Kevin McGrattan, Ph.D., Randall McDermott, Ph.D., Glenn Forney, Ph.D., Kristopher Overholt, Ph.D., Craig Weinschenk, Ph.D. (National Institute of Standards and Technology) and Jason Floyd, Ph.D. (Hughes Associates, Inc.) | Fire Protection Engineering
The Fire Dynamics Simulator (FDS), first publicly released in 2000, has recently undergone its fifth major revision. Since its first release, FDS has been applied in three major areas: basic research in fire dynamics, performance-based design, and forensic reconstructions of actual fires.
As its applications widen in scope, there is a need to develop new capabilities, while at the same time to verify and validate new and existing algorithms. This is a difficult task because the variety of applicable scenarios is vast and growing.
Sept. 24, 2014
—Hearth & Home Technologies recalled certain fireplaces, inserts, log sets and stoves, because the gas valve that’s in the unit might break.
This recall affects Hearth & Home, Heat-N-Glo, Heatilator, Outdoor Lifestyles and Quadra Fire indoor and outdoor natural and propane-gas fireplaces, stoves, inserts and log sets. For a complete list of affected serial numbers, go to Consumer Product Safety Commission’s website. The product’s brand and serial number are printed on the unit’s rating plate, which is near the controls and in the instruction manual.
The recalled products were sold at fireplace stores from May 2014 through June 2014. No incidents were reported. Consumers should stop using the recalled product, turn off the gas to the unit and contact the fireplace store where the unit was purchased to arrange for a free inspection and, if necessary, valve replacement.
For more information, consumers should call Hearth & Home at 800/883-6690 Monday–Friday 8:00 a.m.–8:00 p.m. CT or go to hearthnhome.com.
Dec. 3, 2014
—Daikin recalled its Streamer air purifier, because the product’s circuit board can overheat, which poses a fire hazard.
The air purifier is 23 inches tall, 15 inches wide and 8 inches deep. The model’s color is cream. Daikin is printed on the front, and model code MC75KSU is printed on a rating plate that’s on the lower right side.
The recalled product was sold at Goodman Manufacturing and other HVAC contractors and at amazon.com from December 2010 through October 2014. No incidents were reported. Consumers should unplug the air purifier and contact Daikin for a full refund or a free replacement.
For more information, consumers should call Daikin at 888/770-7156 Monday–Friday 9:00 a.m.–5:00 p.m. ET or go to daikin.com.
Nov. 13, 2014
—Challenger Supply Holdings recalled Coaire and Quietside gas-powered tankless water heaters that were manufactured by Daesung Celtic Enersys because they can overheat, which poses a fire hazard.
The recall involves all models of single- and dual-purpose Coaire and Quietside gas-fired tankless water heaters, which heat either 4 or 7.2 gallons of water per minute. The water heaters are white. The models are 25–28 inches tall, 15–19 inches wide and 8–14 inches thick. “S-Line Condensing” appears on the top front of the model, and the brand name Coaire or Quietside appears on the bottom front.
The recalled products were sold nationwide at independent dealerships and on websites such as amazon.com from July 2009 through August 2014. Daesung received 40 reports of models that overheated, including four that involved burns on the wall where the heater was mounted and two that involved a fire and property damage. No injuries were reported. Consumers should stop using the recalled water heaters and contact Challenger Supply to arrange for a free repair.
For more information, consumers should call Challenger Supply at 800/729-6118 Monday–Friday 7:00 a.m.–6:00 p.m. CT or go to challengersupply.com.
In the new issue of NFPA Journal®, President Jim Shannon said the Association will focus on the leading causes of home fires, including cooking. "We also need to continue to push hard for home fire sprinklers. That's still a large priority for NFPA, and we plan to work very aggressively in 2014 on our residential sprinkler initiative," he said.
April 14, 2015
—San Pedro Manufacturing recalled its mattresses and mattresses with foundations, because the products fail to meet the federal open-flame standard, which poses a fire hazard.
The rebuilt mattresses and mattresses with foundations were sold in twin, full, queen and king sizes. They were sold in a variety of fabrics and colors, and each has a white federal tag and yellow state tag that is sewn at the foot of the mattress that reads “San Pedro Manufacturing Company, 1041 La Grange Blvd., Atlanta, Georgia 30336.”
The recalled mattresses were sold at A1 Mattress and Furniture, Affordable Furniture, Beds Beds Beds, Bruce Furniture and Thrift, Checkouts, Christian Outreach, Fowlers Furniture, Greenbrier Furniture, Larry Rhodes, Mattress and Furniture Outlet, Mattress and Furniture Warehouse, Mattress Barn, Save Big Mattress and Unclaimed Freight stores from May 2013 through January 2014. No incidents were reported.
Consumers who contact San Pedro Manufacturing Company will have their recalled mattresses picked up, rebuilt to compliant federal flammability standards and returned to the them.
For more information or to schedule a pick-up, consumers may call San Pedro Manufacturing at 855/997-0300 Monday–Friday, 10:00 a.m.–4:00 p.m. ET.
by: Larry Arnold
Faced with growing losses, insurance companies are focusing on fraud management and implementing risk mitigation controls, while at the same time remaining cognizant of their duty of good faith to policyholders. So what happens when an insurer makes good faith payments on legitimate elements of an insurance claim but subsequently uncovers fraud in other elements of the claim? Is the insurer entitled to recover all monies paid as part of the claim? Or only the amount paid in reliance on the insured's misrepresentations?
Previously, there was no clear answer. It was safe to assume that an insurer could recover monies paid on a claim under the right circumstances – the difficulty occurred when trying to recover payments made prior to the established fraud date. For example, in California, the insurance code states, “If a representation is false in a material point, whether affirmative or promissory, the injured party is entitled to rescind the contract from the time the representation becomes false.”
Recent trial court rulings in favor of insurance companies, however, are changing the claims landscape. These rulings will impact the way insurance companies handle genuine claims that are subsequently tainted by fraud, encouraging them to be proactive in recouping good faith payments.
Steps for Recouping
What options do insurance companies have to recoup these payments? There are several avenues available.
Deny the Claim. When the SIU has completed a claims investigation and determined that an insured has breached the policy by materially misrepresenting facts, the claim can be denied – even the legitimate part. Appropriate cases should be referred to law enforcement for prosecution. In addition, the insured has a duty to present and prove the merits of the claim. Failure to cooperate with insurance company representatives can independently result in denial of the claim. This includes an examination under oath (EUO), which plays a key role in obtaining information. Typically, the named insured (or others, as dictated by the policy) is required to submit to an EUO as a precondition for claims settlement. Failure to do so can result in denial of the claim.
Void the Policy. An insurer may void or cancel its policy in the event of material misrepresentation or concealment of facts by the insured. This includes fraudulent claims.
Litigation. If a policy is voided for fraudulent claims, insurers must then decide whether to sue the insured to recoup payments - even legitimate ones. One advantage with litigation is that it allows for pretrial discovery process, including depositions and the ability to subpoena documents previously unavailable during the claims process.
A Case in Point
A recent case illustrates that insurance companies are entitled to recoup good faith payments when fraud is uncovered. Here is some background on the case.
An insurer issued a fire insurance policy to the owner of a dry cleaning business located in Southern California. A fire destroyed the business, so the owner submitted claims for replacement equipment, debris removal, damage to customer goods and loss of business income. Based on these claims, the insurance company paid the owner $527,000.
However, during the insurance company’s investigation of additional claims, a forensic accountant uncovered inconsistencies in a laundry services contract submitted as part of the owner’s claim for loss of business income. As a result, the owner was asked to sit for an EUO. The owner declined and withdrew his pending claim. The insurer then declined the claim, rescinded the policy and sued the business owner to recoup all loss payments.
At trial, evidence and witness testimony was presented that showed the owner had falsified the laundry contract and also inflated amounts paid for replacement equipment, debris removal, and payroll, among other items. Attorneys argued that the insurer was entitled to full recovery (payments made before the fraud occurred) for several novel reasons, including:
Though portions of the claim were legitimate, the judge ruled in favor of the insurer and its decision to rescind the fire insurance policy. The insured was ordered to repay $452,064, which represented all payments less monies paid to customers who lost clothing in the fire and the policy premium.
Implications for Insurers
This decision is important as it reinforces the rights of insurance companies not only to decline a claim when fraud is uncovered but also to rescind a policy and sue the insured to collect good faith payments. Previously, the law was not clear about what happens to monies paid as part of a legitimate claim, when fraud is discovered in a separate area. It is now clear that fraud in part of a claim translates to fraud in the entire claim.
Claims managers should have an open discussion with claims adjusters and SIU team members, with the goal of establishing a claims review protocol that outlines what to look for and what to do if fraud is suspected. This is critical, as claim adjusters are the first line of defense against fraud. Once fraud is uncovered, insurance companies should not hesitate to consult with an attorney and pursue the insured in order to recover monies already paid. In the end, both insurance companies and policyholders will benefit by reducing the high cost of fraud.
Larry M. Arnold, P.C., is a senior partner at Cummins & White, LLP. He can be reached at (949) 852-1800,
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