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January 22, 2024
Who’s on First – Defense and/or Indemnity

Insurer v. Insurer Disputes Should be Resolved by Mediation Rather Than Litigation

Barry Zalma
Jan 22, 2024

Read the full article at https://lnkd.in/gsGmB8HY, see the full video at https://lnkd.in/gXqr4hzR and at https://lnkd.in/gvgzk8MH, and at https://zalma.com/blog plus more than 4700 posts.

Post 4717

In an insurance coverage dispute that arose out of the tragic death of an employee on a construction site the Fifth Circuit was called upon to determine which insurer was obligated to deal with the claims of the family of the deceased employee because the insurers could not agree.

In Gemini Insurance Company v. Indemnity Insurance Company of North America, No. 23-20026, United States Court of Appeals, Fifth Circuit (January 12, 2024) the court dealt with the coverage disputes over which insurer is obligated to defend and or indemnify which person or entity.

BACKGROUND FACTS

ExxonMobil Corporation (“Exxon Mobil”) retained Bechtel Oil, Gas, and Chemicals, Inc. (“Bechtel”) as a general contractor to build a new hydrocarbon processing facility in Beaumont, Texas (the “Project”). As part of its contract with Bechtel, Exxon Mobil implemented an Owner Controlled Insurance Program (“OCIP”), which provided workers’ compensation and employers’ liability coverage to Bechtel and all of its subcontractors. Bechtel retained Echo Maintenance, L.L.C. (“Echo”) as a subcontractor to perform mechanical, structural, and piping work on the Project. Bechtel and Echo subsequently entered into a contract that incorporated the OCIP and required Echo to enroll in the program (the “Subcontract”). Both Bechtel and Echo were enrolled in the OCIP.

Indemnity’s Workers’ Compensation and Employers’ Liability Policies Issued Under The OCIP

Under the OCIP, Indemnity Insurance Company of North America (“Indemnity”) issued a workers’ compensation and employers’ liability insurance policy to Bechtel (“OCIP Policy”). Separately, Gemini Insurance Company (“Gemini”) issued a general commercial liability policy to Echo under which Bechtel was an additional insured.

Part Two the OCIP Policy sets forth the type of covered claim that Indemnity agreed to defend and indemnify Bechtel. The OCIP contained a VCEL Endorsement whose first provision explains that the endorsement “adds Voluntary Compensation Insurance to the policy,” and that the insurance applies to bodily injury by accident so long as it is “sustained by an employee included in the group of employees described in the Schedule” and “arise[s] out of and in the course of employment necessary or incidental to work in a state listed in the Schedule.”

Employers’ Liability Insurance

It defines “State of Employment” in relevant part as “Texas but only at the site indicated in the designated premises endorsement.”

Underlying Incident and Lawsuit

In December 2017, Ms. Espinoza was working as a pipefitter helper on the Project when she was struck by a piece of pipe and sustained fatal injuries. In response to the suit brought by her heirs, Bechtel sought coverage as an additional insured on the commercial general liability policy issued by Gemini to Echo and received a defense from Gemini under a reservation of rights.

Bechtel moved for summary judgment on the heirs suit because Exxon Mobil’s OCIP provided blanket workers’ compensation insurance and coverage to Bechtel and Echo, Intervenors’ sole remedy in accordance with Texas Labor Code was workers’ compensation benefits. The state court granted Bechtel’s motion for summary judgment.

DISCUSSION

The main issue was whether Ms. Espinoza was an “employee” of Bechtel within the terms of the OCIP policy. Reading the VCEL Endorsement together with Part Two, the Fifth Circuit concluded that the only reasonable interpretation was that the VCEL Endorsement expanded the definition of a Bechtel “employee.” The ordinary meaning of “employee” is someone who works in the service of another person (the employer) under an express or implied contract of hire, under which the employer has the right to control the details of work performance. The Fifth Circuit concluded that the VCEL Endorsement expanded the OCIP Policy’s definition of “employee” to include employees of Bechtel’s subcontractors, such as Ms. Espinoza.

THE DUTIES TO DEFEND AND INDEMNIFY

Duty to Defend

Ms. Espinoza was an employee of Echo, but also simultaneously working for Bechtel at the designated premises, thus satisfying the VCEL Endorsement. Ms. Espinoza was killed while working in the scope of her employment. The allegations, construed liberally, constitute a claim potentially within the OCIP policy. As a result Indemnity had a duty to defend Bechtel in the Underlying Litigation.

Duty to Indemnify

There is no dispute that Ms. Espinoza was an Echo employee, that Echo was a subcontractor of Bechtel, that Bechtel and Echo had a written contract, and that the work they performed was on a “designated premises” within the meaning of the OCIP Policy the workers’ compensation OCIP coverage applies. Bechtel “provided” workers’ compensation insurance to Echo when they executed the Subcontract. Accordingly, Indemnity has a duty to indemnify Bechtel as well.

Contractual and Equitable Subrogation

Because the district court concluded that Indemnity did not have a duty to defend or indemnify Gemini, it never addressed the substance of Gemini’s subrogation arguments. The Fifth Circuit reversed the district court’s grant of Indemnity’s motion for summary judgment and remanded the case back to the district court with instructions to:

1 grant Gemini’s motion for summary judgment on Indemnity’s duties to defend and indemnify under the Policy, and

2 consider the subrogation issues in the first instance.

ZALMA OPINION

Insurance policies must be dealt with as an entirety, no matter how extensive or complex. Once the court determined that Ms. Espinoza was an employee it resolved the dispute and found that Indemnity owed defense and indemnity to the defendants. The insurer’s should not have engaged in this litigation but worked out a resolution to the benefit of the insureds with the assistance of a mediator knowledgeable about insurance issues. Failing to do so, after the expenditure of discovery, a summary judgment and an appeal the obvious resulted a case where only one party was happy and there existed a possibility that much would be saved by an agreement between equals.

(c) 2024 Barry Zalma & ClaimSchool, Inc.

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

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

00:10:17
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Post 5196

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You Plead Guilty You Must Accept the Sentence

In Commonwealth Of Pennsylvania v. Mark D. Redfield, No. 20 WDA 2025, No. J-S24010-25, Superior Court of Pennsylvania (September 19, 2025) the appellate court reviewed the case of Mark D. Redfield, who pleaded guilty to third-degree murder for killing April Dunkle with malice using a rifle.

Affirmation of Sentence:

The sentencing court’s judgment was affirmed, and jurisdiction was relinquished, concluding no abuse of discretion occurred.

Reasonable Inference on Trigger Pulling:

The sentencing court reasonably inferred from the guilty plea facts that the appellant pulled the trigger causing the victim’s death, an inference supported by the record and consistent with the plea.

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00:07:16
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September 25, 2025
Prelitigation Communications Privileged

The Judicial Proceedings Privilege
Post 5196

Posted on September 25, 2025 by Barry Zalma

See the full video at and at

Judicial Proceeding Privilege Limits Litigation

In David Camp, and Laura Beth Waller v. Professional Employee Services, d/b/a Insurance Branch, and Brendan Cassity, CIVIL No. 24-3568 (RJL), United States District Court, District of Columbia (September 22, 2025) a defamation lawsuit filed by David Camp and Laura Beth Waller against Insurance Branch and Brendon Cassity alleging libel based on statements made in a letter accusing them of mishandling funds and demanding refunds and investigations.

The court examined whether the judicial proceedings privilege applieD to bar the defamation claims.

Case background:

Plaintiffs Camp and Waller, executives of NOSSCR and its Foundation, sued defendants Insurance Branch and Cassity over a letter alleging financial misconduct and demanding refunds and audits. The letter ...

00:07:56
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September 24, 2025
Untrue Application for Insurance Voids Policy

Misrepresentation or Concealment of a Material Fact Supports Rescission

Post 5195

Don’t Lie to Your Insurance Company

See the full video at and at https://rumble.com/v6zefq8-untrue-application-for-insurance-voids-policy.html and at https://zalma.com/blog plus more than 5150 posts.

In Imani Page v. Progressive Marathon Insurance Company, No. 370765, Court of Appeals of Michigan (September 22, 2025) because defendant successfully established fraud in the procurement, and requested rescission, the Court of Appeals concluded that the Defendant was entitled to rescind the policy and declare it void ab initio.

FACTS

Plaintiff's Application:

Plaintiff applied for an insurance policy with the defendant, indicating that the primary use of her SUV would be for "Pleasure/Personal" purposes.

Misrepresentation:

Plaintiff misrepresented that she would not use the SUV for food delivery, but records show she was compensated for delivering food.

Accident:

Plaintiff's SUV was involved in an accident on August ...

00:07:48
September 09, 2025
The Dishonest Chiropractor/Physician

How a Need for Profit Led Health Care Providers to Crime
Post 5185
Posted on September 8, 2025 by Barry Zalma

See the full video at https://lnkd.in/gePN7rjm and at https://lnkd.in/gzPwr-9q

This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers.

The Dishonest Chiropractor/Physician

How a Need for Profit Led Health Care Providers to Crime

See the full video at and at

This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to 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.

How Elderly Doctors Fund their ...

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September 08, 2025
The Dishonest Chiropractor/Physician

How a Need for Profit Led Health Care Providers to Crime
Post 5185
Posted on September 8, 2025 by Barry Zalma

See the full video at https://lnkd.in/gePN7rjm and at https://lnkd.in/gzPwr-9q

This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers.

The Dishonest Chiropractor/Physician

How a Need for Profit Led Health Care Providers to Crime

See the full video at and at

This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to 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.

How Elderly Doctors Fund their ...

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September 03, 2025

Barry Zalma: Insurance Claims Expert Witness
Posted on September 3, 2025 by Barry Zalma
The Need for a Claims Handling Expert to Defend or Prove a Tort of Bad Faith Suit

© 2025 Barry Zalma, Esq., CFE

When I finished my three year enlistment in the US Army as a Special Agent of US Army Intelligence in 1967, I sought employment where I could use the investigative skills I learned in the Army. After some searching I was hired as a claims trainee by the Fireman’s Fund American Insurance Company. For five years, while attending law school at night while working full time as an insurance adjuster I became familiar with every aspect of the commercial insurance industry.

On January 2, 1972 I was admitted to the California Bar. I practiced law, specializing in insurance claims, insurance coverage and defense of claims against people insured and defense of insurance companies sued for breach of contract and breach of the implied covenant of good faith and fair dealing. After 45 years as an active lawyer, I asked that my license to practice law be declared inactive ...

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