Criminal Investigation of Insurance Fraud Without Indictment Not Grounds for Stay of Civil Action
Post 4828
Read the full article at https://lnkd.in/gsJrsuz5, see the full video at https://lnkd.in/g2cGwFh7 and at https://lnkd.in/gpHUbHfU and at https://zalma.com/blog plus more than 4800 posts.
Defendant Kith Furniture, LLC’s moved to stay the proceedings brought by Liberty Mutual in Liberty Mutual Fire Insurance Company v. Kith Furniture, LLC, No. 6:23-cv-01130-LSC, United States District Court, N.D. Alabama, Jasper Division (July 1, 2024) and the District Court resolved the dispute.
BACKGROUND
Defendant Kith Furniture, LLC’s moved to stay the proceedings brought by Liberty Mutual in Liberty Mutual Fire Insurance Company v. Kith Furniture, LLC, No. 6:23-cv-01130-LSC, United States District Court, N.D. Alabama, Jasper Division (July 1, 2024) and the District Court resolved the dispute.
BACKGROUND
Kith’s furniture plant and inventory were allegedly damaged in a tornado. While investigating Kith’s insurance claim, Plaintiff Liberty Mutual Fire Insurance Company learned information that called Kith’s claim into question and warranted further investigation. Kith insisted that Liberty continue making payments under the policy “during the pendency of this investigation.”
Liberty sued seeking a declaration that it need not continue making payments until it concludes its investigation. Simultaneously the Alabama Department of Insurance, Fraud Bureau opened an investigation into Kith’s insurance claim.
Liberty amended its complaint to add a new claim alleging fraud and Liberty alleged that Kith employees “intentionally damaged” “almost $500,000 worth” of “furniture that [Kith] could no longer sell to make it look like it had been damaged in the tornado.” Kith asked the Court to stay all proceedings in this action pending the Alabama Department of Insurance’s criminal investigation.
DISCUSSION
Kith contended that it will be substantially prejudiced by having to defend itself in this action while simultaneously facing a parallel criminal investigation. Liberty countered that, if this Court stays this action, Liberty will be substantially prejudiced by the very real risk that evidence would be lost and memories would fade.
This Case Significantly Overlaps The Related Criminal Investigation.
The Alabama Department of Insurance opened its criminal investigation on the very insurance claim at issue here. Kith asserted that the investigation and this case “involve the same legal theories and alleged conduct by Kith,” and are “practically identical.” Liberty dismissed Kith’s assertions as “entirely speculative,” emails exchanged between Liberty and a criminal investigator tend to corroborate Kith’s assertions.
Kith Has No Fifth Amendment Rights.
The Fifth Amendment privilege against self-incrimination does not extend to non-natural entities. Courts routinely hold parallel criminal proceedings and do not entitle corporate defendants to a stay of civil proceedings.
There Are No Pending Criminal Proceedings.
Among Liberty’s attempts to distinguish this case from those cited by Kith, one fact stands out: here, there are no pending or imminent criminal proceedings. The record does not indicate that anyone has been indicted, charged, or arrested for any crime related to this insurance dispute. The lack of pending or imminent criminal proceedings makes any potential avoidance of prejudice to Kith or any potential conservation of judicial resources by granting a stay entirely speculative.
Liberty Faces Potential Prejudice From Delayed Proceedings.
Liberty argued that staying this case would be putting Liberty’s civil action on the shelf to grow cold without the benefit of a criminal prosecution against Kith.
Although Alabama’s ongoing investigation somewhat mitigates the risk that evidence will be lost and memories will fade, the current absence of any arrests or criminal charges failed to assure the Court that Alabama’s investigation will be sufficiently “brief” and “exhaustive” to shield Liberty from all prejudice. This factor weighs heavily in Liberty’s favor. Therefore, Defendant Kith Furniture, LLC’s motion to stay proceedings was denied.
ZALMA OPINION
Liberty found evidence of fraud and needed to move forward with its action before evidence became lost or forgotten. A criminal investigation without an arrest or indictment is nothing more than that: an investigation. There was no reason for a stay of the civil action. My experience makes clear that state investigations into insurance fraud seldom result in arrest or trial while a civil action asserting fraud can be brought to trial quickly without the need a criminal investigation has to prove the fraud beyond a reasonable doubt.
(c) 2024 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 my substack at https://barryzalma.substack.com/subscribe or Subscribe to my substack at https://lnkd.in/gmmzUVBy
Go to X @bzalma; Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01; 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://lnkd.in/gwEYk
Fraud Judgment for $45.657,401.01 Against Fraudster Seeks Bankruptcy Protection
Post 4904
Read the full article at https://www.linkedin.com/pulse/chutzpah-fraud-perpetrator-tries-use-court-avoid-zalma-esq-cfe-drswc, sSee the full video at and at and at https://zalma.com/blog.
Court Refuses to Allow Procedural Rules To Enable Fraud Perpetrator Lupolover To Manipulate the Federal Court to Avoid Paying The Judgment
Before the USDC, ED, New York was the motion of Non-Debtor Respondents Michael Lupolover and NJTM Ventures, LLC seeking reconsideration of the Court’s July 29, 2024 Order establishing a temporary restraining order (TRO).
In Allstate Insurance Company, et al. v. Mark Mirvis, et al., No. 08-CV-4405 (PKC), United States District Court, E.D. New York (September 26, 2024) was compelled to continue jurisdiction of an October 2008 motion by Plaintiff Allstate Insurance Company after...
Insurance Fraud Exists at the Time the False Claim is Made Not Payment of the False Claim
Read the full article at https://www.linkedin.com/pulse/intentionally-presenting-false-claim-crime-barry-zalma-esq-cfe-lrp6c, see the full video at and and at https://zalma.com/blog plus more than 4900 posts.
Post 4903
A Knox County, Tennessee jury convicted John M. Fletcher of initiating a false report to a law enforcement officer and presenting a false or fraudulent insurance claim. The trial court imposed an effective sentence of four years.
In State Of Tennessee v. John M. Fletcher, No. E2022-01319-CCA-R3-CD, Court of Criminal Appeals of Tennessee, Knoxville (September 24, 2024) the court of appeals disposed of the false report to a law enforcement officer and dealt with the Insurance Frau charge.
FACTUAL BACKGROUND
On November 11, 2018, the Defendant purchased a 2006 black Hummer. The Defendant owned several other ...
Independent Adjuster Owes no Duty to Insured Absent Fraud
Post 4902
Read the full article at https://www.linkedin.com/pulse/adjuster-only-owes-duty-insurer-barry-zalma-esq-cfe-ouoqc, see the full video at and at and at https://zalma.com/blog plus more than 4900 posts.
Defendant Applied Building Sciences, Inc. (“Applied”) moved the USDC to dismiss claims of negligence, intentional misrepresentation, and conspiracy brought by Plaintiff Hermes Health Alliance, LLC (“Hermes”).In Hermes Health Alliance, LLC v. Certain Underwriters At Lloyd’s, London, et al., Civil Action No. 23-2276, United States District Court, E.D. Louisiana (September 25, 2024) the USDC resolved the dispute.
BACKGROUND
Defendant Applied Building Sciences, Inc. (“Applied”) moved the USDC to dismiss claims of negligence, intentional misrepresentation, and conspiracy brought by Plaintiff Hermes Health Alliance, LLC (“Hermes”).
In Hermes...
No Coverage After Failure to Pay Premium Before Ten Days Notice to Cure Cancellation
Post 4900
Read the full article at https://www.linkedin.com/pulse/failure-pay-premium-results-cancellation-barry-zalma-esq-cfe-krlxc and see the full video at and at and at https://zalma.com/blog
Posted on September 27, 2024 by Barry Zalma
In a this first-party automobile negligence action, defendant, USA Underwriters (USAU), appealed the trial court’s order denying its motion for summary disposition even though policy had been cancelled six months before accident.
In Cynthia Jackso v. John Doe and Eddie Jennard Richardson, and USA Underwriters, No. 367269, Court of Appeals of Michigan (September 19, 2024) the Court of Appeals resolved the dispute by applying Michigan statutes.
FACTS
USAU provided auto insurance coverage to Willie Jackson to provide auto insurance, including uninsured motorist benefits ...
Intentional Acts, Insurance Claims & Exclusions
Insurance Requires a Fortuitous Act
Available only to subscribers to Excellence in Claims Handling at Subscribe to “Excellence in Claims Handling” at https://barryzalma.substack.com/subscribe for only $5 a month or $50 a year.
It includes the following: "In 1978, the California Supreme Court in Clemmer v. Hartford Insurance Co.71 dealt with a shooting that resulted in the death of the victim.
Regardless, it still led to a finding by the Supreme Court of California of a need for defense and indemnity. The court concluded that Hartford had no duties with regard to Dr. Lovelace’s intentional acts in the killing of Dr. Clemmer but was obligated to defend him. If there was a finding of nonintentional conduct in the shooting, however, it would be obligated to defend and its refusal to do so was wrongful."
Go to my Interview on the Art of Adjusting Podcast
Barry Zalma, Esq., CFE
Insurance claims expert, consultant at Barry Zalma, Inc. and author/Publisher at ClaimSchool, Inc.
August 30, 2024
Posted on August 30, 2024 by Barry Zalma
See the video at:
In this episode, Chantal Roberts and William Auten welcome Barry Zalma, a seasoned insurance industry professional with over 56 years of experience. The trio discusses the changing role of insurance adjusters, their relationship with policyholders, and the current challenges faced by the industry.
Barry shares his journey from a military investigator to a trainee adjuster and recounts significant cases that shaped his career. Barry focuses on the critical importance of effective and fair claims handling for the profitability of insurance companies and the detrimental impact of poor handling practices. The team also grapple insurance fraud, the adversarial nature of the legal system, and the ...
