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Insurance Claims professional presents articles and videos on insurance, insurance Claims and insurance law for insurance Claims adjusters, insurance professionals and insurance lawyers who wish to improve their skills and knowledge. Presented by an internationally recognized expert and author.
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July 08, 2025
Insurer that Fails to Tender Settlement Promptly Must be Penalized

Statutory Penalties Must be Based on Evidence
Without Sufficient Evidence Penalty Assessment was Wrongful
Post 5114

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When an appeal involved issues concerning the statutory penalties that apply to an insurer who knowingly or arbitrarily fails to pay a settlement to a third-party claimant within 30 days after a settlement agreement is reduced to writing The plaintiff, James Bridges, Sr., settled his claims arising from an automobile accident for $450,000. The trial court found that the settlement amount was not paid timely and applied La. R.S. 22:1892 to the penalty claim, imposing a penalty of $225,000 on one of the insurance company defendants. The insurers appealed.

In James Bridges, SS. v. Chubb Indemnity Insurance Company, Ace American Insurance Company, Southeast Louisiana Flood Protection Authority-East, East Jefferson Levee District, Deidrick Green, And Government Employees Insurance (In Its Capacity As Uninsured/Underinsured Motorist Carrier, No. 24-CA-593, Court of Appeals of Louisiana, Fifth Circuit (July 2, 2025) dealt with, what appeared to be an excessive penalty for failing to deliver payment within 30 days of settlement.

Defendants’ Appeal

The defendants appealed the judgment, raising five assignments of error concerning the amount of the penalty and the sufficiency of the plaintiff’s proof.

Factual and Procedural Background

James Bridges alleged that he was injured in an automobile accident caused by Deidrick Green’s negligence. Bridges settled his claims with Green, Green’s employer, and their alleged liability insurers for $450,000. The settlement agreement required payment within 30 days of defendants’ receipt of signed release and final payment letter from CMS. He did not assert a claim for any damages sustained as a result of the late payment of the settlement funds.

Trial Court Ruling

The trial court found that Plaintiff had met that burden for several reasons, all of which are clearly based on “facts” presented solely in the supporting and opposing memoranda or in argument of counsel. The trial court found that the failure to pay the settlement timely was arbitrary, capricious, or without probable cause and imposed a penalty of $225,000. The “facts,” which were not presented in the form of competent evidence caused the trial court to conclude that the delay could easily have been avoided, therefore it was not justified or reasonable and issued a judgment against Chubb for penalties of $225,000, or half of the total settlement amount, and $1,500 in attorney fees.

Trial Court Findings on Burden and Elements of Proof

The only evidence that was submitted at the penalty hearing was Bridges’ evidence proving that the conditions of the Settlement Agreement were met. Bridges did not introduce any evidence proving that the settlement payment was untimely or that the delay was arbitrary, capricious, or without probable cause.

Lack of Evidence in this Record

Here, the trial court found that Bridges met his burden of proving that the settlement payment was untimely because “there was no dispute that there was no payment made within thirty days” after it became due. However, the record did not support the trial court’s conclusions that Bridges met his burden of proving facts establishing his entitlement to a penalty under § 1892.

Scope of Insurer’s Duty under § 1892(A)(2)

When the settlement includes property damage and medical expense claims along with other types of damage claims, as it did here, the amount of a penalty awarded under § 1892 may not exceed fifty percent of the amount of the settlement attributable to the property damage and reasonable medical expense claims, or $1,000, whichever is greater.

Analysis and Conclusion

The appellate court concluded that the trial court’s broader interpretation of the statute was contrary to the statute and the Louisiana Supreme Court’s directives.

Therefore, the trial court was ordered to render its decision based on the evidence properly before it for consideration and the interpretation of the penalty provisions in § 1892 set forth in the appellate decision.

ZALMA OPINION

There is usually no logical reason for an insurer to fail to pay an agreed upon settlement in more than 30 days from the settlement. For reasons never brought to the trial court or the appellate court, Chubb failed and by statute must be penalized for that failure. The trial court assessed an excessive penalty based on a lack of evidence from the parties so the trial court must reconsider based on actual evidence.

(c) 2025 Barry Zalma & ClaimSchool, Inc.

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22 hours ago
Fraud Succeeds When Insurer Chooses to Not Sue for Fraud

Unjust Enrichment is an Non-Contract Remedy
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When an Insurer is Defrauded it Should Sue For Fraud Only

MONY Life Insurance Company v. Bernard R. Perez, No. 23-10770, United States Court of Appeals, Eleventh Circuit (July 23, 2025) resulted in a decision that allows an insured of a Disability Insurance policy to successfully defraud his insurer.

The case involved a dispute between MONY Life Insurance Company and Bernard R. Perez, an ophthalmologist, over a disability insurance contract. Perez was diagnosed with throat cancer in 2011 and began receiving monthly disability benefits from MONY. However, MONY later suspected Perez of dishonesty in his disability claims and discontinued payments in 2018.

FACTS

In 1987, ophthalmologist Bernard R. Perez formed a for-profit medical practice in Tampa, Florida. Soon thereafter, in June 1988, Perez applied for, and, in September 1988, was ...

00:08:33
July 30, 2025
Insurer Not Negligent in Causing Accident Caused by Its Insured

USDC Bends Over Backwards to Give a Pro Se Plaintiff Some Causes of Action
Post 5157

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When You Represent Yourself in Litigation You Have a Fool for a Lawyer

Plaintiff Gordon Clark, proceeding pro se, sued Defendant Olga L. Orengo and her auto insurance carrier, The Hanover Insurance Group, Inc. (“Hanover”), related to a motor vehicle collision between Plaintiff and Orengo. Plaintiff alleged that Orengo was at fault for the accident, but Hanover has refused to accept liability. In Gordon Clark v. The Hanover Insurance Group, Inc., No. 3:24-cv-348 (SVN), United States District Court, D. Connecticut (July 22, 2025)

Claims and Motions

Plaintiff has brought eight claims against both Defendants and a ninth claim against Hanover for alleged violations of Plaintiff’s rights under federal and state law. Defendants have both moved to dismiss Plaintiff’s amended complaint in full for failure to state a claim. The ...

00:09:16
July 29, 2025
Corporate Owners are not Innocent Co-Insureds

Arson by Insured’s Management Voids Coverage

Post 5156

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Corporate Owners are not Innocent Co-Insureds

Read the full article at https://lnkd.in/gwkA76x5, see the full video at https://lnkd.in/gBekGhfK and at https://lnkd.in/gwReRCKz and at https://zalma.com/blog plus more than 5150 posts.

Arson by Insured’s Management Voids Coverage

Post 5156

Arson for Profit by Corporate Entity Management Voids Policy

Following a fire that destroyed The Press Bar and Parlor in St. Cloud, Minnesota the insurer denied coverage after its determination that Andrew Welsh – a controlling officer of the insured intentionally set the fire and submitted a false proof of loss.

In Timeless Bar, Inc., doing business as The Press Bar and Parlor; Horseshoe Club, LLC; Jessie Welsh v. Illinois Casualty Company, No. 24-2245, United States Court of Appeals, Eighth ...

00:07:29
July 16, 2025
There is no Tort of Negligent Claims handling in Alaska

Rulings on Motions Reduced the Issues to be Presented at Trial

Read the full article at https://lnkd.in/gwJKZnCP and at https://zalma/blog plus more than 5100 posts.

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 ...

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May 15, 2025
Zalma's Insurance Fraud Letter - May 15, 2025

ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional

See the full video at https://lnkd.in/gK_P4-BK and at https://lnkd.in/g2Q7BHBu, and at https://zalma.com/blog and at https://lnkd.in/gjyMWHff.

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 ...

May 15, 2025
CGL Is Not a Medical Malpractice Policy

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 ...

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