The Law

Legal Spotlight

A look at the latest court decisions impacting the insurance industry.
By: | March 5, 2018 • 6 min read

Insurer Not Responsible for Former Worker

Joel Palmer was involved in a civic organization for the Bella Vista neighborhood. He served in various roles throughout the organization, including president. In 2011, Palmer resigned from the board.

On March 10, 2012, Palmer filed a conservatorship petition over 614 Kater Street, a house located in the Bella Vista neighborhood. The property owners were furious, claiming that the petition was littered with falsities and was a backhanded way to “run the owner … out of the neighborhood.”

The petition was ultimately denied, but the owner filed suit against Palmer, his attorney and Bella Vista, claiming Palmer co-conspired with Bella Vista.

Bella Vista argued it did not have anything to do with the petition and filed preliminary objections. Palmer, too, filed preliminary objections. The court dismissed all claims against Bella Vista but overruled Palmer’s objections. At trial, the jury ruled in favor of the property owners. Palmer and his attorney owed $277,000 in attorney’s fees and emotional and punitive damages.

Twin City Fire Insurance Company provided coverage for Bella Vista and controlled its defense during the suit. Palmer initially sought defense coverage from Twin City, which agreed to the defense “under a reservation of rights until it was established that Palmer was not entitled to coverage under the policy.”

In the policy, Twin City covered “loss on behalf of any Insured Person … for a Wrongful Act by the Insured Person … duly elected or appointed” to the board of Bella Vista. It defined a wrongful act as an action “committed by an Insured Person, solely by reason of their serving in such capacity.”

When Bella Vista was dismissed from the case, Twin City withdrew its coverage of Palmer, stating that he no longer served Bella Vista or its board, and therefore did not qualify for coverage.


In the following suit, the clause “solely by reason of their serving in such capacity” became the deciding factor on whether Palmer’s defense would be covered. His tenure at Bella Vista also came into question. Ultimately, the court ruled in favor of Twin City; Palmer would receive no defense.

Scorecard: Joel Palmer resigned from the Bella Vista board in 2011. The conservatorship petition was posted on March 10, 2012. By this point, Palmer no longer associated with Bella Vista, therefore breaking ties with the neighborhood’s insurer Twin City.

Takeaway: Insurers must provide clear language as to who and what is covered under a policy. Otherwise, it can lead to confusion over coverage and possible extraneous claims.

Employer Must Pay PTD

Oneal Gillispie sustained compensable injuries to his back, right shoulder and neck in March 2014 while working for Estes Express Lines Inc. Following injury, Gillispie underwent two surgeries, extensive treatment for his lumbar spine and had a spinal cord stimulator inserted and removed. After all was said and done, Gillispie was released to temporary light-duty work with permanent restrictions in April 2017.

Estes was unable to provide Gillispie with appropriate work accommodations to match the restrictions placed on him and so did not bring him back in to work. Without light-duty options, Gillispie remained on his temporary total disability (TTD) benefits.

In the state of Oklahoma, where Estes and Gillispie are located, the statutory maximum of TTD is 104 weeks. When the 104 weeks passed, Gillispie filed for permanent total disability (PTD) benefits as he was still restricted by light-duty requirements and was not working.

Evaluating and establishing return-to-work programs for light-duty workers can save businesses and their workers’ comp insurers money, time and productivity in the long run.

Estes denied PTD benefits, stating that Gillispie’s light-duty work restrictions proved he was capable of employment and did not qualify for PTD. The employer said that in contrast to TTD, PTD can be awarded “only after consideration of [Gillispie’s] ability to earn wages in any employment for which the worker is suited and reasonably fit” has been determined.

At the time of trial, Gillispie was under a temporary ten-pound work restriction and awaiting neck surgery. The Workers’ Compensation Commission said these temporary restrictions prevented the worker from doing light-duty assignments due to light work involving up to 20 pounds of lifting. The commission argued Gillispie could not return to work yet.

Further, the commission pointed to a workers’ comp ruling that stated PTD can only be attached to a claim after the percentage of permanent disability from the injury had been adjudicated and the worker had reached maximum medical improvement (MMI). When a worker has exhausted their 104-week allotment of TTD, PTD benefits can be collected if the worker has not reached MMI.


Gillispie had yet to reach his MMI. Additionally, the court said that “a determination of PTD during the healing period is not a final adjudication of permanent disability, but rather a temporary determination of a claimant’s compensation status.”

Estes was found liable for PTD compensation.

Scorecard: Following a serious work injury, Oneal Gillispie will receive permanent total disability benefits from his employer Estes Express Lines Inc.

Takeaway: Evaluating and establishing return-to-work programs for light-duty workers can save businesses and their workers’ comp insurers money, time and productivity in the long run.

Imposter Not Covered Under Computer Fraud

Posco Daewoo America Corp. imports and exports chemicals. Allnex USA Inc. is a leading supplier of specialty chemicals. Allnex owed Daewoo for a shipment of products, but an imposter stepped in before the bill could be settled.

The imposter posed as an employee of Daewoo and created a fake email account. They then sent an Allnex employee fraudulent emails requesting wire payments be sent. Over the next few months, the imposter was able to gain a total of $630,058 from Allnex through four separate bank accounts.

Then the fraud was discovered.

Allnex recovered $262,444, but Daewoo still wanted the remaining $367,613 to satisfy its original bill. Allnex disagreed. The company said that the unrecovered wire payments to the imposter satisfied the balance owed, and it was not responsible to pay that amount again.

Daewoo turned to its insurer Travelers Casualty and Surety Company of America. Daewoo said Travelers should indemnify it for the loss caused by the imposter, but Travelers denied the claim.

Travelers pointed to the policy’s computer fraud provision: “[t]he Company will pay the Insured for the Insured’s direct loss of, or direct loss from damage to, Money, Securities, and Other Property directly caused by Computer Fraud.”

In Travelers’ eyes, computer fraud was defined as “when someone hacks or obtains unauthorized access to or entry to a computer in order to make an unauthorized transfer.” The insurer said that no Daewoo computer w as hacked. The imposter used their own computer and created a fake account.


The court agreed, granting Travelers’ motion to dismiss without prejudice.

Scorecard: Because the account that was used to trick Allnex was not from a Daewoo computer, the computer fraud clause does not cover the lost money.

Takeaway: The digital age opens the door to many kinds of cyberattacks. Insurers can best prepare by writing detailed policies with specific exclusions when needed. This clearly defines coverages and avoids lengthy legal affairs down the road. &

Autumn Heisler is a staff writer at Risk & Insurance. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Management

The Profession

Janet Sheiner, VP of risk management and real estate at AMN Healthcare Services Inc., sees innovation as an answer to fast-evolving and emerging risks.
By: | March 5, 2018 • 4 min read

R&I: What was your first job?

As a kid, bagging groceries. My first job out of school, part-time temp secretary.

R&I: How did you come to work in risk management?

Risk management picks you; you don’t necessarily pick it. I came into it from a regulatory compliance angle. There’s a natural evolution because a lot of your compliance activities also have the effect of managing your risk.

R&I: What is the risk management community doing right?


There’s much benefit to grounding strategic planning in an ERM framework. That’s a great innovation in the industry, to have more emphasis on ERM. I also think that risk management thought leaders are casting themselves more as enablers of business, not deterrents, a move in the right direction.

R&I: What could the risk management community be doing a better job of?

Justified or not, risk management functions are often viewed as the “Department of No.” We’ve worked hard to cultivate a reputation as the “Department of Maybe,” so partners across the organization see us as business enablers. That reputation has meant entertaining some pretty crazy ideas, but our willingness to try and find a way to “yes” tempered with good risk management has made all the difference.

Janet Sheiner, VP, Risk Management & Real Estate, AMN Healthcare Services Inc.

R&I: What was the best location and year for the RIMS conference and why?

San Diego, of course!  America’s Finest City has the infrastructure, Convention Center, hotels, airport and public transportation — plus you can’t beat our great weather! The restaurant scene is great, not to mention those beautiful coastal views.

R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?

The emergence of risk management as a distinct profession, with four-year degree programs and specific academic curriculum. Now I have people on my team who say their goal is to be a risk manager. I said before that risk management picks you, but we’re getting to a point where people pick it.

R&I: What emerging commercial risk most concerns you?


The commercial insurance market’s ability to innovate to meet customer demand. Businesses need to innovate to stay relevant, and the commercial market needs to innovate with us.  Carriers have to be willing to take on more risk and potentially take a loss to meet the unique and evolving risks companies are facing.

R&I: Of which insurance carrier do you have the highest opinion?

Beazley. They have been an outstanding partner to AMN. They are responsive, flexible and reasonable.  They have evolved with us. They have an appreciation for risk management practices we’ve organically woven into our business, and by extension, this makes them more comfortable with taking on new risks with us.

R&I: Are you optimistic or pessimistic about the U.S. health care industry and why?

I am very optimistic about the health care industry. We have an aging population with burgeoning health care needs, coupled with a decreasing supply of health care providers — that means we have to get smarter about how we manage health care. There’s a lot of opportunity for thought leaders to fill that gap.

R&I: Who is your mentor and why?

Professionally, AMN Healthcare General Counsel, Denise Jackson, has enabled me to do the best work I’ve ever done, and better than I thought I could do.  Personally, my husband Andrew, a second-grade teacher, who has a way of putting things into a human perspective.

R&I: What have you accomplished that you are proudest of?

In my early 20s, I set a goal for the “corner office.” I achieved that when I became vice president.  I received a ‘Values in Practice’ award for trust at AMN. The nomination came from team members I work with every day, and I was incredibly humbled and honored.

R&I: What is your favorite book or movie?

The noir genre, so anything by Raymond Chandler in books. For movies,  “Double Indemnity,” the 1944 Billy Wilder classic, with insurance at the heart of it!

R&I: What is your favorite drink?


Clean water. Check out for how to help people enjoy clean, safe water.

R&I: What’s the best restaurant at which you’ve eaten?

Liqun Roast Duck Restaurant in Beijing.

R&I: What is the most unusual/interesting place you have ever visited?

China. See favorite restaurant above. This restaurant had been open for 100 years in that location. It didn’t exactly have an “A” rating, and it was probably not a place most risk managers would go to.

R&I: What is the riskiest activity you ever engaged in?

Eating that duck at Liqun!

R&I: If the world has a modern hero, who is it and why?

Dr. Seuss who, in response to a 1954 report in Life magazine, worked to reduce illiteracy among school children by making children’s books more interesting. His work continues to educate and entertain children worldwide.

R&I: What do your friends and family think you do?

They’re not really sure!

Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]