STATUTORY OBLIGATION TO FIGHT FRAUD INCLUDES THE RIGHT TO EXAMINE PEOPLE CLAIMING NO FAULT INJURIES UNDER OATH
Apparent Staged Accident Requires EUO to Investigate Potential Fraud
Post 4995
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The trial court initially denied Allstate’s suit stating that Allstate failed to show good cause and did not cite any contractual provision compelling the Appellees to provide information in an examination under oath (“EUO”). Allstate argued that it had a duty to investigate suspected insurance fraud and that the Appellees had a contractual obligation to submit to EUOs.
In Allstate Property And Casualty Insurance Company v. Gloria E. Companioni; Isair H. Lubo-Rodriguez; and Mercedes H. Cervantes, No. 2023-CA-1012-MR, Court of Appeals of Kentucky (February 7, 2025) resolved the dispute.
The Court of Appeals of Kentucky vacated the trial court’s total denial of the petition and remanded the case for further proceedings. The appellate court found that the trial court overlooked contractual provisions allowing Allstate to conduct EUOs and binding precedent that permits inquiries into accident-related issues. The appellate court directed the trial court to reconsider whether good cause exists to allow questioning pertaining to medical treatment and solicitation, following the principles set forth in Deadwyler v. Grange Property and Casualty Insurance Company.
The appellate court’s decision emphasized the importance of allowing insurers to conduct thorough investigations, especially when there are concerns about potential fraud. The case highlights the balance between protecting claimants’ rights and ensuring that insurers can fulfill their duty to investigate claims thoroughly.
FACTS
Gloria Companioni was driving a car insured by Allstate which was in an accident with another car. Appellees Isair Lubo-Rodriguez and Mercedes Cervantes were allegedly riding in the car Companioni was driving when the accident happened. All three resided in Kentucky.
Four days after the accident, all three Appellees commenced care at Total Health Chiropractic and Rehab (“Total Health”). The next day (five days after the accident), Appellees submitted Personal Injury Protection (“PIP”) applications through counsel. Appellees requested reimbursement for medical treatment resulting from the accident and for any coverage available, including coverage for basic reparations benefits (“BRB”).
Allstate filed a suit for an EUO pursuant to Kentucky statutes.
ANALYSIS
Trial Court Erred in Finding Allstate Failed to Cite a Contractual Provision Which Required Appellees to Submit to EUOs
The trial court overlooked policy provisions relating to EUOs, but it also overlooked pertinent authority allowing inquiries into predominantly accident-related issues in EUOs. In sum, its total denial of the EUO petition cannot stand and must be vacated with the case remanded to the trial court for further proceedings.
The appellate court directed the trial court to consider its guidance in considering anew whether good cause exists to permit questioning about matters of medical treatment and/or solicitation via EUO and, if so, to establish any appropriate limits on such questioning.
The trial court’s total denial of the EUO petition was vacated and remanded for the trial court to issue a new order allowing an EUO at least regarding purely accident-related issues, to reconsider whether good cause exists to permit inquiries pertaining to medical treatment and solicitation, and to provide direction to the parties as to the permissible scope of inquiry.
ZALMA OPINION
Kentucky, like most states, requires insurers to maintain a Special Fraud Investigative Unit to help the state defeat insurance fraud and to protect every insurer doing business in the state from damages from fraud. Allstate, faced with an apparent staged accident sought to examine the parties claiming injury under oath in its effort to fully investigate a potential insurance fraud. The trial court refused but the Court of Appeals of Kentucky reversed requiring the trial court to approve the EUOs.
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Concurrent Cause Doctrine Does Not Apply When all Causes are Excluded
Post 5119
Death by Drug Overdose is Excluded
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Southern Insurance Company Of Virginia v. Justin D. Mitchell, et al., No. 3:24-cv-00198, United States District Court, M.D. Tennessee, Nashville Division (October 10, 2024) Southern Insurance Company of Virginia sought a declaratory judgment regarding its duty to defend William Mitchell in a wrongful death case pending in California state court.
KEY POINTS
1. Motion for Judgment on the Pleadings: The Plaintiff moved for judgment on the pleadings, which was granted in part and denied in part.
2. Duty to Defend: The court found that the Plaintiff has no duty to defend William Mitchell in the California case due to a specific exclusion in the insurance policy.
3. Duty to Indemnify: The court could not determine at this stage whether the Plaintiff had a duty to ...
GEICO Sued Fraudulent Health Care Providers Under RICO and Settled with the Defendants Who Failed to Pay Settlement
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Post 5119
Default of Settlement Agreement Reduced to Judgment
In Government Employees Insurance Company, Geico Indemnity Company, Geico General Insurance Company, and Geico Casualty Company v. Dominic Emeka Onyema, M.D., DEO Medical Services, P.C., and Healthwise Medical Associates, P.C., No. 24-CV-5287 (PKC) (JAM), United States District Court, E.D. New York (July 9, 2025)
Plaintiffs Government Employees Insurance Company and other GEICO companies (“GEICO”) sued Defendants Dominic Emeka Onyema, M.D. (“Onyema”), et al (collectively, “Defendants”) alleging breach of a settlement agreement entered into by the parties to resolve a previous, fraud-related lawsuit (the “Settlement Agreement”). GEICO moved the court for default judgment against ...
ZIFL – Volume 29, Issue 14
Post 5118
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You can read the full 20 page issue of the July 15, 2025 issue at https://lnkd.in/giaSdH29
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
This issue contains the following articles about insurance fraud:
The Historical Basis of Punitive Damages
It is axiomatic that when a claim is denied for fraud that the fraudster will sue for breach of contract and the tort of bad faith and seek punitive damages.
The award of punitive-type damages was common in early legal systems and was mentioned in religious law as early as the Book of Exodus. Punitive-type damages were provided for in Babylonian law nearly 4000 years ago in the Code of Hammurabi.
You can read this article and the full 20 page issue of the July 15, 2025 issue at https://zalma.com/blog/wp-content/uploads/2025/07/ZIFL-07-15-2025.pdf
Insurer Refuses to Submit to No Fault Insurance Fraud
...
Rulings on Motions Reduced the Issues to be Presented at Trial
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CASE OVERVIEW
In Richard Bernier v. State Farm Mutual Automobile Insurance Company, No. 4:24-cv-00002-GMS, USDC, D. Alaska (May 28, 2025) Richard Bernier made claim under the underinsured motorist (UIM) coverage provided in his State Farm policy, was not satisfied with State Farm's offer and sued. Both parties tried to win by filing motions for summary judgment.
FACTS
Bernier was involved in an auto accident on November 18, 2020, and sought the maximum available UIM coverage under his policy, which was $50,000. State Farm initially offered him $31,342.36, which did not include prejudgment interest or attorney fees.
Prior to trial Bernier had three remaining claims against State Farm:
1. negligent and reckless claims handling;
2. violation of covenant of good faith and fair dealing; and
3. award of punitive damages.
Both Bernier and State Farm dispositive motions before ...
ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional
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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 ...
Professional Health Care Services Exclusion Effective
Post 5073
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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 ...
