November 4, 2019

The Supreme Court of Oklahoma has ruled that Oklahoma law provides immunity for reporting or providing information regarding suspected insurance fraud as long as the reporter themselves does not act fraudulently, in bad faith, in reckless disregard for the truth or with actual malice in providing the information about the fraud. The case is Loven v. Church Mut. Ins. Co., 2019 OK 68.

Lisa Loven is a general contractor who applied for a public adjuster license with the Oklahoma Department of Insurance. During the application process she revealed that a former client had sued her for acting as an unlicensed adjuster, so the department opened an investigation into her application. The Department denied her application and she appealed that denial. During the appeal hearing Church Mutual Insurance and its adjuster Jeffrey Hanes both provided information about their dealings with Loven as a general contractor when she provided storm repair work for two churches they insured. After contracting with the church to perform the repairs, Loven quoted over $221,000 more than the insurer's initial estimate of loss. The church paid her for her work. A strikingly similar scenario occurred with the second church. The hearing examiner denied her application and state prosecutors charged Loven with felonies for filing a false claim for insurance and conspiracy to commit a felony. The charges were dismissed, and Loven sued Church Mutual alleging that Church Mutual and its adjuster had intentionally interfered with her attempts to get licensed as a public adjuster in direct retaliation for her actions that caused them to pay more in claims than it had offered to the two churches.

Church Mutual moved to dismiss the suit due to protection by immunity from the lawsuit pursuant to 36 O.S. §363, which provides immunity for those who report or furnish information concerning fraudulent acts as long as they, themselves do not act fraudulently, in bad faith, in reckless disregard for the truth, or with actual malice in providing the information.

Loven argued that the statutory immunity provided by 36 O.S. §363 only applies when an insurer actually reports the suspected fraudulent activity, which Church Mutual and Hanes both failed to do.

Church Mutual and Hanes argue that Loven's argument opposes the plain language of the statute, with which the court agrees.

The court found that the phrasing of 36 O.S. §363 was plain and unambiguous, and that Loven provided no evidence to show that Church Mutual acted with fraud, bad faith, reckless disregard for the truth, or actual malice. The court also determined that Church Mutual's involvement was directly in response to the department's inquiry, which was in response to Loven's public adjuster application. So, the court decided that Church Mutual was entitled to immunity under 36 O.S. §363.

Editor's Note: Despite the fact that Church Mutual never reported Loven's suspected fraudulent activity, the court found that the statute still applied. The only exception for immunity under the statute is if the insurer provides the information about the fraud fraudulently, in bad faith, in reckless disregard for the truth, or with actual malice. The court found that Church Mutual would not have involved themselves with the matter if it weren't for Loven attempting to apply for a public adjusters license, so the court found none of the above exceptions to apply.

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