Chutzpah: Criminal Seeks Disability Because his Crime was Discovered and Prosecuted

Claim of Disability Because of Stress of Arrest & Conviction Fails

Post 4681

See the full video at and at

Jason Brand (“Brand”) appealed from the judgment of the district court entered on September 30, 2021, challenging the court’s dismissal of Brand’s counterclaims for breach of contract and breach of the implied covenant of good faith and fair dealing. Brand’s claimed Principal Life Insurance Company (“Principal Life”) failed to pay him benefits under his disability insurance policy (the “Policy”).

In Principal Life Insurance Company v. Jason P. Brand, Nos. 21-2716, 21-2908, United States Court of Appeals, Second Circuit (November 30, 2023) the Second Circuit resolved the dispute.


The words and phrases in a contract of insurance must be given their plain meaning and the contract must be construed to give full meaning and effect to all of its provisions. Straining a contract’s language beyond its reasonable and ordinary meaning will not be understood to create an ambiguity. All provisions of a contract should be read together as a harmonious whole.

The Criminal Activity Exclusion Applies and Justified Principal Life’s Denial of Coverage

Courts may enforce an exclusionary clause only when it has a definite and precise meaning, unattended by danger of misconception and concerning which there is no reasonable basis for a difference of opinion. Whenever an insurer wishes to exclude certain coverage from its policy obligations, it must do so in clear and unmistakable language.

The Policy issued by Principal contains an exclusion for criminal activity (the “Criminal Activity Exclusion”) that states: “This policy does not pay benefits for an injury or sickness which in whole or in part is caused by, contributed to by, or which results from: . . . Your commission of or Your attempt to commit a felony, or Your involvement in an illegal occupation[.]” Principal Life contended that the exclusion entitled it to deny Brand’s 2014 claim for coverage.

Application of the Criminal Activity Exclusion.

As to the applicability of the Criminal Activity Exclusion, Brand premised his November 2014 claim for disability benefits on his assertion that he was “total[ly] disab[led]” by “extreme anxiety” that began in “July 2014, [after] a warrant was served” on him by officers of the New York State Attorney General’s Office. The application cites no other cause or type of disability. On February 8, 2016-about fifteen months after filing the application-Brand entered into a plea agreement in which he admitted to committing, in connection with his businesses, and between January 1, 2009, and March 11, 2015, the felony crimes of enterprise corruption, insurance fraud in the first degree, and grand larceny in the second degree.

Insured Admits Criminal Conduct

Brand stated under oath that he committed enterprise corruption, insurance fraud, and grand larceny in the period before he submitted his disability claim for “extreme anxiety.” Brand without merit contended that it was the criminal proceedings brought against him, not his commission of several felonies, that were the proximate cause of his disability. Even if the criminal proceedings triggered his most extreme anxiety, it was Brand’s commission of the felonies that led to those criminal proceedings that in turn led to his disabling anxiety

Brand’s 2014 claim for benefits was barred by the Criminal Activity Exclusion and  Principal Life was within its rights to reject the claim. The Court affirmed so much of the judgment as granted Principal Life’s motion for summary judgment dismissing, based on the Criminal Activity Exclusion, Brand’s counterclaims for breach of contract and breach of the implied covenant of good faith. However, the district court erred in dismissing the remaining claim asserted by Principal Life asking to reconsider Principal’s request for rescission.


Misrepresenting material facts to an insurer when acquiring a policy allows the insurer to rescind the policy. Principal established that Mr. Brand was a criminal and denied his claim appropriately. It doesn’t want him as an insured any more and sought rescission which the Second Circuit was unable to rule on so it returned the case to the trial court to decide whether rescission was appropriate because it appeared that he lied to obtain the policy.

(c) 2023 Barry Zalma & ClaimSchool, Inc.

Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.

Subscribe to Excellence in Claims Handling at at or at substack at

Go to

Follow me on LinkedIn:

Daily articles are published at Go to the podcast Zalma On Insurance at; Go to Barry Zalma videos at at; Go to Barry Zalma on YouTube-;  Go to the Insurance Claims Library –

About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
This entry was posted in Zalma on Insurance. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.