limitations-unless Wooten was otherwise authorized to subsequently file his lawsuit and timely did so. The Discovery Rule An injury is not inherently undiscoverable when it is the type of injury that could be discovered through the exercise of reasonable diligence. Wooten testified he reviewed each of the life insurance policies and disability insurance policies when they were delivered to him. Summary judgment evidence conclusively demonstrated that Wooten actually reviewed the policies. Wooten knew, or should have known, at the time he bought the policies-and when he reviewed the policies-that they did not provide the coverage or benefits appellees allegedly misrepresented. Consequently, appellees conclusively demonstrated in the trial court that the alleged injuries are not "inherently undiscoverable" and that the discovery rule does not apply. Even in a breach of fiduciary duty case where a fiduciary's misconduct is inherently undiscoverable, a breach of fiduciary duty claim accrues when the claimant knows or in the exercise of ordinary diligence should know of the wrongful act and resulting injury. The Court of Appeals concluded that by 2005, at the latest, Wooten knew, or exercising reasonable diligence, should have known of the facts giving rise to the cause of action. An insurance agent has no duty to explain policy terms to an insured. Instead, an insured has a duty to read the policy, and failing to do so, is charged with knowledge of the policy terms and conditions. Therefore, appellees carried their summary judgment burden to conclusively prove Wooten's last claim accrued in December 2005 and to negate applicability of the common-law discovery rule to his common-law claims of fraud, negligent misrepresentation, and breach of fiduciary duty. ZALMA OPINION An insured has a duty to read a policy to confirm that it received the coverage the sales person represented. Although Wooten was neither dead or disabled, he sought damages against the insurer and sales persons when, ten years late, he found the policies did not cover the events he was promised. He sat on his rights well past the running of every applicable statute of limitations. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 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; 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\

Immediate Notice Requirement Defeats Claim IHC Construction Companies, LLC ("IHC") and MA Rebar Services, Inc. ("MA Rebar"), appealed a final summary judgment entered in favor of Westfield Insurance Company ("Westfield") in Westfield's declaratory judgment action against IHC, MA Rebar, and Wayne McClure. In Westfield Insurance Company v. MA Rebar Services, Inc., IHC Construction Companies, LLC, and Wayne Kelly McClure, No. 1-23-0161, 2023 IL App (1st) 230161-U, Court of Appeals of Illinois, First District, Fourth Division (July 27, 2023) the Court of Appeals resolved the dispute. FACTS In 2016 IHC was the general contractor for a municipal construction project ("the Project") and that IHC had hired MA Rebar as a subcontractor on the Project. As a condition of its subcontract, MA Rebar was required to obtain liability insurance. In accordance with the subcontract, MA Rebar obtained the required insurance from Westfield and provided IHC with a certificate of insurance confirming such compliance. Wayne McClure filed a complaint against IHC alleging that he was injured as a result of IHC's negligence while working on the Project as an employee of MA Rebar. IHC promptly notified its insurance carrier, Hartford Insurance Company, of the suit, but it did not provide any notice to Westfield at that time. In July 2018, IHC filed a motion to dismiss McClure's complaint. After the circuit court denied the motion in October 2018, IHC filed a third-party complaint against MA Rebar seeking indemnification and contribution. Approximately three months later MA Rebar notified Westfield of IHC's third-party complaint against it. Westfield then sued for declaratory judgment seeking declarations (1) that it has no duty to defend and indemnify MA Rebar and (2) that it owed no coverage obligation to IHC due to the six-month delay between the time that IHC learned of the McClure lawsuit and the time that Westfield received notice of the suit. The circuit court issued a final order granting Westfield's motion for summary judgment and denying IHC and MA Rebar's cross-motion. The focus of the present dispute is IHC's compliance with a notice requirement in MA Rebar's insurance policy with Westfield, for which IHC was listed an additional insured. The relevant policy language in this case provides that an insured is required to "[immediately send [Westfield] copies of any demands, notices, summonses or legal papers received in connection with [a] claim or 'suit.'" " 'Immediate' in this context 'has been uniformly interpreted to mean within a reasonable time, taking into consideration all the facts and circumstances.'" Zurich Insurance Co. v. Walsh Construction Co. of Illinois, Inc., 352 Ill.App.3d 504, 512 (2004) The circuit court below determined that IHC's notice to Westfield was untimely because IHC had not provided a justifiable excuse for its three- to six-month delay in notifying Westfield of McClure's claim. IHC failed to provide Westfield with notice of the suit for six months after it received service of the complaint. IHC's only justification for the delay in providing notice is that it was attempting to negate the need for insurance coverage by seeking dismissal of the case, but that does not justify the delay. Westfield was entitled to be informed of the suit "immediately," precisely to allow it to participate in defense actions like motions to dismiss. IHC denied Westfield that contractual right by withholding notice while pursuing the motion to dismiss. The court concluded that the Insured failed to comply with the terms of an insurance policy notice provision requiring "immediate" notice of any claims when the insurer did not receive notice of a lawsuit against the insured until six months after service of the complaint on the insured. ZALMA OPINION The insured tried to reduce its premium, by moving to dismiss without reporting a claim, found itself to be its own worst enemy. Its scheme to save future premium increases resulted only to eliminate its insurance for McClure's claimed injury and lost over $10 million in available coverage and the unlimited defense costs. Ignorance can be cured but stupid attempts to save insurance premiums is not curable. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 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; 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\

Experienced Lawyer Claiming Ignorance of Law Is No Defense PHOTOCOPY COMPANY ACTED AS A PASS THROUGH TO PAY THE CAPPER Robert Irving Slater was a practicing worker's compensation attorney when he entered into an agreement with the owner of USA Photocopy who paid a third party to perform intake interviews with clients of defendant's practice, saving a significant amount of his the lawyer's own employees time and money. In exchange, defendant used USA Photocopy's services during all workers' compensation proceedings on those cases. The law prohibits referring workers' compensation clients for remuneration. Defendant was ultimately convicted of conspiracy, submitting false and fraudulent claims against insurers, and 21 counts of insurance fraud. He was sentenced to probation for two years in The People v. Robert Irving Slater, G061331, California Court of Appeals, Fourth District, Third Division (July 17, 2023) and appealed his conviction. FACTS USA Photocopy provided attorney services, including photocopying and sending subpoenas for records for workers' compensation cases. The company would then bill insurance carriers for its services Peter Ayala worked as a "legal investigator performing intake services." Ayala's role was to meet with the potential "workers' compensation client to fill out the intake retainer . . . and also get the retainer signed for the claim." Ayala was told by the lawyer to send an invoice for his services every two weeks to USA Photocopy, which paid him for his services. Ayala had done similar work in the past for approximately 13 attorneys, and this was the first time he would be paid by a party other than an attorney. Over the six years his relationship with USA Photocopy and defendant lasted, Ayala estimated he performed intake services for about 2,000 clients for defendant, and USA Photocopy was the only copy service used for those clients. Ayala did not perform any service for USA Photocopy other than the services he performed for the lawyer defendant. Employees from USA Photocopy went to defendant's offices once or twice a month to obtain records. As the injured worker's attorney, defendant would authorize all subpoenas that were issued. Each entity would respond to the subpoena with records or by stating they had no responsive records. USA Photocopy would separately bill the cost for each subpoena to the workers' compensation insurance carrier, regardless of whether the subpoena resulted in the production of documents. Defendant was convicted of conspiracy submitting a false and fraudulent claim; and 21 counts of insurance fraud based on concealing or failing to disclose information that affects a person's right to an insurance benefit. Verdict and Sentencing The jury convicted defendant on all 23 counts. The jury also found the enhancement regarding the pattern of fraudulent conduct true. The court sentenced defendant to serve a total of 183 days, with 182 of those days suspended on the successful completion of two years of supervised probation. Six months of the probation term was to be served with an ankle bracelet. The court also ordered defendant to pay $356,175.24 in victim restitution in addition to statutory fines and fees. DISCUSSION In reviewing the sufficiency of the evidence to support a conviction, the Court of Appeal applied the test whether substantial evidence, of credible and solid value, supported the jury's conclusions. Appellate courts simply consider whether any rational trier of fact could have found the essential elements of the charged offenses beyond a reasonable doubt. The standard of review is the same even when the case relies on circumstantial evidence and the appellate court must accept logical inferences that the jury might have drawn from that evidence. To prove defendant guilty of conspiracy and insurance fraud, the prosecution was required to prove defendant conspired to refer clients for compensation in violation of section 3215. Defendant's only argument is that the evidence did not support that he knew the referral scheme at issue in this case was a crime. Based on defendant's level of knowledge and experience, the jury could infer that defendant knew the laws involving what kinds of referrals were lawful and which ones were not in the context of workers' compensation law. A defendant cannot remain willfully ignorant and then claim a lack of knowledge about the specific law he was violating as a defense to a specific intent requirement. Further, the very oddness of the scheme involved here - where Ayala was paid by USA Photocopy, rather than by defendant himself - a type of scheme the experienced workers' compensation attorney and retired Judge Hernandez had never heard of - suggested that something was not aboveboard. The jury was entitled to infer from the oddity of the scheme that defendant, as an experienced attorney, was aware it was illegal. The lack of a written agreement - something a reasonable jury might consider routine for a lawyer - also suggests knowledge of illegality. Taken together, and given the substantial evidence standard, the evidence was sufficient for a reasonable jury to infer that defendant was aware that the referral scheme violated the law. ZALMA OPINION Slater, an experienced lawyer, should have known - and the jury found he did - that the scheme with the photocopy service and Mr. Ayala, was an attempt to hide capping - causing insurers to pay for the illegal referrals to a lawyer of clients - a crime in California and most states. He received a kind sentence with no jail time and payment of restitution. If he doesn't pay it he will go to jail. Creativity in hiding the scheme did not work and his conviction properly stands. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 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; 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\

Construction and Development Activities Exclusion Unambiguous In Grenadier Realty Corp., et al. v. RLI Insurance Company, appellant, et al., No. 2020-06795, Index No. 502159/18, 2023 NY Slip Op 03910, Supreme Court of New York, Second Department (July 26, 2023) a New York Supreme Court (trial court) order requiring RLI Insurance Company to defend its insured was appealed by RLI. The trial court order granted the plaintiffs' motion for summary judgment declaring that certain losses were covered under a general liability insurance policy issued by RLI Insurance Company and that RLI Insurance Company was obligated to indemnify the plaintiffs in connection with the underlying action entitled Gargiso v Howland Hook Housing Co., Inc. UNDERLYING ACTION AND INSURANCE CLAIM In July 2012, Michael Gargiso allegedly was injured when he stepped in a trench which was dug as part of a construction project that had been left unfinished. Gargiso sued the property owner, Howland Hook Housing Co., and the property manager, Grenadier Realty Corp. Grenadier, which had purchased a general liability insurance policy from the defendant RLI effective March 1, 2012 (the subject policy), sought to obtain coverage from RLI. RLI denied coverage based upon an exclusion in an endorsement to the subject policy for "bodily injury" arising out of "Construction and Development Activities." Thereafter, the plaintiffs sued RLI to recover damages for breach of the subject policy and for a judgment declaring that RLI is obligated to provide coverage under the policy and to indemnify the plaintiffs in connection with the underlying action. The plaintiffs moved for summary judgment on their causes of action against RLI alleging breach of contract and for a judgment declaring that RLI was obligated to provide insurance coverage to them under the policy and to indemnify them. RLI cross-moved for summary judgment dismissing the complaint insofar as asserted against it and for a judgment declaring that it has no duty to indemnify the plaintiffs. ANALYSIS In determining a dispute over insurance coverage, the appellate court first looks to the language of the policy. As with any contract, unambiguous provisions of an insurance contract must be given their plain and ordinary meaning. The insurer has the burden of proving the applicability of an exclusion. If the language is doubtful or uncertain in its meaning, any ambiguity will be construed in favor of the insured and against the insurer. However, the plain meaning of a policy's language may not be disregarded to find an ambiguity where none exists. The RLI policy provided coverage for, among other things, damages because of "bodily injury." The policy, however, includes a construction and development exclusion, which, as is relevant, excludes from coverage "bodily injury" resulting from "Construction and Development Activities." Gargiso was injured when he stepped into a trench which had been dug as part of the construction activities in a parking lot on the property. RLI demonstrated that the construction and development exclusion unambiguously excluded from coverage bodily injury arising out of such construction and development activities. Therefore, RLI established that it did not have a duty to indemnify the plaintiffs in connection with the underlying action. CONCLUSION The Supreme Court should have denied plaintiffs' motion for summary judgment and should have granted RLI's cross-motion for summary judgment dismissing the complaint insofar as asserted against it and for a judgment declaring that RLI is not obligated to indemnify the plaintiffs in connection with the subject underlying action The appellate court reversed, with costs. RLI Insurance Company's cross-motion for summary judgment dismissing the complaint insofar as asserted against it and for a judgment declaring that it has no duty to indemnify the plaintiffs was granted. The appellate court then remitted the matter to the Supreme Court, Kings County, for the entry of a judgment, inter alia, declaring that RLI is not obligated to indemnify the plaintiffs in the underlying action entitled Gargiso v Howland Hook Housing Co., Inc. ZALMA OPINION Clear and unambiguous exclusions must, as did the appellate court, be affirmed and enforced. When you fall into a construction trench, as did Mr. Gargiso, you are the victim of construction activities that were clearly and unambiguously 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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 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; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library\

ZIFL - 08/01/2023 Man Bites Dog Story State Farm Sues Fraudster Doctor to Stop False No-Fault Accident Claims In State Farm Mutual Automobile Insurance Company, State Farm Fire and Casualty Company v. Herschel Kotkes, M.D., P.C., Herschel Kotkes, M.D., No. 22-cv-03611-NRM-RER, United States District Court, E.D. New York (July 13, 2023) Plaintiffs, various State Farm insurers sued Herschel Kotkes and Herschel Kotkes, M.D., P.C. (“Kotkes”), alleging that Dr. Kotkes defrauded State Farm by submitting hundreds of fraudulent bills for no-fault insurance charges on behalf of insured patients who were involved in automobile accidents. Read the full article at https://zalma.com/blog/wp-content/uploads/2023/07/ZIFL-08-01-2023.pdf More McClenny Moseley & Associates Issues This is ZIFL’s eleventh 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 at https://zalma.com/blog/wp-content/uploads/2023/07/ZIFL-08-01-2023.pdf Lie to Your Insurer and You Will Lose Plaintiffs Richard Converse and Stephanie Converse own a dwelling that was damaged by fire. Defendant State Farm Fire and Casualty Company (“State Farm”) insured the property at the relevant time. After a fire on December 8, 2019, Plaintiffs sought coverage under the insurance policy. Plaintiffs brought this action when Defendant denied coverage for much of the claim. In Richard Converse, and Stephanie Converse v. State Farm Fire and Casualty Company, No. 5:21-CV-457 (TJM/ATB), United States District Court, N.D. New York (July 12, 2023) the USDC was asked to rule on cross-motions for summary judgment. Read the full article at https://zalma.com/blog/wp-content/uploads/2023/07/ZIFL-08-01-2023.pdf Alex Murdaugh & Insurance Fraud After being convicted of murder investigators and lawyers turned to the financial frauds alleged to have been committed by Murdaugh and how those served as a motive for the murders. There is a civil lawsuit against Murdaugh related to a fatal boat wreck involving the same son that Murdaugh was convicted of killing. Read the full article at https://zalma.com/blog/wp-content/uploads/2023/07/ZIFL-08-01-2023.pdf Good News From the A British man tried to pass off as the son of a dead man, stealing thousands of pounds from his real family. Jack Reece, from the Welsh city of Flint, appeared at Chester Crown Court on Thursday for sentence after previously pleading guilty to two counts of fraud, one of theft and one of providing false information. The crimes he is admitting to: Between January and February of 2020, Reece claimed he was the son of the late David Hughes and intended to gain a life insurance policy to the value of over £3K. He also tried illegally accessing the deceased’s bank account, stealing almost £1K. Reece also pleaded guilty to claiming he was the stepson, illegally registering the death of David Hughes at Flintshire Registrar Office, and stealing a £500 motor car belonging to Mr. Hughes. Read the full article and many more convictions at https://zalma.com/blog/wp-content/uploads/2023/07/ZIFL-08-01-2023.pdf How to Add to the Professionalism of The Insurance Claims Profession The insurance industry has been less than effective in training its personnel. Their employees, whether in claims, underwriting or sales, are hungry for education and training to improve their work in the industry. Read the full article at https://zalma.com/blog/wp-content/uploads/2023/07/ZIFL-08-01-2023.pdf 8 Years in Prison for Firefighter’s Fraud Joined in Major Health Insurance Fraud Conspiracy Tom Sher and another firefighter were sentenced to prison Wednesday, July 12, for their respective roles in a multimillion-dollar health care fraud conspiracy, U.S. Attorney Vikas Khanna announced. Sher, 50, was sentenced to 96 months in prison. The former Margate, New Jersey firefighter was found guilty Sept. 8, 2022, of one count of conspiracy to commit health care fraud and three counts of health care fraud following a 12-day trial before U.S. District Judge Robert B. Kugler in Camden federal court. Read the full article at https://zalma.com/blog/wp-content/uploads/2023/07/ZIFL-08-01-2023.pdf Health Insurance Fraud Convictions 3 Years for $7M Auto Fraud Scheme Gyulnara Bayryshova, a 57-year-old owner of the Brighton Physical Therapy Center, was one of four people who were indicted in February 2021 by the US Attorney’s Office in Boston on felony insurance fraud charges. All four pleaded guilty to a single count of fraud and three have been sentenced. Read the full article and many more convictions at https://zalma.com/blog/wp-content/uploads/2023/07/ZIFL-08-01-2023.pdf Other Insurance Fraud Convictions Four Years in Federal Prison for Insurance Fraud Michael Stuart Smith, also known as Black Mike, 36, pleaded guilty in federal court in Jefferson City, Missouri, to participating in wire and mail fraud conspiracies. Smith, a Kansas City man was sentenced to four years in federal prison for his role in a $1.1 million insurance fraud scheme with a former Columbia, Missouri man. In addition to jail Smith was also ordered by U.S. District Judge Roeseann Ketchmark to pay $40,836 in restitution. Read the full article and many more convictions at https://zalma.com/blog/wp-content/uploads/2023/07/ZIFL-08-01-2023.pdf Funeral Services Owner Sentenced to Three Years in Prison for Insurance Fraud Whitt Pleads Guilty to Multiple Charges, Receives Sentence, Behind Bars Jeremiah Randall “J.R.” Whitt, former owner of Harrelson Funeral Services in Yanceyville, North Carolina pleaded guilty to numerous charges in Caswell County and will serve a minimum of three years in the North Carolina prison system. Upon his release, he will be on supervised probation for five years and owes $51,011.86 restitution. Read the full article at https://zalma.com/blog/wp-content/uploads/2023/07/ZIFL-08-01-2023.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

Negligent Broker Saved by Exclusion Boulevard RE Holdings, LLC, (Boulevard) sued Mixon Insurance Agency, Inc., (Mixon), alleging breach of contract and negligent procurement of insurance only to find that if the policy had been issued protecting Boulevard there would be no coverage because of a clear and unambiguous exclusion requiring operative fire sprinkler systems. In Boulevard RE Holdings, LLC v. Mixon Insurance Agency, Inc., No. 22-1895, United States Court of Appeals, Eighth Circuit (July 20, 2023) the Eighth Circuit applied Missouri law to resolve the dispute. FACTUAL HISTORY Boulevard owned commercial property in which BMG Service Group, LLC, (BMG) operated a bar (Property). Boulevard entered into a contract for deed with BMG for the sale of the Property for $1,275,000. Under the contract, Boulevard retained the Property's legal title until BMG paid the purchase price in full. The contract also obligated BMG to obtain, at its own expense, fire insurance in the amount of the purchase price. The insurance was to be issued in Boulevard's name. BMG asked its broker, Mixon, to have Boulevard listed as a "named insured, loss payee, additional insured, and mortgagee" on the insurance policy. Mixon procured the policy from Berkley Assurance Co. The policy was issued and contained an endorsement called the Fire Protective Safeguard Endorsement (Endorsement). The Endorsement required the insured to maintain a working automatic sprinkler system on the Property. The Endorsement also excluded all coverage for loss or damage by fire if the sprinkler system was inoperative. The policy, as issued, did not list Boulevard as a "named insured, loss payee, additional insured, and mortgagee." Approximately one year later, the Property was destroyed by fire. At the time of the fire, the sprinkler system was inoperative. Boulevard submitted a proof of loss to Berkley Assurance, claiming to have an interest in the property as a "lender." The district court held that Boulevard was not entitled to recover as a mortgagee because sellers in a contract for deed are not mortgagees under Missouri law. The district court also concluded that even if Boulevard was an insured or a mortgagee, noncompliance with the Endorsement barred recovery. BOULEVARD'S COMPLAINT AGAINST MIXON The operative complaint raises two causes of action against Mixon: negligent failure to procure insurance and breach of contract. Under Missouri law, both causes of action require showing that the defendant caused the plaintiff to suffer damages. The Eighth Circuit noted that on the record facts, even if Boulevard had been named as a mortgagee, coverage would still be barred because of the Endorsement. The Endorsement required the Property to have a working sprinkler system. The Property was destroyed by a fire that occurred while the Property lacked a working sprinkler system. Indeed, had Mixon procured the Policy in precisely the manner requested by BMG, and had the Policy issued with Boulevard listed as a mortgagee or other additional insured, Boulevard would nonetheless be in the same position in which it found itself. If the policy had issued listing Boulevard as requested, the Endorsement would still have barred coverage. ZALMA OPINION It is usual for insurers of restaurant and bar risks to require the presence of fire sprinkler systems. The bar that burned had no operative fire sprinkler systems and, as a result, had no available coverage for damage by fire. Boulevard, who sold the property under contract tried to avoid the condition precedent and its own negligence by failing to review the policy or insist on the fire sprinklers, by suing the broker for not naming it as an insured. The Eighth Circuit found the arguments sufficient to consider and then avoided all the arguments by concluding that if the broker did everything requested there would still be no coverage. In essence it concluded as did the great basketball announcer Chick Hearn: "No harm, no foul." (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 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; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library\

Insurers Should Avoid Suing Each Other The United StatesCourt of Appeals for the Ninth Circuit certified to the California Supreme Court, the following question for our review: "Under California's Motor Carriers of Property Permit Act (Veh. Code, § 34600 et seq.; the Act), does a commercial automobile insurance policy continue in full force and effect until the insurer cancels the corresponding Certificate of Insurance on file with the Department of Motor Vehicles (DMV or Department), regardless of the insurance policy's stated expiration date?" The Supreme Court in Allied Premier Insurance v. United Financial Casualty Company, S267746, Supreme Court of California (July 24, 2023) the California Supreme Court logically advised the court of its opinion based on the statute and California precedent. The certified question arose only in the context of claims for equitable contribution and subrogation between two insurance companies. It bears repeating that the plaintiffs in the underlying lawsuit were compensated to the full limits of Allied's policy under the terms of their settlement and that, at all relevant times, Porras, the trucker, properly maintained an active operating permit. BACKGROUND Commercial trucker Jose Porras is a "motor carrier of property" (motor carrier or carrier). Under the Act, a motor carrier cannot operate on public highways without securing a DMV permit, which requires proof of the carrier's financial responsibility. A carrier can satisfy that requirement by obtaining a policy of insurance. If a carrier does so, the insurer must submit a certificate of insurance to the Department as evidence that the "protection required under [section 34631.5,] subdivision (a)" is provided. The Act requires that proof of financial responsibility be continued in effect during the active life of the permit issued to the motor carrier. This requirement prohibits cancellation of a certificate of insurance without notice to the DMV by the insurer. When an insurer gives notice that a certificate will be cancelled because the policy will lapse or be terminated, the DMV must suspend the carrier's permit effective on the date of lapse or termination unless the carrier provides evidence of valid insurance coverage pursuant to section 34630. United appealed to the Ninth Circuit, which certified the question of law to the Supreme Court. If the Act requires a commercial auto insurance policy to remain in effect indefinitely until the insurer cancels the certificate of insurance on file with the DMV, then Allied must prevail. If not, United must prevail. DISCUSSION Equitable contribution assumes the existence of two or more valid contracts of insurance covering the particular risk of loss and the particular casualty in question. This assumption lies at the heart of the Ninth Circuit's question. Allied's entitlement to equitable contribution depends on whether United was obligated to indemnify Porras for any damages due to the accident. Allied is entitled to equitable contribution only if it can show that United was a "coobligor who shares . . . liability" with Allied for the loss resulting from that event. That is, did both insurers have a policy in effect because of the statute. The Act Does Not Extend the Policy Beyond the Term Contained in the Contract As to cancellation of a policy, the HCA provided that protection against liability shall be continued in effect during the active life of the trucker's permit, and that the policy of insurance or surety bond shall not be cancelable on less than 30 days' written notice to the PUC, except in the event of cessation of operations as a highway carrier as approved by the PUC. An uncancelled certificate of insurance that remains on file with the DMV does not cause the corresponding insurance policy to remain in effect in perpetuity. But that is not to say that an uncancelled certificate of insurance imposes no obligation of any kind on the responsible insurer. It is true that commercial trucking is a business affecting the public interest and that one goal of the regulating legislation is to ensure that truckers do not improperly seek to reduce costs by carrying inadequate insurance. The Act's legislative history indicates that it was also intended to "enhance public safety." CONCLUSION Under the Act, a commercial automobile insurance policy does not continue in full force and effect until the insurer cancels a corresponding certificate of insurance on file with the DMV. The duration of the policy's coverage is regulated by its terms and those of any endorsement or amendment to the policy itself. The terms of an insurance contract generally determine the duration of the policy's coverage. Although an endorsement can amend the policy, neither the Act nor the specific endorsement requires extending coverage beyond the underlying policy's expiration date. ZALMA OPINION The California Supreme Court, in a Solomon-like decision, read an insurance policy as written. Although the statute requires proof of insurance for a trucker to be able to operate on the road it does not intend to, nor can it, change the wording of the policy. If the Legislature wished to change the wording of the policy, eliminate the expiration date to a date to be determined by notice to the DMV, it could have done so. It did not. The expiration date stood and only the insurer with a policy in effect at the time of the accident was responsible and it could not force an insurer whose policy had expired to take on a portion of the liability owed. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 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; 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

Ninth Circuit Is Exhausted by Covid Insurance Claims Suit Khatchik Hairabedian d/b/a Kris Mobil ("Khatchik") appealed from the district court's order granting Defendant Security National Insurance Company's ("Security") motion to dismiss this action for insurance coverage in Khatchik Hairabedian, Dba Kris Mobil v. Security National Insurance Company, a Texas Corporation, No. 22-55355, United States Court of Appeals, Ninth Circuit (July 21, 2023) applied its precedent. THE CLAIM Khatchik sought coverage from its insurer, Security, for COVID-19 related economic losses. However, the policy had a virus exclusion that provides: Security "will not pay for loss or damage caused by or resulting from any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease." The virus exclusion "applies to all coverage under all forms and endorsements," in the policy, including "forms or endorsements that cover business income, extra expense or action of civil authority." Khatchik argued that the virus exclusion does not apply because government orders, not COVID-19, caused the losses. Here COVID-19 is the efficient proximate cause of Khatchik's alleged losses. Khatchik also contended that the virus exclusion does not apply to pandemics because Security chose not to use a publicly available "pandemic exclusion" in its policy. The Ninth Circuit disagreed. Arguing that the Virus Exclusion does not apply to bar coverage for losses stemming from the COVID-19 pandemic defies the plain and unambiguous text of the Policy and is akin to arguing that a coverage exclusion for damage caused by fire does not apply to damage caused by a very large fire. ZALMA OPINION It is time that courts stop dealing with lawsuits seeking insurance coverage resulting from Covid-19. They continue to fill the trial and appellate courts and they continue to lose. They are causing unnecessary expense to the plaintiffs, the insurers and the courts. Considering the volume of precedent it is beginning to be considered a frivolous law suit that would subject the parties and their lawyers to sanctions. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 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; 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

Mutual Benefit Insurance Defeats Subrogation Effort Typically, an insurer that pays a claim to an insured as a result of the negligent acts of a third party an insurer has the right, in the name of its insured, to sue the responsible party in the name of its insured. The right to sue in the name of the insured results from the equitable remedy of subrogation and is effective as long as the insured has not waived the right of its insurer to subrogate. In Delaware there is an exception to the equitable remedy because landlords and tenants are presumed to be co-insureds under the landlord's fire insurance policy unless a tenant's lease clearly expresses an intent to the contrary. If the rule applies, the fact that the landlord's insurance is presumed to be for the mutual benefit of the landlord and the tenant, and the insurer cannot pursue the tenant for the landlord's damages by way of subrogation. The Superior Court ruled in the tenants' favor at summary judgment that the rule applied because the lease did not clearly express an intent to hold the tenants liable for the landlord's damages. In Donegal Mutual Insurance Company A/S/O Seaford Apartment Ventures LLC T/A The Villages Of Stoney Brook Apartments v.Thangavel and Muthusamy, No. 379, 2022, Supreme Court of Delaware (July 18, 2023) the apartment's insurer sued the tenants for the $77,704.06 to repair the water damage they caused. The Superior Court ruled in the tenants' favor at summary judgment that the rule applied because the lease did not clearly express an intent to hold the tenants liable for the landlord's damages. ANALYSIS In Delaware landlords and tenants are presumed to be co-insureds under the landlord's fire insurance policy unless a tenant's lease clearly expresses an intent to the contrary. If the rule applies, the landlord's insurer cannot pursue the tenant for the landlord's damages by way of subrogation. The tenants who leased an apartment from Seaford Apartment Ventures, LLC, Donegal's insured, were considered to be coinsueds since the lease did not express an intent to the contrary. The complaint alleged that the tenants hit a sprinkler head while they flew a drone inside the apartment. Water sprayed from the damaged sprinkler head and caused damage to the apartment building. The Superior Court granted the tenants' summary judgment motion. It concluded that the lease in this case was substantially similar to the leases in three other Delaware all of which found that the leases did not clearly express an intent to the contrary. CONCLUSION The Supreme Court concluded that the Superior Court correctly found that the apartment lease did not clearly express an intent that the tenants were responsible for the water damage in this case. Since the Seaford Apartment lease did not specifically address liability for fire or water damage caused by the tenant's negligence the policy issued by Donegal was issued for the mutual benefit of the insured and the tenant and Donegal had no right to subrogate.. Also, the Superior Court correctly observed that the policy considerations recognizing the one-sided nature of residential leasing and protecting the parties' typical expectations regarding the assignment of risk of loss - are served by applying the rule in this case because residential landlords control the lease terms. If they want, they can clearly express a requirement that the tenants obtain fire insurance or notify them that they would not benefit from the landlord's fire insurance policy. ZALMA OPINION Most commercial fire insurance policies, like the Donegal policy in this case, allow the insured to waive the insurer's right of subrogation. Apparently, the landlord did not specifically waive its insurer's right to subrogation but, Delaware precedent, accomplished the same effect by, as a mater of law, made the landlord's policy a policy for the benefit of both the insured and the tenant, effectively acting as a waiver of subrogation. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 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; 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

There Must be a Claim for Coverage Under a Claims Made Policy Homeland Insurance Company of New York (Homeland) issued Plaintiff a claims made liability insurance policy covering errors and omissions, effective January 16, 2019 to January 16, 2020. Plaintiff eQHealth AdviseWell, Inc., f/k/a eQHealth Solutions, Inc., a Louisiana corporation that provides health care management services to Medicaid agencies, commercial healthcare payers, third-party administrators, and self-insured employer groups. In Eqhealth Advisewell, Inc. v. Homeland Ins. Co. Of N.Y., Civil Action No. 22-00050-BAJ-EWD, United States District Court, M.D. Louisiana (July 15, 2023) the USDC resolved the dispute over coverage. BACKGROUND Homeland issued a Managed Care Organizations Errors and Omissions Liability Policy (“the Policy”) to Plaintiff. The Policy covered “Damages and Claim Expenses in excess of the Retention that [Plaintiff is] legally obligated to pay as a result of a Claim ...” A “Claim,” as defined by the Policy, “means any written demand from any person or entity seeking money or services or civil, injunctive, or administrative relief from [Plaintiff].” Plaintiff Authorizes Treatment For B.N., A Florida Resident, In Oklahoma One of Plaintiff's contracts was to provide Medicaid management services to the State of Florida. Under this contract, Plaintiff's primary operational contact was Florida's Agency for Health Care Administration (“AHCA”), which is the state agency responsible for administering Florida's Medicaid program. As part of its contract, Plaintiff reviewed requests for patients-Medicaid recipients-to receive medical services outside of Florida. One such request for out-of-state services was a Medicaid claim by B.N. a Florida resident. B.N. was admitted on an emergency basis into non-party Brookhaven Hospital (“Brookhaven”), a licensed psychiatric hospital located in Tulsa, Oklahoma. At the end of B.N.'s initial 180-day period neared, Brookhaven submitted a continued stay authorization request to Plaintiff, requesting an additional 180 days of inpatient services for B.N. Plaintiff denied Brookhaven's request based on Plaintiff's determination that B.N. no longer met the medical necessity criteria for the level of neurological rehabilitation provided at Brookhaven. Plaintiff's Communications To Defendant Regarding B.N.'S Treatment At Brookhaven Plaintiff's April 30 Notice of Circumstances email also contained a written timeline of events for B.N.'s treatment at Brookhaven. On June 10, 2019, a lawyer with the Jones Law Firm, representing Brookhaven, sent a letter to Florida's Governor, multiple Florida AHCA officials, and a Medicare/Medicaid official. Brookhaven's June 10 letter discussed Brookhaven's disagreements with how Florida AHCA handled B.N.'s case. The lawyer stated that “[n]o lawsuit has been filed, at least as yet.” (emphasis added) The lawyer recommended to Plaintiff that it review its E&O insurance policy “to determine whether th[e] letter triggers a reporting requirement.” He concluded that “[t]his letter reasonably constitutes threatened litigation. Depending on the language of the policy, it may need to be reported.” Plaintiff and Florida AHCA's Settlement with Brookhaven Six months later, on December 12, 2019, Plaintiff “formally tender[ed]” the matter for coverage. To do so, Plaintiff wrote a letter to Defendant, discussing the history of the B.N. matter and informing Defendant that Plaintiff had participated in settlement negotiations with Florida AHCA and Brookhaven and, ultimately, settled the matter in September 2019. At the point of a settlement eQHealth had virtually no choice but to settle on the terms agreed by AHCA and Brookhaven. Had eQHealth refused, then the likely alternative would have been a suit by Brookhaven in federal court against AHCA and eQHealth, with eQHealth not only having to indemnify AHCA for any judgments but for all defense fees and costs. In order to mitigate the total exposure to all parties involved, eQHealth agreed. The settlement agreement was signed by the last parties on September 20, 2019, and pursuant to it, eQHealth paid Brookhaven $262,500. Defendant denied coverage on February 3, 2020, stating that: “[n]o Claim against eQHealth was reported to Homeland, eQHealth did not ask for consent to settle any Claim, and Homeland did not provide prior written consent for the settlement, or for any expense, payment, liability, or obligation eQHealth may have had in relation to this matter. Therefore, no coverage is available for the settlement payment eQHealth made to Brookhaven.” DISCUSSION Homeland expressly conditioned coverage of all claims under the Policy on the filing of notice of a “Claim” against Plaintiff. When considering what constitutes a “claim” to trigger coverage under a “claims-made” insurance policy, the court relied on the Fifth Circuit that instructs trial courts to differentiate the “mere threat of a claim” from an “actual claim.” The USDC concluded that despite the numerous communications between the parties and relevant third parties, no communication rose to the definitional level of a “Claim” such that coverage under the Policy was triggered. Because the Court found that none of the relevant communications prior to the September 2019 settlement between Brookhaven, Florida AHCA, and Plaintiff constituted “Claims” as defined by the Policy, coverage under the Policy was never triggered since none of the communications sought "money or services or civil, injunctive, or administrative relief." ZALMA OPINION Homeland included in its policy wording a definition of the word "claim." For the insured to obtain defense or indemnity it must establish that a claims, as defined, happened. Without question threats were made. A settlement was reached and the insured paid money to fund the settlement. Yet, no one made a "claim" as defined, the insurer was not advised of the settlement nor was it advised of the insured's intent to pay until after it paid although the decision to pay was a "business" decision since no one made a demand in writing that they pay for a cause of loss insured against, there could not be coverage for a claim or loss triggered under the policy's clear and unambiguous definition of the word "claim." (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 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; 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

Exclusion Defeats Claim for Defense and Indemnity Duckworth roofing, while repairing a roof for LGO Properties caused a fire at the Tulane Building while using hot torches to repair the roof. In Certain Underwriters At Lloyd's Of London As Subrogee Of L.G.O. Properties, LLC v. Duxworth Roofing And Sheetmetal, Inc., No. 2022-CA-0821, Court of Appeals of Louisiana, Fourth Circuit (July 18, 2023) the defendant sought coverage when the defendant's insurer denied coverage because of an exclusion called the Torch Down Roofing Exclusion. FACTS L.G.O. Properties, L.L.C. entered into a contract with Duxworth to perform roofing work at 4033 Tulane Avenue (hereinafter "the Tulane Building"). Duxworth's roofing work included the use of hot tools and the installation of a process called "torch down roofing" to repair a leak on the roof of the Tulane Building. On December 9, 2016, the Tulane Building was damaged in a fire (hereinafter "the December 2016 fire"). On October 12, 2017, Certain Underwriters at Lloyd's, as a subrogee of L.G.O. Properties, L.L.C. (hereinafter collectively "Lloyd's of London") filed a suit for damages naming Duxworth as a defendant. Lloyd's of London's petition alleges that Duxworth negligently used hot torches to perform roofing work on the Tulane Building thus causing the December 2016 fire. The petition also asserted that Duxworth failed to train its employees and take reasonable precautions to prevent damage to the Tulane Building. James River, Duckworth's insurer, filed a motion for summary judgment arguing that the Commercial General Liability insurance policy precludes Duxworth from receiving coverage. Specifically, James River maintained that the CGL policy excludes coverage for damages resulting from the use of torches to perform roofing work (hereinafter "the Torch Down Roofing Exclusion"). Duxworth opposed James River's motion for summary judgment arguing that the CGL policy and Lloyd's of London's petition contains language that does not entitle James River to summary judgment. The trial court granted James Rivers' motion for summary judgment dismissing James River, without prejudice and before Duckworth could amend James Rivers appealed. DISCUSSION Duxworth asserts multiple assignments of error challenging the trial court's ruling on the motion for summary judgment. The Language Of The Torch Down Roofing Exclusion Is Not Ambiguous The extent of coverage is determined by the parties' intent as reflected by the words in the policy. In order to resolve ambiguous language within an insurance policy, the policy must be construed as a whole. If the policy wording at issue is clear and unambiguously expresses the parties' intent, the insurance contract must be enforced as written. The Louisiana Court of Appeals found that the Torch Down Roofing Exclusion precludes Duxworth from receiving coverage from James River. A Court must give words and phrases their general meaning. Mr. Duxworth's deposition revealed that he was a part of the crew that was present and performing torch down roofing repairs to the Tulane Building on the day of the December 2016 fire. Since Mr. Duxworth testified that his team was instructed to repair a leak to the Tulane Building's roof which required the use of hot tools and torches, also known as "torch down" roofing, and since Mr. Duxworth concedes that hot tools and torches were used to install a flat torch down roof to the Tulane Building the exclusion applies. Given the plain, ordinary, and generally prevailing meaning of the words "arise out of," it was clear to the Court of Appeals that Lloyd's of London's claims against Duxworth arose out of and are derived from the property damage caused by the fire that occurred during the time Duxworth was performing ongoing torch down roofing installation. Duxworth's contention that the James River's CGL policy fails to define "Torch Down Roofing" is unpersuasive. Although the Torch Down Roofing Exclusion does not define the term "Torch Down Roofing Operations" it is undisputed that hot tools and torches were used on the date of the December 2016 fire. A plain reading of the CGL policy between James River and Duxworth provides that the damages caused by the use of hot tools to perform roofing repairs, triggers the Torch Down Roofing Exclusion, and precludes coverage. Duty to Defend A duty to defend is determined solely from the plaintiff's pleadings and on the face of the policy. James River's CGL policy provides: "we will have no duty to defend the insured against any 'suit' seeking damages for 'bodily injury' or 'property damage' to which this insurance does not apply." Lloyd's of London's petition alleges that Duxworth failed to safely use hot torches to perform roofing work on the Tulane Building. The Torch Down Roofing Exclusion unambiguously excluded the claims against Duckworth. The trial court properly sustained James River's motion for summary judgment and determining that the Torch Down Roofing Exclusion prevents coverage from the use of torch down roofing operations. ZALMA OPINION Everyone who is sued wants to use other people's money to defend the suit. Duckworth bought a policy with a "Torch Down Roofing Exclusion" that obviously applied after the insured testified he and his staff were using torches to repair the building at the time it caught fire. Using that type of roofing with a policy that excludes it accepted the full risk of loss and will have to use his own funds to pay off the Lloyd's Underwriters' subrogation action. (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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808 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; 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.