It is not Defamation to Report a Suspected Fraud to the State

Read the full article at https://www.linkedin.com/pulse/isurers-report-insurance-fraud-authorities-privileged-barry and at https://zalma.com/blog plus more than 3850 posts. 

Cholla Bay Hotel Group LLC; CBHG Management S.A. DE C.V.; Desert Springs Equestrian Center LLC (“DSEC”); and Lorilei Peters (collectively “CBHG”) appealed from the trial court’s grant of summary judgment in favor of Farm Bureau Financial Services, its “affiliate,” Western Agricultural Insurance Company, and Paul Cully (collectively “Farm Bureau”), and the ultimate dismissal of its claims. In CBHG Management, S.A. de C.V., a foreign corporation; Cholla Bay Hotel Group, an Arizona corporation; Desert Springs Equestrian Center, LLC, an Arizona limited liability company; and Lorilei Peters, in her individual capacity v. Farm Bureau Financial Services, a foreign corporation, and Paul Cully, No. 2 CA-CV 2020-0111, Court of Appeals of Arizona, Second Division (August 6, 2021) the Court of Appeals was asked to reverse the trial court’s judgment.

ZALMA OPINION  

Insurance fraud prevention acts require insurers to report to the DOI suspicion of insurance fraud and protects the insurer, by creating a statutory privilege, for any claim made against the insurer for making the report in good faith. Since Farm Bureau, acting fairly and in good faith when it reported the suspected fraud to the DOI, obtained the privilege and the defamation claim could not be asserted or proved.