To Prove Exclusion the Injury Must Flow Directly and Immediately from Intentional Act

Release After Payment of Limits Protects Insurers

Major losses with insufficient insurance will invariably draw insurance coverage litigation. When insurers paid their limits less than a $200 million train accident loss where twenty-four passengers were killed and scores more were injured brought about coverage litigation.

In Those Certain Underwriters At Lloyd’s, London et al. v. Connex Railroad LLC et al., B276373, Court Of Appeal Of The State Of California Second Appellate District Division Five (April 19, 2018) an aftermath of the fatal September 12, 2008 Chatsworth, California head-on collision between a Metrolink commuter train and a Union Pacific freight train. Plaintiffs are all insurers. They insured Metrolink, Connex Railroad LLC and Connex’s parent, Veolia Transportation, Inc. Insurers interpleaded their policy limits and then sued for reimbursement, unjust enrichment and a judicial determination that an express policy exclusion precluded coverage for the accident. Connex and Veolia (collectively, Insureds) cross-complained, alleging breach of contract, bad faith, coverage estoppel, and fraud.

Connex and Veolia moved separately for summary judgment on the first amended complaint, contending the express policy exclusion did not apply as a matter of law. The trial court agreed and granted the motions. Insurers moved for summary judgment on the cross-complaint, contending it failed as a matter of law based on Insureds’ release of all claims against them. The trial court also agreed and granted the motion.

FACTUAL  BACKGROUND

Twenty-four passengers were killed and scores more were injured in the Chatsworth accident. Metrolink engineer Robert Sanchez also died. The wrongful death and personal injury claims and lawsuits (Chatsworth claims) settled for $200 million, the maximum allowable recovery under federal law for a single rail collision.

No lawsuit arising out of the accident went to verdict, so there was no judicial determination as to the cause of the collision. The Metrolink train, however, ran a red light and began traveling on a single set of tracks designated for traffic in both directions. The National Transportation Safety Board (NTSB) investigated the crash and found the Metrolink engineer “was actively, if intermittently, using his wireless device shortly after his train departed Chatsworth station, and his text messaging activity during this time compromised his ability to observe and appropriately respond to the stop signal at Control Point Topanga.”

The insurers interpleaded $146 million for settlement of the Chatsworth claims. In exchange for contributing their aggregate policy limits, Insurers and Insureds entered into a “Policy Release and Agreement” (Agreement). Insurers retained the right, “if any, to seek contribution and/or subrogation, or to assert policy defenses with respect to Connex [and] Veolia . . . .” Except for the right to assert a setoff in the event Insurers did sue, Insureds “release[d] and forever discharge[d]” Insurers for all liability arising out of the Chatsworth collision.

Insurers then sued the Insureds based on exclusion 3, which excluded coverage for “Bodily Injury, Personal Injury, Property Damage and/or Advertising Injury which the Insured intended or expected or reasonably could have expected.”

Motions for summary judgment followed. Insureds maintained the exclusion precluded coverage only for losses that flowed directly and immediately from Insureds’ alleged intentional conduct and asserted that, as a matter of law, the exclusion did not defeat coverage for the Chatsworth accident.

Viewing the evidence and reasonable inferences from the evidence produced in discovery in the light most favorable to Insurers, the trial court concluded there was evidence Metrolink engineers used handheld electronic devices while on duty, in violation of Connex’s policies, and Connex executives knew corporate rules were being violated and accidents could result if engineers were distracted by their cell phones. The trial court also concluded this evidence failed to raise a triable issue of material fact and granted Connex’s motion for summary judgment on the first amended complaint, finding as a matter of law the policy exclusion did not apply.

The trial court also granted Insurers’ motion for summary judgment on the cross-complaint. Insurers paid the policy limits and expressly reserved the right to seek contribution from Insureds. Insureds expressly released Insurers for breach of the duty of good faith and fair dealing or any other contractual or extra-contractual duties that existed as of the date of the execution of this agreement.”

Policy Language

The “reasonably could have expected” exclusion does not apply unless a reasonable person would conclude the injury and damage “flow[ed] directly and immediately from an insured’s alleged intentional act.” This is a reasonable interpretation of the policy’s exclusionary language, and Insurers failed to demonstrate otherwise.

Analysis

Insureds’ summary judgment motion was filed after the trial court interpreted the exclusion under New York law. The motion shifted the burden to Insurers to present evidence that raised a triable issue of material fact that would lead a reasonable person to conclude the losses in the Chatsworth collision flowed directly and immediately from Insureds’ conduct. The evidence required was to show the Chatsworth collision flowed directly and immediately from an insured’s alleged intentional act. They did not meet their burden. Clearly the engineer was negligent by sending text messages and missing a stop sign but the insurers could not prove that his actions were an intentional act that directly and immediately caused the deaths.

Insurers’ lawsuit “released” Insureds from the strictures of the Agreement only to extent their claims for breach of contract, breach of the covenant of good faith and fair dealing/bad faith, and fraud would offset any award to Insurers’ on the first amended complaint. Once the Insureds obtained judgment in their favor on the Insurers’ first amended complaint, there was no potential award to offset. Accordingly, Insureds at that point were bound by the terms of the Agreement.

Insurers had already interpleaded their aggregate policy limits by the time the Agreement was signed, suggesting no claims against them.  Insureds did not present any evidence to raise a triable issue of fact concerning the Insurers’ conduct that fell outside the Agreement.

Insureds expressly agreed they were releasing all claims based on contract and breach of the duty of good faith and fair dealing. Fraud was not expressly referenced in the Agreement, but conduct based on the breach of a fiduciary duty, i.e., “extra-contractual duties,” was.

Insureds’ claim that they were fraudulently induced to enter into the Agreement was not supported by any evidence and was belied by the language in the Agreement. Insureds contend another indicia of fraud was Insurers’ decision to attribute the entire interpleaded sum to Insureds, rather than allocating any to Metrolink. This determination was apparent on the face of the Agreement, however, as Insurers reserved the right to sue Insureds, but not Metrolink. Summary judgment was properly granted on the cross-complaint.

ZALMA OPINION

Interesting because of the sums and injuries involved. The question of proof should have been simple. However, since the engineer died in the accident his intent and that of his employers was difficult – and as the case established – impossible to prove.

 


© 2018 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

Legal Disclaimer:

The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

 

 

 

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Thank You St. Johns

Thank You St. Johns

Zalma’s Insurance Fraud Letter

The Essential Resource For The Insurance Fraud Professional

Since I started ZIFL twenty two years ago all I have discussed is the evil people who are involved in insurance fraud who kill people in arson-for-profit schemes, commit all types of insurance fraud from agricultural insurance claims fraud to medical claims fraud; from auto fraud to fake thefts and burglaries; from murder for insurance money to surgeries performed on people who don’t need it; from auto accident schemes that are really ways to feed oxycodone habits; and from crooked medical providers who steal from Medicare and Medicaid to lawyers who forgot their oaths to protect the Constitution of the United States. I’ve dealt with bad people for the last fifty years over a lengthy career in insurance claims and insurance law. I have put a few away in jail, defeated many fraudulent claims, and lost out to devious claimants and lawyers. I never stopped trying and I believe I was more successful at what I do than not.

I write ZIFL, my blog and books to pass on what I learned over the last fifty years so that it is now more difficult for the insurance criminals to succeed in their task.

On May 1, 2018 I published the issue of ZIFL and then went to visit my cardiologist, Richard F. Wright, who gave me a very fancy stress test that showed, with serious technology that my arteries were not passing sufficient blood to my heart to keep me alive and active. He scheduled an angiogram that sent a video camera up my arm into my heart to see if a balloon and stent could be used to clear the arteries. I was the one in 1000 patients where that wouldn’t work since putting a balloon at the location of the blockage would simply turn off my heart.

Since I was on blood thinners already, I was required to stay in a cardiac care unit for three days doing absolutely nothing except get to know some truly kind, efficient, beautiful, handsome, and almost perfect nurses and certified nurse assistants who were kind enough to laugh at my bad jokes.

I met with the surgeon who heads St. John’s cardiac surgery who would do a by-pass operation taking material from my chest and leg to take the place of those that had been plugged. Dr. John Robertson and his team of surgeons, pulmonary specialists, nurses, etc worked to get me ready. I have worn a beard since 1982 but was shaved from head to toe in places I never expected to shave. I could have worn a bikini without any trouble.
Last week I was wheeled into a surgical theater where Dr. Robertson and his team were introduced to me. The anathesiologist said: “I’m giving you a cocktail.” I saw no drink and – in fact saw nothing until five next morning – when ICU nurse Dorothy pulled the intubation tubes from my throat.

I was wired up to tubes and electronics and looked like a really weak and pale Borg Queen from the old Star Trek T.V. series. What surprised me was that, although my chest had been opened and my ribs jacked apart, there was little pain. I was given pain medication but I insisted on less than the amounts prescribed.

I was in the Intensive Care Unit (ICU) for only two days cared for with skill, wisdom, empathy, and absolute professionalism by nurses for whom, although I love my wife of 50 years, with absolute love for Dororthy, Vickie, Angela and others whose names the drugs keep me from remembering but who were no less professional and expert care. The doctors from the team visited me often and as my condition approved and I was able to walk around the ward, tubes, injections, drips and electronics were removed from me in bits and pieces with each removal making me more comfortable even when I was a less than perfect patient.

I went back to a cardiac care unit where I spent two days complaining about having to sit still and only walk a few laps around the ward in a “gown” that hid little and exposed more than I wished to those in the hospital who had seen it all before and reminded me that ICU really stands for “I see You.”

They sent me home Thursday and I am in the loving care of a perfect wife and my eldest daughter who make me feel like Sally Field: “They really like me.”

I am only allowed a short amount of time on a computer, as I heal, so I wish to take this opportunity to thank everyone at St. John’s Hospital in Santa Monica, California who have me successfully home and on the way to a full recovery. I write because it is important to me to tell everyone who hears what I say or write that I am totally impressed, awed and thank G_d that I was cared for by Dr. Robertson, Dr. Wright and the entire staff at St. John’s from the surgeons, the technicians, the nurses, the Certified Nursing Assistants and the people who drove the gurneys and wheelchairs that moved me around the hospital.

The next issue of ZIFL should be back in full force by the 1st since I feel very strong today, five days post surgery.

As a bonus to my recovery, Fastcase.com and Full Court Press announced last week – while I was less than mobile – that they have selected three of my books as their first published works. That news was better than any drug. Their Press Release follows:


New Books From Full Court Press

Full Court Press continues to publish expert secondary content. This time it’s a new collection of insurance law treatises from consultant, expert witness, arbitrator, and mediator Barry Zalma.

Barry Zalma practiced law in California for more than 44 years as an insurance coverage and claims-handling lawyer, and has spent more than 50 years in the insurance business. We welcome his deskbooks as the first published under our Full Court Press imprint. Three titles are available in ePub and MOBI format, as well as on the Fastcase legal research platform.

Insurance Law Deskbook: Learn the insurance basics that are essential to every civil practitioner.

California Insurance Law Deskbook: California has long led the way when it comes to insurance jurisprudence in the United States, and few know more about California insurance law than Barry Zalma.

Insurance Bad Faith and Punitive Damages Deskbook: Understand the relationship between insurance, the tort of bad faith, and why punitive damages are awarded to punish insurers.

An annual subscription to secondary content on the Fastcase platform includes new editions and updates published by the author as they are rolled out, so you can rest assured that your research is up to date.

Go to fastcase.com for more detail and how to use the material on-line as part of your legal or insurance research or as stand-alone e-books.


A ClaimSchool ™ Publication, Written by Barry Zalma, Esq., CFE, © 2018 ClaimSchool, Inc. & Barry Zalma

Volume 22, No. 10
May 15 2018

Go to Zalma Books – E-Books and Articles by Barry Zalma –
http://zalma.com/zalma-books/
Go to my videoblog: Zalma’s Insurance 101 at http://www.zalma.com/videoblog

Subscribe to e-mail Version, it’s Free! –
http://zalma.com/zalmas-insurance-fraud-letter-2/
Go to my blog: Zalma On Insurance at http://zalma.com/blog
Go to my website at http://www.zalma.com


 

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Zalma’s Insurance Fraud Letter – May 1, 2018

 Zalma’s Insurance Fraud Letter

 May 1, 2018

How Much Does Fraud Cost? 

In the 2018 Report to the Nation published by the Association of Certified Fraud Examiners an attempt is made to quantify the cost of fraud in the world which is available for free download.

The report starts with a projection of total fraud losses.

In doing so the ACFE recognizes that its decision is based on imperfect data. Even with these limitations on projecting the total amounts lost to fraud, however, we know that such a projection has an important place in the fight against fraud. Consequently, the ACFE asked survey participants, based on their professional experience, what percentage of revenues they believe a typical organization loses to fraud each year. The median response provided by these CFEs is that organizations lose 5% of their annual revenues to fraud. While this number is only a general estimate based on the opinions of the CFEs who took part in our study, it represents the collective observations of more than 2,000 anti-fraud experts who together have investigated hundreds of thousands of fraud cases. To place their estimate in context, if the 5% loss estimate were applied to the 2017 estimated Gross World Product of USD 79.6 trillion, it would result in a projected total global fraud loss of nearly USD 4 trillion. To be clear, this number is only an estimate and, given the limitations it is unlikely anyone will ever be able to calculate the true cost of fraud on a global scale. But we can be certain that the amount of damage is incredibly large, and this estimate, provided by anti-fraud professionals who work to prevent and detect fraud on a daily basis, helps give  us some insight into just how big the problem may be.

The Current Issue Contains the Following

  • The Burning Bed
  • May 1 is Law Day In the U.S.A.
  • How Much Does Fraud Cost?
  • The Third Largest Insurance Market in the World Also the Market for Insurance Fraud Perpetrators
  • Florida CFO Releases List of Top 10 Most Wanted Insurance Fraudsters
  • Good News From the Coalition Against Insurance Fraud
  • Physician Heal Thyself – in Prison
  • Health Insurance Fraud Convictions
  • Chutzpah” by an Arsonist
  • Other Insurance Fraud Convictions
  • Zalma Books

New Insurance Books by Barry Zalma

  • The Compact Book on the Commercial Property Insurance Policy
  • Insurance Fraud & Weapons to Defeat Insurance Fraud – Volumes One and Two
  • Rescission of Insurance
  • Ethics for the Insurance Professional
  • Random Thoughts on Insurance – A Collection of Blog Posts from Zalma on Insurance)
  • The Insurance Examination Under Oath
  • The Compact Book on Adjusting Liability Claims
  • The Compact Book on Adjusting Property Claims
  • The California Fair Claims Settlement Practices Regulations.
  • The California SIU Regulations.
  • Passover Seder for Americans” An All English – Easy to Perform – Passover Seder Paperback

Now available as Kindle or paperback books are the following fiction pieces on insurance matters:

  • Heads I Win, Tails You Lose
  • Arson for Profit
  • Murder & Old Lace
  • Murder and Insurance Fraud Don’t Mix
  • Candy & Able – Murder for Insurance Money
  • The Runt – a short story
 The most recent posts to the daily blog, Zalma on Insurance, are available at  http://zalma.com/blog.

Check in every day for a case summary at http://zalma.com/blog:
I have completed a video blog called that consist of 1022 three to four minute videos starting with “What is Insurance” and moving forward to insurance fraud investigations explaining the basics of insurance and insurance claims handling in a painless fashion that can be viewed every morning with the first cup of coffee at  Zalma’s Insurance 101.

The videoblog is adapted from my book, Insurance Claims: A Comprehensive Guide available at the Zalma Insurance Claims Library.
Some of the 1,022 videos follow: If you start at Volume 1 at the bottom of the blog’s first page and view one or two videos a day you will have approximately 12 to 24 hours of training a year until you get to the last video.

Are you a lawyer, law firm, independent insurance adjuster or insurer who would you to promote yourself or your firm to more than 200 daily visits by insurance professionals or the more than 2000 subscribers to ZIFL?
If you are, an ad on the blog Zalma on Insurance or Zalma’s Insurance Fraud Letter, to such a selective audience of insurance professionals and management can be more effective than any other form of advertising.
For only $100 a month on the blog or $100 an issue on ZIFL your ad will be permanent and effective.

    Regards,

    Barry Zalma  
     Barry Zalma, Inc.
    (c) 2018, Barry Zalma & ClaimSchool, Inc.

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    Two Books Needed by Every Insurance Adjuster

    Being a Professional Adjuster

    Insurance adjusting is a profession where individual provide service to people who are insured when a contingent or unexpected loss occurs. It requires skill, intelligence, expertise and empathy to do the job properly. The two new books that follow will provide every adjuster the basics needed to perform the job of the adjuster professionally, thoroughly and with good faith.

    “The Compact Book on Adjusting Liability Claims: A Handbook for the Liability Claims Adjuster”

    This Compact Book of Adjusting Liability Claims is designed to Product Detailsprovide the new adjuster with a basic grounding in what is needed to become a competent and effective insurance adjuster. It is also available as a refresher for the experienced adjuster.

    The liability claims adjuster quickly learns that there is little difficulty with a claimant (the person alleging bodily injury or property damage against a person insured) if the claim is paid as demanded. The insured may be unhappy if the claimant’s claim is paid as presented since most do not believe they did anything wrong or fear an increase in premiums charged for subsequent policies.

    The adjuster must be prepared to salve the insured’s emotions, explain why in the law and the policy it was appropriate to pay the claimant and that the settlement is in the best interest of both the insured and the insurer the adjuster represents.
    The adjuster knows, and must be prepared to explain to an insured, that if a claim is resisted or denied the claimant will be unhappy, will probably file suit. If not promptly settled the claimant’s lawyers will rake the insured over the coals to prove that the insured is liable for the claimant’s injuries. The litigation will take time, effort, and money to establish the extent of the injuries and who is responsible for the injuries. Failure to settle promptly can cost the insured his or her reputation and will certainly cost the insurer much more than the claim could have been resolved for had it been resolved before the claimant retained a lawyer.

    Available as a Kindle book

    Available as a paperback.

    The Compact Book of Adjusting Property Insurance Claims: A Manual for the First Party Property Insurance Adjuster

    The insurance adjuster is not mentioned in a policy of insurance. The The Compact Book of Adjusting Property Insurance Claims: A Manual for the First Party Property Insurance Adjusterobligation to investigate and prove a claim falls on the insured. Standard first party property insurance policies, based upon the New York Standard Fire Insurance policy, contain conditions that require the insured to, within sixty days of the loss, submit a sworn proof of loss to prove to the insurer the facts and amount of loss.

    The policy allows the insurer to then, and only then, respond to the insured’s proof of loss. The insurer can then either accept or reject the proof submitted by the insured.

    Technically, if the wording of the policy was followed literally the insurer could sit back, do nothing, and wait for the proof. If the insured was late in submitting the proof the insurer could reject the claim. If the insured submits a timely proof of loss the insurer could either accept or reject the proof of loss. If the insurer rejected the proof of loss the insured could either send a new one or give up and gain nothing from the claim. Suit on the policy would be difficult because the policy contract limited the right to sue to times when the proof of loss condition had been met.

    Insureds and insurers were not happy with that system. It made it too difficult for a lay person to successfully present a claim. The system, as written into the standard fire policy seemed to run counter to the covenant of good faith and fair dealing that had been the basis of the insurance contract for centuries. Most insurers understood that their insureds were mostly incapable of complying with the strict enforcement of the policy conditions. To fulfill the covenant of good faith and fair dealing insurers created the insurance adjuster to fulfill its obligation to deal fairly and in good faith with the insured.

    Available as a Kindle book.

    Available as a paperback.


     

    Barry Zalma, Inc.

    © 2018 – Barry Zalma

    I have placed books on Amazon.com as both e-books and as paperbacks to explain, in fiction based on reality, information to help everyone understand that insurance fraud can be defeated by a thorough investigation.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

    Share
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    Imputed Negligence of Auto Owner Dead in Maryland

    Innocent Owner Not Deprived of Coverage Because of Negligence of Permissive Driver

    Maryland still allows contributory negligence as a defense to a tort action thereby depriving recovery for damages incurred by a person contributarily negligent. Most states assess liability on a comparative negligence basis. In Maryland, until April 20, 2018 when an owner of a vehicle is injured because the permissive driver of the vehicle was negligent, the doctrine of imputed negligence prevented the innocent owner of the right to damages.

    In Victoria Seaborne-Worsley v. Jeffrey Mintiens, No. 26, Court of Appeals of Maryland (April 20, 2018) the doctrine of imputed negligence was done away with in Maryland for auto accidents.

    HISTORY

    In the past, the doctrine functioned to ensure that individuals injured in automobile accidents would be able to obtain compensation from the party most likely to be financially responsible – the car’s owner. However, developments in the law and in insurance coverage make reliance on the fiction of owner control less compelling. Moreover, in situations where an owner-passenger is injured and innocent of any negligence, application of the doctrine, in conjunction with a defense of contributory negligence, can have the perverse effect of foreclosing compensation to an injured party who was not personally at fault. As a result, courts in many states have abrogated or limited the doctrine of imputed negligence.

    FACTS

    This case grew out of an accident in a restaurant parking lot when Respondent Jeffrey Mintiens backed his truck out of a parking space and struck a car in which Petitioner Victoria Worsley (“Ms. Worsley”) was seated. Ms. Worsley’s husband had driven the couple to the restaurant and left the car and his wife stopped in a travel lane perpendicular to Mr. Mintiens’ parking space while he retrieved the couple’s take-out order from the restaurant.

    Ms. Worsley sued  Mr. Mintiens alleging that Mr. Mintiens was negligent and seeking various damages. At trial, Mr. Mintiens raised the defense of contributory negligence. The District Court concluded that Ms. Worsley’s husband had himself been negligent. It also concluded that his negligence should be imputed to Ms. Worsley under the imputed negligence doctrine because, though a passenger, she was the sole owner of the car at the time of the accident. Accordingly, the District Court entered a judgment in favor of Mr. Mintiens.

    At the restaurant, there was a window facing the parking lot where customers could pick up take-out orders. Adjacent to this window were at least two handicapped parking spaces. Ms. Worsley’s husband stopped the car perpendicular to the handicapped parking spaces, placed it in park, got out of the car, and walked to the carry out window, leaving Ms. Worsley alone in the car. According to Ms. Worsley, she was supposed to take her husband’s place in the driver’s seat and park the car while he retrieved their food.

    In the meantime, Mr. Mintiens had been at the restaurant since 5 p.m., during which time he met a friend and drank three beers. Shortly before 6:30 p.m., he obtained a take-out order for his family’s dinner and set out for the parking lot, where he had parked his truck opposite the handicapped spaces.

    Ms. Worsley testified that she was about to unbuckle her seat belt to get out and move her car when she saw the truck backing towards her. She braced herself against the window with her right hand, also hoping to catch Mr. Mintiens’ attention. This was apparently to no avail. The back of Mr. Mintiens truck hit the back passenger-side door of Ms. Worsley’s car.

    A little over nine months after the accident Ms. Worsley sued Mr. Mintiens alleging negligence and seeking compensation for her injuries. The District Court stated that it would likely find that Mr. Mintiens was negligent and liable, except that the defense of contributory negligence applied to relieve him of liability.

    Because the negligence of Ms. Worsley’s husband was therefore imputed to her, Ms. Worsley was deemed to be contributorily negligent. Accordingly, the court entered judgment in favor of Mr. Mintiens.

    Discussion

    In this case, the District Court found that Ms. Worsley’s claim was barred by the defense of contributory negligence. It did so without making any finding as to whether Ms. Worsley herself was negligent. Instead, the trial court found that her husband was negligent in his operation of the car and imputed that negligence to Ms. Worsley because she asserted that she was the sole owner of that car.

    Assuming for the sake of argument that Ms. Worsley’s husband was negligent in how he parked the car, the question is thus whether the doctrine of imputed negligence applies here to defeat Ms. Worsley’s claim on the basis of contributory negligence.

    The Doctrine of Imputed Negligence

    Under the classic formulation of the doctrine of imputed negligence, when the owner of a vehicle is a passenger in that vehicle and allows another person to drive, any negligence of the operator of the vehicle may be attributed to the owner.

    The doctrine of imputed negligence is not based on any negligence of the owner-passenger. Rather, it is a form of vicarious liability.  It is a form of direct negligence and is not a theory of vicarious liability.

    Where the car owner (Ms. Worsley) is a passenger in that car while a permissive driver (her husband) is negligent in parking or operating the car, and where there is no showing that she was asleep or otherwise incapable of exercising control, her husband’s negligence is attributed to her. If that negligence was a proximate cause of an accident that injured her, the doctrine of imputed negligence, under the “both ways” theory, deems her to be contributorily negligent and defeats a negligence claim by her against a third party such as Mr. Mintiens.

    The Fiction of Owner Control

    The fiction underlying the “controversial doctrine of imputed negligence” is divorced from reality according to Slutter v. Homer, 244 Md. at 139-40; Nationwide Mut. Ins. Co. v. Stroh, 314 Md. 176, 179-80 (1988). In Slutter, the Court observed that the doctrine “has been criticized as unrealistic and fictitious. The criticism rests on the practical consideration that, while back-seat driving is generally an annoyance, and sometimes a danger, it is almost never a physical fact.”

    While an owner-passenger may have the right to control the vehicle when present as a passenger, the owner’s ability to control the vehicle is quite another thing. Indeed, an owner-passenger’s attempt to take control of a car, especially while the car is moving, is both inadvisable and likely ineffective in preventing the driver from driving negligently.

    The primary policy aim undergirding the doctrine of imputed negligence was to locate a source for compensating an innocent victim for another’s negligence.

    When dealing with the doctrine of imputed negligence, Maryland appellate courts have recognized that its premise – owner control – is entirely fictional in the context of automobile torts, noted that certain applications of the doctrine lead to results at odds with its original purpose, and have circumscribed its reach by creating an exception (does not apply to a co-owner) and enlarging the breadth of that exception (need not be on the title to be a co-owner).

    Summary and Application to this Case

    Because the courts below based their decisions on application of the doctrine of imputed negligence to hold that Ms. Worsley was contributorily negligent, the appellate court concluded it must vacate the judgment in this case.

    There may be occasions when the doctrine still serves its original purpose of spreading risk and compensating an innocent injured party. Nor, in an era in which it is anticipated that many motor vehicles will soon operate autonomously without human drivers, can the court anticipate the felt necessities of the future.

    The doctrine of imputed negligence does not apply to deem an owner-passenger of a motor vehicle contributorily negligent based on the negligence of a permissive driver of the owner-passenger’s vehicle and bar the owner-passenger from recovering compensation from a negligent third party.

    ZALMA OPINION

    It is good to see, in the 21st Century, that Maryland Courts have moved to join the 20th Century. Imputed negligence has lost its purpose many years ago, especially with regard to the operation of an automobile and deserved the quick, painless and effective death of the doctrine of imputed negligence by this decision. It’s about time.


    © 2018 – Barry Zalma

    This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

     

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    Posted in Zalma on Insurance | Leave a comment

    How to Avoid & Defeat Insurance Fraud

    “Insurance Fraud & Weapons to Defeat Insurance Fraud” In Two Volumes

    Product Details

    When insurers and governments put on a serious effort to reduce the amount of insurance fraud the number of claims presented to insurers and the pseudo-government-based or funded insurers drops logarithmically. The two volumes provide anyone in the business of insurance the ability to find and use the multiple weapons available to defeat insurance fraud.

    Insurance fraud continually takes more money each year than it did the last from the insurance buying public. No one knows the actual amount with any certainty because most attempts at insurance fraud succeed. Estimates of the extent of insurance fraud in the United States range from $87 billion to more than $300 billion every year.

    Insurers and government backed pseudo-insurers can only estimate the extent they lose to fraudulent claims. Lack of sufficient investigation and prosecution of insurance criminals is endemic. Most insurance fraud criminals are not detected. Those that are detected do

    so because they became greedy, sloppy and unprofessional so that the attempted fraud becomes so obvious it cannot be ignored.

    No one will ever be able to place an exact number on the amount lost to insurance fraud. Everyone who has looked at the issue knows – whether based on their heart, their gut or empirical fact determined from convictions for the crime of insurance fraud – that the number is enormous.

    When insurers and governments put on a serious effort to reduce the amount of insurance fraud the number of claims presented to insurers and the pseudo-government-based or funded insurers drops logarithmically. Since the appointment of Attorney General Sessions,

    the effort to stop insurance fraud against Medicare and Medicaid has increased.

    Insurance Fraud & Weapons to Defeat Fraud - Volume Two: A Manual for Those Working to Defeat Insurance Fraud by [Zalma, Barry]This book contains appellate decisions regarding insurance fraud from federal and state appellate courts across the country and full text of many insurance fraud statutes.

    It is available as both a legal research tool and a product to assist insurers, insurance company personnel, independent insurance adjusters, special investigation unit investigators, state fraud investigators and insurance lawyers to become effective persons involved in the attempt to defeat or reduce the effect of insurance fraud.

    Volume One available as a Kindle book and a paperback.

    Volume Two Available as a Kindle book and a paperback


     

    Barry Zalma, Inc.

    © 2018 – Barry Zalma

    I have placed books on Amazon.com as both e-books and as paperbacks to explain, in fiction based on reality, information to help everyone understand that insurance fraud can be defeated by a thorough investigation.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

    Share
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    Who’s on First or Which Insurer Owes a Defense and Indemnity

    Risk Transfer Device Works for City of New York

    When insurers dispute over which one owes defense and indemnity to an insured they both insured the result is almost always disappointing. Litigation between insurers should never reach the court of appeal since they are both professional insurers with supposedly knowledgeable staff and management who should be able to amicably resolve the dispute.

    In Valley Forge Insurance Company, et al. v. ACE American Insurance Company, 2015-08959, 2018 NY Slip Op 02665, Supreme Court Of The State Of New York Appellate Division, Second Judicial Department (April 18, 2018) the rule was proved in its breach and two insurers fought through trial and appeal.

    THE DISPUTE

    In an action for a judgment declaring, among other things, that the defendant ACE American Insurance Company is obligated to reimburse the plaintiff Valley Forge Insurance Company for costs expended in defending and settling an underlying personal injury action entitled Cunha v City of New York, the plaintiffs appeal.

    Defendant ACE American Insurance Company appealed the order that declared that it was obligated to reimburse the plaintiffs for costs expended in defending and settling the underlying personal injury action.

    FACTS

    Severino Cunha was injured while working on a roadway excavation project in Brooklyn. The City of New York had hired Cunha’s employer, JLJ Enterprises, Inc., as the prime contractor, and HAKS Engineers, P.C. (hereinafter HAKS), to perform engineering inspection services in connection with the project. Cunha commenced an action to recover damages for personal injuries against the City, and the City commenced a third-party action for contractual and common-law indemnification against HAKS. The City and HAKS settled with Cunha, but proceeded to trial in the third-party action. After a trial eventually the Court of Appeals determined that the City was entitled to 100% indemnification from HAKS.

    INSURANCE

    HAKS had a primary commercial general liability policy with the plaintiff Valley Forge Insurance Company (hereinafter Valley Forge), an excess commercial general liability policy with the plaintiff Transportation Insurance Company (hereinafter Transportation), and a professional liability for design professionals policy with the defendant ACE American Insurance Company (hereinafter ACE). Valley Forge and Transportation sued  ACE, HAKS, and the City, seeking a declaration that the plaintiffs were not obligated to defend or indemnify HAKS, and that ACE was obligated to reimburse Valley Forge for the costs that it expended in defending and settling the underlying action on behalf of HAKS.

    MOTIONS FOR SUMMARY JUDGMENT

    ACE sought reimbursement of the payments that it made to settle the underlying action on behalf of HAKS. HAKS then moved for summary judgment against ACE, seeking a declaration that ACE was obligated to defend and indemnify HAKS. In April 2009, the Supreme Court (trial court) issued an order granting HAKS’s motion.

    ACE thereafter moved for summary judgment dismissing the complaint and granting its counterclaim for contribution from Valley Forge, and the plaintiffs cross-moved for summary judgment dismissing ACE’s counterclaim and for a declaration that ACE was obligated to reimburse Valley Forge for the costs that it expended in defending and settling the underlying action.

    TRIAL COURT DECISION

    The Supreme Court (trial court) denied ACE’s motion, and granted the plaintiffs’ cross motion. On December 19, 2016, the court entered a judgment declaring that ACE was required to reimburse the plaintiffs for costs expended in defending and settling the underlying action.

    ANALYSIS

    In an insurance coverage case, the insurer bears the burden of establishing that the claimed policy exclusion defeats the insured’s claim to coverage by demonstrating that the exclusion relied upon is stated in clear and unmistakable language, is subject to no other reasonable interpretation, and applies in the particular case.

    Here, the plaintiffs established that there was no coverage under the Valley Forge policy since the “professional services” exclusion was applicable to the claims asserted in the underlying action. The claims asserted by Cunha in the underlying action arise out of HAKS’s “supervisory, inspection, architectural or engineering activities,” and, thus, fall within the professional services exclusion under the Valley Forge policy and the E&O coverages provided by ACE.

    Accordingly, the Supreme Court properly awarded judgment in favor of the plaintiffs, declaring that ACE was obligated to reimburse Valley Forge for costs expended in defending and settling the underlying action.

    Further, the Supreme Court providently exercised its discretion in declining to award prejudgment interest to the plaintiffs.

    ZALMA OPINION

    Exclusions are designed to limit the exposure of an insurer to its insured. In this case the insurer Valley Forge proved that its “professional services” exclusion applied without question and that it owed nothing to its insured and ACE, the E&O insurer did. Why the two insurers did not resolve the dispute and insisted on summary judgment and appeals is beyond reason and a waste of litigation expenses.


    © 2018 – Barry Zalma

    This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

    Share
    Posted in Zalma on Insurance | Leave a comment

    Become a Certified Expert in Corporate Property Insurance and a Certified Expert in Corporate Liability Insurance

    Certifications to Become an Insurance Professional

    Now available from Illumeo and Barry Zalma

    Everyone involved in insurance – either as an insurer or as an insured – requires excellence in claims handling. Businesses need to deal with insurers who have an excellence in claims-handling mandate. Insurers who wish to profit need an excellence in property and/or liability claims-handling program. Everyone in business needs an insurer who has an excellence in property or liability claims-handling program in effect.

    I have created two comprehensive video programs enabling anyone to become an insurance professional and Certified as an Expert in Corporate Property Insurance and/or as a Certified Expert in Corporate Liability Insurance. Both programs are available from Illumeo.com.

    The programs are complete courses of study providing education and training to allow insurance professionals, after completing the individual classes, to become a Certified Expert. The programs cover everything an employee, an officer or a director of a corporation, an insurance agent or broker, an insurance adjuster or underwriter, need to know about how to acquire proper insurance, how to present a claim to an insurer, how to cooperate in the investigation of the insurer and to resolve any claim presented by the corporation to the insurer.

    Major topics of study include, but are not limited to:

    1. That insurance is a contract and how to understand the basic rules of interpretation of contracts.
    2. The application for insurance and how it is used by the applicant and the insurer.
    3. The need for offer, acceptance, and consideration to form an insurance contract.
    4. How to read and understand the insurance contract.
    5. The first party property insurance contract and how it is formed and made effective.
    6. The importance of conditions and limitations in a first party property policy.
    7. The rules of insurance contract interpretation.
    8. The “contra preferentum” rule.
    9. The standard fire policy.
    10. The auto material damage policy.
    11. The need for a thorough claims investigation.
    12. How to conduct a thorough claims investigation.
    13. Understanding the damages available to a claimant who believes he or she was injured by the insured’s negligence.
    14. What is required to complete a thorough investigation.
    15. Why the insured is required to assist the insurer in completing a thorough investigation.
    16. Why it is essential that the claims person evaluates the potential liability of the insured.
    17. Understanding the various types of special and general damages.
    18. Liability and comparative negligence.
    19. The importance of venue and jurisdiction.
    20. Understanding the importance of the plaintiff and defendant and their lawyers.
    21. Dealing with the importance of the nature of the injuries.
    22. Understanding the importance of judicial review.
    23. Consideration for an early settlement.
    24. The duty owed by the insurer to the insured.
    25. The duty of the insured to the insurer.
    26. Use of experts.
    27. The Independent Medical Exam.
    28. Settlement Negotiations.
    29. Alternative dispute resolution.

    The full curriculum of the courses and other courses from Barry Zalma are available at http://www.ilumeo.com by entering in the search bar the word “zalma.”


     

    Barry Zalma, Inc.

    © 2018 – Barry Zalma

    I have placed books on Amazon.com as both e-books and as paperbacks to explain, in fiction based on reality, information to help everyone understand that insurance fraud can be defeated by a thorough investigation.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

     

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    The Compact Book on Commercial Property Insurance Policy

    How to Obtain, Read, Understand and Make Claims on a Commercial Property Policy

    The Means to Effectively Acquire a Commercial Property Policy and Present and Collect a First Party Property Insurance Claim Paperback – March 22, 2018

    The Compact Book on Commercial Property Insurance Policy : The Means to  Effectively Acquire a Commercial Property Policy and Present and Collect a First Party Property Insurance Claim by [Zalma, Barry]Insurance is a contract that requires an offer to provide insurance to a person or entity, acceptance of the offer and payment of consideration called a premium. Insurance is defined by California Insurance Code Section 22, as: “a contract whereby one undertakes to indemnify another against loss, damage, or liability arising from a contingent or unknown event.” As such it is a special type of contract because it is limited to provide protection only from a contingent or unknown event. Any loss to be covered must be fortuitous, accidental, contingent or unknown. An intentional act can never be insured.

    The book explains what insurance is, how it is acquired, how to read and understand it, what to do when a loss occurs and how to successfully present and collect a claim to indemnify the insured from all losses incurred.


     

    Barry Zalma, Inc.

    © 2018 – Barry Zalma

    I have placed books on Amazon.com as both e-books and as paperbacks to explain, in fiction based on reality, information to help everyone understand that insurance fraud can be defeated by a thorough investigation.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

    Share
    Posted in Zalma on Insurance | Comments Off on The Compact Book on Commercial Property Insurance Policy

    Delivering Anything For Compensation Excluded by Auto Policy

    Vehicle While Used to Carry Sandwiches for a Charge Excluded

    Auto insurance polices provide a great deal of liability insurance for a small premium. It is, usually, a bargain for the purchaser. However, like every insurance policy, the automobile liability insurance policy does not cover every eventuality.

    In Cox III, LLC, and Andre Leon Queen v. Farmers Insurance Company, Inc. and Farmers Insurance Exchange, No. 336777, State Of Michigan Court Of Appeals (April 12, 2018) the insurers appealed an order granting damages to plaintiffs, Cox III, LLC, and Andre Leon Queen.

    FACTS

    The suit arsoe after a car accident involving plaintiff, Andre Leon Queen (“Queen”), while he was delivering sandwiches for plaintiff, Cox III, LLC (“Cox III”), a Jimmy John’s franchisee. Queen hit another driver with his car, and the driver filed a personal injury lawsuit against plaintiffs. Queen’s vehicle was insured by the Farmers defendants through a policy that was issued to Queen’s father. Plaintiffs sought coverage and indemnification through the automobile insurance that Queen retained through defendant. Defendant declined to defend or indemnify plaintiffs based on exclusions in Queen’s automobile insurance policy. The exclusions essential exclusion follows:

    This coverage does not apply to:

    1. Bodily injury or property damage arising out of the ownership, maintenance or use of a vehicle while used to carry persons or property for a charge.

    Plaintiffs alleged two causes of action in their initial complaint. The trial court found that defendant breached its insurance contract with plaintiffs.

    Defendant argues that the trial court erred in granting summary disposition in favor of plaintiffs because both Exclusion #1 and Exclusion #6 preclude coverage of plaintiffs for the lawsuit that arose out of Queen’s car accident.

    ANALYSIS

    Defendant first argues that Exclusion #1, which excludes coverage for vehicles that are used “to carry persons or property for a charge,” is not an ambiguous provision, and that it precludes coverage of plaintiffs because the delivery of sandwiches amounts to carrying property for a charge.

    The language of an insurance policy is construed and interpreted in accordance with ordinary contract construction principles. The trial court found that the language of Exclusion #1 was ambiguous because the exclusion did not appropriately define what “carrying a person or property for a charge” included, or indicate whether delivering sandwiches constituted carrying property for a charge.

    The Court of Appeal has found that a similar arrangement, where an individual was paid a wage to deliver pizzas using his personal car, amounted to carrying property for a charge. Amerisure Ins Co v Graff Chevrolet, Inc, 257 Mich App 585, 596; 669 NW2d 304 (2003). In Amerisure, an employee of a company insured by the plaintiff got into a car accident while delivering pizzas. The employee’s fiancée had rented the car and placed the employee on the rental contract as a permissive user of the car. The employee was sued by the other driver.

    The plaintiff and the defendant both contributed $90,000 to the settlement of the case against the employee, and the plaintiff then sued the defendant, seeking a declaratory judgment that the defendant was responsible for the payment of the entire settlement. The rental contract in Amerisure contained an exclusion that precluded insurance coverage where the car was used “to carry . . . property for consideration . . . .”

    The plaintiff argued that, because the employee was “paid a wage for whatever work he did and did not receive a special wage or mileage reimbursement for carrying pizzas, he did not carry property for consideration.”  The Court found that the employee’s hourly wage constituted consideration within the meaning of the insurance policy, and “because [the employee] was hired for the purpose of delivering pizzas, his transportation of those pizzas was for consideration.”

    In this case, Queen was an employee of Cox III’s Jimmy John’s franchise and delivered sandwiches in return for hourly compensation, as well as tips. With the exception of the type of food being delivered, the arrangement between plaintiffs is the same as the arrangement between the employee and employer in Amerisure.

    Therefore, the language in Exclusion #1 is not ambiguous and plaintiffs are precluded from coverage because the accident occurred while Queen used the vehicle to carry property for a charge.

    Accordingly, plaintiffs should not have been granted summary disposition because Exclusion #1 precludes insurance coverage for the car accident that Queen was involved in and that judgment was reversed.

    ZALMA OPINION

    This case teaches that businesses that allow employees to use their private cars to deliver product, whether sandwiches, pizza, widgets, or people (Uber or Lyft) should have them insured under a commercial insurance policy. Delivery people, using personal cars, if the employer will not insure them, must speak to their insurer about amending the policy to cover the delivery operations. Unfortunately no one reads an insurance policy until after a loss so Mr. Queen and his employer had no available coverage from Farmers.

     


    © 2018 – Barry Zalma

    This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

     

     

    Share
    Posted in Zalma on Insurance | Comments Off on Delivering Anything For Compensation Excluded by Auto Policy

    Five True Crime Insurance Fraud Books

    Fiction from an Insurance Lawyer’s Fifty Years Dealing with Insurance Fraud

    After fifty years acting as a claims adjuster and insurance coverage lawyer I have seen and heard just about every possible way for an insurer to be defrauded. The five books below are short novels on how some people attempted insurance fraud and failed because of a thorough investigation by knowledgeable and experienced adjusters, investigators and lawyers. The names and locations were changed to protect the guilty.

    Candy and Abel: Murder for Insurance MonProduct Detailsey

    How a young lawyer and wise old investigator defeated an attempt at life insurance fraud.

    Available as a Kindle Book.

    Available as a paperback.

    Murder And Insurance Fraud Don’t Mix

    My name is Marion Orpheus Montague. My friends, and some enemies, call me “MOM.” It is not a designation of my ability to nurture my clients. I have never been, nor will I Product Detailsever be, maternal. I accept the play on my initials because it causes adversaries to underestimate me.

    I am 66-years-old. My grayish blond hair is thin and my full beard is a bit scraggly. My face is round and often tinged with red. My nose is full, my eyes green and my cheeks bulge out to the sides trying to emulate the belly that precedes every other part of my body as I walk. People see me and do not believe that I am a private investigator. Seeing me they often think that I am on leave from my winter work as a Macy’s Santa Claus.

    I like being underestimated. It makes my job as an investigator easier.

    See how a fake robbery at a jewelry store led to murder and prison.

    Available as a Kindle book.

    Available as a paperback

    Murder & Old Lace: Solving Murders Performed for Insurance Money

     

    Product Details

    When the women first met – 20 years ago at a Santa Monica health spa – Magogassasanian appeared taken with Gogolivesky. The women moved Alvarado into an apartment, then started applying for life insurance policies on him. They jointly took out four policies, each as 50% beneficiaries in addition to the individual policies they bought from my client. Gogolivesky also took out three more policies on her own while Magogassasanian only took out a single individual policy on Earnest. The two women pocketed nearly $6,000,000 in insurance benefits on Alvarado alone and $4,000,000 in insurance benefits on Earnest. They also recovered a total of $5,000,000 on the other six old men they killed.

    Available as a Kindle book.

    Available as a paperback.

    Arson for Profit: How an Attempt to use Arson & Fraud to Fund Terrorism Failed

    This story is based on a real case involving a member of Russian/Armenian organized crime, real insurers, investigators, lawyers, fire fighters, and insurance brokers. The names, descriptions, and identities of the people involved have been changed to protect both the guilty and the innocent. The report to the US Senate, after this case was decided by the California Courts, reveal that the threats made on MOM and lawyer Hazan were real and they are lucky that the threats were never fulfilled. The person identified in this story as Levonyan was described to the US Senate as the leader of a Russian/Armenian organized crime ring. It is important to take seriously threats from criminals. Insurance fraud and arson-for-profit are not victimless crimes. They are crimes of violence that cost everyone who lives in the U.S.]

    Available as paperback.

    Available as a Kindle Book.

    M.O.M. & The Taipei Fraud: How an Experienced Adjuster Defeated a $7 Million Fake Burglary Claim

    The problem is that each option the insurers have available have a down side and Feng is represented by a lawyer who has proved highly successful in suing insurers and collecting large compensatory and punitive damage awards. Since the claims exceed $6 million dollars, he can expect, applying the law set out by the U.S. Supreme Court in State Farm Mut. Automobile Ins. Co. v. Campbell and BMW of North America, Inc. v. Gore as much as $60 million in punitive damages. So I need to explain to the insurers that they face an exposure anywhere from their policy limits to ten times the policy limit. They need the courage of their convictions to reject this major claim.

    Available as a paperback.

    Available as a Kindle book.


     

    Barry Zalma, Inc.

    © 2018 – Barry Zalma

    I have placed books on Amazon.com as both e-books and as paperbacks to explain, in fiction based on reality, information to help everyone understand that insurance fraud can be defeated by a thorough investigation.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

    Share
    Posted in Zalma on Insurance | Comments Off on Five True Crime Insurance Fraud Books

    UIM Cover Properly Limited to Designated Vehicles

    Ambiguity in State Mandated Policy Wording Should Not Be Held Against Insurer

    In most states the language of uninsured motorist (UM) and underinsured motorist (UIM) coverages are mandated by state law. Insurers have no choice, they must use the language required by the law. In Virginia the UM/UIM coverage wording is required by law. By decisions of its appellate courts Virginia allows insurers to limit their UM/UIM coverage to designated vehicles.

    In Bruce Levine, Administrator of the Estate of Carlos Bolanos Castillo, deceased, and Marco A. Gabarette v. Employers Insurance Company Of Wausau, and Jessica Lynn Coble; Purnell Furniture Services, Inc.; Penske Truck Leasing Company, Incorporated, No. 17-1342, No. 17-1432, United States Court Of Appeals For The Fourth Circuit (April 12, 2018) the estate of one deceased plaintiff and an injured plaintiff claimed the policy was ambiguous and even though they were not in a designated vehicle coverage should apply.

    Applying Virginia law, the district court analyzed the Policy and held that the plain language of its terms dictated that the UIM coverage applied only to those vehicles that Purnell owned. Because Purnell did not own the Penske truck, it was not a “covered auto,” and therefore the Plaintiffs were not entitled to UIM coverage.

    FACTS

    Carlos Bolanos Castillo was killed and Marco A. Gabarette was injured in a motor vehicle accident during the course of their employment. The district court held that the policy did not extend coverage to Castillo’s estate or Gabarette and granted summary judgment to the insurer.

    Purnell Furniture Services, Inc. (“Purnell”), a Virginia company, hired Castillo and Gabarette (collectively, the “Plaintiffs”) as independent contractors to deliver furniture in northern Virginia. Purnell regularly hired such independent contractors to deliver its furniture in the contractors’ vehicles. Purnell permitted them to use a truck for that delivery that Purnell had rented from Penske.

    Gabarette drove the truck with Castillo as passenger. En route to their destination, they pulled over on the side of the interstate so Castillo could check on the security of the furniture load. Another driver then struck the rented Penske truck, killing Castillo and injuring Gabarette.

    At the time of the accident, Purnell had a motor vehicle insurance policy (the “Policy”) issued by Employers Insurance Co. of Wausau (“Wausau”), which includes an uninsured/underinsured motorists (“UIM”) endorsement as required by the applicable state law of Virginia. The Policy’s “Schedule of Coverages and Covered Autos” (i.e., the “Declarations Pages” or “Schedule”) lists the insurance coverages that Purnell purchased. These coverages are identified on the Declarations Pages as limited “to those autos shown as covered autos.”

    However, for UIM coverage—as opposed to liability coverage—the Schedule restricts covered autos to those designated which the Motor Carrier Coverage Form defines as “Owned Autos Only.” The Policy lists only three vehicles on the “Schedule of Covered Autos You Own,” none of which are the rented Penske truck.

    For UIM purposes, an insured party is defined as “[a]nyone . . . occupying a covered auto.” The UIM endorsement defines “covered auto” as “a motor vehicle, or a temporary substitute, with respect to which the bodily injury or property damage liability coverage of the policy applies.”

    Castillo’s estate and Gabarette filed separate suits against the alleged negligent driver in the Fairfax County, Virginia, Circuit Court. Because of the driver’s limited insurance coverage, the Plaintiffs also brought an action in the same state court against Wausau for a declaration as to UIM coverage under the Policy and their entitlement to that coverage.

    ANALYSIS

    Courts in Virginia apply traditional principles of contract interpretation when reviewing insurance policies. The intent of the parties is the focus of the inquiry. A court will construe unambiguous terms of the policy according to their plain meaning. Importantly, no contract provision “will be treated as meaningless if a reasonable meaning can be given to it, and there is a presumption that the parties have not used words needlessly.” Each phrase and clause of an insurance contract should be considered and construed together and seemingly conflicting provisions harmonized when that can be reasonably done, so as to effectuate the intention of the parties as expressed therein.

    If an insurance policy is ambiguous, however, it is ordinarily construed against the insurance company. Where two constructions are equally possible, that most favorable to the insured will be adopted. Language in a policy purporting to exclude certain events from coverage will be construed most strongly against the insurer.  The insurer has the burden of proving lack of coverage.

    In this case, the plain language of the Policy resolves the issue.

    Only owned vehicles were covered by the policy. Although specific policy provisions were not recited in the opinion, the basis for this holding is clear from the record on file with the Court.

    Because the Penske truck is not listed in the Policy as one of the owned vehicles, there is no UIM coverage related to it under the Policy. In Virginia, uninsured motorist coverage is meant to protect an insured motorist, his family and permissive users of his vehicle against the peril of injury by an uninsured wrongdoer, not to provide insurance coverage upon each and every uninsured vehicle to everyone.

    The thrust of the Plaintiffs’ case is that the required UIM endorsement has a definition of “covered auto” that is broader than the UIM limitation of the Policy’s Declarations Pages. Moreover, Virginia follows the well-settled principle in contract law of applying specific provisions of a contract over more general provisions dealing with the same subject matter.

    When two provisions of a contract conflict with one another, and one provision specifically addresses the dispute at hand while the other remains general, appellate courts have consistently held that the specific provision will govern over the general. Comparing the two provisions at issue in this case, the Policy’s Declarations Pages place limitations on UIM coverage that are more specific than the generic UIM endorsement which, according to the Plaintiffs, provides coverage to any vehicle covered by the Policy whatsoever. The Plaintiffs’ view is simply not consonant with Virginia law.

    Here, the generic UIM endorsement is solely the creation of the Virginia State Corporation Commission (“SCC”), which requires the endorsement for every motor vehicle policy issued in Virginia. In contrast, the Policy’s Declarations Pages, which were written by Wausau, have no ambiguity as the covered autos provision is clear: there is no UIM coverage for the non-owned Penske truck.

    As a result of the statutory language the Fourth Circuit found that the interpretative presumption favoring insureds can play no role in the court’s analysis. The Fourth Circuit found it illogical to penalize an insurance company for using a form it is required to use by law. Unlike the government-mandated UIM endorsement, the Declarations Pages were a result of contract negotiations by the parties.

    As a court sitting in diversity state law must be applied, not created. As previously noted, Virginia law permits the insurer to limit UIM coverage to owned vehicles via the declarations page, despite the inclusive wording of the state mandated UIM endorsement. Wausau so limited the UIM coverage in this case, and the district court properly followed the terms of the Policy to award summary judgment to it.

    ZALMA OPINION

    This is an important decision which refused to hold an insurer hostage to a state mandated ambiguity and allowed it to have its specific, and negotiated, declarations page control over the ambiguity in the basic policy wording. Courts who find ambiguities in such contracts, like state mandated fire policies, UM coverage, flood coverage, and others should not be used to punish an insurer for following the law.


    © 2018 – Barry Zalma

    This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

     

     

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    “Random Thoughts on Insurance Volumes I through V

    Digests from Barry Zalma’s Blog: “Zalma on Insurance”

    Product DetailsAfter more than 50 years acting as a claims person and insurance coverage lawyer I enjoy reading court decisions concerning insurance. The idea of the blog “Zalma on Insurance” is to find new cases that are interesting to me and then write a summary or digest.

    Some of the 2100 cases reviewed and digested will be important. Some may be of first impression. Others will be totally unimportant. All will be interesting.

    The case digests and articles in these five books summarize cases published by courts of the various states and the United States. The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

    Read about these five volumes and more books by Barry Zalma at http://zalma.com/zalma-books/ and you may subscribe to the blog at http://zalma.com/blog.


     

    Barry Zalma, Inc.

    © 2018 – Barry Zalma

    I have placed books on Amazon.com as both e-books and as paperbacks to explain, in fiction based on reality, information to help everyone understand that insurance fraud can be defeated by a thorough investigation.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

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    Subrogation Fails for Failure to State Amount of Damage

    Carmack Amendment Requires a Statement of Damage

    Subrogation is an equitable right provided to an insurer after it indemnifies its insured for a loss covered by the policy of insurance. As a result every subrogating insurer must know how much the loss was and how much the subrogating insurer is seeking from the person responsible for loss. When an insurer makes a claim under the Carmack Amendment, 49 U.S.C. § 14706, it is required to list the amount of damages so the shipper or its insurer can investigate.

    THE ISSUE

    In New York Marine And General Insurance Company v. Estes Express Lines, Inc.; Exfreight Zeta, Inc., No. 16-56748, United States Court Of Appeals For The Ninth Circuit, (April 17, 2018) Plaintiff-Appellant N.Y. Marine brought suit for carrier liability under the Carmack Amendment, 49 U.S.C. § 14706, against Defendant-Appellee Estes as carrier and Defendant-Appellee Zeta as broker, to recover $84,511.23 that N.Y. Marine paid to its insured XPO when a cargo of batteries owned by XPO’s customer TransPower suffered damage while carried by Estes.

    THE TRIAL COURT DECISION

    On summary judgment, the district court held that neither Estes nor Zeta was liable to N.Y. Marine, because the loss claims did not indicate “a specified or determinable amount of money.”

    ANALYSIS

    To obtain relief against a carrier under the Carmack Amendment, claimants must comply with “[m]inimum filing requirements.” [Ins. Co. of N. America v. G.I. Trucking Co., 1 F.3d 903, 905-06 (9th Cir. 1993)]. A claim must, at a minimum, “(1) contain[ ] facts sufficient to identify the baggage or shipment (or shipments) of property; (2) assert[ ] liability for alleged loss, damage, injury, or delay; and (3) mak[e] claim for the payment of a specified or determinable amount of money.”

    The forms at issue here lack a specified or determinable claim amount, which is necessary to alert Estes to the extent of its liability: they state that “[e]xtent of damage” is “unknown until cargo is inspected,” and merely note the cargo’s total value of $148,055.30. Neither Estes nor Zeta was ever told of the results of the January 17 inspection conducted by TransPower and the NYC Transit Authority.

    A few weeks after the claim was submitted, Zeta warned XPO that “the amount for the referenced claim” was still missing, and that the claim form needed to be updated “to include claim amount.” No update followed. In the absence of a “specified or determinable amount” listed on the claim form, and in the absence of any other means for Estes to assess the extent of the loss, the forms did not reasonably permit Estes to apprise itself of the approximate claim value. Merely identifying the upper bound of possible damages with exact damages “TBD” does not suffice.

    Even under a “substantial performance” standard, N.Y. Marine’s claim fails. The damage to batteries here was nonobvious: the damage was out-of-sight without any apparent means for Estes to inspect them. While the letter did not specify an amount of damages, that amount was arguably determinable from the other information given in the letter or already available to the carrier.

    ZALMA OPINION

    Although its insured made the initial claim before it knew about the total extent of the loss to the insured’s batteries, once that amount was determined it was the obligation of the insured or the subrogating insurer to advise the people from whom it sought money of the exact amount before filing suit. It did not and its error defeated a compensable subrogation claim.


    © 2018 – Barry Zalma

    This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

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    “HEADS I WIN, TAILS YOU LOSE”

    How Insurance Fraud Succeeds

    Product DetailsA collection of columns originally published in the magazines “Insurance Journal,” “Insurance Week,” and “The John Cooke Insurance Fraud Report” insurance trade publications serving the insurance community in the United States that have been updated and revised.

    The title, “Heads I Win, Tails You Lose” is meant to describe insurance fraud as it works in the Unites States. It means that whenever a person succeeds in perpetrating an insurance fraud everyone who buys insurance is the loser.

    Available as a Kindle Book.

    Available as a paperback.


     

    Barry Zalma, Inc.

    © 2018 – Barry Zalma

    I have placed books on Amazon.com as both e-books and as paperbacks to explain, in fiction based on reality, information to help everyone understand that insurance fraud can be defeated by a thorough investigation.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

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    Fake Psychiatrist Will Get Psychiatric Treatment — in Prison

    Unhappy with Sentence Fake Doc Appeals with Fake Arguments

    Some criminals believe that their crimes do not deserve punishment no matter how egregious their crime. By pretending to be a physician and psychiatrist Scott C. Redman treated people with a mental illness and prescribed medicines that could have addicted or  killed those he took on as “patients.” He was convicted at trial and appealed, as excessive, the sentence imposed by the trial court.

    In United States of America v. Scott C. Redman, No. 17-1357, United States Court of Appeals for the Seventh Circuit (April 17, 2018) the trial court found that from September 2015 until his arrest in February 2016, Scott Redman posed as a psychiatrist at a Chicago medical clinic using the name and license number of Dr. Julian Lopez Garcia. He “treated” patients who suffered from a variety of mental illnesses, and he “prescribed” a variety of controlled substances. Redman is not a doctor; indeed, he did not attend school past the tenth grade.

    Redman did not contest his convictions. He claims that the district court erred in determining the appropriate sentence.

    HISTORY

    Scott Redman identified himself as Dr. Julian Lopez Garcia when he responded to an advertisement for an open psychiatry position at Clarity Clinic, a downtown Chicago mental health clinic. He submitted a curriculum vitae in which he claimed to have attended the University of Connecticut for undergraduate and medical school, as well as a residency, and that he was licensed to practice medicine in the state of Illinois. In mid-September 2015, Redman interviewed with the clinic owner, Dr. Pavan Prasad, to whom he recited the lies listed on his curriculum vitae. At the close of the interview, Dr. Prasad offered him a job.

    Prior to commencing employment, Redman provided falsified documentation of his credentials: an employment application, payroll application, I-9 Employment Eligibility Verification form, W-9 form, photograph of an Indiana driver’s license with Redman’s picture, photocopy of an Illinois medical license, photocopy of a medical school diploma, a residency certificate for training in psychiatry, and a photocopy of a social security card.

    Redman obtained many of the documents from online counterfeiting services (“fakediplomanow.com,” for example) to create some of these falsified documents. Each bore the name of Julian Lopez Garcia. In addition, Redman submitted an online Drug Enforcement Administration Form 224 using false information to obtain a DEA registration number, thereby enabling him to prescribe controlled substances. He obtained malpractice insurance by using false information as well.

    During his approximately two-and-a-half months of employment at Clarity Clinic, Redman “treated” patients with a combination of therapy and controlled substances. He issued approximately 92 prescriptions for controlled substances to 57 patients. Unsurprisingly, the government’s trial presentation included evidence that Redman made errors in his practice, particularly with respect to prescriptions.

    The clinic attributed Redman’s mistakes to his being a recent graduate, a “little rusty” on fundamentals that he would eventually correct. At trial, Dr. Prasad testified that he thought Redman was doing a “decent job.” By the end of his time at Clarity Clinic, Redman was seeing nearly a dozen patients a day.

    Local authorities, and later the federal government, were alerted to Redman’s scheme when the real Dr. Julian Lopez Garcia reported that someone had used his State of Illinois medical license number to obtain a DEA registration number in his name.

    ANALYSIS

    A finding of fact is clearly erroneous only if, based upon the entire record, we are left with the definite and firm conviction that a mistake has been committed.

    Sophisticated Means

    Redman challenged the “sophisticated means” enhancement.  Statutes require enhancement of the sentence if the crime involved sophisticated means and the defendant intentionally engaged in or caused the conduct constituting sophisticated means.

    The district court found application of the sophisticated means enhancement was appropriate based on the “ample evidence showing that the defendant caused the creation of a substantial amount of paperwork, including fake diplomas, fake resumes, and fake unauthorized licenses and made government filings in order to further and conceal his elaborate scheme.”

    Redman insists that his conduct was not more complex than typical fraud. The appellate court concluded, contrary to Redman’s assertion, that the facts of this case clearly warrant application of the sophisticated means enhancement. Redman’s conduct required planning and deception sophisticated enough to fool Dr. Prasad and the clinic’s patients and involved devious maneuvers.

    Finally, Redman claimed that his scheme only lasted a couple of months and involved a primitive counterfeiting website does not, in this case, diminish its sophistication. Not all of the defendant’s actions needed to be elaborate for the adjustment to apply; it is enough that, as the district court found, his actions when viewed as a whole constituted a sophisticated scheme.

    Redman’s conduct involved a series of complicated and elaborate theatrics to commit and conceal his criminal conduct. The district court did not clearly err in finding that Redman’s scheme involved sophisticated means.

    Conduct Involving Conscious or Reckless Risk of Death or Serious Bodily Injury

    The statute calls for a two-level upward adjustment if the offense involved “the conscious or reckless risk of death or serious bodily injury.”

    “Serious bodily injury” is a phrase of general applicability used frequently throughout the Guidelines and means “injury involving extreme physical pain or the protracted impairment of a function of a bodily member, organ, or mental faculty; or requiring medical intervention such as surgery, hospitalization, or physical rehabilitation.” Actual injury need not occur for the enhancement to apply.

    In applying this enhancement, the district court emphasized that Redman’s patients, who had serious psychiatric problems, relied on him to diagnose and treat their illnesses. Redman had absolutely no training to equip him to do that. His conduct, both in what he did to treat patients and what he might have missed because of his lack of training, put his patients at risk.

    The real Dr. Julian Lopez Garcia penned a letter that was read at sentencing, stating a doctor has to prescribe a precise dose and evaluate possible interactions with other medications. It is a complex process but if done incorrectly can have serious implications in the health of a patient and can even cause their demise. Mr. Redman put every patient’s life at stake when he recklessly decided to treat and write prescriptions under Dr. Garcia’s name.

    Redman’s conduct was more egregious than that of other defendants whose conduct the courts have found warranted this enhancement.

    Although it is true that sentencing determinations must be based on reliable evidence, not speculation or unfounded allegations, the district court in this case relied on ample evidence that Redman exposed his “patients” and others to the risk of tragic harm.

    ZALMA OPINION

    Although, posing as a brain surgeon performing surgery on innocent patients would have been worse this scheme, to defraud insurers, the medical community, the clinic, and his patients deserved the most serious punishment allowed by the law. The only reason some of Redman’s patients did not die was pure luck and the quick action of the real Dr. Garcia whose identity Redman had assumed.


    © 2018 – Barry Zalma

    This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

     

     

     

     

     

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    “The Insurance Examination Under Oath”

    An Important Tool to Defeat Fraud

    Product DetailsThe Standard Fire Insurance policy, statutorily mandated for two centuries, contains a condition that requires an insured to appear for and testify at examination under oath before anyone appointed by the insurer. The U.S. Supreme Court in 1884 ruled in Claflin v. Commonwealth Insurance Co. (1884) 110 U.S. 81 [28 L.Ed. 76, 3 S.Ct. 507]. ““The object of the provisions in the policies of insurance, requiring the assured to submit [202 CalApp3d Page 1416] himself to an examination . . . was to enable the company to possess itself of all knowledge, and all information as to other sources and means of knowledge, in regard to the facts, material to its rights, to enable it to decide upon its obligations, and to protect it against false claims. And every interrogatory that was relevant and pertinent in such an examination was material, in the sense that a true answer to it was of the substance of the obligation of the assured. A false answer as to any matter of fact, material to the in-not statements made in an insured’s claim.”

    The insurance Examination Under Oath (“EUO”) is a formal type of interview authorized by an insurance contract. It is taken under the authority provided by a condition of the insurance contract that compels the insured to appear and give sworn testimony on the demand of the insurer or find his, her or it claim rejected for breach of a condition. A notary and a certified shorthand reporter are always present to give the oath to the person interviewed and record the entire conversation.

    Available as a Kindle book.

    Available as a paperback.


     

    Barry Zalma, Inc.

    © 2018 – Barry Zalma

    I have placed books on Amazon.com as both e-books and as paperbacks to explain, in fiction based on reality, information to help everyone understand that insurance fraud can be defeated by a thorough investigation.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

    Share
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    Insured Must Treat Insurer With Good Faith & Fair Dealing

    Insured Must Cooperate in Insurer’s Investigation of Claim

    The covenant of good faith and fair dealing goes in both directions. Neither party to the contract of insurance may do anything to deprive the other of the benefits of the contract of insurance.

    When an insured makes a first party claim the insured is obligated to cooperate in the investigation of the insurer and provide documents required to be produced by the insurer. In addition the insured can be required to provide sworn testimony about the loss. The cooperation requirement is a condition precedent to indemnity. Since many insureds think insurers are evil and can be threatened to pay any claim presented if threatened with bad faith, when a claim is denied for failure to cooperate the insured will usually sue.

    In Ngoc Tran v. Federal Insurance Company, Case No. 17-3921, United States Court Of Appeals For The Sixth Circuit (April 18, 2018) the Sixth Circuit dealt with an interesting case presented by Ngoc Tran. She owned a great deal of gold jewelry: $374,330 worth, to be exact. A few years ago, she decided it was time to insure her collection. She purchased a valuable-articles policy from Federal Insurance Company (“Federal”). About eight months later, Tran reported the jewelry stolen and sought to collect on the policy.

    SUSPICIOUS CLAIM

    Federal suspected that the burglary was an inside job. For starters, the responding officer did not think the crime scene—which would have required the purported burglar to make a rather acrobatic leap through a window—looked like a break-in. And Federal spotted a number of other inconsistencies and oddities in Tran’s story, including the substantial disparity between her reported annual income ($0) and monthly living expenses (sometimes in excess of $5000). As a result, the company asked Tran to provide various business and personal records to corroborate her story. For one reason or another, Tran failed substantially to do provide the business and personal records. After several unsuccessful attempts to obtain the records, Federal denied Tran’s claim, citing her “failure to cooperate.”

    THE SUIT

    Tran filed suit, seeking to compel Federal to cover the claimed loss. The district court granted Federal summary judgment, holding that Tran had failed to cooperate with the company’s investigation. Tran appealed.

    ANALYSIS

    Insurance policies often include “cooperation clause[s]” that impose certain duties on the insured party in the event of a loss. Tran’s policy had a cooperation clause requiring her to “produce all records and documents” that the insurance company requested. Because Tran failed to produce many requested documents, Federal maintains that it does not have to pay out her claim.

    Under Ohio law, an insured party’s failure to comply with a cooperation clause lets the insurer off the hook if the insured’s noncooperation result[s] in material and substantial prejudice to the insurance company.

    Federal repeatedly requested records from Tran, and Tran repeatedly failed to produce many of those records. Initially, Tran claimed that she did not have the records. Then, instead of retrieving copies of those records from third parties—such as her bank and accountant—she gave Federal written authorization to get the documents. The problem is, even with Tran’s written authorization, many of the third parties would not provide the records directly to the company.

    When Federal eventually received some records Tran refused to confirm their accuracy. For example, the company obtained a few years’ tax returns from Tran’s accountant, but Tran would not verify that they accurately represented her income. In another instance, Federal got Tran’s phone records from AT&T, but Tran claimed not to remember the identities of eight key telephone numbers listed in the log. And when Federal obtained win/loss statements from local casinos (Tran’s live-in boyfriend was a gambler), Tran disputed the statements’ accuracy.

    Federal was never able to obtain, in the course of its claims, investigation Tran’s complete bank account information, as well as two years’ tax returns. Tran initially told Federal that she did not have any bank accounts. After further questioning, she admitted to having two accounts, but she still never gave Federal complete account information. Tran also claimed that two years of missing tax returns simply did not exist, but did not offer evidence to support that claim. When all was said and done, Tran provided the insurance company only some of the documents and information it requested and refused to confirm the accuracy of several key documents Federal obtained on its own accord.

    This level of noncompliance was material and substantial. Federal had reason to question Tran’s story about the burglary. And Tran’s failure to provide the requested records impeded its ability to investigate the truth of her claims. The bank records and tax returns would have shed light on Tran’s financial situation in the years surrounding the alleged burglary. So too would the casino records reflecting her boyfriend’s gambling habit.

    Federal was confronted with a record that suggested Tran had no annual income, yet somehow maintained monthly expenses sometimes exceeding $5,000 around the time of the loss. Tran’s obstinacy frustrated the company’s ability to determine Tran’s motive, alibi, or any other aspect of her involvement (or non-involvement) in the alleged burglary. Moreover, because Tran’s noncooperation persisted for months and affected several categories of information, it impaired Federal’s ability to complete a full and fair investigation. Her noncooperation was clearly prejudicial.

    Tran nevertheless insisted that her attempted compliance was enough. She reasons that she provided some records and made an effort to obtain others. But Tran sets the bar for compliance too low. A party’s compliance with some of a policy’s requirements does not excuse the party’s material failure to comply with others. Although Tran provided Federal with authorizations to obtain records from third parties, it was Tran’s undisputed responsibility under the contract to obtain the requested documents—not Federal’s.

    Tran also argues that Federal cannot prove that her failure to cooperate was willful, because she did not destroy any documents or fail to produce documents that she had in her possession. Maybe so, but she missed the point since, if Tran did not currently have the requested records, the cooperation clause obligated her to make an effort to obtain them. While Tran suggests that she did eventually make an effort to obtain her tax returns, she did not do so until more than a year after she filed this suit. That is not “cooperation.”

    The district court thus properly granted summary judgment to Federal on the grounds that Tran failed to cooperate.

    ZALMA OPINION

    Federal went beyond the call of duty required by the covenant of good faith and fair dealing. It was patient and waited for production from Tran after multiple requests. It took authorizations and tried to get the records which were withheld and it was met with an impossible fact that she earned nothing but spent $5,000 a month. Unable to complete the investigation Federal rightfully and fairly rejected the claim. Failure to cooperate is a breach of a material condition and a failure to deal in good faith.


    © 2018 – Barry Zalma

    This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

     

     

     

     

     

     

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    Posted in Zalma on Insurance | Comments Off on Insured Must Treat Insurer With Good Faith & Fair Dealing

    Insurance Ethics and Rescission

    How to Be an Effective Insurance Professional

    Since insurance is a business of utmost good faith it is necessary for every insurance professional to understand the ethical compass that must be followed to deal fairly and in good faith with every insured.  The same obligation falls equally on the insured who, if the insured breaches the covenant and deceives the insurer into entering into a contract of insurance, the contract can be rescinded from its inception.

    The two books that follow make it possible for every insurance professional to deal ethically and understand how to void a policy of insurance if the insured does something that deceives an insurer into issuing a policy it would not have issued had it not been deceived.

    Ethics for the Insurance Professional

    Methods for Insurers and their Personnel to Act with the Utmost Good FaithProduct Details

    Ethics is a process of systematically applying, using, defending and recommending concepts of right and wrong behavior. Ethical behavior is required of both parties to a contract of insurance for the system to work. Ethics is the essence of insurance. Ethical behavior is required of both parties to a contract of insurance for the system to work. If any party to the insurance contract acts unethically the ability of insurance to work effectively and profitably will fail. Ethics is the essence of insurance. Since insurance was first created it has been a business of utmost good faith. As a result, the insured and the insurer are expected to treat each other ethically.

    Rescission of Insurance

    Product DetailsRescission is an equitable remedy as ancient as the common law of Britain. When the United States was conceived in 1776 the founders were concerned with protecting their rights under British common law. They adopted it as the law of the new United States of America modified only by the limitations placed on the central government by the U.S. Constitution approved in 1789. The viability and ability to enforce contracts was recognized as essential to commerce. Courts of law were charged with enforcing legitimate contracts. Courts of equity were charged with protecting contracting parties from mistake, fraud, misrepresentation and concealment since enforcing a contract based on mistake, fraud, misrepresentation or concealment would not be fair. The common law developed rules that courts could follow to refuse to enforce the terms of a contract that was entered into because of mutual mistake of material fact, a unilateral mistake of material fact, the breach of warranty (a presumptively material promise to do or not do something), a material concealment, or a material misrepresentation. The remedy – called rescission – created a method to apply fairness to the insurance contract and allow an insurer to void a contract and allowed courts to refuse to enforce such a contract entered into by misrepresentation or concealment of material facts.

    Available as a paperback.

    Available as a Kindle book.

    Read this and more books by Barry Zalma at http://zalma.com/zalma-books/


     

    Barry Zalma, Inc.

    © 2018 – Barry Zalma

    I have placed books on Amazon.com as both e-books and as paperbacks to explain, in fiction based on reality, information to help everyone understand that insurance fraud can be defeated by a thorough investigation.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

    Share
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    “Chutzpah” by an Arsonist

    Appeal to Remove Guilty Plea Ridiculous

    Arson is the most dangerous and vicious of insurance crimes. Firefighters, residents, neighbors, passers by, pets and other animals often die as a result of an arson for profit. “Chutzpah” as readers of this blog know is a Yiddish word meaning unmitigated gall usually defined as a criminal defendant who is convicted of murdering his parents seeks mercy because he is an orphan.

    When an arsonist is given the opportunity to plead guilty in exchange by removing many of the charges available to the state the defendant can obtain a lesser sentence than if convicted of all of the charges against the arsonist. When, as in Gloria Eun Hye Lee, a/k/a Gloria Eunhye Lee v. The State Of Nevada, No. 72653, Supreme Court Of The State Of Nevada (April 10, 2018) is greater than expected the defendant will attempt to change the plea and seek a new trial claiming inadequacy of counsel.

    CONTENTIONS

    Gloria Eun Hye Lee contends that the district court erred in denying claims that her counsel was ineffective. She asserts that, had counsel more effectively challenged the charges pretrial, she would not have pleaded guilty and would have insisted upon going to trial. She also argues that counsel was ineffective at sentencing.

    ANALYSIS

    To establish ineffective assistance of counsel, a petitioner must demonstrate counsel’s performance was deficient because it fell below an objective standard of reasonableness, and resulting prejudice in that there is a reasonable probability, but for counsel’s errors, the petitioner would not have pleaded guilty and would have insisted on going to trial. The Supreme Court will always give deference to the district court’s factual findings if supported by substantial evidence and not clearly erroneous.

    First, Lee argues that trial counsel was ineffective for failing to successfully dismiss the charge of first-degree arson or challenge the statute at sentencing because the business she was accused of setting ablaze, a pet store, was unoccupied and not a dwelling. Lee failed to demonstrate deficient performance because the pet store was an “other structure” within the plain language of NRS 205.010(1) and, under the same provision, whether that structure was occupied is irrelevant. Therefore, the district court did not err in denying this claim.

    Second, Lee argues that trial counsel was ineffective for failing to challenge the charges of first-degree arson, arson with intent to defraud, and insurance fraud as violations of double jeopardy. Separate charges for these offences do not offend double jeopardy. First-degree arson and burning with intent to defraud an insurer are not the same offense. First-degree arson requires the willful and malicious setting of a fire to a structure. Setting a fire with intent to defraud an insurer requires the willful setting of a fire with the intent to defraud the insurer. The arson offenses were completed upon the setting of the fires and insurance fraud was alleged to have occurred afterward. Lee has not demonstrated prejudice considering the significant benefits she received in pleading guilty. The State dropped charges of conspiracy to commit burglary, burglary, conspiracy to commit arson, 26 counts of attempted cruelty to animals, one count of arson with intent to defraud insurer, and attempted theft. Therefore, the district court did not err in denying these claims.

    Third, Lee contends that counsel should have argued that there is no felony crime of attempted cruelty to an animal as the statute only operates where actual harm has come to an animal and she did not intend to commit animal cruelty as her alleged actions only incidentally endangered the dogs. Lee failed to demonstrate deficient performance. She has cited no authority suggesting that starting a fire in a building could not amount to willfully and maliciously attempting to kill the dogs kept therein. Therefore, the district court did not err in denying this claim.

    Fourth, Lee argues that the district court erred in denying her claim that trial counsel failed to investigate mitigating circumstances before her guilty plea and sentencing. She asserts that counsel should have introduced evidence concerning Lee’s medical and mental health history, specifically, her drug addiction. This argument lacks merit. Counsel introduced Lee’s medical and mental health history through a sentencing memorandum and letters from Lee, her family, friends, and associates. These documents referenced Lee’s miscarriages, high-risk pregnancy, migraines, abuse of pain medications, depression and attendant medication, and history of counseling. Notably, Lee’s letter to the court did not reference drug addiction and counsel could not recall Lee ever informing them of serious drug addiction. Given this evidence, the district court’s conclusion that counsel was not deficient for not unearthing additional comparable evidence and that such evidence would not have affected the outcome of the sentencing is supported by substantial evidence. As this proposed evidence was unlikely to have affected the outcome of sentencing, Lee failed to demonstrate that it was so compelling as to have demonstrated a legal excuse for the crimes such that she would have forgone the significant benefits of the guilty plea agreement and insisted upon going to trial. Therefore, the district court did not err in denying this claim.

    Fifth, Lee argues that the district court erred in denying her claim that the cumulative effect of the ineffectiveness of counsel, prosecutorial misconduct, and trial court error deprived her of due process. Lee has cited no authority that requires consideration of the cumulative effect of defaulted claims with properly raised claims of ineffective assistance of counsel.

    ZALMA OPINION

    Lee set fire to her pet shop in order to obtain money from her insurance company ignoring the fact the pet shop was filled with animals who could have died from the results of the fire, not to mention firefighters and neighbors. She was charged with many crimes and pleaded guilty to one to avoid a very long sentence. Then, with Chutzpah greater than that expressed by Bernie Madoff, she tried to withdraw her guilty plea and get a trial. Thankfully, the Supreme Court of Nevada did not fall for her claims and she will spend the full sentence in prison.


    © 2018 – Barry Zalma

    This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

     

     

     

     

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    Posted in Zalma on Insurance | Comments Off on “Chutzpah” by an Arsonist

    California Claims Regulations

    Training Required Every September

    The state of California regulates the insurance industry with a vengeance. Every year everyone involved in claims must be trained on the application of the California Fair Claims Settlement Practices Regulations and the California SIU Regulations. It does allow, rather than require a training session, that the claims person can sign a sworn statement that he or she has read and understood the Regulations.

    In two books each set of Regulations is explained in language any claims person or member of claims management can understand and apply. The books are available at Amazon.com at http://zalma.com/zalma-books/

    California Fair Claims Settlement Practices Regulations

    A Guide to Insureds, Public Insurance Adjusters, and Lawyers to Properly Investigate and Adjust Insurance Claims

    This book was designed to assist insurance personnel who do business in the state of California. It will assist all insurance claims personnel, claims professionals, independent insurance adjusters, special fraud investigators, private investigators who work for the insurance industry, the management in the industry, the attorneys who serve the industry, public insurance adjusters, policyholders and counsel for policyholders working with insurers doing business in California. All insurers doing business in California must comply with the requirements of the Regulations or face the ire of, and attempts at financial punishment from, the CDOI. That punishment is now questionable and limited because some courageous insurers fought the CDOI and succeeded before an administrative law judge who limited the right to punish. Regardless of difficulties in assessing punishment the state of California requires all who are involved in the claims process — even if only tangentially — to be trained with regard claims handling in compliance with the Regulations and attest to completion of such training under oath. To avoid the annual training the claims person can submit a sworn document that avers that he or she has read and understood the Regulations. Reviewing this book and the Regulations set forth below should be sufficient to comply with the training requirements of the Regulations. It is necessary that insurance personnel who are engaged in any way in the presentation, processing, or negotiation of insurance claims in California be familiar with the Regulations. Counsel for insurers and policyholders should also be familiar with the Regulations since they set a minimum standard for claims handling in the state.

    Available as a Kindle book.

    Available as a paperback.

    California SIU Regulations

    The State of California Imposes Control on the Investigation of Insurance Fraud

    California SIU Regulations: The State of California Imposes Control on the Investigation of Insurance FraudCalifornia SIU Regulations is designed to assist California insurance claims personnel, claims professionals, independent insurance adjusters, special fraud investigators, private investigators who work for the insurance industry, the management in the industry, the attorneys who serve the industry, and all integral anti-fraud personnel working with California admitted insurers to comply with the requirements of California SIU Claims Regulations.

    The state of California, by statute, requires all admitted insurers to maintain a Special Investigative Unit (an “SIU”) that complies with the requirements set forth in the Special Investigative Unit Regulations (the “SIU Regulations”) and train all integral anti-fraud personnel to recognize indicators of insurance fraud.

    Available as a Kindle Book.

    Available as a paperback.

    You can read about each book and other books by Barry Zalma available at Amazon.com at http://zalma.com/zalma-books/


     

    Barry Zalma, Inc.

    © 2018 – Barry Zalma

    I have placed books on Amazon.com as both e-books and as paperbacks to explain, in fiction based on reality, information to help everyone understand that insurance fraud can be defeated by a thorough investigation.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

    Share
    Posted in Zalma on Insurance | Comments Off on California Claims Regulations

    Physician Heal Thyself — in Prison

    Sex With Patient Not a Legitimate Psychotherapeutic Treatment

    A practicing psychologist, Richard Scott Lenhart, engaged in sexual behavior with two of his patients under the guise that the sexual contact was legitimate psychotherapeutic treatment which he then routinely billed insurance for these sessions. He was charged with insurance fraud and indecent assault and plead no contest in a Pennsylvania state court.

    In Commonwealth Of Pennsylvania v. Richard Scott Lenhart, J-S01036-18, No. 1070 MDA 2017, Superior Court Of Pennsylvania (APRIL 6, 2018) after the conviction Lenhart received a fairly harsh sentence and appealed his conviction and sentence.

    FACTS

    On May 19, 2015, Appellant entered a nolo contendere (no contest) plea to two counts each of indecent assault and insurance fraud. On February 4, 2016, with the benefit of a pre-sentence investigation report (“PSI”), the court ordered Appellant to pay restitution to the insurance company in the amount of $71,557.00 and sentenced him to an aggregate term of three (3) to six (6) years’ incarceration. The court also adjudicated Appellant a Tier III sex offender and a sexually violent predator (“SVP”) under the Sex Offender Registration and Notification Act (“SORNA”) in effect at that time.

    ISSUE

    Appellant raised the following issue for review:

    DID THE SENTENCING COURT ABUSE ITS DISCRETION IN IMPOSING MINIMUM SENTENCES WITHIN AND ABOVE THE AGGRAVATED RANGE OF THE SENTENCING GUIDELINES WHERE THE RECORD DID NOT SUPPORT AGGRAVATING CIRCUMSTANCES OR REASONS TO DEPART FROM THE GUIDELINES[?]

    ANALYSIS AND ARGUMENTS

    Appellant argued he had no prior record and cannot abuse his position of authority as a psychologist anymore, due to the revocation of his license and his conviction for a registerable offense. Yet, the court sentenced Appellant to an aggregate sentence of three to six years’ incarceration, including consecutive, aggravated range or above the aggravated range sentences, which were unsupported by legitimate factors, the court’s reasons, or the record.

    Appellant complained the number of counts charged against him adequately addressed the number of victims, and their vulnerability was sufficiently addressed in the acknowledgment that the offensive conduct was nonconsensual. Appellant submitted his commission of these offenses while he also committed insurance fraud was adequately addressed by the consecutive nature of the sentences imposed.

    Appellant concedes the possibility of consecutive sentences, based on the number of counts he pled guilty to, but he insists the court cannot then use the same factors (number of victims or insurance remuneration) to justify any departure from the standard sentencing guidelines. Appellant complained the sentence was too strict.

    Generally, Pennsylvania law affords the sentencing court discretion to impose its sentence concurrently or consecutively to other sentences being imposed at the same time or to sentences already imposed. Any challenge to the exercise of this discretion ordinarily does not raise a substantial question.

    A basic allegation that a sentencing court failed to consider or did not adequately consider certain factors does not raise a substantial question that the sentence was inappropriate.

    On the other hand, an appellant raises a substantial question when he alleges the sentencing court erred by imposing an aggravated range sentence without consideration of mitigating circumstances. An allegation that the sentencing court provided inadequate reasons on the record for imposing a sentence above the standard range also constitutes a substantial question.

    A sentencing court may consider any legal factor in imposing an aggravated range sentence. Provided there is an appropriate evidentiary link between the uncharged conduct and the defendant, the court may consider the conduct as relevant to the “protection of the public” sentencing factor.

    The appellate court’s standard of review concerning the discretionary aspects of sentencing states: “Sentencing is a matter vested in the sound discretion of the sentencing judge, and a sentence will not be disturbed on appeal absent a manifest abuse of discretion. In this context, an abuse of discretion is not shown merely by an error in judgment. Rather, the appellant must establish, by reference to the record, that the sentencing court ignored or misapplied the law, exercised its judgment for reasons of partiality, prejudice, bias or ill will, or arrived at a manifestly unreasonable decision.” [Commonwealth v. Hyland, 875 A.2d 1175, 1184 (Pa.Super. 2005)]

    Where the sentencing court had the benefit of a PSI, the appellate court is allowed to assume the sentencing court was aware of relevant information regarding the defendant’s character and weighed those considerations along with mitigating statutory factors.

    After a thorough review of the record, the briefs of the parties, the applicable law, and the well-reasoned opinion of the Honorable Jonathan D. Grine, the appellate court concluded the record belies Appellant’s claims, which in turn merit no relief. The trial court opinion comprehensively discusses and properly disposes of the complaints raised. Appellant abandoned all professional ethics when he engaged in sex acts with his highly vulnerable patients for seventeen years, failed to stop on his own, and isolated himself from other professionals and support people who warned him to stop. Appellant was unable to accept that his conduct was wrong. The trial court considered, for example, Victim N.M.’s impact statement and Victim A.M.’s allegations and explained on the record it imposed sentences outside standard range on both indecent assault charges, in light of Appellant’s monstrous offenses against his victims, whom he exploited and intimidated mentally and physically over long periods of time for Appellant’s own sexual gratification. The trial court’s belief Appellant is a poor candidate for rehabilitation and the court’s explained on record it imposed aggravated range sentences for insurance fraud offenses because Appellant systematically sought and received financial gain from his victimization of his patients.

    As a result the appellate court concluded that the trial court properly fashioned an aggregate sentence for the Appellant under the circumstances. The sentencing court considered the particularly heinous specifics of the offenses, which Appellant perpetrated for many years while he occupied a position of trust, as well as his character and lack of remorse.

    ZALMA OPINION

    Dr. Lenhart is a perfect example of unmitigated gall. To state, after using his profession as a means of convincing vulnerable women to allow him to sexually abuse them – the equivalent of a rape by fraud – and then to charge insurance companies for the activities that he claimed was treatment, is probably the most egregious form of insurance fraud coupled with sexual misconduct.


    © 2018 – Barry Zalma

    This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

     

     

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    Posted in Zalma on Insurance | Comments Off on Physician Heal Thyself — in Prison

    Basic Training For All New and Experience Claims People

    All Adjusters Need Knowledge of Insurance and Claims Handling

    Are you a claims person? Do you employ claims people? Do they all know the basics necessary to thoroughly and in good faith investigate and resolve an insurance claim? Do they all think they know everything there is to know about claims handling? Are you presenting a claim? Do you want to know what the adjuster should do when handling your claim?

    The claims person or claims management interested in effective, good faith claims handling the two compact books on insurance claims handling are a necessity for everyone in the insurance claims business.

    The person presenting a claim to an insurer needs to know what to expect from the adjuster assigned to their claim. The two compact books on insurance claims handling are necessary for everyone presenting a claim to an insurer to understand the process and successfully obtain the benefits to which the person making a claim is entitled.

    “The Compact Book on Adjusting Liability Claims: A Handbook for the Liability Claims Adjuster”

    This Compact Book of Adjusting Liability Claims is designed to Product Detailsprovide the new adjuster with a basic grounding in what is needed to become a competent and effective insurance adjuster. It is also available as a refresher for the experienced adjuster.

    The liability claims adjuster quickly learns that there is little difficulty with a claimant (the person alleging bodily injury or property damage against a person insured) if the claim is paid as demanded. The insured may be unhappy if the claimant’s claim is paid as presented since most do not believe they did anything wrong or fear an increase in premiums charged for subsequent policies.

    The adjuster must be prepared to salve the insured’s emotions, explain why in the law and the policy it was appropriate to pay the claimant and that the settlement is in the best interest of both the insured and the insurer the adjuster represents.
    The adjuster knows, and must be prepared to explain to an insured, that if a claim is resisted or denied the claimant will be unhappy, will probably file suit. If not promptly settled the claimant’s lawyers will rake the insured over the coals to prove that the insured is liable for the claimant’s injuries. The litigation will take time, effort, and money to establish the extent of the injuries and who is responsible for the injuries. Failure to settle promptly can cost the insured his or her reputation and will certainly cost the insurer much more than the claim could have been resolved for had it been resolved before the claimant retained a lawyer.

    Available as a Kindle book

    Available as a paperback.

    The Compact Book of Adjusting Property Insurance Claims: A Manual for the First Party Property Insurance Adjuster

    The insurance adjuster is not mentioned in a policy of insurance. The The Compact Book of Adjusting Property Insurance Claims: A Manual for the First Party Property Insurance Adjusterobligation to investigate and prove a claim falls on the insured. Standard first party property insurance policies, based upon the New York Standard Fire Insurance policy, contain conditions that require the insured to, within sixty days of the loss, submit a sworn proof of loss to prove to the insurer the facts and amount of loss.

    The policy allows the insurer to then, and only then, respond to the insured’s proof of loss. The insurer can then either accept or reject the proof submitted by the insured.

    Technically, if the wording of the policy was followed literally the insurer could sit back, do nothing, and wait for the proof. If the insured was late in submitting the proof the insurer could reject the claim. If the insured submits a timely proof of loss the insurer could either accept or reject the proof of loss. If the insurer rejected the proof of loss the insured could either send a new one or give up and gain nothing from the claim. Suit on the policy would be difficult because the policy contract limited the right to sue to times when the proof of loss condition had been met.

    Insureds and insurers were not happy with that system. It made it too difficult for a lay person to successfully present a claim. The system, as written into the standard fire policy seemed to run counter to the covenant of good faith and fair dealing that had been the basis of the insurance contract for centuries. Most insurers understood that their insureds were mostly incapable of complying with the strict enforcement of the policy conditions. To fulfill the covenant of good faith and fair dealing insurers created the insurance adjuster to fulfill its obligation to deal fairly and in good faith with the insured.

    Available as a Kindle book.

    Available as a paperback.


     

    Barry Zalma, Inc.

    © 2018 – Barry Zalma

    I have placed books on Amazon.com as both e-books and as paperbacks to explain, in fiction based on reality, information to help everyone understand that insurance fraud can be defeated by a thorough investigation.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

    Share
    Posted in Zalma on Insurance | Comments Off on Basic Training For All New and Experience Claims People

    Excess Insurer Must Prove Bad Faith of Primary Insurer to Subrogate

    Equitable Subrogation Requires Subrogee to Stand in the Shoes of the Insured

    In Preferred Professional Insurance Company v. The Doctors Company, 2018 COA 49, Court of Appeals No. 17CA0405, Colorado Court of Appeals (April 5, 2018), because the insured would have to prove bad faith in an action against his primary insurer based on the insurer’s refusal to settle, the primary insurer argued that the excess insurer must also plead and prove such bad faith. The court surmised:

    “Suppose that an injured party sues a person who has both primary and excess insurance covering the claim. The injured party offers to settle for an amount within the primary coverage limit. The primary insurer exercises its contractual, discretionary right not to accept the settlement. But the excess insurer, perhaps spooked by the prospect of a judgment exceeding the primary coverage limit, pays the settlement demanded by the injured party. When the excess insurer sues the primary insurer to recover the amount paid in settlement, claiming that the primary insurer should have accepted the settlement offer, what sort of claim may the excess insurer assert? And must the excess insurer plead and prove that the primary insurer acted in bad faith in declining to settle?”

    FACTS

    Preferred Professional Insurance Company (PPIC) is the excess insurer that paid the settlement. The Doctors Company (TDC) is the primary insurer that declined to settle. But while PPIC purported to bring a claim of equitable subrogation against TDC, it disavowed any intent to proceed on the legal theory that it stands in the insured’s shoes. And it did not plead or attempt to show that TDC acted in bad faith. Instead, PPIC’s theory is that general equitable principles allow it to recover from TDC apart from any rights of the insured under his contract with TDC, and that it need not plead or prove that TDC acted in bad faith.

    The district court accepted PPIC’s theory and granted summary judgment in its favor.

    BACKGROUND

    The undisputed facts establish that the parties both held separate professional liability policies for the same insured, Dr. Rupinder Singh. A medical malpractice suit was filed against Dr. Singh and other parties.

    TDC defended Dr. Singh in the suit as required by its primary liability policy. The policy provided coverage up to a limit of $1 million. TDC’s policy required Dr. Singh’s consent before accepting any settlement offers, but TDC retained the discretion whether to accept or reject any such offers.

    PPIC’s insurance policy was an “excess policy,” which would cover any losses that exceeded TDC’s $1 million coverage up to an additional $1 million. As an excess insurer, PPIC did not have any duty to defend Dr. Singh in the suit.

    The plaintiff in the medical malpractice suit offered to settle the case with Dr. Singh for $1 million. Dr. Singh conveyed his desire to accept the settlement offer to both insurers, but TDC declined the plaintiff’s offer. PPIC told Dr. Singh he should accept, and it paid the $1 million settlement.

    On appeal, TDC contended that the district court erred as a matter of law. TDC asserted that, under well-established Colorado insurance law, an equitable subrogation claim brought by an excess insurer against the primary insurer to recover the amount paid in settlement can only be derivative of the insured’s rights.

    ANALYSIS

    Subrogation is a creature of equity having for its purpose the working out of an equitable adjustment between the parties by securing the ultimate discharge of a debt by the person who in equity and good conscience ought to pay it. Equitable subrogation arises because it is imposed by courts to prevent unjust enrichment.

    In insurance cases, equitable subrogation is often used as a loss-shifting mechanism, dependent on the rights, obligations, and duties between the parties as set forth in the insurance policy. Thus, a subrogated insurer has no greater rights than the insured, for one cannot acquire by subrogation what another, whose rights he or she claims, did not have.

    Under the terms of an insurance policy, a primary insurer, to the exclusion of the insured, may have complete discretion to accept or reject settlement offers. However, in deciding whether to accept a settlement offer, the insurer must give at least as much consideration to the insured’s interests as it does to its own.

    If Dr. Singh had a contractual right to bring a tort claim against TDC for breach of the insurance contract for alleged bad faith failure to settle. In that claim, Dr. Singh would be required to prove that TDC acted in bad faith.

    Conversely, Dr. Singh could not recover against TDC for any liability he suffered if TDC’s settlement decisions were shown to have been objectively reasonable. A primary insurer does not guarantee that its decision as to settlement will end advantageously, but it owes to its insured the duty to exercise an honest discretion at the risk of liability beyond its policy limits. Premising liability on an insurer’s negligence for failure to settle reasonably reflects the quasi-fiduciary relationship that exists between the insurer and the insured by virtue of the insurance contract, which necessarily imposes a correlative duty on the part of the insurance company to ascertain all facts in making a decision to settle.

    It has often been said that the equitable doctrine of subrogation places the subrogee in the precise position of the one to whose rights and disabilities he is subrogated. Based on this principle the excess insurer and subrogee stands in the same place as the insured.

    Whether derivatively based or not, an equitable subrogation claim allows for recovery only against obligated parties. Conversely, equity will not impose on someone an obligation not otherwise required by law. Equitable subrogation is not an unchecked principle of conscience that allows recovery whenever it seems fair or right to make the defendant pay for the subrogor’s losses that defendant is not legally obligated to pay.

    PPIC presented no good reason for ignoring the parties’ rights under the insurance contract. To the contrary, if PPIC were allowed to seek recovery without a showing that TDC acted in bad faith in ordinary circumstances such as alleged here, an excess carrier could accept a pretrial settlement offer within the primary insurer’s policy limits, knowing it could collect reimbursement from the primary carrier for whatever settlement amount it, as the “equitable subrogee,” paid. This outcome would occur regardless of whether the primary carrier had fulfilled its contractual duty to its insured to make settlement decisions reasonably and in good faith.

    Were the Court of Appeal to accept PPIC’s argument that equitable subrogation applies where the excess insurer shows merely that it “had a reasonable, good faith belief that it should make the payment to settle the claim,” the Court of Appeal would subvert a primary insurer’s contractual right to control the insured’s case by effectively giving control of settlement decisions to the excess insurer. That would incentivize excess carriers to settle claims within primary policy limits without regard to damages or liability, and with no risk to them.

    Without an assertion that TDC acted in bad faith, PPIC’s equitable subrogation claim is not legally viable. Therefore, because PPIC’s claim for recovery is not supported by law, the Court of Appeal reversed the district court’s order granting summary judgment for PPIC and remanded the case for entry of judgment of dismissal in TDC’s favor.

    ZALMA OPINION

    An excess insurer does not want the obligation of the primary insurer to defend the insured. It only wants to become involved if the exposure faced by the insured exceeds the primary limits. In this case the offer was for the primary limit that the primary did not want to accept. The excess, without evidence that the refusal was in bad faith, paid out its limit and then sued the primary insurer without cause. The Court of Appeal refused to subvert the primary insurer’s rights to control defense and settlement.


    © 2018 – Barry Zalma

    This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

     

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    Risk Transfer Devices Don’t Always Work

    A Brief Opinion Must Be Honored

    Landlords engage in risk transfer by requiring a tenant to insure the property leaving the responsibility for damages to the structure or bodily injury occurring to people on the premises. Because they don’t trust the tenant the landlord will often buy its own insurance to protect against contingent losses.

    In Jedak Corporation d/b/a Razzle’s v. Seabreeze Office Associates, LLC and Neil Hunter, Case No. 5D16-3777, District Court of Appeal of The State Of Florida Fifth District (April 13, 2018) the parties disputed the obligations under a written commercial lease agreement.

    Seabreeze Office Associates, LLC (“Landlord”), obtained summary judgment for damages arising from the breach of contractual provisions requiring that Appellant, Jedak Corporation d/b/a Razzle’s (“Tenant”), to indemnify and provide insurance coverage to protect Landlord from losses arising from Tenant’s occupancy of the premises. Although Tenant raises numerous issues on appeal, the Court of Appeal only needed to address one, which it conclude is dispositive of the dispute.

    The Court of Appeal cited the parties to Cas. Indem. Exch. v. Penrod Bros., 632 So. 2d 1046, 1047 (Fla. 3d DCA 1993) where the landlord’s insurer fully covered a loss, the landlord was found to suffer no compensable damages arising from tenant’s breach of contract.

    Because the Landlord did not incur any damages that were caused by the breach of the particular lease provisions dealing with insurance, the lower court erred in granting summary judgment in favor of Landlord and in denying summary judgment in favor of Tenant.

    Accordingly, the Court of Appeal reversed and remanded the cause with directions that summary judgment be entered in favor of Tenant.

    ZALMA OPINION

    The Court of Appeal resolved the issues in three paragraphs and probably could have done it with one. Since lawyers and insurers are faced with reviewing court opinions that run dozens of pages before getting to the point Chief Justice Cohen and justices Palmer and Torpy must be commended for their brevity and succinctness. Those of us who read appellate decisions thank you all.


    © 2018 – Barry Zalma

    This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

     

     

     

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    Insurance Fraud & Weapons to Defeat Fraud In Two Volumes

    Insurance Fraud

    A Manual for Insurance Claims Professionals, Insurance Fraud Investigators and Insurance Coverage Lawyers

    Insurance fraud continually takes more money each year than it did the last from the insurance buying public. No one knows the actual amount with any certainty because most attempts at insurance fraud succeed. Estimates of the extent of insurance fraud in the United States range from $87 billion to more than $300 billion every year.

    Insurers and government backed pseudo-insurers can only estimate the extent they lose to fraudulent claims. Lack of sufficient investigation and prosecution of Product Detailsinsurance criminals is endemic. Most insurance fraud criminals are not detected. Those that are detected do so because they became greedy, sloppy and unprofessional so that the attempted fraud becomes so obvious it cannot be ignored.

    No one will ever be able to place an exact number on the amount lost to insurance fraud. Everyone who has looked at the issue knows – whether based on their heart, their gut or empirical fact determined from convictions for the crime of insurance fraud – that the number is enormous.

    When insurers and governments put on a serious effort to reduce the amount of insurance fraud the number of claims presented to insurers and the pseudo-government-based or funded insurers drops logarithmically. Since the appointment of Attorney General Sessions, the effort to stop insurance fraud against Medicare and Medicaid has increased.

    Insurance Fraud & Weapons to Defeat Fraud - Volume Two: A Manual for Those Working to Defeat Insurance Fraud by [Zalma, Barry]This book contains appellate decisions regarding insurance fraud from federal and state appellate courts across the country and full text of many insurance fraud statutes.

    It is available as both a legal research tool and a product to assist insurers, insurance company personnel, independent insurance adjusters, special investigation unit investigators, state fraud investigators and insurance lawyers to become effective persons involved in the attempt to defeat or reduce the effect of insurance fraud.

    Volume One available as a Kindle book and a paperback.

    Volume Two Available as a Kindle book and a paperback


     

    Barry Zalma, Inc.

    © 2018 – Barry Zalma

    I have placed books on Amazon.com as both e-books and as paperbacks to explain, in fiction based on reality, information to help everyone understand that insurance fraud can be defeated by a thorough investigation.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

    Share
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    Zalma’s Insurance Fraud Letter

    The Essential Resource For The Insurance Fraud Professional  

     April 15, 2018

    In 1973 an insurance adjuster, frustrated by his failure to prove that a bar owner had destroyed his bar by arson with the intent to defraud the insurer, was responsible for the creation of the tort of bad faith in first-party claims. The California Supreme Court, in Gruenberg v Aetna Insurance Co., 9 Cal 3d 566, 108 Cal Rptr 480 (1973), concluded that unfounded actions by an investigator which caused an insured to be arrested for arson required implementation of the new tort of bad faith.

    Zalma’s Insurance Fraud Letter, Volume 22, No. 8


    • Ethics & the Insurance Fraud Investigation
    • A Fraud Decision
    • Creative Criminal Gets 57 Months in Prison
    • Please, Say It Isn’t So, DidCalifornia Steal More than $1 Billion from the Federal Government?
    • How Much Does Fraud Take From California?
    • Man Bites Dog – Insurer Gets Judgment Against Medical Provider for Fraud
    • Good News From the Coalition Against Insurance Fraud
    • Health Insurance Fraud Convictions
    • Other Insurance Fraud Convictions
    • Zalma Books

     Now available as Kindle or paperback books are the following non-fiction texts for insurance professionals:

    • The Compact Book on the Commercial Property Insurance Policy
    • Insurance Fraud & Weapons to Defeat Insurance Fraud – Volumes One and Two
    • Rescission of Insurance
    • Ethics for the Insurance Professional
    • Random Thoughts on Insurance – A Collection of Blog Posts from Zalma on Insurance)
    • The Insurance Examination Under Oath
    • The Compact Book on Adjusting Liability Claims
    • The Compact Book on Adjusting Property Claims
    • The California Fair Claims Settlement Practices Regulations.
    • The California SIU Regulations.
    • Passover Seder for Americans” An All English – Easy to Perform – Passover Seder Paperback

    Now available as Kindle or paperback books are the following fiction pieces on insurance matters:

    • Heads I Win, Tails You Lose
    • Arson for Profit
    • Murder & Old Lace
    • Murder and Insurance Fraud Don’t Mix
    • Candy & Able – Murder for Insurance Money
    • The Runt – a short story

    See all Barry Zalma Books Available on Amazon here.


    Zalma on Insurance – A Blog

     The most recent posts to the daily blog, Zalma on Insurance, are available at  http://zalma.com/blog.

    Check in every day for a case summary at http://zalma.com/blog:

    Zalma’s Insurance 101

    I have completed a video blog called that consist of 1022 three to four minute videos starting with “What is Insurance” and moving forward to insurance fraud investigations explaining the basics of insurance and insurance claims handling in a painless fashion that can be viewed every morning with the first cup of coffee at  Zalma’s Insurance 101.

    The videoblog is adapted from my book, Insurance Claims: A Comprehensive Guide available at the Zalma Insurance Claims Library.

    Some of the 1,022 videos follow: If you start at Volume 1 at the bottom of the blog’s first page and view one or two videos a day you will have approximately 12 to 24 hours of training a year until you get to the last video.

     Advertise

    Are you a lawyer, law firm, independent insurance adjuster or insurer who would you to promote yourself or your firm to more than 200 daily visits by insurance professionals or the more than 2000 subscribers to ZIFL?

    If you are, an ad on the blog Zalma on Insurance or Zalma’s Insurance Fraud Letter, to such a selective audience of insurance professionals and management can be more effective than any other form of advertising.

    For only $100 a month on the blog or $100 an issue on ZIFL your ad will be permanent and effective.

    Regards,
    Barry Zalma  

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    The Compact Book on Commercial Property Insurance Policy:

    The Means to Effectively Acquire a Commercial Property Policy and Present and Collect a First Party Property Insurance Claim

     

    The Compact Book on Commercial Property Insurance Policy : The Means to  Effectively Acquire a Commercial Property Policy and Present and Collect a First Party Property Insurance Claim by [Zalma, Barry]Insurance is a contract that requires an offer to provide insurance to a person or entity, acceptance of the offer and payment of consideration called a premium. Insurance is defined by California Insurance Code Section 22, as: “a contract whereby one undertakes to indemnify another against loss, damage, or liability arising from a contingent or unknown event.” As such it is a special type of contract because it is limited to provide protection only from a contingent or unknown event. Any loss to be covered must be fortuitous, accidental, contingent or unknown. An intentional act can never be insured.

    The book explains what insurance is, how it is acquired, how to read and understand it, what to do when a loss occurs and how to successfully present and collect a claim to indemnify the insured from all losses incurred.


     

    Barry Zalma, Inc.© 2018 – Barry Zalma

    I have placed books on Amazon.com as both e-books and as paperbacks to explain, in fiction based on reality, information to help everyone understand that insurance fraud can be defeated by a thorough investigation.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

    Share
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    A Mule Drawn Cart is Neither an Auto nor a Trailer

    Win Some – Lose Some

    Insurance contracts need to be written in clear and unambiguous language that can be understood by anyone with a Fourth Grad education. Preparing an insurance contract is often difficult and by not being absolutely clear can cost an insurance company money.

    In Georgia Farm Bureau Mutual Insurance Company v. Claxton et al., A18A0737, Court of Appeals of Georgia (April 2, 2018) Georgia Farm Bureau Mutual Insurance Company (“Georgia Farm Bureau”) appealed from the trial court’s denial of its motions for summary judgment in a declaratory judgment action it filed against Dena Claxton and Carl Lowery. Claxton and Lowery, both of whom hold insurance policies issued by Georgia Farm Bureau and were involved in a motor vehicle accident. They each sought coverage under their respective policies.

    FACTS

    The largely undisputed record before the court reflects that Lowery was operating a mule-drawn carriage in a Christmas parade organized by the City of McRae. Claxton was riding in the carriage. After the parade had ended, Lowery and Claxton were riding the carriage back to Lowery’s motor vehicle when the carriage was struck in the rear by a motor vehicle operated by a third party, resulting in injuries to Claxton.

    Lowery testified at deposition that the carriage he was driving was designed to be pulled by one horse or mule. He further stated that the carriage was designed to only be pulled by an animal and could not be hooked up to a motor vehicle. The carriage was being pulled by a mule during the parade and at the time of the accident. Lowery did not charge Claxton a fee to ride in the carriage.

    Following the accident, Claxton filed suit against Lowery. In that action, which is separate from this case, she sought damages from Lowery arising out of the accident.

    Lowery, an insured of Georgia Farm Bureau, claimed the policy covers any liability he may have for Claxton’s injuries. In the same action, Claxton also claims that two uninsured motorist (“UM”) policies she holds with Georgia Farm Bureau also provide coverage for her injuries arising from the accident.

    THE COVERAGES

    The liability policy issued to Lowery contains an exclusion that Georgia Farm Bureau claims shields it from liability under the insurance contract. The exclusion provides that the policy “does not apply to . . . [t]he use of any livestock or other animal, with or without an accessory vehicle, for providing rides to any person for a fee or in connection with or during a fair, charitable function, or similar type of event[.]” The policy defines “livestock” to include mules.

    The UM policies issued to Claxton define “uninsured motor vehicle” to mean a “land motor vehicle or trailer of any type.” The policy defines “trailer” to mean a “vehicle designed to be pulled by a . . . [p]rivate passenger auto [or] [p]ickup or van.”

    ISSUES

    Georgia Farm Bureau first argues that the trial court erred by denying its motion for summary judgment with regard to its claim that the exclusion for livestock in Lowery’s policy applies and that Georgia Farm Bureau has no liability to him under his policy.

    The trial court’s order focused specifically on the phrase “for a fee,” determining that because neither Claxton nor any other party had paid Lowery a fee to drive the carriage the exclusion did not apply. The actual terms of the policy provide an exclusion where the insured provides rides “for a fee or in connection with or during a fair, charitable function or similar type of event.” (emphasis supplied by the court) The trial court’s omission of this small but critical word caused it to err in denying summary judgment on these grounds. However, that does not end the issue.

    ANALYSIS

    The Mule Drawn Cart

    It is undisputed that Claxton was utilizing a mule to draw the carriage at all relevant times, including during the parade and as he and Claxton were returning to Lowery’s vehicle at the time of the accident. However, it remains disputed whether the parade constitutes a “fair, charitable function, or similar type of event.”

    The construction of an insurance contract is a matter of law for the court. When an exclusion is unambiguous and capable of but one reasonable construction, the trial court must expound the contract as made by the parties. A word or phrase is ambiguous when it is of uncertain meaning and may be fairly understood in more ways than one.

    The Merriam-Webster Dictionary defines “similar” variously to mean “having characteristics in common” and “alike in substance or essentials.” Whether one thing is similar to another thing is necessarily a multi-faceted, qualitative, and subjective determination, and it is no less so in determining whether the parade at issue here is similar to a fair or charitable function. In brief, whether something is similar to something else is almost inherently ambiguous.

    Because any ambiguities in the contract are strictly construed against the insurer as drafter of the document and any exclusion from coverage sought to be invoked by the insurer is likewise strictly construed. The court of appeal was unable to conclude that, as a matter of law, the Christmas parade was an event similar to a fair or charitable function.

    Whether Lowery was providing a ride in connection with the event at the time of the accident is also a question of fact. The record reflects that the parade had ended at the time of the accident and that Lowery and Claxton were riding the carriage back to Lowery’s vehicle. As with the determination of whether the parade constitutes a “similar type of event” contemplated by the insurance policy, whether Lowery’s act of driving back to his vehicle was taken in connection with the parade is a question of fact for a jury to resolve.

    In light of the foregoing, summary adjudication of Georgia Farm Bureau’s claim in regard to Lowery’s policy is not appropriate.

    The UM/UIM Claim

    Georgia Farm Bureau next argues that the trial court erred in denying its motion for summary judgment in regard to its coverage obligations under Claxton’s UM policies. Here, the record before us makes clear that the carriage Claxton was riding in was not a motor vehicle under the terms of her UM policy. She claimed the cart was a “trailer” as defined in her UM policy.

    However, the definition of the term “trailer” in the UM policies sets a clear outer boundary relevant to the issues in this case: in order to qualify as a trailer that can be considered an uninsured motor vehicle, the vehicle must be designed in such a way that it can be pulled by private passenger autos, pickups, or vans.

    The undisputed testimony in the record shows that the carriage Claxton was riding in was designed only to be drawn by an animal and that it specifically could not be attached to or pulled by a motor vehicle. Thus, there is no genuine issue of fact as to whether the carriage constituted a trailer under the terms of Claxton’s UM policies, and summary judgment was improperly denied by the trial court as to Georgia Farm Bureau’s coverage obligations under those policies.

    ZALMA OPINION

    If Georgia Farm Bureau wished to avoid liability for a mule draw cart in a parade would have been to add the word “parade” to the exclusion’s limitation to an animal drawn action in a “fair or charitable function” and not rely on the statement: “or similar type of event” language that was vague and ambiguous on its face.


    © 2018 – Barry Zalma

    This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

     

     

     

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    True Insurance Crime Stories

    Insurance Crime Stories from an Insurance Fraud Expert

    Insurance fraud is a major crime taking as much as $300 billion every year from the insurance public. Understanding insurance fraud is important to the public and the people involved in the insurance industry. To protect the guilty I have fictionalized some cases in which I was personally involved dealing with the crime of insurance fraud. They have been published at Amazon.com as Kindle and as paperback books. Sometimes the fraud succeeds and sometimes it does not.

    I hope you enjoy these, and other books I have written that are summarized at http://zalma.com/zalma-books/.

    M.O.M. & The Taipei Fraud: How an Experienced Adjuster Defeated a $7 Million Fake Burglary Claim

    The problem is that each option the insurers have available have a down side and Feng is represented by a lawyer who has proved highly successful in suing insurers and collecting large compensatory and punitive damage awards. Since the claims exceed $6 million dollars, he can expect, applying the law set out by the U.S. Supreme Court in State Farm Mut. Automobile Ins. Co. v. Campbell and BMW of North America, Inc. v. Gore as much as $60 million in punitive damages. So I need to explain to the insurers that they face an exposure anywhere from their policy limits to ten times the policy limit. They need the courage of their convictions to reject this major claim.

    Available as a paperback.

    Available as a Kindle book.

    Candy and Abel: Murder for Insurance MoneyProduct Details

    How a young lawyer and wise old investigator defeated an attempt at life insurance fraud.

    Available as a Kindle Book.

    Available as a paperback.

    Murder And Insurance Fraud Don’t Mix

    My name is Marion Orpheus Montague. My friends, and some enemies, call me “MOM.” It is not a designation of my ability to nurture my clients. I have never been, nor will I Product Detailsever be, maternal. I accept the play on my initials because it causes adversaries to underestimate me.

    I am 66-years-old. My grayish blond hair is thin and my full beard is a bit scraggly. My face is round and often tinged with red. My nose is full, my eyes green and my cheeks bulge out to the sides trying to emulate the belly that precedes every other part of my body as I walk. People see me and do not believe that I am a private investigator. Seeing me they often think that I am on leave from my winter work as a Macy’s Santa Claus.

    I like being underestimated. It makes my job as an investigator easier.

    See how a fake robbery at a jewelry store led to murder and prison.

    Available as a Kindle book.

    Available as a paperback

    Murder & Old Lace: Solving Murders Performed for Insurance Money

    Product Details

    When the women first met – 20 years ago at a Santa Monica health spa – Magogassasanian appeared taken with Gogolivesky. The women moved Alvarado into an apartment, then started applying for life insurance policies on him. They jointly took out four policies, each as 50% beneficiaries in addition to the individual policies they bought from my client. Gogolivesky also took out three more policies on her own while Magogassasanian only took out a single individual policy on Earnest. The two women pocketed nearly $6,000,000 in insurance benefits on Alvarado alone and $4,000,000 in insurance benefits on Earnest. They also recovered a total of $5,000,000 on the other six old men they killed.

    Available as a Kindle book.

    Available as a paperback.

    Arson for Profit: How an Attempt to use Arson & Fraud to Fund Terrorism Failed

    This story is based on a real case involving a member of Russian/Armenian organized crime, real insurers, investigators, lawyers, fire fighters, and insurance brokers. The names, descriptions, and identities of the people involved have been changed to protect both the guilty and the innocent. The report to the US Senate, after this case was decided by the California Courts, reveal that the threats made on MOM and lawyer Hazan were real and they are lucky that the threats were never fulfilled. The person identified in this story as Levonyan was described to the US Senate as the leader of a Russian/Armenian organized crime ring. It is important to take seriously threats from criminals. Insurance fraud and arson-for-profit are not victimless crimes. They are crimes of violence that cost everyone who lives in the U.S.]

    Available as paperback.

    Available as a Kindle Book.


     

    Barry Zalma, Inc.© 2018 – Barry Zalma

    I have placed books on Amazon.com as both e-books and as paperbacks to explain, in fiction based on reality, information to help everyone understand that insurance fraud can be defeated by a thorough investigation.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

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    Falling Down Is Not a Motor Vehicle Accident

    Nexus With Vehicle and Injury Required

    Uninsured motorist (UM) coverage and Personal Insurance Protection (PIP) coverage is designed to protect an insured person against the risk of injury by an uninsured person. If an uninsured operator of an automobile causes injury to a person who has UM or PIP coverage the person with UM or PIP coverage can treat his insurer as if it was the insurer of the uninsured motorist. The coverage, of course, is limited to an accident that has a direct nexus to a vehicle.

    In Gino Sulpizi v. LM General Insurance Company, Docket NO. A-4255-16T4, Superior Court Of New Jersey Appellate Division (April 4, 2018) Plaintiff Gino Sulpizi appealed after his insurer obtained a summary judgment of no coverage.

    FACTS

    Plaintiff, a Pennsylvania resident, primarily resides in Philadelphia. He owns a vehicle that has a Pennsylvania automobile insurance policy provided by LM Insurance. Plaintiff also owns a vacation home in Brigantine, New Jersey.

    On June 30, 2015, plaintiff was at his vacation home in New Jersey when he decided to mail a letter. He drove his car from his home and parked across the street from a mailbox. Plaintiff exited his vehicle and began to walk across the street towards the mailbox. When he was halfway across the opposite lane, he saw a pickup truck approaching him and he “scurried over” to the side of the road. Plaintiff then tripped on the curb and fell near the mailbox. He alleges he suffered personal injuries as a result of the fall.

    His Pennsylvania automobile policy issued by LM Insurance provided $5000 in PIP medical benefit coverage. Plaintiff submitted a PIP claim to LM Insurance for benefits exceeding $5000, contending he was entitled to additional coverage under the Deemer statute that makes an out of state policy a New Jersey policy if incident occurs in New Jersey. LM Insurance denied the claim because plaintiff was injured as a pedestrian and not while using his vehicle.

    Thereafter, plaintiff filed a declaratory judgment action seeking $250,000 in New Jersey standard PIP benefits under the Deemer statute. On cross-motions for summary judgment, the trial court granted summary judgment to LM Insurance and denied plaintiff’s request for summary judgment.

    ANALYSIS

    The Deemer statute generally requires an insurer, authorized to do business in New Jersey, to provide PIP coverage for policies sold outside of New Jersey when the insured motor vehicle is “used or operated” in New Jersey.

    The Deemer statute provides that out-of-state policies within its ambit are automatically construed as New Jersey policies when the covered vehicle is involved in a New Jersey accident. Specifically, the question is whether the Deemer statute requires coverage for a claim involving a pedestrian injured after parking his or her car and while walking across the street.

    After reviewing the plain language of the statute and the case law discussing the terms “use” and “operation[,]” the court noted that the Deemer statute demanded a “‘substantial nexus’ between that out-of-state vehicle and the accident for which benefits are sought.

    The appellate court affirmed the order granting summary judgment in favor of LM Insurance. Plaintiff never came into contact with the truck. Instead, he was injured when he moved out of the way, tripped, and fell. Thus, there was no nexus between plaintiff’s use or operation of his vehicle and his injuries.

    ZALMA OPINION

    When a person is injured it is natural to seek payment from whoever is responsible for the injury. Mr. Sulpizi attempted to put the blame on the person driving the truck he scurried away from while crossing the street. He never came in contact with the vehicle and tripped over the curb. Being clumsy after leaving a car is not an auto insurance loss.

     


    © 2018 – Barry Zalma

    This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

     

     

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    “Random Thoughts on Insurance”

     Digests from Barry Zalma’s Blog: Zalma on Insurance

    Volume V: Digests from Barry Zalma’s Blog: ‘Zalma on Insurance’”

    Product Details

    Since 2010 I have been writing a blog post at least five days a week.

    After more than 50 years acting as a claims person and insurance coverage lawyer I enjoy reading court decisions concerning insurance. The idea of this blog is to find new cases that are interesting to me and then write a summary. Some of the cases reviewed will be important. Some may be of first impression. Others will be totally unimportant. All will be interesting.

    The case digests and articles in this book, and the four preceding books, summarize cases published by courts of the various states and the United States. The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

    Available as a Kindle book.

    Available as a paperback.

    Volume IV

    After more than 50 years acting as a claims person and insurance coverage lawyer I enjoy reading court decisions concerning insurance. The idea of this blog is to find new cases that are interesting to me and then write a summary. Some of the cases reviewed will be important. Some may be of first impression. Others will be totally unimportant. All will be interesting.

    The case digests and articles in this book summarize cases published by courts of the various states and the United States. The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

    Total Volume IV Available as a Kindle Book

    2014-2015 Available as a paperback

    2014-2015 Available as a Kindle Book

    Volume III for the period from August 2013 to February 2015

    Since 2010 I have been writing a blog post at least five days a week. Random Thoughts on Insurance Volume III: From Barry Zalma's Blog - "Zalma on Insurance" for the period from August 2013 to February 2015This book is a collection of those posts that reveal my interest in insurance case law. Some of the cases reviewed were important. Some were of first impression. Others will be totally unimportant. All were interesting to me and I hope are interesting to the reader.

    Available as a Kindle book.

    Available as a paperback.

    Volume II: Articles from August 2012 – August 2013

    Since 2010 I have been writing a blog post at least five days a week. This book is a collection of those posts that reveal my interest in insurance case law. Some of the cases reviewed were important. Some were of first impression. Others will be totally unimportant. All were interesting to me and I hope are interesting to the reader.

    Available as a Kindle book.

    Available as a paperback.

    Volume I

    Case Digests from Barry Zalma’s blog: “Zalma on Insurance”

    Since 2010 I have been writing a blog post at least five days a week. This e-book is a collection of those poRandom Thoughts on Insurance - Volume One: Case Digests from Barry Zalma's blog: "Zalma on Insurance"sts that reveal my interest in insurance case law. Some of the cases reviewed were important. Some were of first impression. Others will be totally unimportant. All were interesting to me and I hope are interesting to the reader. This is the first of Five Volumes.

    Available as a Kindle Book.

    Available as a paperback.


     

    Barry Zalma, Inc.© 2018 – Barry Zalma

    I have placed books on Amazon.com as both e-books and as paperbacks to explain, in fiction based on reality, information to help everyone understand that insurance fraud can be defeated by a thorough investigation.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

    Share
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    Forge a Certificate of Insurance – Guilty of Crime

    Certificate of Insurance Has Legal Efficacy

    Although issued by insurance agents with alacrity, Certificates of Insurance (COA) are important documents relied upon by those who receive them to provide comfort that the person they are dealing with is appropriately insured. When someone fails to obtain an accurate COA or alters a legitimate COA and forges the document to make it state the coverages falsely that person is subject to criminal prosecution.

    In State of Washington v. Stacy Ann Bradshaw, No. 75853-5-I, Court of Appeals of the State of Washington Division One (April 9, 2018) the Court of Appeals was asked to determine if there was sufficient evidence to support a charge under the current forgery statute. To support the charge the State needed to prove that the allegedly altered written instrument had “legal efficacy.” Stacy Ann Bradshaw (Bradshaw), an escrow agent was convicted of forgery for altering a certificate of insurance to make it appear she had enough liability insurance to cover a transaction she had been hired to handle

    FACTS

    In 2014, Bradshaw was a licensed escrow agent and the owner of North Sound Escrow. By law, an escrow agent must maintain several types of liability insurance. Bradshaw had coverage for crime as well as for errors and omissions through the insurance firm USI Kibble & Prentice. The limits were $1 million per claim.

    In February 2014, Bradshaw was retained as the escrow agent for the sale of commercial property for the price of approximately $1.4 million. Umpqua Bank was the lender for one of the parties. Umpqua asked Bradshaw for a copy of her insurance information. Bradshaw obtained a “Certificate of Liability Insurance” from Kibble & Prentice showing her limits of $1 million. She gave Umpqua a copy of the certificate that was altered to represent that Bradshaw had coverage limits of $2 million. Umpqua noticed the alterations and contacted both Kibble & Prentice and the Department of Financial Institutions, the agency that regulates escrow agents. This led to the prosecution of Bradshaw on one count of forgery who was convicted and sentenced her to 40 hours of community service, $3,600 in financial restitution, and 6 months of community supervision.

    Bradshaw appealed.

    ANALYSIS

    Evidence is sufficient to support a conviction if, viewed in the light most favorable to the prosecution, it permits a rational trier of fact to find the essential elements of the crime beyond a reasonable doubt. At common law, forgery was the act of falsely making or materially altering, with intent to defraud, a writing which, if genuine, might apparently be of efficacy or the foundation of legal liability.

    Legislation revising the forgery statute in 1975 removed the particularized list of categories of items susceptible to forgery. The current forgery statute simply prohibits the forgery of a “written instrument.”

    At Bradshaw’s trial, the only issue was whether the certificate of insurance was a “written instrument.” A written instrument is broadly defined in the current statute as (a) Any paper, document, or other instrument containing written or printed matter or its equivalent; or (b) any access device, token, stamp, seal, badge, trademark, or other evidence or symbol of value, right, privilege, or identification. [RCW 9A.60.010 (7).] This definition was intended to continue the common law requirement that the instrument be something which, if genuine, may have legal effect.

    Public Record

    The certificate holder named on Bradshaw’s certificate of liability insurance is the Washington State Department of Financial Institutions. The certificate was filed with the department as evidence that Bradshaw was in compliance with coverage requirements. The trial court had no problem determining that the certificate has legal efficacy as a public record.

    The former statute explicitly recognized that any “paper on file in any public office” is a writing susceptible to forgery. [Former RCW 9.44.020 (1909).] Bradshaw claimed, however, that to meet the requirement of legal efficacy as a public record, the written instrument must be issued by a government agency.

    Forgery covers virtually every kind of instrument which has an effect on private or public rights.

    This is not a case where an altered document found its way into an agency file accidentally. The certificate had material significance to the department. As part of the licensing process, an escrow agent must submit proof of financial responsibility to the department, including a fidelity bond providing coverage in the aggregate amount of one million dollars. To demonstrate compliance with the requirement for a fidelity bond, the applicant is required by regulation to provide the department with a certificate of insurance that includes the aggregate amount of coverage. Maintaining such insurance is a condition precedent to the escrow agent’s authority to transact escrow business in this state.

    In short, the record shows that Bradshaw’s certificate of insurance was a type of document required by law to be filed and necessary or convenient to the discharge of the duties of the department. In view of the regulatory scheme, the trial court reasonably found that a certificate of insurance coverage for an escrow agent is a written instrument, the alteration of which supports a forgery charge because it is a public record with legal efficacy.

    Bradshaw’s certificate of insurance, before alteration, was genuine. It was a representation of the limits of her coverage. The trial court correctly reasoned that if Umpqua had suffered damages as a result of the alteration and had sued Bradshaw for fraudulent misrepresentation, the original unaltered document would be a foundational piece of evidence of Bradshaw’s liability. And this is true even though the certificate states on its face that it “is issued as a matter of information only and confers no rights upon the certificate holder.” The court heard testimony that insurance certificates are typically used by insureds as evidence of their current policies and limits and that Bradshaw’s certificate provided such evidence to the department.

    The Court of Appeals concluded that sufficient evidence supported the trial court’s determination that Bradshaw’s certificate of insurance had legal efficacy as a foundation for legal liability.

    Rule of Lenity

    Finally, Bradshaw invokes the rule of lenity to argue for reversal of her conviction. The rule of lenity operates to resolve statutory ambiguities in favor of a criminal defendant. The forgery statute provides a fair warning that it applies to Bradshaw’s conduct. She falsely altered a written instrument with intent to injure or defraud.

    The requirement that the written instrument have legal efficacy is a limitation on the statutory definition of forgery, not an expansion of it. Because Bradshaw’s conduct is clearly covered by the statute, the rule of lenity is not applicable.

    ZALMA OPINION

    Bradshaw, to save some premium by increasing her limits of liability, became a felon and destroyed her ability to practice as an escrow officer. Although the criminal punishment is minimal with no jail time the effect on Brandshaw’s career explains why she tried to change the conviction on appeal. The COA is an important document and insurance professionals should be ready to report anyone who tries to modify it for purposes outside the true reason for the COA.


    © 2018 – Barry Zalma

    This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

     

     

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    “HEADS I WIN, TAILS YOU LOSE”

    Fictionalized Real Insurance Crime Stories

    Product DetailsA collection of columns originally published in the magazines “Insurance Journal,” “Insurance Week,” and “The John Cooke Insurance Fraud Report” insurance trade publications serving the insurance community in the United States that have been updated and revised.

    The title, “Heads I Win, Tails You Lose” is meant to describe insurance fraud as it works in the Unites States. It means that whenever a person succeeds in perpetrating an insurance fraud everyone who buys insurance is the loser.

    Available as a Kindle Book.

    Available as a paperback.


     

    Barry Zalma, Inc.© 2018 – Barry Zalma

    I have placed books on Amazon.com as both e-books and as paperbacks to explain, in fiction based on reality, information to help everyone understand that insurance fraud can be defeated by a thorough investigation.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

    Share
    Posted in Zalma on Insurance | Comments Off on “HEADS I WIN, TAILS YOU LOSE”

    Mother, Don’t Let Your Child Become an Adjuster in Washington State

    Statute Makes Individual Adjuster Liable for Tort of Bad Faith

    The state of Washington, in an attempt to protect consumers, has acted in a way to drive insurers and their employed adjusters out of the state. This case makes it financially dangerous to be an insurance adjuster in Washington state.  I have railed against the tort of bad faith on this blog for several years and the case that follows proves why it should be done away with even if the insured was treated badly.

    In Moun Keodalah and Aung Keodalah, husband and wife v. Allstate Insurance Company, a corporation, and Tracey Smith and John Doe Smith, wife and husband, No. 75731-8-I, Court Of Appeals Of The State Of Washington Division One (March 26, 2018) the Court of Appeals found that an adjuster could be personally liable for tort damages incurred by an insured as a result of what the state found to be bad faith conduct.

    Moun Keodalah, unhappy with Allstate’s treatment of his uninsured motorist claim, sued Allstate and  Tracey Smith, the Allstate insurance adjustor who handled his claim. Washington state statute RCW 48.01.030 imposes a duty of good faith on all persons engaged in the business of insurance, including individual adjusters.

    FACTS

    Keodalah and a motorcyclist collided in April 2007. After Keodalah stopped at a stop sign and began to cross the street in his truck, a motorcyclist struck him. The collision killed the motorcyclist and injured Keodalah. Keodalah had purchased auto insurance from Allstate Insurance Company. Keodalah’s insurance policy provided underinsured motorist (UIM) coverage. The motorcyclist was uninsured.

    The Seattle Police Department (SPD) determined the motorcyclist was traveling between 70 and 74 m.p.h. in a 30 m.p.h. zone. SPD reviewed Keodalah’s cell phone records. They showed that Keodalah was not using his cell phone at the time of the collision.

    Allstate also investigated the collision. Allstate interviewed several witnesses who said the motorcyclist was traveling faster than the speed limit, had proceeded between cars in both lanes, and had “cheated” at the intersection. Allstate hired an accident reconstruction firm, Traffic Collision Analysis Inc. (TCA), to analyze the collision. TCA found that Keodalah stopped at the stop sign, the motorcyclist was traveling at a minimum of 60 m.p.h., and the motorcyclist’s “‘excessive speed'” caused the collision.

    Keodalah asked Allstate to pay him the limit of his UIM policy, $25,000. But Allstate refused. Keodalah sued Allstate, asserting a UIM claim. Allstate designated Smith as its representative. Although Allstate possessed both the SPD report and TCA analysis, Smith claimed that Keodalah had run the stop sign and had been on his cell phone. Smith later admitted, however, that Keodalah had not run the stop sign and had not been on his cell phone. Before trial, Allstate offered Keodalah $15,000 to settle the claim. Keodalah refused and again requested the $25,000 policy limit. The case proceeded to a jury trial.

    At trial, Allstate contended that Keodalah was 70 percent at fault. The jury determined the motorcyclist to be 100 percent at fault and awarded Keodalah $108,868.20 for his injuries, lost wages, and medical expenses.

    Keodalah filed a second lawsuit against Allstate and included claims against Smith. These included IFCA violations, insurance bad faith, and CPA violations. Allstate and Smith moved to dismiss the complaint and the trial court granted the motion in part. It dismissed Keodalah’s claims against Smith and certified the case for discretionary review.

    ANALYSIS

    Bad Faith

    Washington statute RCW 48.01.030 imposes a duty of good faith on “all persons” involved in insurance, including the insurer and its representatives.

    The business of insurance is one affected by the public interest, requiring that all persons be actuated by good faith, abstain from deception, and practice honesty and equity in all insurance matters. Upon the insurer, the insured, their providers, and their representatives rests the duty of preserving inviolate the integrity of insurance.

    A person who violates this duty may be liable for the tort of bad faith. Smith was engaged in the business of insurance and was acting as an Allstate representative. Thus, under the plain language of the statute, she had the duty to act in good faith. And she can be sued for breaching this duty.

    The code’s broad definition of “person” includes both individuals and corporations and does not make any distinction between the duties they owe. Nothing in the statute limits the duty of good faith to corporate insurance adjusters or relieves individual insurance adjusters from this duty. The duty of good faith applies equally to individuals and corporations acting as insurance adjusters.

    Washington courts have expressly stated that the statute does impose a duty of good faith on both the insureds and the insurer. Just as corporate insurance adjusters are representatives, so too are individual employee insurance adjusters.

    RCW 48.01.030 imposes a duty of good faith on corporate and individual insurance adjusters alike.

    The CPA

    The CPA prohibits “[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.”  The CPA serves to deter unfair or deceptive acts or practices, protect the public, and foster fair and honest competition.

    To prevail on a CPA claim, a plaintiff must show (1) an unfair or deceptive act or practice, (2) that act or practice occurs in trade or commerce, (3) a public interest impact, (4) injury to the plaintiff in his or her business or property, and (5) a causal link between the unfair or deceptive act and the injury.

    The CPA itself, the purposes for which it was enacted, and precedent do not support the argument that a CPA claim must be predicated on an underlying consumer or business transaction. The CPA allows “[a]ny person who is injured in his or her business or property by a violation” of the act to bring a CPA claim. Nothing in this language requires that the plaintiff must be a consumer or in a business relationship with the actor.

    Keodalah need not show the existence of a contractual relationship with Smith to establish a CPA claim against her.

    The Court of Appeal concluded that an individual employee insurance adjuster can be liable for bad faith and a violation of the CPA.

    ZALMA OPINION

    Insurance adjusters who are not parties to the contract of insurance cannot breach the covenant of good faith and fair dealing because they are not a party to the contract, except in the State of  Washington. No reasonable person would agree to be an adjuster unless the insurer agrees, in writing, to defend and indemnify the adjuster for any claim or judgment of bad faith made against the adjuster. This opinion will devastate the insurance industry’s ability to retain well trained and experienced adjusters in Washington state.


    © 2018 – Barry Zalma

    This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

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    “The Insurance Examination Under Oath”

    “The Insurance Examination Under Oath”

    Product DetailsThe insurance Examination Under Oath (“EUO”) is a formal type of interview authorized by an insurance contract. It is taken under the authority provided by a condition of the insurance contract that compels the insured to appear and give sworn testimony on the demand of the insurer or find his, her or it claim rejected for breach of a condition. A notary and a certified shorthand reporter are always present to give the oath to the person interviewed and record the entire conversation.

    Available as a Kindle book.

    Available as a paperback.


     

    Barry Zalma, Inc.© 2018 – Barry Zalma

    I have placed books on Amazon.com as both e-books and as paperbacks to explain, in fiction based on reality, information to help everyone understand that insurance fraud can be defeated by a thorough investigation.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

    Share
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    Failure to Exceed SIR Releases the Excess Insurers

    No Cover Available from Excess and Umbrella Policies

    Insurers use a self-insured-retention (SIR) to avoid the expense of dealing with small claims and avoid the expense of defending or indemnifying an insured until the SIR or underlying insurance is exhausted. As a result the excess insurer can charge a small premium because its exposure is limited.

    In City Of Phoenix v. First State Insurance Company, a foreign insurer; No. 16-16767, United States Court of Appeals For The Ninth Circuit (April 4, 2018) the City of Phoenix (“the City”) appealed an adverse summary judgment in favor of First State Insurance Company, Twin City Fire Insurance Company, New England Reinsurance Corporation, and Nutmeg Insurance Company (collectively, “Hartford”) on the City’s declaratory judgment, breach of contract, and bad faith claims, and from the denial of the City’s motion for partial summary judgment.

    FACTS

    The City’s insurance coverage action against Hartford arose from an underlying personal injury and wrongful death lawsuit brought by Carlos Tarazon and his wife. Mr. Tarazon was exposed to asbestos through his work as an underground pipe layer in the City from 1968 to 1993 and died of mesothelioma in 2014. The City settled the Tarazon family’s claims against it for $500,000. The City’s legal defense expenses amounted to over $1,400,000.

    From July 1, 1981 to July 1, 1985, the City was covered by four successive excess liability policies (“Excess Policies”) issued by Hartford, each of which provided $500,000 in liability coverage in excess of a $500,000 self-insured retention (“SIR”). The City also purchased three successive umbrella policies (“Umbrella Policies”) from Hartford, covering periods from July 1, 1981 to July 1, 1984.

    THE POLICY WORDING

    The Excess Policies’ basic insuring agreement states that Hartford “will indemnify the [City] for ultimate net loss in excess of the retained limit [of $500,000.]” “Ultimate net loss” is defined in the Excess Policies to “exclude[] all loss adjustment expenses . . . .” The parties agree that defense costs are “loss adjustment expenses.” The plain language of this provision is unambiguous. Hartford only has to indemnify the City if the City’s ultimate net loss (i.e., not including defense costs) exceeds $500,000. The City settled its claim for $500,000 and is not entitled to indemnity.

    The Excess Policies also contain a “No Costs” provision, which states: “Should any claim arising from such occurrence be adjusted prior to trial court judgment for a total amount not more than the retained limit, then no loss expenses or legal expenses shall be payable by the Company(s).”

    ANALYSIS

    The City attempts to inject ambiguity into the No Costs provision by arguing that use of the term “adjusted” includes both liability and defense costs, and defense costs therefore erode the SIR. However, this reading would contradict the language from the basic insuring agreement, which clearly provides that Hartford’s duty to indemnify applies when the retained limit is exhausted by liability costs. We are also persuaded by City of Oxnard v. Twin City Fire Insurance Co., which examined an insurance policy with similar policy language, and likewise concluded that the insured “was responsible for defense costs for claims it settled within its SIR amount.” 44 Cal. Rptr. 2d 177, 180 (Cal. Ct. App. 1995).

    The City argues in the alternative that if Hartford is not obligated to pay the City under the Excess Policies, Hartford must pay under the Umbrella Policies. The Umbrella Policies provide that Hartford will indemnify the City “for ultimate net loss in excess of the underlying limit or the [SIR], whichever is the greater . . . .” The Umbrella Policies define “underlying limit” as the “limits of liability of the underlying insurance . . . .” Each Umbrella Policy’s Schedule of Underlying Policies lists an Excess Policy and states that the Excess Policy’s limit of liability is $500,000 in excess of the $500,000 SIR. Where no underlying insurance applies, the Umbrella Policies have a separate SIR of $10,000 or $25,000, depending on the policy year.

    Because the City’s asbestos liability fell within the scope of the Excess Policies, the City is only entitled to “ultimate net loss in excess of the underlying limit . . . .” As the City did not exhaust the underlying limit of the Excess Policies, it is not entitled to indemnity under the Umbrella Policies.

    The City conceded below that it could not show bad faith if Hartford’s refusal to pay out on the policies was justified.

    ZALMA OPINION

    Excess means what it says. The insurer doesn’t pay unless the underlying limit or SIR are exhausted. Since they were not exhausted the excess and umbrella insurers owed nothing. For once the Ninth Circuit has a clear, simple and appropriate decision.


    © 2018 – Barry Zalma

    This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

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    Rescission of Insurance

    Rescission of Insurance

    Product DetailsRescission is an equitable remedy as ancient as the common law of Britain. When the United States was conceived in 1776 the founders were concerned with protecting their rights under British common law. They adopted it as the law of the new United States of America modified only by the limitations placed on the central government by the U.S. Constitution approved in 1789. The viability and ability to enforce contracts was recognized as essential to commerce. Courts of law were charged with enforcing legitimate contracts. Courts of equity were charged with protecting contracting parties from mistake, fraud, misrepresentation and concealment since enforcing a contract based on mistake, fraud, misrepresentation or concealment would not be fair. The common law developed rules that courts could follow to refuse to enforce the terms of a contract that was entered into because of mutual mistake of material fact, a unilateral mistake of material fact, the breach of warranty (a presumptively material promise to do or not do something), a material concealment, or a material misrepresentation. The remedy – called rescission – created a method to apply fairness to the insurance contract and allow an insurer to void a contract and allowed courts to refuse to enforce such a contract entered into by misrepresentation or concealment of material facts.

    Available as a paperback.

    Available as a Kindle book.


     

    Barry Zalma, Inc.© 2018 – Barry Zalma

    I have placed books on Amazon.com as both e-books and as paperbacks to explain, in fiction based on reality, information to help everyone understand that insurance fraud can be defeated by a thorough investigation.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

    Share
    Posted in Zalma on Insurance | Comments Off on Rescission of Insurance

    Insurance Fraud to Gain Thousands of Free Cell Phones

    Creative Criminal Gets 57 Months in Prison

    If criminals would put in the effort and skill they use to defraud insurers they would own a multi-million dollar business. Rather, they get short term profits and then find themselves is an 8 foot by 12 foot cell in a federal prison.

    In United States Of America v. Carlo Michell, No. 16-16208, United States Court Of Appeals For The Eleventh Circuit (March 22, 2018) Carlo Michell, a very creative criminal, appealed his 57-month sentence imposed after he pled guilty to conspiracy to commit access device fraud.

    FACTS

    The indictment to which he pled guilty charged Michell and two other co-defendants with using customer identification information to fraudulently obtain wireless devices from AT&T Wireless. AT&T offers insurance that provides for a replacement wireless device if a customer’s phone is lost, stolen, or damaged. To get the replacement device, the customer pays a deductible and provides a personal identification number (“PIN”).

    Michell and his co-conspirators got customer information from Teleperformance USA Corp., a contractor that provides customer service for AT&T. Five employees at Teleperformance accessed the personal account information of 3,700 AT&T customers—including the customers’ names, telephone numbers, and PINs—and sold that information to Michell and his co-conspirators. Using this information, the conspirators made false claims to AT&T for replacement wireless devices. Michell used his Facebook page to coordinate the receipt of the fraudulently obtained wireless devices by other co-conspirators. In total, approximately 3,800 wireless devices were shipped to Michell and his co-conspirators.

    THE PRE-SENTENCE INVESTIGATION

    The presentence investigation report (“PSR”) sets out that Michell recruited at least five people to receive shipments of wireless devices, and instructed them to send the wireless devices to him or a co-conspirator. After recruiting them to the conspiracy, he also asked two of them if they “wanted to come work for him instead” of another conspirator.

    Michell objected to certain portions of the PSR, including the attribution of the total loss amount of the conspiracy to him as well as a sentencing enhancement based on the number of victims. The government also objected to the PSR, arguing that Michell should receive sentencing enhancements for trafficking in unauthorized access devices and for his role in the offense. The district court sustained the government’s objections, overruled Michell’s objections, and sentenced him to 57 months in prison.

    ISSUE

    Michell argues the district court should not have applied a two-level enhancement under Guidelines § 2B1.1 because the only victim was AT&T.

    Language in the guidelines is given its plain and ordinary meaning. Ordinarily, the guidelines commentary is authoritative, unless it violates the Constitution or a federal statute, or is inconsistent with, or a plainly erroneous reading of, that guideline.

    The commentary to § 2B1.1 defines a “victim” as “any person who sustained any part of the actual loss” as a result of the offense. In cases involving means of identification, a victim is further defined as “any individual whose means of identification was used unlawfully or without authority.”

    The names and PINs of the AT&T customers are means of identification, and they were used without authorization. More than ten AT&T customers information was stolen because Michell admitted Teleperformance employees accessed 3,700 customer accounts, and admitted 3,800 wireless devices were ultimately obtained as a result of the conspiracy.

    Michell argued, again creatively, that  he did not directly steal the identifying information, but merely bought it second-hand. However, the enhancement applies when a defendant uses the means of identification. Michell does not dispute that he used the names and PINs to fraudulently obtain wireless devices.

    Michell and his co-conspirators used thousands of customers’ information to fraudulently obtain wireless devices, which was the clear purpose of the conspiracy.

    Michell admitted to paying Teleperformance employees for customer information, which was emailed to him. He then used his Facebook page to coordinate the receipt of the fraudulently obtained wireless devices by other co-conspirators.

    By receiving the stolen customer information, recruiting accomplices, directing the shipment of wireless devices, and managing a number of participants, Michell demonstrated a leadership role in the conspiracy. Michell admitted to purchasing stolen customer information—including names, telephone numbers, and PINs—and using that information to file false insurance claims in order to receive replacement wireless devices. The term “traffic” means transfer, or otherwise dispose of, to another, or obtain control of with intent to transfer or dispose of. Because Michell’s offense involved the trafficking of unauthorized access devices the district court properly applied the enhancement.

    Michell’s final objection was to the loss amount attributed to him at sentencing. The district court is not required to make a precise determination of the loss, and only needs to make a reasonable estimate based on available information. When determining a loss amount, a defendant may be held responsible for the reasonably foreseeable acts of his co-conspirators in the furtherance of the conspiracy.

    Michell agreed to fully participate in the offense. The district court found the actions of his co-conspirators were reasonably foreseeable. Specifically, the district court found Michell was deeply involved with the conspiracy because he personally obtained stolen customer information, filed false insurance claims, and used his Facebook page to coordinate the activities of the conspiracy.

    In addition to his own actions, the district court found Michell maintained frequent contact with other co-conspirators, including 820 phone calls between Michell and his cousin Kennol Placil. Michell has not shown any reason why these findings were erroneous. To the contrary, the findings were supported by the record, so the district court did not err when it determined that the entire loss amount was attributable to Michell.

    ZALMA OPINION

    I thought, after dealing with insurance fraud for more than 50 years I had seen it all. I was wrong. Defrauding a cell phone insurer to get new cell phones is creative and does not include the hazards of armed robbery. The sentence for the multitudinous frauds seems small and insufficient to punish the perpetrator.


    © 2018 – Barry Zalma

    This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

     

     

     

     

     

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    Ethics for the Insurance Professional

    Methods for Insurers and their Personnel to Act with the Utmost Good FaithProduct Details

    Ethics is a process of systematically applying, using, defending and recommending concepts of right and wrong behavior. Ethical behavior is required of both parties to a contract of insurance for the system to work. Ethics is the essence of insurance. Ethical behavior is required of both parties to a contract of insurance for the system to work. If any party to the insurance contract acts unethically the ability of insurance to work effectively and profitably will fail. Ethics is the essence of insurance. Since insurance was first created it has been a business of utmost good faith. As a result, the insured and the insurer are expected to treat each other ethically.

     

    Barry Zalma, Inc.© 2018 – Barry Zalma

    I have placed books on Amazon.com as both e-books and as paperbacks to explain, in fiction based on reality, information to help everyone understand that insurance fraud can be defeated by a thorough investigation.

    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 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

    Mr. Zalma’s books available as Kindle books or paperbacks at Amazon.com can be reached at http://zalma.com/zalma-books/

    Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/bzalma  on Facebook at https://www.facebook.com/barry.zalma and you can follow him on Twitter at https://twitter.com/bzalma

    Legal Disclaimer:

    The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

    Share
    Posted in Zalma on Insurance | Comments Off on Ethics for the Insurance Professional