Zalma on Insurance
Education • Business
Insurance Claims professional presents articles and videos on insurance, insurance Claims and insurance law for insurance Claims adjusters, insurance professionals and insurance lawyers who wish to improve their skills and knowledge. Presented by an internationally recognized expert and author.
Interested? Want to learn more about the community?
July 25, 2023
A Threat of Litigation is not a Claim

There Must be a Claim for Coverage Under a Claims Made Policy

Barry Zalma
Jul 25, 2023

Read the full article at https://lnkd.in/giHFRGaj and see the full video at https://lnkd.in/gRHu9mJz and at https://lnkd.in/gjFJfyrm and at https://zalma.com/blog plus more than 4550 posts.

Homeland Insurance Company of New York (Homeland) issued Plaintiff a claims made liability insurance policy covering errors and omissions, effective January 16, 2019 to January 16, 2020. Plaintiff eQHealth AdviseWell, Inc., f/k/a eQHealth Solutions, Inc., a Louisiana corporation that provides health care management services to Medicaid agencies, commercial healthcare payers, third-party administrators, and self-insured employer groups.

In Eqhealth Advisewell, Inc. v. Homeland Ins. Co. Of N.Y., Civil Action No. 22-00050-BAJ-EWD, United States District Court, M.D. Louisiana (July 15, 2023) the USDC resolved the dispute over coverage.

BACKGROUND

Homeland issued a Managed Care Organizations Errors and Omissions Liability Policy (“the Policy”) to Plaintiff. The Policy covered “Damages and Claim Expenses in excess of the Retention that [Plaintiff is] legally obligated to pay as a result of a Claim …” A “Claim,” as defined by the Policy, “means any written demand from any person or entity seeking money or services or civil, injunctive, or administrative relief from [Plaintiff].”

Plaintiff Authorizes Treatment For B.N., A Florida Resident, In Oklahoma

One of Plaintiff’s contracts was to provide Medicaid management services to the State of Florida. Under this contract, Plaintiff’s primary operational contact was Florida’s Agency for Health Care Administration (“AHCA”), which is the state agency responsible for administering Florida’s Medicaid program. As part of its contract, Plaintiff reviewed requests for patients-Medicaid recipients-to receive medical services outside of Florida.

One such request for out-of-state services was a Medicaid claim by B.N. a Florida resident. B.N. was admitted on an emergency basis into non-party Brookhaven Hospital (“Brookhaven”), a licensed psychiatric hospital located in Tulsa, Oklahoma. At the end of B.N.’s initial 180-day period neared, Brookhaven submitted a continued stay authorization request to Plaintiff, requesting an additional 180 days of inpatient services for B.N. Plaintiff denied Brookhaven’s request based on Plaintiff’s determination that B.N. no longer met the medical necessity criteria for the level of neurological rehabilitation provided at Brookhaven.

Plaintiff’s Communications To Defendant Regarding B.N.’S Treatment At Brookhaven

Plaintiff’s April 30 Notice of Circumstances email also contained a written timeline of events for B.N.’s treatment at Brookhaven. On June 10, 2019, a lawyer with the Jones Law Firm, representing Brookhaven, sent a letter to Florida’s Governor, multiple Florida AHCA officials, and a Medicare/Medicaid official. Brookhaven’s June 10 letter discussed Brookhaven’s disagreements with how Florida AHCA handled B.N.’s case.

The lawyer stated that “[n]o lawsuit has been filed, at least as yet.” (emphasis added) The lawyer recommended to Plaintiff that it review its E&O insurance policy “to determine whether th[e] letter triggers a reporting requirement.” He concluded that “[t]his letter reasonably constitutes threatened litigation. Depending on the language of the policy, it may need to be reported.”
Plaintiff and Florida AHCA’s Settlement with Brookhaven

Six months later, on December 12, 2019, Plaintiff “formally tender[ed]” the matter for coverage. To do so, Plaintiff wrote a letter to Defendant, discussing the history of the B.N. matter and informing Defendant that Plaintiff had participated in settlement negotiations with Florida AHCA and Brookhaven and, ultimately, settled the matter in September 2019.

At the point of a settlement eQHealth had virtually no choice but to settle on the terms agreed by AHCA and Brookhaven. Had eQHealth refused, then the likely alternative would have been a suit by Brookhaven in federal court against AHCA and eQHealth, with eQHealth not only having to indemnify AHCA for any judgments but for all defense fees and costs. In order to mitigate the total exposure to all parties involved, eQHealth agreed. The settlement agreement was signed by the last parties on September 20, 2019, and pursuant to it, eQHealth paid Brookhaven $262,500.

Defendant denied coverage on February 3, 2020, stating that: “[n]o Claim against eQHealth was reported to Homeland, eQHealth did not ask for consent to settle any Claim, and Homeland did not provide prior written consent for the settlement, or for any expense, payment, liability, or obligation eQHealth may have had in relation to this matter. Therefore, no coverage is available for the settlement payment eQHealth made to Brookhaven.”

DISCUSSION

Homeland expressly conditioned coverage of all claims under the Policy on the filing of notice of a “Claim” against Plaintiff. When considering what constitutes a “claim” to trigger coverage under a “claims-made” insurance policy, the court relied on the Fifth Circuit that instructs trial courts to differentiate the “mere threat of a claim” from an “actual claim.”

The USDC concluded that despite the numerous communications between the parties and relevant third parties, no communication rose to the definitional level of a “Claim” such that coverage under the Policy was triggered.

Because the Court found that none of the relevant communications prior to the September 2019 settlement between Brookhaven, Florida AHCA, and Plaintiff constituted “Claims” as defined by the Policy, coverage under the Policy was never triggered since none of the communications sought “money or services or civil, injunctive, or administrative relief.”

ZALMA OPINION

Homeland included in its policy wording a definition of the word “claim.” For the insured to obtain defense or indemnity it must establish that a claims, as defined, happened. Without question threats were made. A settlement was reached and the insured paid money to fund the settlement. Yet, no one made a “claim” as defined, the insurer was not advised of the settlement nor was it advised of the insured’s intent to pay until after it paid although the decision to pay was a “business” decision since no one made a demand in writing that they pay for a cause of loss insured against, there could not be coverage for a claim or loss triggered under the policy’s clear and unambiguous definition of the word “claim.”

(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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe.

Consider subscribing to my publications 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; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; 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 – https://zalma.com/blog/insurance-claims-library

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

Consider subscribing to my publications at substack at https://lnkd.in/gcZKhG6g

Excellence in Claims Handling at locals.com https://lnkd.in/gfFKUaTf.

Follow me on LinkedIn: https://lnkd.in/guWk7gfM

Go to the Insurance Claims Library – https://lnkd.in/gWVSBde

00:10:20
Interested? Want to learn more about the community?
What else you may like…
Videos
Posts
14 hours ago
Ambiguity in Insurance Contract Resolved by Jury

Jury’s Findings Interpreting Insurance Contract Affirmed
Post 5105

See the full video at https://lnkd.in/gPa6Vpg8 and at https://lnkd.in/ghgiZNBN, and at https://zalma.com/blog plus more than 5100 posts.

Madelaine Chocolate Novelties, Inc. (“Madelaine Chocolate”) appealed the district court’s judgment following a jury verdict in favor of Great Northern Insurance Company (“Great Northern”) concerning storm-surge damage caused by “Superstorm Sandy” to Madelaine Chocolate’s production facilities.

In Madelaine Chocolate Novelties, Inc., d.b.a. The Madelaine Chocolate Company v. Great Northern Insurance Company, No. 23-212, United States Court of Appeals, Second Circuit (June 20, 2025) affirmed the trial court ruling in favor of the insurer.

BACKGROUND

Great Northern refused to pay the full claim amount and paid Madelaine Chocolate only about $4 million. In disclaiming coverage, Great Northern invoked the Policy’s flood-exclusion provision, which excludes, in relevant part, “loss or damage caused by ....

00:07:02
June 23, 2025
The Clear Language Of The Insurance Contract Controls

Failure to Name a Party as an Additional Insured Defeats Claim
Post 5104

Read the full article at https://lnkd.in/gbcTYSNa, see the full video at https://lnkd.in/ggmDyTnT and at https://lnkd.in/gZ-uZPh7, and at https://zalma.com/blog plus more than 5100 posts.

Contract Interpretation is Based on the Clear and Unambiguous Language of the Policy

In Associated Industries Insurance Company, Inc. v. Sentinel Insurance Company, Ltd., No. 23-CV-10400 (MMG), United States District Court, S.D. New York (June 16, 2025) an insurance coverage dispute arising from a personal injury action in New York State Supreme Court.

The underlying action, Eduardo Molina v. Venchi 2, LLC, et al., concerned injuries allegedly resulting from a construction accident at premises owned by Central Area Equities Associates LLC (CAEA) and leased by Venchi 2 LLC with the USDC required to determine who was entitled to a defense from which insurer.
KEY POINTS

Parties Involved:

CAEA is insured by Associated Industries Insurance Company, Inc. ...

00:08:22
June 20, 2025
Four Corners of Suit Allows Refusal to Defend

Exclusion Establishes that There is No Duty to Defend Off Site Injuries

Post 5103

Read the full article at https://lnkd.in/geje73Gh, see the full video at https://lnkd.in/gnQp4X-f and at https://lnkd.in/gPPrB47p, and at https://zalma.com/blog plus more than 5100 posts.

Attack by Vicious Dog Excluded

In Foremost Insurance Company, Grand Rapids, Michigan v. Michael B. Steele and Sarah Brown and Kevin Lee Price, Civil Action No. 3:24-CV-00684, United States District Court, M.D. Pennsylvania (June 16, 2025)

Foremost Insurance Company (“Foremost”) sued Michael B. Steele (“Steele”), Sarah Brown (“Brown”), and Kevin Lee Price (“Price”) (collectively, “Defendants”). Foremost sought declaratory relief in the form of a declaration that

1. it owes no insurance coverage to Steele and has no duty to defend or indemnify Steele in an underlying tort action and
2. defense counsel that Foremost has assigned to Steele in the underlying action may withdraw his appearance.

Presently before the Court are two ...

00:08:29
May 15, 2025
Zalma's Insurance Fraud Letter - May 15, 2025

ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional

See the full video at https://lnkd.in/gK_P4-BK and at https://lnkd.in/g2Q7BHBu, and at https://zalma.com/blog and at https://lnkd.in/gjyMWHff.

Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
This issue contains the following articles about insurance fraud:

Health Care Fraud Trial Results in Murder for Hire of Witness

To Avoid Conviction for Insurance Fraud Defendants Murder Witness

In United States of America v. Louis Age, Jr.; Stanton Guillory; Louis Age, III; Ronald Wilson, Jr., No. 22-30656, United States Court of Appeals, Fifth Circuit (April 25, 2025) the Fifth Circuit dealt with the ...

May 15, 2025
CGL Is Not a Medical Malpractice Policy

Professional Health Care Services Exclusion Effective

Post 5073

See the full video at https://lnkd.in/g-f6Tjm5 and at https://lnkd.in/gx3agRzi, and at https://zalma.com/blog plus more than 5050 posts.

This opinion is the recommendation of a Magistrate Judge to the District Court Judge and involves Travelers Casualty Insurance Company and its duty to defend the New Mexico Bone and Joint Institute (NMBJI) and its physicians in a medical negligence lawsuit brought by Tervon Dorsey.

In Travelers Casualty Insurance Company Of America v. New Mexico Bone And Joint Institute, P.C.; American Foundation Of Lower Extremity Surgery And Research, Inc., a New Mexico Corporation; Riley Rampton, DPM; Loren K. Spencer, DPM; Tervon Dorsey, individually; Kimberly Dorsey, individually; and Kate Ferlic as Guardian Ad Litem for K.D. and J.D., minors, No. 2:24-cv-0027 MV/DLM, United States District Court, D. New Mexico (May 8, 2025) the Magistrate Judge Recommended:

Insurance Coverage Dispute:

Travelers issued a Commercial General Liability ...

April 30, 2025
The Devil’s in The Details

A Heads I Win, Tails You Lose Story
Post 5062

Posted on April 30, 2025 by Barry Zalma

"This is a Fictionalized True Crime Story of Insurance Fraud that explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help everyone 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."

Immigrant Criminals Attempt to Profit From Insurance Fraud

People who commit insurance fraud as a profession do so because it is easy. It requires no capital investment. The risk is low and the profits are high. The ease with which large amounts of money can be made from insurance fraud removes whatever moral hesitation might stop the perpetrator from committing the crime.

The temptation to do everything outside the law was the downfall of the brothers Karamazov. The brothers had escaped prison in the old Soviet Union by immigrating to the United...

post photo preview
See More
Available on mobile and TV devices
google store google store app store app store
google store google store app tv store app tv store amazon store amazon store roku store roku store
Powered by Locals