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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Insurer’s Exclusion for Claims of Assault & Battery is Effective
Post 5250
Read the full article at https://lnkd.in/gBzt2vw9, see the video at https://lnkd.in/gEBBE-e6 and at https://lnkd.in/gk7EcVn9, and at https://zalma.com/blog plus more than 5250 posts.
Bar Fight With Security is an Excluded Assault & Battery
In The Cincinnati Specialty Underwriters Insurance Company v. Mainline Private Security, LLC, et al., Civil Action No. 24-3871, United States District Court, E.D. Pennsylvania (December 16, 2025) two violent attacks occurred in Philadelphia involving young men, Eric Pope (who died) and Rishabh Abhyankar (who suffered catastrophic injuries). Both incidents involved security guards provided by Mainline Private Security, LLC (“Mainline”) at local bars. The estates of the victims sued the attackers, the bars, and Mainline for negligence and assault/battery. The insurer exhausted a special limit and then denied defense or indemnity to Mainline Private Security.
INSURANCE COVERAGE
Mainline had purchased a commercial ...
Marine Insurer May Dispose of Vessel to Avoid Waste
Post 5249
Read the full article at https://lnkd.in/gfn_UHdp, see the video at https://lnkd.in/gDWVccnr and at https://lnkd.in/gv9nsBqk, and https://zalma.com/blog plus more than 5200 posts.
In Western World Insurance Company v. The Estate Of Shawn Arsenault, No. 25-cv-13413-PGL, United States District Court, D. Massachusetts (December 17, 2025) the USDC was asked to resolve a marine insurance dispute after the sinking of the F/V Seahorse, a commercial fishing vessel, off Cape Cod on June 8, 2025. The vessel’s owner and operator, Shawn Arsenault, died in the incident.
Western World Insurance Company issued a hull insurance policy for the vessel. With no personal representative yet appointed for the estate, the insurer cannot determine the proper payee for the insurance proceeds.
The insurer paid for the vessel’s recovery and removal, and the vessel is now with a salvage company, incurring substantial storage fees. The insurer determined the loss is covered under the ...
Marine Insurer May Dispose of Vessel to Avoid Waste
Post 5249
Read the full article at https://lnkd.in/gfn_UHdp, see the video at https://lnkd.in/gDWVccnr and at https://lnkd.in/gv9nsBqk, and https://zalma.com/blog plus more than 5200 posts.
In Western World Insurance Company v. The Estate Of Shawn Arsenault, No. 25-cv-13413-PGL, United States District Court, D. Massachusetts (December 17, 2025) the USDC was asked to resolve a marine insurance dispute after the sinking of the F/V Seahorse, a commercial fishing vessel, off Cape Cod on June 8, 2025. The vessel’s owner and operator, Shawn Arsenault, died in the incident.
Western World Insurance Company issued a hull insurance policy for the vessel. With no personal representative yet appointed for the estate, the insurer cannot determine the proper payee for the insurance proceeds.
The insurer paid for the vessel’s recovery and removal, and the vessel is now with a salvage company, incurring substantial storage fees. The insurer determined the loss is covered under the ...
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 ...
The Professional Claims Handler
Post 5219
Posted on October 31, 2025 by Barry Zalma
An Insurance claims professionals should be a person who:
Can read and understand the insurance policies issued by the insurer.
Understands the promises made by the policy.
Understand their obligation, as an insurer’s claims staff, to fulfill the promises made.
Are competent investigators.
Have empathy and recognize the difference between empathy and sympathy.
Understand medicine relating to traumatic injuries and are sufficiently versed in tort law to deal with lawyers as equals.
Understand how to repair damage to real and personal property and the value of the repairs or the property.
Understand how to negotiate a fair and reasonable settlement with the insured that is fair and reasonable to both the insured and the insurer.
How to Create Claims Professionals
To avoid fraudulent claims, claims of breach of contract, bad faith, punitive damages, unresolved losses, and to make a profit, insurers ...
The History Behind the Creation of a Claims Handling Expert
The Insurance Industry Needs to Implement Excellence in Claims Handling or Fail
Post 5210
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.
My Training to be an Insurance Claims Adjuster
When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.
I was initially sat at a desk reading a text-book on insurance ...
