Insurer Immune from Suit for Good Faith Report to Louisiana Department of Insurance of Suspected Fraud
Post 5224
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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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ZIFL Volume 30, Number 2
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
Post number 5260
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Zalma’s Insurance Fraud Letter (ZIFL) continues its 30th 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/ This issue contains the following articles about insurance fraud:
Read the full 19 page issue of ZIFL at https://zalma.com/blog/wp-content/uploads/2026/01/ZIFL-01-15-2026.pdf.
The Contents of the January 15, 2026 Issue of ZIFL Includes:
Use of the Examination Under Oath to Defeat Fraud
The insurance Examination Under Oath (“EUO”) is a condition precedent to indemnity under a first party property insurance policy that allows an insurer ...
ERISA Life Policy Requires Active Employment to Order Increase in Benefits
Post 5259
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In Katherine Crow Albert Guidry, Individually And On Behalf Of The Estate Of Jason Paul Guidry v. Metropolitan Life Insurance Company, et al, Civil Action No. 25-18-SDD-RLB, United States District Court, M.D. Louisiana (January 7, 2026) Guidry brought suit to recover life insurance proceeds she alleges were wrongfully withheld following her husband’s death on January 9, 2024.
FACTUAL BACKGROUND
Jason Guidry was employed by Waste Management, which provided life insurance coverage through Metropolitan Life Insurance Company (“MetLife”). Plaintiff contends that after Jason’s death, the defendants (MetLife, Waste Management, and Life Insurance Company of North America (“LINA”)) engaged in conduct intended to confuse and ultimately deny her entitlement to...
Failure to Respond to Motion to Dismiss is Agreement to the Motion
Post 5259
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In Mercury Casualty Company v. Haiyan Xu, et al., No. 2:23-CV-2082 JCM (EJY), United States District Court, D. Nevada (January 6, 2026) Plaintiff Mercury Casualty Company (“plaintiff”) moved to dismiss. Defendant Haiyan Xu and Victoria Harbor Investments, LLC (collectively, “defendants”) did not respond.
This case revolves around an insurance coverage dispute when the parties could not be privately resolved, litigation was initiated in the Eighth Judicial District Court of Nevada. Plaintiff subsequently filed for a declaratory judgment in this court.
On or about April 15, 2025, the state court action was dismissed with prejudice pursuant to a stipulation following mediation. Plaintiff states that the state court dismissal renders its ...
Court Must Follow Judicial Precedent
Post 5252
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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 ...
