Top Midwest Region Insurance Journal Stories of 2024
This year’s top Insurance Journal Midwest headlines feature a range of misconduct, from fraud and embezzlement to high-profile lawsuits.
Top stories stories also highlight increasing frequency of severe weather event and the evolving legal landscape of workplace safety.
Former Iowa Insurance Agent Sentenced to 19 Years for Defrauding the Elderly
A former Iowa insurance agent, Zach Flaherty, was sentenced to 19 years in prison for defrauding elderly clients out of their retirement savings. Flaherty pleaded guilty to wire fraud charges after admitting to deceiving clients by making false promises about investments and misusing their funds for personal gain. He used the stolen money to purchase personal assets like boats and automobiles. Flaherty also defrauded insurance companies out of over $650,000.
State Farm Sues Norfolk Southern Over Ohio Train Derailment Damages
State Farm filed a lawsuit against Norfolk Southern in Ohio, seeking over $85,000 in reimbursement for payouts made to two homeowners whose properties were damaged in the East Palestine train derailment. The lawsuit alleges that Norfolk Southern’s negligence, which led to the release of hazardous chemicals and subsequent fires, directly caused the property damage. State Farm paid out claims to Justin Daubenmire for both personal and real property damage, and to Barbara Georgescu for personal property damage. This lawsuit comes as Norfolk Southern faces numerous other legal challenges and mounting costs related to the derailment, including a $1.1 billion estimated total cost and various settlements with businesses impacted by the incident.
Missouri Farmer Who Stars in Reality TV Series Pleads Guilty to Crop Insurance Fraud
Steve McBee, a Missouri farmer and star of the reality TV show “The McBee Dynasty,” pleaded guilty to a multi-million dollar crop insurance fraud scheme. McBee underreported his crop yields and submitted false information to obtain federal crop insurance benefits he was not entitled to. He faces up to 30 years in prison and is required to pay restitution and forfeit a significant portion of the fraudulently obtained funds. This plea comes despite the recent renewal of his reality show for a second season.
Michigan Jury Awards $12M to Woman Fired for Refusing to Get COVID Vaccine
A Michigan jury awarded a woman over $12 million, including $10 million in punitive damages, after she was fired from Blue Cross Blue Shield of Michigan for refusing to get a COVID-19 vaccine due to religious beliefs. Lisa Domski, a long-time employee who worked remotely, argued that the company’s vaccine mandate violated her religious rights. Blue Cross denied discrimination and argued that Domski lacked a sincerely held religious belief. The company is reviewing its legal options and may appeal the verdict.
Owner of Michigan Insurance Agency Charged With Embezzlement
The owner of a Michigan insurance agency has been charged with embezzlement and wage and benefit violations after allegedly misappropriating employee payroll deductions intended for their retirement accounts. Agency owner Nancy Caviston allegedly used these funds for personal and business expenses and failed to contribute the required employer matching funds. The investigation was conducted by the U.S. Department of Labor, and Caviston faces felony and misdemeanor charges. Attorney General Dana Nessel emphasized the seriousness of payroll fraud and the importance of protecting employees’ retirement savings.
Illinois Insurance Agent Sentenced to 7 Years in Prison for Swindling Premiums
The owner of an Illinois insurance agency, Daniel M. Rosenbaum, was sentenced to seven years in federal prison for defrauding clients out of over $1 million by collecting annuity premiums for policies he never purchased. Rosenbaum used the stolen funds for personal expenses, including spousal and child support, credit card payments, and luxury purchases. He further defrauded the government through fraudulent PPP loan applications and unemployment insurance claims. Rosenbaum pleaded guilty to wire fraud and was sentenced in February 2024.
Minnesota Homeowners Report Surge in Insurance Complaints
Homeowners insurance complaints in Minnesota have surged 108% since 2020, with many grievances stemming from denied claims or high out-of-pocket costs related to wind and hail damage. This increase coincides with rising insurance premiums driven by more frequent extreme weather events and inflation. The Minnesota Department of Commerce warns homeowners to carefully review their policies for potential changes, such as higher deductibles specifically for wind and hail damage, to avoid unexpected costs after a claim.
Cracks in O’Hare Columns Aren’t Insured Property, Just Bad Product – Court
The 7th Circuit Court of Appeals ruled that cracked steel columns in a Chicago airport construction project do not constitute “property damage” under the contractor’s general liability insurance policies. The court found that the policies only covered damage to property owned by “others,” and the cracked columns were the subcontractor’s own defective products. The court rejected the contractor’s arguments that the cracked columns posed a risk to the entire structure and required costly repairs, stating that these constituted economic losses not covered by the insurance. This ruling emphasizes that general liability insurance does not typically cover damage to a company’s own products, even if those products cause broader issues within a construction project.
Lawsuit Filed Against Lighting Company Over Ohio Cannabis Facility Explosion
An Ohio cannabis manufacturer, Cure Ohio, and its insurer, Dorchester Insurance, filed a lawsuit against Eye Lighting International for negligence and strict liability following an explosion at a Cure facility. In February 2022, an Eye Lighting lamp exploded at the Columbus facility, causing significant damage to the grow facility and resulting in losses exceeding $884,000. The lawsuit alleges that Eye Lighting failed to warn of the dangers of using the lamp and fixture together, and that the explosion was a direct result of negligence and design/manufacturing defects in their products. Dorchester Insurance, having paid Cure’s claim, is also seeking reimbursement for their losses.
Oscar Mayer Wienermobile Rolls Over in Chicago Highway Crash
The iconic Oscar Mayer Wienermobile was involved in an accident on a Chicago highway in July. The hot dog-shaped vehicle collided with another car, causing the Wienermobile to roll onto its side. While the right lane of the highway was temporarily closed, no injuries were reported. The Oscar Mayer brand expressed relief that everyone involved was safe, and the damaged Wienermobile was later transported away on a flatbed truck.
Here’s a video discussing popular Midwest articles, produced by Wells Media Group editors and our new-media team.