“All crime is stupid, your honor,” her defense lawyer said at her arson trial. “And this one elevates stupid to monumental new heights.” You know you’re in trouble when your defense in court is that you are monumentally stupid.
The arson that triggered the “monumental stupidity” defense resulted in a sentence of five years in prison for the woman charged with an accomplice for burning down her farmhouse about three hours west of Cincinnati. However, her deceptions carried far beyond the crime of arson.
The Kentucky woman also submitted an insurance claim for $866,000 for the house. The insurer paid her more than $425,000 before it filed in court to void her policy, alleging that she conspired to burn down the house and that she inflated the insurance claim.
The woman then filed a counterclaim against the insurer, alleging bad faith and breach of contract.
She eventually admitted that she had indeed hired a friend to torch her house so that she could collect on the insurance. According to a news story, she had a monthly house payment she couldn’t meet and a lifestyle she couldn’t afford. Arson was her apparent solution to her financial problems.
After her admission and indictment on wire fraud charges, the insurer filed a claim against her for reverse bad faith. As you likely know, bad faith is a term applied to insurance companies that don’t act in good faith and don’t engage in fair dealings with their clients who file claims.
The insurer in this case was arguing that its policyholder had acted in reverse bad faith, violating the terms of the policy and implied covenant of good faith and fair dealing. Though an appeals court eventually rejected the insurer’s argument, it’s an argument that has been brought up in the past in Ohio and other places, and will undoubtedly rise again like a phoenix from a fire.
The case sheds light on some of what insurers have to endure daily from policyholders who have decided for one reason or another to breach a contract, file a false claim or otherwise try to rig the game in their favor. Insurance companies then rely on experienced attorneys to fight for what is right and to uphold contracts and deny inflated claims. In that way, we all benefit from lower premiums and knowledge that justice prevailed.
