Insurer Immune from Malicious Prosecution Suit

SIU Report to State Made in Good Faith Makes it Immune from Suit for Malicious Prosecution

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In The Hanover Insurance Group, Inc; and Michael Arline, Jr., v.  Luke Frazier, No. 2D22-1689, Florida Court of Appeals, Second District (April 3, 2024) Luke Frazier sued The Hanover Insurance Group, Inc., and Michael Arline, Jr., an employee in Hanover’s Special Investigations Unit, for malicious prosecution after Frazier was acquitted of charges of making a false statement in support of an insurance claim and grand theft arising from statements Frazier made to Hanover in connection with an insurance claim.

Hanover and Arline defended claiming immunity from suit under section 626.989(4)(c), Florida Statutes (2011). The trial court rejected the claims of immunity and ultimately entered judgment in favor of Frazier. Hanover and Arline appealed.


Every insurer admitted to do business in Florida is statutorily required to establish and maintain an “anti-fraud investigative unit” or division, commonly called a special investigations unit (SIU), to investigate and report possible fraudulent insurance acts by insureds or by persons making claims against policies held by insureds. If an insurer has knowledge or believes that a fraudulent insurance act has been committed, it must send a report to the Division of Investigative and Forensic Services (“DIFS”) detailing the information it has giving rise to its suspicion. This reporting is mandatory. Upon receiving a report, DIFS conducts an independent investigation. Should DIFS’s investigation lead it to conclude that there has been a violation of law, it is required by statute to report it to the state attorney.

As part of this legislatively mandated anti-fraud program, section 626.989(4)(c) provides insurers and their employees immunity from civil actions, absent fraud or bad faith, arising out of the furnishing of the information required by the statute.


Arline, as an SIU investigator, investigated a dispute that arose after Frazier was involved in a minor collision while driving a car owned by a Hanover insured, Marvic Grant. The driver of the other car involved in the collision, Wendy Williams, filed a claim with Hanover.

Williams’ claim went unresolved for almost a month while Hanover tried unsuccessfully to get a statement from Grant and Frazier. When the adjuster finally spoke to Frazier, his description of the collision and the resulting damage was different than the account Williams had provided. Frazier told Hanover that as the cars approached the toll plaza, Williams accelerated to get in front of him and the rear passenger side of her car hit the front driver’s side of his car which then pushed his car into yellow posts near the toll booth causing damage to the passenger side of his car, not just the driver’s side. Relying on Frazier’s statement, Hanover’s adjuster told Williams that he was holding her fifty percent responsible for the accident and that Hanover would compensate her accordingly. Williams told the adjuster this was unacceptable and that she intended to contact her carrier and retain an attorney.

Unbeknownst to Williams, at the time this took place Grant had filed a claim with Hanover for damage to her car, which included damage to the passenger side of the car. Williams first learned of Grant’s claim when she got a subrogation letter from Hanover stating it was holding her responsible for nearly $5,000 in damages to Grant’s car. Williams was stunned at the amount because the damage to Grant’s car, as well as hers, had been minor.

Williams advised Hanover her belief that Frazier and Grant were acting fraudulently because they were claiming that both sides of Grant’s car were damaged in the collision with her car. Hanover assigned Arline to investigate the conflicting accounts given by Frazier and Williams. Williams filed a fraud report with DIFS alleging that Frazier and Grant were claiming damage to Grant’s car that was not related to the accident in which she was involved. Based on Williams’ allegations, DIFS opened an investigation.

Arline, completed his investigation and concluded Grant should have filed two claims with Hanover, not one, and been subject to two deductibles. DIFS determined that there was probable cause to believe that Grant and Frazier “made material misrepresentations of fact in their claim” with Hanover in that they claimed Grant’s car was damaged on the passenger side during the accident when it was not.  Frazier and Grant were charged with making a false statement to an insurance company and grand theft. After a jury found Frazier not guilty, he sued for malicious prosecution against Hanover and Arline.


Absent fraud or bad faith, section 626.989(4)(c) immunizes insurers and their employees if they have done what is required by the anti-fraud statute. Frazier’s evidence entirely failed to show fraud or bad faith in connection with Arline’s investigation or report to DIFS. Accordingly, Arline and Hanover were statutorily immune from suit, and the judgment in favor of Frazier was reversed.


States like Florida realize that insurance fraud makes it difficult or impossible for insurers in the state to make a profit and provide affordable insurance to its citizens. By requiring insurers to maintain an SIU and report all suspected insurance fraud to the DIFS, it hopes to reduce the impact of insurance fraud. Acting on the report of Ms. Williams and Hanover’s SIU, Frazier was arrested for fraud, tried, and acquitted. Since Hanover and its SIU reported in good faith it was immune from suit and the judgment in favor of Williams was reversed and the intent of the statute was enforced

(c) 2024 Barry Zalma & ClaimSchool, Inc.

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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.
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