Insurer Immune from Suit for Good Faith Report to Louisiana Department of Insurance of Suspected Fraud
Post 5224
See the video at https://lnkd.in/gtjRffb5 and at https://lnkd.in/ghWutpe9, and at https://zalma.com/blog plus 5200 posts.
Appellate Court Gives Plaintiff a Second Chance to Sue Insurer Who Reported Suspected Fraud
In Solon E. Smith v. State Of Louisiana By And Through The Louisiana Department Of Insurance, Cuna Mutual Group, And CMFG Life Insurance Company, No. 2024 CA 0735, Court of Appeals of Louisiana, First Circuit (October 23, 2025) the appeal addressed whether an insurance company (CMFG Life Insurance Company d/b/a TruStage) is immune from civil liability under Louisiana's Insurance Code for reporting suspected fraud to the Louisiana Department of Insurance (LDI).
FACTS
On December 22, 2022, LDI issued a Suspension Order, ordering Mr. Smith to "cease and desist conducting any business of insurance in the state of Louisiana[.]" On February 8, 2023, LDI issued the Revocation Order permanently revoking Mr. Smith's license to sell insurance and issuing a fine.
On April 19, 2022, the Suspension Order and Revocation Order issued by LDI were reversed by the ALJ as the ALJ determined, "the evidence does not support a finding that [Mr. Smith] violated the relevant statutes." Specifically, the ALJ determined that Mr. Smith having made a typographical error on the application is a much more probable explanation than the alleged act of fraud.
Procedural History
On July 31, 2023 Smith filed a Petition for Damages against LDI, CMFG, and TruStage Financial Group, Inc., alleging defamation, malicious prosecution, abuse of process, and unfair trade practices. CMFG claimed no civil liability for good-faith fraud reports. The trial court sustained the exception and dismissed CMFG with prejudice.
Relevant Law
Peremptory Exception of No Cause of Action (La. Code Civ. P. art. 927(A)(5)):
The statute tests the legal sufficiency of the petition and assumes all well-pleaded facts true, but conclusory statements insufficient. For affirmative defenses like immunity, the exception will be overruled unless facts exclude all reasonable hypotheses supporting defense.
Mandatory Fraud Reporting (La. R.S. 22:1926(A)):
Insurers (and others in insurance business) must report suspected fraud to LDI's Office of Insurance Fraud within 60 days of notice.
Immunity from Liability (La. R.S. 22:1928(A)):
No civil suit (e.g., defamation, torts) exists for required reports or information shared with LDI/NAIC/law enforcement unless malice, fraudulent intent, or bad faith. Plaintiff bears burden to allege facts defeating immunity; conclusory claims (e.g., "reckless disregard" ) insufficient.
Court's Analysis and Holding
CMFG qualifies as a mandatory reporter because it is engaged in the insurance business. The Petition facts show CMFG reported based on Broussard's credible affidavit (her belief of fraud due to non-receipt of policy). There was no duty for CMFG to investigate further because the statute shifts that duty to LDI.
Immunity applies because there were no viable causes of action stated.
CONCLUSION
The Court of Appeals affirmed the trial court's January 18, 2024 judgment insofar as it sustained CMFG's peremptory exception raising the objection of no cause of action. However, it reversed the portion of the judgment dismissing CMFG from Mr. Smith's suit and remand this matter to the trial court to allow Mr. Smith an opportunity to amend his petition with specific facts showing malice. The Court of Appeals concluded that the trial court abused its discretion by not allowing amendment of the Petition. The decision balanced mandatory fraud-reporting duties with protections against malicious reports, emphasizing that conclusory allegations alone cannot defeat immunity.
Dissent (Chief J. McClendon):
The Chief Justice concluded that there was no abuse of discretion because an amendment would be futile given facts of the case. The statute protects insurers from retaliatory suits for good-faith compliance but preserves amendment rights to prevent premature dismissal.
ZALMA OPINION
The statute that requires an insurer to report suspected fraud to the LDI also includes immunity for the insurer's good faith report unless the insurer makes the report with malice. The decision on appeal gives the plaintiff the chance to amend his pleading to find some way to sue the insurer that was not immunized. The Chief Justice's dissent is convincing since an amendment would be futile and defeat the purpose of the immunity statute by making the insurer defend a second time the futile attempt to allege fraud or malice with more than the mere conclusory allegations.
(c) 2025 Barry Zalma & ClaimSchool, Inc.
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Policy Limits Demand Accepted Settles Claim
Post 5434
Posted on August 26, 2026 by Barry Zalma
See the full video at https://lnkd.in/g-ZtsSgK and at https://lnkd.in/ghMBdYWR
A Contingent Offer Accepted Ends the Dispute
In Farmers Insurance Exchange, a California Reciprocal Insurance Exchange, The Superior Court For The County Of San Bernardino, Kathleen Ann Wood, E087128, California Court of Appeals, (July 9, 2026) Farmers Insurance Exchange insured Doyle Archer under an automobile policy with bodily injury limits of $15,000 per person and $30,000 per accident.
FACTUAL BACKGROUND
Archer rear-ended Kathleen Ann Wood at a red light, causing Wood to assert a bodily injury claim against him. Wood’s counsel sent Farmers a pre-litigation settlement demand offering to resolve Wood’s claim for the available policy limits, stating that if the $100,000 demand exceeded the policy, the offer was for the policy limits.
Farmers timely responded in writing, agreed to pay Wood the $15,000 per-person policy limit, and provided the requested ...
Policy Limits Demand Accepted Settles Claim
Post 5434
Posted on August 26, 2026 by Barry Zalma
See the full video at https://lnkd.in/g-ZtsSgK and at https://lnkd.in/ghMBdYWR
A Contingent Offer Accepted Ends the Dispute
In Farmers Insurance Exchange, a California Reciprocal Insurance Exchange, The Superior Court For The County Of San Bernardino, Kathleen Ann Wood, E087128, California Court of Appeals, (July 9, 2026) Farmers Insurance Exchange insured Doyle Archer under an automobile policy with bodily injury limits of $15,000 per person and $30,000 per accident.
FACTUAL BACKGROUND
Archer rear-ended Kathleen Ann Wood at a red light, causing Wood to assert a bodily injury claim against him. Wood’s counsel sent Farmers a pre-litigation settlement demand offering to resolve Wood’s claim for the available policy limits, stating that if the $100,000 demand exceeded the policy, the offer was for the policy limits.
Farmers timely responded in writing, agreed to pay Wood the $15,000 per-person policy limit, and provided the requested ...
The Largest Residential Burglary of All Time
Post 5407
Fraud & the Fear of Bad Faith Suits
Posted on July 22, 2026 by Barry Zalma
See the full video at https://lnkd.in/gWQQEySW and at https://lnkd.in/gyhdK6wv
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection 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.
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection 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.
After ...
Insurance Requires Fortuity to be an Insured Risk
Post 5485
Posted on September 8, 2026 by Barry Zalma
In Industrial Park Center, LLC, doing business as Mainspring Capital Group v. Great Northern Insurance Company, a foreign insurer, No. CV-25-0330-CQ, Supreme Court of Arizona (September 1, 2026).
The United States Court of Appeals for the Ninth Circuit certified the following question to this Court:
"Is damage to property a “fortuitous” loss when, based on the insured’s knowledge at the time the insurance policy issued, it was reasonably foreseeable that such damage was almost certain to occur if certain preventative measures were not taken?"
FACTUAL BACKGROUND
Mainspring owned commercial property leased to Star Fisheries for decades. Star Fisheries’ use of water and salt allegedly caused structural damage over time. In 2010, Mainspring learned of damage and made some repairs but did not implement all recommended preventive measures. In 2021–2022, additional similar structural damage was discovered, and ...
Qui Tam Relators are not officers of the United States
Posted on September 4, 2026 by Barry Zalma
Attempt to use Constitution to Stop a Qui Tam False Claims Act Case
Post 5486
FCA’s Qui Tam Provisions do not Violate the Appointments Clause.
In United States Of America, Clarissa Zafirov, ex rel; Dr. v. Florida Medical Associates, LLC, d.b.a. Vipcare, Physician Partners, LLC, Anion Technologies, LLC, Freedom Health, Inc., Optimum Healthcare, Inc., Physician Partners Specialty Services, LLC, et al., No. 24-13581, United States Court of Appeals, Eleventh Circuit (September 1, 2026).
The False Claims Act (“FCA”) allows the Attorney General to bring civil suits against perpetrators of fraud against the government. This case involves another portion of the FCA-the qui tam provisions-which allow people, called relators, who have knowledge about fraud against the government to pursue a case against the perpetrator of the fraud.
Dr. Clarissa Zafirov filed a qui tam action under the False Claims Act on behalf of...
Posted on September 3, 2026 by Barry Zalma
You Only Get One Chance to Sue
Post 5484
In David Cromp v. Johnny Harkrider, Monique Harkrider, and their Marital Community, dba Able Plumbing Plus, No. 61678-5-II, Court of Appeals of Washington, Division 2 (August 25, 2026) David Cromp hired Able Plumbing Plus in 2018 to install plumbing, including two toilets, at his residence. In 2019, both toilets allegedly leaked, causing damage. Insurance claims were submitted through Able’s contractor policy, but the insurer eventually denied the claims.
Cromp sued Able in 2022 for breach of contract based on the allegedly defective toilet installation. During that case, Cromp attempted to add claims related to Able’s conduct during the insurance claim process, including fraud, bad faith, tortious conduct, and bond-related claims, but the superior court denied leave to amend. The 2022 breach-of-contract claim was later dismissed with prejudice on summary judgment as time-barred.
On the same day the 2022 case was dismissed, Cromp filed a ...
