Federal: Bed and Breakfast Owner Guilty of Insurance Fraud for Failing to Disclose Farm Operation Associated with His Inn

Federal: Bed and Breakfast Owner Guilty of Insurance Fraud for Failing to Disclose Farm Operation Associated with His Inn

A U.S. District Court in Eastern Pennsylvania recently denied a post-trial motion of defendants Albert Granger (“Granger”) and Glasbern, Inc. ("Glasbern") for judgment as matter of law under Rule 50(b) and a new trial under Rule 59 in an action originally filed against them by Zenith Insurance Company for negligent misrepresentation and violation of the Pennsylvania Insurance Fraud Act ("Insurance Fraud Act") in connection with Zenith's issuance of a workers' compensation insurance policy.  Glasbern operates a bed and breakfast in Lehigh County, PA that features a hotel and restaurant with adjacent farmland. Granger owned Glasbern as well as the farmland contiguous to the inn. The farming operation, it turned out, was run by Glasbern employees, although they were not included in the workers’ compensation policy issued by Zenith.   An employee of Glasbern was seriously injured on June 11, 2010 when he was struck by a 1200-pound cow on the farm.  Following a trial in the federal district court, a jury found, inter alia, that Glasbern and Granger violated the Insurance Fraud Act in connection with failing to disclose the farming operation of Glasbern to Zenith’s agent.  Following the verdict, the court entered judgment in favor of Zenith for more than $1 million in damages and subsequently, the judge ruled that Zenith was entitled to nearly $583,000 of the roughly $900,000 in attorneys' fees and costs it had sought.  In denying the post-trial motions, the judge indicated that it was uncontested that defendants’ application for insurance omitted required information about Glasbern's farming operation.  Other evidence indicated that Granger had told Zenith’s agent that the farm had nothing to do with the bed and breakfast.  The truth was substantially different and there was, therefore, sufficient evidence for the jury to find, under a clear and convincing evidence standard, that Granger and Glasbern intended to make false or misleading statements in connection with the application for insurance submitted to Zenith.

Thomas A. Robinson, J.D., the Feature National Columnist for the LexisNexis Workers’ Compensation eNewsletter, is a leading commentator and expert on the law of workers’ compensation.

LexisNexis Online Subscribers: Citations below link to Lexis Advance. Bracketed citations link to lexis.com.

See Zenith Ins. Co. v. Wells Fargo Ins. Servs. of Pa., 2014 U.S. Dist. LEXIS 1295 (Jan. 7, 2014) [2013 Neb. App. LEXIS 232 (E.D., Pa., Dec. 31, 2013)]

See generally Larson’s Workers’ Compensation Law, § 152.01 [152.01]

Source: Larson’s Workers’ Compensation Law, the nation’s leading authority on workers’ compensation law.



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