It Takes “Chutzpah” to Claim Bad Faith After Admitting Fraud Under Oath


Insurance Fraud Voids Coverage as a Matter of Law

I once, in an argument to a court, used the term “chutzpah” to make my case. The judge had never heard the term and thought I had used a swear word in his court and was about to hold me in contempt when my opponent, who also happened to be Jewish, joined me explaining the meaning of the word to the court. He and I explained that “chutzpah” means unmitigated gall such that, if he had presided over a trial where the defendant was found guilty of murdering his parents and asked for clemency because he was an orphan. In State Auto Property And Casualty Insurance Company v. Sigismondi Foreign Car Specialists, Inc., Civil Action No. 19-5578, USDC For The Eastern District Of Pennsylvania (April 12, 2021) the insured, after admitting under oath that he had fabricated documents to obtain greater returns from his insurer, had the unmitigated chutzpah to sue his insurer for bad faith for refusing to pay his fraudulent claim.


The State Auto policy provided coverage to Sigismondi for a commercial property in Philadelphia where the auto repair shop is located. In January 2019, Sigismondi presented a claim under the policy for water damage to its building and certain inventory, including automobile and audio equipment.

Sigismondi provided the insurer’s salvor with claimed replacement cost figures. Many of those figures were substantially greater than the values determined by the salvor.  Sigismondi admitted that it used computer software to edit at least some of the invoices submitted to State Auto, including by entering price information and dates.  As a result, State Auto requested the Examinations Under Oath of Joseph Sigismondi, Sigismondi’s owner, and Debbie Miller, an employee of Sigismondi.

During his examination, Mr. Sigismondi provided sworn testimony that the invoices provided to State Auto were scanned into a computer and altered. State Auto submitted that the president of the vendor in question submitted an affidavit stating that Mr. Sigismondi did not contact the vendor to ask for pricing information. Based on the discovery of the altered invoices, State Auto denied Sigismondi’s claim.


Sigismondi pointed to no record evidence indicating that State Auto lacked a reasonable basis for denying benefits under the policy, let alone that State Auto “knew of or recklessly disregarded” the lack of such a basis. To the contrary, the record reflects that State Auto responded reasonably after learning that Sigismondi had submitted altered vendor invoices to support its claim under the policy.

Generally, to void an insurance policy under Pennsylvania law, an insurer must prove the following factors by clear and convincing evidence:

  1. the insured made a false representation;
  2. the insured knew the representation was false when it was made or the insured made the representation in bad faith; and
  3. the representation was material to the risk being insured.

The clear and convincing evidence standard requires evidence that is so clear, direct, weighty, and convincing as to enable the trier of fact to come to a clear conviction, without hesitancy, of the truth of the precise facts in issue. State Auto argued it was entitled to summary judgment on this Count because Sigismondi materially breached the policy’s concealment or fraud provision by altering the invoices at issue. Pennsylvania courts have long ruled that a violation of the fraud and concealment provision of an insurance policy serves as a complete bar to the insured’s recovery under the policy and Sigismondi does not dispute that it made misrepresentations to State Auto by submitting altered invoices, or that it knew its representations were false when it made them.

Therefore, the Court’s analysis requires a determination that the misrepresentations were material. A fabricated receipt created by a consumer and presented as an official document from a retailer, without the retailer’s knowledge, constitutes false or misleading information, and certainly would be material to the insurance claim. Sigismondi’s fabricated invoices were clearly material to its insurance claim. Construing the record in the light most favorable to Sigismondi, and applying the clear and convincing evidence standard, no reasonable jury could find that Sigismondi did not knowingly make false representations by submitting altered invoices in support of its claim and that the representations were material to its claim. Therefore, State Auto was entitled to summary judgment on this Count.

State Auto also moved for summary judgment on its claim that Sigismondi violated Pennsylvania’s Insurance Fraud Act, which creates a private cause of action for insurers to remedy various types of fraud. Sigismondi does not dispute that it knowingly made false representations to State Auto, and the Court can only conclude as a matter of law that those misrepresentations were material to the claim.

On this record, no reasonable jury could find for Sigismondi even under the heightened clear and convincing evidentiary standard. State Auto is entitled to summary judgment on its Pennsylvania Insurance Fraud Act claim. As a matter of law Sigismondi intended to mislead State Auto into relying on the misrepresentations.

The Court granted State Auto’s motion for summary judgment on the declaratory judgment claim (Count I) and the Pennsylvania Insurance Fraud Act claim (Count II) but denied its motion for summary judgment on the common law fraud claim (Count III). The reverse bad faith claim (Count IV) was dismissed without prejudice. State Auto’s motion for summary judgment on the counterclaim was denied as moot. A hearing on damages will be scheduled at a future date.


To sue an insurer for bad faith claims handling after admitting to a blatant attempt at fraud, a misrepresentation and concealment of material fact establishes a person with unmitigated chutzpah. In my opinion the court should have referred Sigismondi to the local prosecutor for attempted insurance fraud which would, based upon his under-oath admissions, be an easy crime to prosecute. Insurance fraud is inimical to the public policy of every state and deserves more punishment than a simple dismissal of Sigismondi’s attempt at fraud.

© 2021 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost

equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at and

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

Over the last 53 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the podcast Zalma On Insurance at;  Follow Mr. Zalma on Twitter at; Go to Barry Zalma videos at at; Go to Barry Zalma on YouTube-; Go to the Insurance Claims Library – Read posts from Barry Zalma at; and the last two issues of ZIFL at  podcast now available at



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.