The investigation of hay fires has long been a challenge for the fire service. Fires of this type are notoriously difficult to extinguish and usually require allowing the fire to run out of fuel (or the use of heavy equipment and large volumes of water). Inherently, this creates a “black hole” for fire investigators as they are often left with little more than witness statements to base their conclusions on. As a result, many hay fires are attributed to spontaneous combustion for lack of a better explanation. One of the traditional indicators of spontaneous combustion that fire investigators have relied upon in the past is the formation and/or presence of hay clinkers. Several reliable sources indicate the formation of hay clinkers is an event which is mutually exclusive to spontaneous combustion. After a string of suspicious cases in which hay clinkers were discovered, the Tennessee Department of Agriculture’s Criminal Investigation Division conducted a series of field tests. The results of these field tests indicate that hay clinker production is possible with an external ignition source and should not be utilized as an indicator of fire cause.
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This recall involves Homelite 12 amp electric blower vacuums with model numbers UT42120, UT42120A and UT42121. Model numbers are located on a label on the left side of the red motor housing. The blower vacuums are red and black. “Homelite BlowerVac 2 Speed Powerful 220 MPH” is printed on the side of the motor housing and on the black plastic blower tube.
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This recall involves Expert Gardener 12 amp electric blower vacuums with model numbers 20254EG, 20254EGA, 20254EGB, 20254EGBC, 20254EGC and 21254EG. Model numbers are located on a label on the left side of the motor housing. The blower vacuums are green and black. “Expert Gardener” and “Blower Vac 2 Speed Quiet 150 MPH Powerful 220 MPH” are printed on the side of the green motor housing and on the black plastic blower tube.
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.
UNDER ADVISEMENT RULING
The Court has had under advisement Plaintiff Barbara A. Sloan’s (“Sloan”) Rule 60 Motion. Having read and considered the briefing and having heard oral argument, the Court issues the following ruling.
This recall involves four types of DD branded single-wick candles: Mason jars in 5- and 12- ounce sizes, decorative jars in 10- and 20-ounce sizes, 13-ounce coffee tins and 13-ounce jars with a holiday theme. The candles were sold in a variety of fragrances and colors.
The 5-ounce Mason jars are 2.25 inches wide by 3.75 inches high. The 12-ounce Mason jars are 3 inches wide by 5 inches high. The jars have gray metal lids. The DD logo and the word Handcrafted are in raised letters on the front of the jars. The candle fragrance and size are printed on a hang tang attached to the mouth of the jars.
The 10-ounce decorative jars are 4 inches wide by 3 inches high. The 20-ounce decorative jars are 5 inches wide by 4 inches high and hold a candle. The jars have gray metal lids with the DD logo in raised letters on the top. The candle fragrance and size are printed on a rectangular label on the front of the jar.
The 13-ounce coffee tins are 3.5 inches wide by 4 inches high and have a silver metal lid. The candle size and fragrance are printed on a label that wraps around the outside of the tin.
The 13-ounce holiday candle jars are 3.75 inches wide by 4 inches high and have silver metal lids with the DD logo in raised letters on the top. The DD logo inside a floral wreath, the fragrance and size are printed directly onto the front of the jar in silver.
See the full details at CPSC
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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