No Coverage for Failure to Testify at EUO

Proof of Staged Auto Accident Requires Default Judgment

Jun 23, 2021

In State Farm Mutual Automobile Insurance Company v. Surgicore of Jersey City, LLC, et al., Wellmart RX, Inc., 2021 NY Slip Op 03536, Index No. 161692/18, Appeal No. 13992-13992A, Case No. 2020-02906, Case No. 2020-02907, Appellate Division of the Supreme Court of the State of New York (June 3, 2021) the court was asked to reverse a trial courts refusal to grant default judgement.

FACTS

In support of its motion for entry of a default judgment State Farm submitted evidence of defendants’ defaults after proper service, as well as an affidavit of its no-faults claims representative sufficiently setting forth the basis for plaintiff’s claims seeking a declaration of noncoverage. The claim representative’s affidavit set forth the factual basis for plaintiff’s belief that the accident was not a covered event because the loss was intentionally caused and the injuries purportedly sustained by the claimants in connection with the June 1, 2018 accident therefore did not arise from an insured event.

By failing to answer, the defaulting defendants were “deemed to have admitted” the allegations in the complaint, including that the accident was intentional and staged. The claims representative’s affidavit, as well as red flags raised by defendant Walton’s testimony at her EUO, support plaintiff’s belief.

In addition plaintiff submitted an arbitration award in which the Arbitrator found that plaintiff had demonstrated by a preponderance of the evidence that it had a founded belief that the subject accident was not a covered event, because it was a deliberate event in furtherance of an insurance fraud scheme.

As to claimant Ronald Marcellus, plaintiff additionally provided sufficient proof that he failed to appear for an examination under oath (EUO) despite receiving proper notice, which vitiates the policy. Since Marcellus failed to appear on two or more occasions and the EUO requests were sent prior to plaintiff’s receipt of a claim form, plaintiff did not need to demonstrate compliance for the verification requests under 11 NYCRR 65-3.5.

DECISION

As a result, plaintiff is entitled to a declaration that it is not obligated to defend or indemnify Jhoie Bradford, the owner of the insured vehicle, or Walton, the driver, or to provide no-fault coverage to any of the claimants in connection with the June 1, 2018 accident.

ZALMA OPINION

When an insurer establishes that claims presented to it were obviously fraudulent and it gathered – and presented to the trial court – evidence establishing that the accident was staged and the claims were fraudulent, that should be sufficient to defeat coverage. That the defendants failed to answer the complaint, admitted the allegations, the addition of actual evidence required a judgment be entered on behalf of State Farm, who should be honored for refusing to pay fraudsters.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 53 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ Read posts from Barry Zalma at https://parler.com/profile/Zalma/posts; and the last two issues of ZIFL at https://zalma.com/zalmas-insurance-fraud-letter-2/ podcast now available at https://podcasts.apple.com/us/podcast/zalma-on-insurance/id1509583809?uo=4ead the full article at https://www.linkedin.com/pulse/proof-staged-auto-accident-requires-default-judgment-barry and at https://zalma.com/blog plus more than 3800 posts.

In State Farm Mutual Automobile Insurance Company v. Surgicore of Jersey City, LLC, et al., Wellmart RX, Inc., 2021 NY Slip Op 03536, Index No. 161692/18, Appeal No. 13992-13992A, Case No. 2020-02906, Case No. 2020-02907, Appellate Division of the Supreme Court of the State of New York (June 3, 2021) the court was asked to reverse a trial courts refusal to grant default judgement.

ZALMA OPINION

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

No Coverage for Failure to Testify at EUO

Proof of Staged Auto Accident Requires Default Judgment

FACTS

DECISION

ZALMA OPINION

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