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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Agent Loses License for Misappropriating Insurers Funds
Post 5254
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Insurance Agent Fraud Fails
In Rochell Provost v. State Of Louisiana Division Of Administrative Law And Louisiana Department Of Insurance, No. 2025 CA 0492, Court of Appeals of Louisiana, First Circuit (December 19, 2025) the Louisiana Department of Insurance (LDI) successfully appealed a district court judgment that reinstated Rochell Provost’s insurance producer license and reversed a $5,000 fine previously assessed against her.
FACTUAL BACKGROUND
The underlying dispute began when Union National Life Insurance Company/Kemper Life terminated Ms. Provost for cause, alleging she had committed fraudulent activity and misappropriated $31,471.39 in company funds. An investigative report supporting these findings was sent to LDI.
Following receipt of the report, LDI notified Ms. Provost of proposed regulatory action concerning ...
Post 5254
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Help a Person Commit Insurance Fraud & Go to Jail
Guilty of Tampering With Evidence by Hiding it in Garage
In State Of Montana v. Lila Lynn Lord, 2025 MT 302, No. DA 24-0343, Supreme Court of Montana (December 30, 2025) Lila Lord (Lord) appealed her conviction for Tampering with Evidence following a jury trial in the Seventh Judicial District Court, Richland County. The case centered on a staged burglary in Sidney, Montana, orchestrated by Marie Chris Entzel with the intent to collect insurance proceeds to cover her son’s legal fees. Entzel recruited several individuals — including David Skaw, Lawrence Pohl, Laurie McGregor, and the defendant, Lila Lord — to assist in removing valuable items from her home, causing property damage and theft of items such as an enclosed trailer, boat and trailer, refrigerator, pistol, and television....
Posted on January 2, 2026 by Barry Zalma
ZIFL – Volume 30 Number 1
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
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Supreme Court of Louisiana Removes Judge
Judge Who Lied to Get Elected Cannot Serve
In In Re: Judge Tiffany Foxworth-Roberts, No. 2025-O-01127, Supreme Court of Louisiana (December 11, 2025) the Louisiana Supreme Court in an opinion by Chief Justice Weimer dealt with the recommendation of the Judiciary Commission of Louisiana (Commission) that Judge Tiffany Foxworth-Roberts be removed from office for:
1. making false and misleading statements regarding her judicial campaigns;
2. making false and misleading statements to police investigating the reported burglary of her car; and
3. withholding information and providing false, incomplete, or misleading information during the investigation by the Office of Special Counsel (OSC), as well as in the proceedings before the Commission....
Court Must Follow Judicial Precedent
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Insurance Policy Interpretation Requires Application of the Judicial Construction Doctrine
In Montrose Chemical Corporation Of California v. The Superior Court Of Los Angeles County, Canadian Universal Insurance Company, Inc., et al., B335073, Court of Appeal, 337 Cal.Rptr.3d 222 (9/30/2025) the Court of Appeal refused to allow extrinsic evidence to interpret the word “sudden” in qualified pollution exclusions (QPEs) as including gradual but unexpected pollution. The court held that, under controlling California appellate precedent, the term “sudden” in these standard-form exclusions unambiguously includes a temporal element (abruptness) and cannot reasonably be construed to mean ...
Lack of Jurisdiction Defeats Suit for Defamation
Post 5250
Posted on December 29, 2025 by Barry Zalma
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He Who Represents Himself in a Lawsuit has a Fool for a Client
In Pankaj Merchia v. United Healthcare Services, Inc., Civil Action No. 24-2700 (RC), United States District Court, District of Columbia (December 22, 2025)
FACTUAL BACKGROUND
Parties & Claims:
The plaintiff, Pankaj Merchia, is a physician, scientist, engineer, and entrepreneur, proceeding pro se. Merchia sued United Healthcare Services, Inc., a Minnesota-based medical insurance company, for defamation and related claims. The core allegation is that United Healthcare falsely accused Merchia of healthcare fraud, which led to his indictment and arrest in Massachusetts, causing reputational and business harm in the District of Columbia and nationwide.
Underlying Events:
The alleged defamation occurred when United ...
Zalma’s Insurance Fraud Letter
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ZIFL Volume 29, Issue 24
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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/
Zalma’s Insurance Fraud Letter
Merry Christmas & Happy Hannukah
Read the following Articles from the December 15, 2025 issue:
Read the full 19 page issue of ZIFL at ...
