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.
Insurance Expert May Not Testify to Speculative and Contains Unsupported Conclusions.
Posted on September 18, 2026 by Barry Zalma
See the full video at and at https://rumble.com/v7fmifw-expert-may-only-testify-to-what-experience-supports.html
In Michele A. Over, and The Estate Of Paul R. Over v. State Farm Mutual Automobile Insurance Company, and State Farm Fire And Casualty Company, Civil Action No. 23-cv-02243-PAB-STV, United States District Court, D. Colorado (September 14, 2026) Michele and Paul Over sued State Farm Fire and State Farm Auto over hail-damage and stolen-vehicle claims.
The operative dispute concerned State Farm Auto’s motion to exclude or limit opinions from plaintiffs’ insurance-industry expert, Aaron Castillo. Castillo.
Law
The proponent of expert testimony must establish by a preponderance of the evidence that an expert is qualified and that the opinions are helpful, sufficiently grounded, and reliably derived and applied. Experience-based opinions must explain how the...
150 Months in Prison for Tax Fraud
Post 4846
Posted on September 17, 2026 by Barry Zalma
See the full video at https://lnkd.in/g8rh3JBX and https://lnkd.in/gmkdy-9C, In United States Of America v. Thomas Addaquay, Nos. 25-10609, 25-10611, United States Court of Appeals, Eleventh Circuit (September 9, 2026) the Eleventh Circuit affirmed all challenged convictions, the 150-month aggregate sentence, and the challenged $4,123,474.55 restitution award.
FACTS
In United States Of America v. Thomas Addaquay, United States Of America v. Thomas Addaquay, Nos. 25-10609, 25-10611, United States Court of Appeals, Eleventh Circuit (September 9, 2026) the Eleventh Circuit affirmed all challenged convictions, the 150-month aggregate sentence, and the challenged $4,123,474.55 restitution award.
FACTS
Thomas Addaquay controlled United Consolidated Accounting and Business Services (UC), nominally a check-cashing business.
The government proved a three-stage tax-refund scheme that converted the resulting refund checks into usable funds through ...
Major Fraud Perpetrator Asserts Fifth Amendment Privilege to Avoid Prosecution
Post 5489
Posted on September 14, 2026 by Barry Zalma
Fraudster Refuses to Answer Questions About His Alleged Fraud
See the full video at https://lnkd.in/gvicAMDr and at https://lnkd.in/gvicAMDr
In Great American Insurance Co. v. Gemstone Property Management, LLC, et al., No. 23-cv-9100 (LJL), United States District Court, S.D. New York (September 8, 2026) Great American Insurance Company alleged that it was defrauded through a scheme in which Subin Associates, LLP recruited individuals to stage construction-site injuries, arranged unnecessary medical treatment and litigation funding, and pursued fraudulent personal-injury claims.
Luis Manuel Garcia Salcedo, resulted in a $6 million settlement. Non-party Jose Hernandez allegedly worked as an assistant manager at Subin, operated Hernandez Associates, and owned litigation-funding companies that shared office space with Subin and provided services to its clients.
After Great American ...
Blockchain Fraud Detection Loses Protection
Posted on October 22, 2026 by Barry Zalma
John Earl Madden (April 10, 1936 – December 28, 2021) was an American Professional Football Coach and Sports Commentator in the National Football League Seeking Patent & Trademark Protection
BLOCKCHAIN FRAUD
Mr. Madden was more than football. He was working to establish a program called “Fraud Protection Systems, Methods, and Computer Programs for Blockchain Financial Transactions.”
In Ex parte John Madden, Appeal 2026-001497, Application 18/495,506, Technology Center 3600, United States Patent and Trademark Office, Patent Trial and Appeal Board (October 14, 2026)
The Examiner rejected claims several numbered claims under 35 U.S.C. § 101 as directed to an abstract idea without significantly more.
THE LAW
Section 101 makes patentable any new and useful process, machine, manufacture, or composition of matter.Laws of nature, natural phenomena, and abstract ideas are implicitly excluded.
THE PATENT TRIAL AND ...
Sovereign Immunity Defeats Suit Against Police Officers
Post 4866
Posted on October 21, 2026 by Barry Zalma
In Chad Lightfoot, et al. v. Progressive Direct Insurance Company, et al., Civil Action No. 26-434, United States District Court, E.D. Louisiana (October 9, 2026) Chad Lightfoot was involved in an Orleans Parish automobile accident in 2011 and filed claims with several insurers, including Progressive.
After a related civil dispute, Progressive counsel allegedly submitted a false affidavit stating that Lightfoot had fraudulently received a $50,000 payment. A New Orleans police detective relied on the affidavit to obtain an arrest warrant, and Louisiana State Police Lieutenant Alan Arcana allegedly reported that Lightfoot had received the payment. Lightfoot was arrested in 2015 and charged with theft, insurance fraud, and perjury.
Plaintiffs alleged that no record of the payment existed and that the criminal charges were dismissed on October 15, 2024.
Lightfoot and Geralyn Hawkins filed suit in October 2025 and ...
A Suit Filed Before the Claim Exists is Fatal
Post 4870
Posted on October 20, 2026 by Barry Zalma
In Louis Briggs v. Shaun Wimberly; Somerset Services, Inc.; And Wimberly & Associates, PLLC, and Louis Briggs v. Shaun Wimberly And Wimberly & Associates, PLLC Nos. 2024-CA-1471-MR, 2025-CA-1366-MR, Court of Appeals of Kentucky (October 9, 2026) Louis Briggs was arrested in 2014 after an incident with police and charged with several offenses, including third-degree assault.
Probable cause was found and an indictment was returned, but the charges were eventually dismissed. His attorney, Shaun Wimberly, then filed a federal civil rights suit for Briggs in a United States district court, which also asserted state-law claims. The district court dismissed most of the claims and declined to exercise jurisdiction over the remaining state-law claims. Briggs blamed Wimberly for the result, fired him, and appealed to the Sixth Circuit.
While the federal appeal was pending, Briggs filed a legal malpractice action against Wimberly in the Jefferson Circuit Court. The Sixth ...
