Workers’ Compensation Availability Eliminates Cover Under D&O Policy
Post 5069
Sexual Harassment in the Workplace is Subject to Workers’ Compensation Law
See the full video at https://lnkd.in/gMCSBEV3 and at https://lnkd.in/gdBcT9DW, and at https://zalma.com/blog plus more than 5050 posts.
Rice Enterprises, LLC (“Rice”) appealed the District Court’s order dismissing its claims for insurance coverage against Zenith Insurance Company and partially dismissing its claims against RSUI Indemnity Company. Rice argued the District Court erred in applying two exclusions from the Zenith policy and in finding that coverage under RSUI’s “Umbrella” policy had not been “triggered.”
In Rice Enterprises, LLC v. RSUI Indemnity Co and Zenith Insurance Company, No. 24-1880, United States Court of Appeals, Third Circuit (April 30, 2025) affirmed the decisions of the District Court.
FACTS
Rice operated eight McDonald’s franchises in Allegheny County, Pennsylvania. On September 21, 2021, Rice’s former employee, L.H., sued Rice in the Allegheny County Court of Common Pleas for negligence. L.H. alleged Rice had hired a manager who was a “Lifetime Offender” under Megan’s Law, who proceeded to sexually harass and ultimately rape L.H.
Rice sought coverage with respect to L.H.’s suit under three insurance policies: one issued by Zenith and two by RSUI. The Zenith policy was the “Employers’ Liability” half of a dual “Workers’ Compensation and Employers’ Liability” policy, which covered liability due to “bodily injury . . . aris[ing] out of and in the course of [an] injured employee’s employment.” RSUI’s two policies were a “Directors and Officers Liability” policy and a “Commercial Umbrella” liability policy.
The Umbrella policy, the only RSUI policy provided for a defense if: a. The applicable limits of insurance of the “underlying insurance” and other insurance have been used up in the payment of judgments or settlements; or b. No other valid and collectible insurance is available to the insured for damages covered by this policy.”
Zenith moved to dismiss all claims against it, and RSUI moved to dismiss Rice’s claims only as to the Umbrella policy. The District Court granted both motions.
THE DISTRICT COURT DECISIONS
As to the Zenith policy, the District Court ruled that two exclusions applied. The first, termed “C.4,” excluded coverage for “[a]ny obligation imposed by a workers’ compensation, occupational disease, unemployment compensation, or disability benefits law, or any similar law.” The District Court interpreted C.4 to bar coverage for any claim falling within the exclusive domain of Pennsylvania’s Workers’ Compensation Act and it determined L.H.’s suit was such a claim because “the injuries and damages alleged by L.H. occurred during the course of L.H.’s employment and at L.H.’s Rice employment worksite.”
The second exclusion, “C.7,” barred coverage for “[d]amages arising out of coercion, criticism, demotion, evaluation, reassignment, discipline, defamation, harassment, humiliation, discrimination against or termination of any employee, or any personnel practices, policies, acts or omissions.” Because all allegations in L.H.’s complaint described harassing conduct by her supervisor, the District Court concluded C.7 applied.
As to the RSUI Umbrella policy, the District Court determined that coverage was not “triggered” because there was no allegation that other insurance had been used up or was unavailable.
ZENITH POLICY
Rice argued the District Court erred in applying C.7 because Rice’s liability arose out of “sexual misconduct” rather than “harassment.” However, instances of physical contact have the potential to be among the most severe and psychologically damaging types of sexual harassment.
The Third Circuit concluded that Rice’s claims against Zenith were properly dismissed.
RSUI Umbrella Policy
The RSUI Umbrella policy provides for a defense if other insurance policies have been used up or are unavailable. Rice’s complaint does not allege that either condition was met. The Third Circuit concluded Rice’s claims under the RSUI Umbrella policy were properly dismissed.
While Rice conceded that “the underlying insurance policies had not yet been exhausted,” Rice nevertheless argued that the RSUI Umbrella policy should have been kept in the case for convenience which argument was summarily rejected.
ZALMA OPINION
It continues to amaze me that lawyers will bring cases to an appellate court when faced with clear and unambiguous policy exclusions and even ask to keep an umbrella insurer as a defendant “for convenience” when the underlying policy had not been exhausted. Insurance policies are contracts and must be interpreted, as did the Third Circuit, as they are written.
(c) 2025 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
Go to X @bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/account/content?type=all; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://lnkd.in/gwEYk.
Intentionally Shooting a Woman With A Rifle is Murder
Post 5196
See the full video at and at and at https://zalma.com/blog and more than 5150 posts.
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.
Guilty Plea Facts:
The appellant admitted during the plea hearing...
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 ...
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 ...
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 ...
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 ...
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 ...
