Zalma on Insurance

By Barry Zalma

Presentation of insurance issues relating to claims handling, insurance coverage, interpretation of insurance policy coverages, insurance fraud, and investigation.... more

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Zalma on Insurance episodes:

October 06, 2023 Giving Up Right of Subrogation Cost Insurer $25 Million
Insurer Should Get Premium for Waiver of Subrogation
https://zalma.com/blog
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11min
October 04, 2023 Zalma’s Insurance Fraud Letter – October 1, 2023
ZIFL – Volume 27, Issue 19, October 1, 2023
This, the nineteenth issue of the 27th year of
publication Zalma’s Insurance Fraud Letter provides multiple articles on how to deal with insurance fraud in the United States.
Zalma’s Insurance Fraud Letter – October 1, 2023Volume 27, Issue 19, October 1, 2023Barry ZalmaOct 2, 2023
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Read the full article at https://lnkd.in/gSwZcFtw, see the full video at https://lnkd.in/geXk8tvN and at https://lnkd.in/gyWx2-zm, Read the full article and the full 22 pages of ZIFL at https://lnkd.in/gY5fRg9E and at https://zalma.com/blog plus more than 4650 posts.
See the full video at https://rumble.com/v3ltkfq-zalmas-insurance-fraud-letter... and at
Forty-four
years ago, today I left the world of the employed and became an
entrepreneur by opening my own law firm. The law practice was
incorporated shortly thereafter as Barry Zalma, Inc. When I opened for
business on October 1, 1979, I had no clients and no certainty that I
would have any in the future. I borrowed money from the bank to carry me
through the first six months, rented a small office with my wife’s
grandmother’s dining room table as my first desk and my secretary
brought her own typewriter. I was concerned about my ability to pay the
loan with my third child about to be born.
Much to my surprise,
and pleasure, on October 1, 1979, at 8:10 a.m., the best claims handler
in the London market, Alan Warboys, called from London and provided me
with my first case as an independent lawyer to represent Certain
Underwriters at Lloyd’s, London. He, and the Lloyd’s Underwriters he
represented, showed faith in me as a lawyer and insurance expert. Alan
is now retired but will forever be, my law firm’s first client and a
good friend.
Read the full article and the full 22 pages of ZIFL at https://zalma.com/.../uploads/2023/09/ZIFL-10-01-2023.pdf
This
is ZIFL’s Fifteenth installment of the saga of McClenny, Moseley &
Associates and its problems with the federal courts in the State of
Louisiana and what appears to be an effort to profit from what some
Magistrate and District judges indicate may be criminal conduct to
profit from insurance claims relating to hurricane damage to the public
of the state of Louisiana.
Read the full article and the full 22 pages of ZIFL at https://zalma.com/.../uploads/2023/09/ZIFL-10-01-2023.pdf
When
committing fraud, it is usually good practice not to do it right in
front of a camera. However, this Colorado hail contractor just couldn’t
help himself. The sales manager for a Colorado construction company says
he may have been “too aggressive” after a surveillance camera caught
him appearing to fabricate hail damage during a recent damage inspection
of a home in Parker. Witnesses say David Kuntz was trying to drum up
business in the Newlin Meadows neighborhood of Parker, offering to
inspect homes for hail damage. He said he was unaware of a surveillance
camera that was rolling as he inspected one home.
Read the full article and the full 22 pages of ZIFL at https://zalma.com/.../uploads/2023/09/ZIFL-10-01-2023.pdf
by Barry Zalma on October 19, 2023 = https://netforumpro.com/eweb/Shopping/Shopping.aspx...
Obiageriaku
Iheanacho, 36, of Baltimore, pleaded guilty and was sentenced according
to Maryland Attorney General Anthony G. Brown on September 19, 2023,
announced the plea and sentencing for the death of 75-year-old Ellsworth
Johnson-Bey. Iheanacho pleaded guilty to first degree assault and abuse
of a vulnerable adult in the first degree for her role in the assault
and subsequent death of Mr. Johnson-Bey.
Read the full article and the full 22 pages of ZIFL at https://zalma.com/.../uploads/2023/09/ZIFL-10-01-2023.pdf
Dam Ngoc Luong, 70, a Dorchester woman was sentenced in federal
Read the full article and the full 22 pages of ZIFL at https://zalma.com/.../uploads/2023/09/ZIFL-10-01-2023.pdf

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10min
October 04, 2023Man Bites Dog: GEICO Bites Fraudsters
Don't Ty to Defraud GEICO It Bites Back
See the full video at https://rumble.com/v3mou6r-man-bites-dog-geico-bites-fraudsters.html and at https://youtu.be/KrGnHftnDaA

GEICO (collectively, “GEICO” or “Plaintiffs”) sued Defendants ALP Supply, Inc. (“ALP”), PV Supply, Inc. (“PV”), and Pal Vakula, alleging common law fraud and unjust enrichment claims.
In Government Employees Insurance Company, GEICO Indemnity Company, Geico General Insurance Company, and GEICO Casualty Company v. ALP Supply, Inc.; PV Supply, Inc.; and Pal Vakula, No. 22-CV-79 (LDH)(MMH), United States District Court, E.D. New York (September 29, 2023) GEICO sought, and obtained, default judgments against health care fraud perpetrators.
The GEICO Plaintiffs' moved the USDC for default judgment pursuant to Federal Rule of Civil Procedure 55(b)(2). For the reasons set forth below, the Magistrate Judge recommended that Plaintiffs' motion should be granted as to their common law fraud claims. The Court further recommended that Plaintiffs should be awarded damage.
From July 2019, Vakula used ALP and PV to submit and cause to be submitted to GEICO thousands of fraudulent no-fault insurance claims for medically unnecessary, illusory, and otherwise non-reimbursable DME and OD.
Defendants not only submitted claims to GEICO knowing that they included materially false information but also hired law firms to pursue collection of the fraudulent claims from GEICO, which resulted in expensive and time-consuming litigation against GEICO if the charges were not promptly paid in full.
In the Second and Fourth Causes of Action in the Complaint, GEICO alleges that Defendants committed common law fraud. Under New York law, a plaintiff asserting a claim of common law fraud must plausibly allege:
a material misrepresentation or omission of fact

made by defendant with knowledge of its falsity

intent to defraud;

reasonable reliance on the part of the plaintiff; and

resulting damage to the plaintiff.
Here, GEICO established that an actual controversy exists and that a declaratory judgment would afford specific and conclusive relief as to pending claims with respect to all Defendants. GEICO alleges that ALP and PV have pending bills submitted to GEICO that GEICO has no obligation to pay. Additionally, GEICO has submitted documentation of pending collections actions that ALP and PV are actively prosecuting against GEICO in New York state courts. GEICO has provided a list of the actions, including the amounts involved, the claim numbers, and the status of each action.
In sum, Plaintiffs established liability on their common law fraud claims only. The Magistrate judge recommended:
a default judgment should be entered against Defendants for common law fraud;

Plaintiffs should be awarded compensatory damages in the amounts of

a declaratory judgment should be entered that Plaintiffs have no obligation to pay any pending claims submitted by ALP Supply, Inc. and PV Supply, Inc.
ZALMA OPINION
GEICO seems to have given up on Departments of Insurance and prosecutors to defeat insurance fraud by proactively suing fraudsters and taking the profit out of the crime of insurance fraud. Its success in this case and others should be emulated by the insurance industry who sits back and allows fraudsters to profit from claims.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.
Subscribe to Excellence in Claims Handling at locals.com at https://zalmaoninsurance.locals.com/subscribe or at substack at https://barryzalma.substack.com/publish/post/107007808
Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01
Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257
Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library/
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9min
October 03, 2023Never Complain When You Win
Chutzpah: Plead Guilty to Fraud, Receive Probation and Appeal the Conditions
Raymundo Gonzalez appealed the condition of probation imposed after he pled no contest to one felony count of insurance fraud.
In March 2016, defendant was examined by Dr. Stephen Choi regarding his ongoing claim. Defendant told Choi he had not suffered any prior injuries. Following a clinical exam, Choi was unable to make any specific findings regarding defendant's left arm and right foot.
A new evaluation was completed in February 2018, after surveillance footage from November 2013, April 2015, June 2015, and September 2015 was considered. Choi asked for this reevaluation after seeing the footage, which showed defendant walking and moving as if he was injury free. Choi observed defendant working hard, picking things up from the ground, and bending and twisting his body without trouble. Choi concluded these movements should not have been possible if he truly had lower back and shoulder pain. This new evaluation determined defendant did not have any impairment or disability and did not require future medical care.
A further investigation revealed defendant filed various claims for injuries while employed with other companies between 2001 and 2011. Defendant claimed he was not able to stand or walk for long periods of time and could not lift anything or bend. Defendant further stated he had never filed a worker's compensation injury claim and never suffered an on-the-job injury. .
Defendant was charged with three counts of insurance fraud and one count of perjury. Defendant entered a plea of no contest on count 1 and counts 2 through 4 were then dismissed under the plea agreement. On August 3, 2022, the trial court sentenced defendant to probation following the plea.
A trial court may impose and require any or all of the terms of imprisonment, fine, and conditions as it determines are fitting and appropriate. A condition of probation will not be held invalid unless it
has no relationship to the crime of which the offender was convicted,

relates to conduct which is not in itself criminal, and

requires or forbids conduct which is not reasonably related to future criminality.
Because defendant's trial counsel did not object Gonzalez claimed ineffective assistance of counsel.
To establish ineffective assistance of counsel defendant must show
counsel's representation fell below an objective standard of reasonableness under prevailing professional norms, and

counsel's deficient performance was prejudicial
The possible reasons discussed provide a satisfactory explanation for trial counsel's decision not to object here. The type of evidence that might be found on a computer or other electronic devices would support the condition. Defendant's intent to travel outside the jurisdiction while on probation could also be monitored through those devices, if probation had reason to suspect he traveled or was planning to travel without obtaining permission first.
Moreover the decision not to object to the electronic devices condition could be related to the decision by the trial court not to impose a jail sentence.
The facts established that Mr. Gonzalez was a serial workers' compensation fraudster who was not injured but had successfully defrauded multiple employers only to be caught and prosecuted on his last attempt because investigators acquired video proving he had lied about his condition and work history. When his doctor saw the video he was offended and cut him off. To complain about the terms of probation and take up the time of the court of appeals was unmitigated gall (Chutzpah!) and should have resulted in more than a loss of the appeal but show a violation of probation sufficient to cause him to serve jail time.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
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9min
September 28, 2023 The Burning Bed
When an Obvious Arson is Just an Accident
"This is a Fictionalized True Crime Story of Suspected Insurance Fraud
from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails
You Lose” situation for Insurers. The stories help to Understand How
Insurance Fraud in America is Costing Everyone who Buys Insurance
Thousands of Dollars Every year and Why Insurance Fraud is Safer and
More Profitable for the Perpetrators than any Other Crime."
THE FIRE
Sometimes, what looks like an obvious arson for profit turns out to be
an accidental fire. The insured lived near the ocean within the city
limits of San Luis Obispo. Recently divorced she lived alone for many
months. The divorce had caused her much emotional trauma. After
twenty-five years of marriage, her husband announced he could not live
with her anymore and moved out.
She sought treatment for her depression. She visited with multiple
psychiatrists and psychologists, who only made her life more miserable.
When the divorce was final and she gained absolute title to the land and
house the book store owner moved into the house with her. As they, and
their friends, concentrated their psychic energies, they became
convinced that a major earthquake would strike California and destroy
all who lived in San Luis Obispo.
Shortly before escrow closed, while the insured and her book store owner
lover, slept in the master bedroom, a fire broke out in the second
bedroom of the house. Awakened by a sound like a heavy rainstorm, they
discovered the fire and escaped naked through the bedroom window into
their backyard. Neighbors called the fire department who quickly
extinguished the fire after all its contents and most of the structure
were destroyed.
THE INVESTIGATION
The investigation by the fire department revealed that the fire was
suspicious. No specific cause could be found for the fire. It did burn
very hot. There were marks on the floor in the second bedroom that
seemed to show a flammable liquid was spread. The insurer was concerned.
It demanded the examinations under oath of the insured and her book
store owner lover. Both testified clearly, concisely and honestly that
they had no idea why the fire occurred.
The insurer conducted a thorough investigation and retained the services
of an experienced fire cause and origin investigator. He sifted through
the debris and found in the debris an electrically operated bed,
equipped with a polyurethane foam mattress. The investigator advised the
insurer that, after examining the bed and after reviewing the testimony
of the insured and her lover at the examination under oath, it was his
conclusion that the fire was the result of a short circuit in the bed
motor which ignited the highly flammable (and now banned) polyurethane
foam mattress. He explained that polyurethane foam, when heat is applied
to it, liquefies and burns vigorously. The liquefied polyurethane foam
flows on floor surfaces and leaves a trail similar to that left by the
spreading of a flammable petrochemical accelerant.
The mystery solved; the insurer paid the insured the loss she incurred
to her personal property. The two insurers split the cost of rebuilding
the structure. The insured and her lover used the proceeds of the sale
of the house and the insurance claim to move to the house they had found
in Tennessee.
They now live in a large home on ten acres of land where they have
gathered with them other believers in the occult and the power of the
mind. Since both the insured and her lover were ministers of the
Universal Life Church, they performed their own wedding.
Adapted from my book "Insurance Fraud Costs Everyone" available from Amazon.com as a paperback or a Kindle book
(c) 2023 Barry Zalma & ClaimSchool, Inc.

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10min
September 28, 2023 Louisiana v. North Carolina Insurance
Jurisdiction Chosen by Contract of Insurance Must be Followed
Clear & Unambiguous Policy Conditions Must be Followed
Government Employees Insurance Company (hereinafter “GEICO”) sought
review of the trial court's July 12, 2023 judgment denying its motion
for partial summary judgment.
In Washington Dos Santos v. USAA Casualty Insurance Company, Government
Employees Insurance Company And Carrie Ann Rainey, No. 2023-C-0559,
Court of Appeals of Louisiana, Fourth Circuit (September 18, 2023)
resolved the dispute.
RELEVANT FACTS
Washington Dos Santos sued for damages asserting damages as a result of a
motor vehicle accident. Dos Santos named GEICO as a defendant in its
capacity as the uninsured/underinsured motorist insurer of the vehicle
he was operating at the time of the accident. In his petition for
damages, Dos Santos asserted that GEICO violated Louisiana's penalty
statutes which require that an insurer be fair in its handling of claims
and tender payment when satisfactory proof of loss is established.
On April 23, 2023, GEICO filed a motion for partial summary judgment
asserting that Respondent's claim under his insurance policy contract
dictates that all claims are subject to North Carolina law and
therefore, Louisiana's penalty statutes are inapplicable. GEICO averred
that the policy was issued to Respondent at a North Carolina address;
Respondent has a North Carolina driver's license; and the vehicle is
registered in North Carolina.
DISCUSSION
To succeed in a motion for summary judgment there must be a genuine
issue of material fact. A genuine issue is one to which reasonable
persons could disagree; if reasonable persons could reach only one
conclusion, no need for trial on that issue exists and summary judgment
is appropriate.
GEICO maintained the trial court erred in denying its motion for partial
summary judgment because the insurance policy specifically mandates
Respondent's claim is subject to North Carolina law and thus,
Louisiana's penalty statutes are inapplicable. GEICO did so because Dos
Santos’ policy provided, in pertinent part: “This policy is issued in
accordance with the laws of North Carolina and covers property or risks
principally located in North Carolina. Any and all claims or disputes in
any way related to this policy shall be governed by the laws of North
Carolina.”
CLEAR AND UNAMBIGUOUS POLICY WORDING
Dos Santos’ insurance policy mandates application of North Carolina law.
The language in the policy is clear and unambiguous thus, it must be enforced as written.
When the words of an insurance contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent and courts must enforce the contract as written. The language contained in GEICO's policy with Respondent are
clear, North Carolina law applies to any disputes or claims.
GEICO satisfied its burden of establishing that the language of the
contract of insurance is clear and unambiguous and that North Carolina
law applies. Therefore, the trial court's judgment denying GEICO's
motion for partial summary judgment was reversed.
ZALMA OPINION
People like Mr. Dos Santos want to punish an insurer that fails to pay
what they want so they can profit from an insurance policy. Louisiana allows an insurer to be penalized and North Carolina does not. Since the policy clearly stated that the law of North Carolina applied and the fact that the accident happened in Louisiana was irrelevant. Regardless of the desires of an insured to punish his insurer the contract wording controls the interpretation of an insurance policy.
(c) 2023 Barry Zalma & ClaimSchool, Inc.

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7min
September 26, 2023 Sexual Assault Excluded
Situs of Assault Does not Create Coverage
A coverage dispute arose from the sexual assault of a special needs
student aboard her school bus. National Liability and Fire Company
sought a declaration that it had no duty to defend or indemnify the bus
company or its school district client in a state court action brought by
the student and her mother because its policy did not cover the
incident alleged in their complaint. The District Court erroneously held
that National had to defend both entities and later concluded it also
had to indemnify them.
In National Liability & Fire Insurance Co. v. Brimar Transit, Inc.
Pittsburgh Public School District, No. 22-2565, United States Court of
Appeals, Third Circuit (September 22, 2023) the dispute was resolved.
FACTS
Brimar Transit, Inc. transported students for the Pittsburgh School
District under a multi-year contract. National insured the vehicles in
Brimar's fleet. Among the students Brimar transported to and from school
were children with special needs. One of those students-an adolescent
girl named K.M.-had developmental challenges known to Brimar and the
District. Traveling on the bus with her each day was a 12-year-old boy
with similar challenges who had sexually assaulted K.M. multiple times,
including a groping incident during gym class. The gym incident led the
District and Brimar to craft a specific plan to separate K.M. from the
male student on the bus: K.M. sat right behind the driver, while the
male student sat in the rear. The regular bus driver followed the plan.
And when she took maternity leave, her first replacement did too.
A second substitute driver took over the route without following the
plan and sat K.M. next to the male student. Their proximity allowed the
male student to use his body weight to pin K.M. to the seat. With K.M.
trapped, the male student pulled down both their pants and assaulted her
from behind. Despite being only several feet away during the assault,
and despite the cries of other children, the driver did not intervene or
even acknowledge the attack on K.M. K.M. managed to push the male
student off her a short time later, though he assaulted her again by
slapping her backside as she exited at her stop.
K.M. and her mother sued Brimar and the District alleging Brimar failed
to tell the driver about the plan and failed to train and supervise her
properly.
The District Court disagreed with National on both counts. While this
action was pending, National paid more than $500,000 to settle the
plaintiffs suit.
National moved for summary judgment yet the trial Court held that
because National's act of settling the state court claim before critical
facts and evidence developed kept the District Court from making
nuanced decisions about its duties to defend and indemnify, it would
need to indemnify Brimar and the District.
THE APPEAL
Discussion
The Policy determines whether National had a duty to defend.
National argued the District Court erred and urged instead that, to
trigger coverage, the underlying bodily injury must be causally
connected to the use of the insured vehicle as a motor vehicle.
The male student's previous assaults confirm the bus was merely
incidental to the sexual assault-i.e., as the situs of the attack.
Because the allegations in the complaint do not forge a strong enough link between the use of the school bus and K.M.'s injuries, the Third Circuit concluded that the District Court erred in finding National had a duty to defend Brimar and the District.
ZALMA OPINION
The injuries suffered by KM were horrific but they were not, under any definition of the term, a result of the use of the school bus. The
driver erred but the driver, nor the use of the bus, caused her injury.
National should now seek to recover the money it paid, under a
reservation, on behalf of the defendants.
(c) 2023 Barry Zalma & ClaimSchool, Inc.

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8min
September 26, 2023 Sovereign Immunity Defeats Claim
Indian Tribe's Sovereign Immunity Limits Waived by Insurance if Claimant
Complies with Waiver Requirements
The Seminole Tribe of Florida ("the Tribe") appealed an order denying
its motion to dismiss based on sovereign immunity. The trial court
rejected the Tribe's contention that Jose Webster did not comply with
the terms of the sovereign immunity waiver contained in the 2010 Gaming
Compact (the Compact). The Compact required, among other conditions,
that the Tribe and its insurance carrier have one year to resolve a
claim after a Patron gives notice of the claim, and if the claim is not
settled in that time, the Patron may file suit.
In Seminole Tribe Of Florida, d/b/a Seminole Gaming v. Jose Webster, No.
4D2022-3448, Florida Court of Appeals, Fourth District (September 13,
2023) the Tribe asserted in the motion to dismiss that the defendant
failed to comply with the required conditions because he sued the Tribe
within one year of having given written notice of the underlying claim.
The trial court denied the motion, because the last of three variations
of the plaintiff's complaint filed would have complied with the Compact.
As a federally recognized Indian tribe, the Seminole Tribe is entitled
to sovereign immunity over all claims unless such immunity is abrogated
by Congress or waived by the Seminole Tribe. Further, a waiver must be
strictly construed with any ambiguities being resolved against waiver.
Webster was a patron at the Seminole Hard Rock Hotel & Casino
Hollywood (the "Casino") in September 2019. He claims the Tribe was
negligent in failing to protect him from criminal acts which allegedly
occurred at the Casino during his visit.
In January 2020, Webster timely provided written notice of his claim to
the facility. Two months later, Webster sued "Seminole Hard Rock
Entertainment, Inc. d/b/a Seminole Hard Rock Casino." The proper
defendant was the "Seminole Tribe of Florida d/b/a Seminole Hard Rock
Hotel &Casino-Hollywood. The trial court denied the Tribe's motion
to dismiss without prejudice.
DISCUSSION
The first amended complaint and second amended complaint named the
Tribe, albeit each stating a different fictitious name. Those complaints
alleged the same tort cause of action against the Tribe. Even if the
fictitious name may be in error, the fact remains that the real party in
interest, and the proper defendant, is the Tribe.
The Tribe contends that Webster failed to comply with the Compact's
Section VI.D.4. by filing the first amended complaint within the
one-year pre-suit period set by the Compact, and Webster's failure to
strictly follow the Compact's procedures bars his claim.
The record does not include proof that the Tribe responded to Webster's
claim within thirty days of his written notice. Therefore, although
Webster's first amended complaint commenced suit against the Tribe
within one year of his notice of claim his original suit did not.
For the foregoing reasons, the appellate court reversed the order
denying sovereign immunity and remand for further proceedings.
ZALMA OPINION
Sovereigns, like the tribe can only be sued if the sovereign entity
agrees. The tribe agreed to waive the immunity if certain conditions
were met. Webster failed to meet the requirements of the waiver compact
and, as a result, he could not sue as he did. The tribe had insurance
and he needed to provide the insurer with the time and opportunity to
settle his claim. By prematurely suing he was unable to take advantage
of the waiver.
(c) 2023 Barry Zalma & ClaimSchool, Inc.

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6min
September 22, 2023 You Win Some, You Lose Some
Statute of Limitations Bars Bad Faith Claim
Loann T. Phan-Kramer and Jonerik Kramer sued American States Insurance
Company for underinsured motorist coverage, won, and collected. Now,
they have sued American States again asserting statutory bad faith,
breach of contract/good faith and fair dealing, and loss of consortium.
In Loann T. Phan-Kramer and Jonerik Kramer v. American States Insurance
Company, No. 2:23-cv-01867-JDW, United States District Court, E.D.
Pennsylvania (September 14, 2023) the USDC took away part of plaintiffs
claim and allowed the rest to proceed in a Solomon like decision.
BACKGROUND FACTS
On April 15, 2016, an underinsured motorist rear-ended Loann T.
Phan-Kramer. She suffered a full thickness tear of her rotator cuff, as
well as other neck and back injuries. At the time of the accident,
American States Insurance Company insured Ms. Phan-Kramer, including
underinsured motorist (“UIM”) benefits. After suing then settling with
the other driver, Plaintiffs filed their UIM insurance claim with
American States. American States denied that claim and Plaintiffs sued.
At trial, the jury returned a verdict in Plaintiffs' favor and the
insurer satisfied the verdict.
DISCUSSION
The Tort of Bad Faith
The statute of limitations bars Plaintiffs' claim. The statute of
limitations on a bad faith claim is two years in Pennsylvania. The
statute begins to run when the insurer first refuses to pay the claim.
Breach of Contract/Loss of Consortium
The Third Circuit has adopted a bright-line rule that res judicata
cannot bar claims that are predicated on events that postdate the filing of the initial complaint. Because Plaintiffs' breach of contract and loss consortium claims both rely (at least in part) on American States's conduct following the filing of the initial lawsuit, res judicata cannot preclude these claims.
American States acknowledged that the Amended Complaint “focus[es] . . . on the ways that American States supposedly acted in bad faith during the litigation and trial of the underlying UIM/consortium case.”
Because the bright-line rule bars the application of res judicata,
American States's Motion on the breach of contract and loss of
consortium claims was denied.
ZALMA OPINION
Insurance companies, like every person and corporation, are imperfect.
American States decided it did not owe UIM benefits to its insured, took the issue to trial and lost. It paid the judgment only to be sued for defending the original suit. The court found that the insured/plaintiffs filed their bad faith claim too late and dismissed that action only to allow the breach of contract and loss of consortium claims to proceed.
The decision is a Pyrrhic victory for the plaintiffs since they already
recovered in the initial suit the contract damages.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.
Subscribe to Excellence in Claims Handling at locals.com at
https://zalmaoninsurance.locals.com/subscribe or at substack at
https://barryzalma.substack.com/publish/post/107007808
Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01
Follow me on LinkedIn:
www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257
Daily articles are published at https://zalma.substack.com. Go to the
podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library/

...more
7min
September 21, 2023 No Duty to Accept Offer Five Times Policy Limit
Insurer Not Obligated to Commit Insurance Claims Suicide
Benjamin D. Markuson, Erik Saterbo, and Stephen Saterbo v. State Farm
Mutual Automobile Insurance Company, an Illinois corporation; Crawford
Law Group, P.A., a Florida corporation; and Larry Walker, No. 2D21-2443,
Florida Court of Appeals, Second District (September 15, 2023)
Benjamin Markuson and Erik and Stephen Saterbo appealed the entry final
summary judgment based upon the trial court's conclusion that State Farm
was under no legal duty to its insured to accept any or all of the
three proposals for settlement made by Mr. Markuson.
FACTUAL BACKGROUND
The underlying case arises from a 2006 automobile accident involving
Erik Saterbo and Mr. Markuson. At the time of the accident, Erik was
operating a vehicle owned by his father, Stephen. Due to his injuries,
Mr. Markuson sued the Saterbo. The Saterbos had an insurance policy with
State Farm which provided policy limits of $300,000.00 against
liability for bodily injuries sustained in an auto accident. And on
January 15, 2009, State Farm authorized the Crawford Law Group, P.A.-the
firm retained by State Farm to defend the Saterbos-to make a settlement
offer to Mr. Markuson to resolve his case for the policy limits. The
offer was not accepted.
In return, Mr. Markuson would execute a release of all his claims
against the Saterbos and a satisfaction of the aforementioned consent
judgment. The proposal made no indication that State Farm would be
released from any bad faith liability. State Farm declined to accept
these proposals, and the case continued to trial. Following a jury
trial, Mr. Markuson recovered a total of $3,084,074.00, a sum
considerably greater than the coverage afforded.
The settlement offers by Mr. Markuson formed the basis of a bad faith
complaint against State Farm where Markuson and the Saterbos sued with a
seven count complaint against State Farm, Crawford Law Group, P.A., and
Larry Walker-State Farm's agent. The alleged bad faith occurred when
State Farm failed to settle the personal injury action by declining
three of Mr. Markuson's proposals for settlement.
The trial court concluded that State Farm had no duty to enter into a
consent judgment that was in excess of the policy limits "as a matter of
law." It further found that State Farm never withdrew its offer of the
policy limits. Thus, the trial court determined that "State Farm did
not act in bad faith when it did not agree to or negotiate with respect
to any of the three proposals."
DISCUSSION
CONCLUSION
The Florida Court of Appeals concluded that, as a matter of law, the
trial court correctly determined that State Farm had no duty to enter
such an agreement. Thus, where there was no duty to accept the
proposals, declining the proposals could not serve as the basis of the bad faith claim. The circuit court erred by entering a final judgment in favor of State Farm to the extent the plaintiffs' claims raised other theories of bad faith and remanded the case to trial on the other issues.
ZALMA OPINION
Insurance is a means of protecting against the risk of loss for
accidentally injuring a third person up to the limits of the policy.
Insurers have no obligation to expose themselves to an excess verdict and the court of appeals concluded that State Farm had no duty because entering into a consent judgment, for purposes of expediting bad faith litigation, would force the insurer to pay an excess judgment when its only contractual obligation was to defend its insured and, if there is a judgement, to pay the full limit of liability. To accept the offer that the plaintiff suggested as evidence of bad faith would be to commit financial suicide and violate the clear terms of its policy.
(c) 2023 Barry Zalma & ClaimSchool, Inc.

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