New Today – The Second Edition of The Insurance Examination Under Oath

A Tool Available to Insurers to Thoroughly Investigate Claims and Work to Defeat Fraud

Read about this new book and more than 2950 posts at my blog, Zalma on Insurance. Posted on January 17, 2020 by Barry Zalma

Published today at Amazon.com is the Second Edition of “The Insurance Examination Under Oath” as either a Kindle book or a paperback.

Table of Contents

• Preface
• Chapter 1 The EUO As A Tool 24
• Chapter 2 The EUO Is A Duty Owed By The Insured To The Insurer.
• Chapter 3 Reasonableness Of The EUO Requirement
• Chapter 4 A False Statement At EUO Voids Coverage.
• Chapter 5 Timing Of Submission To The EUO.
• Chapter 6 Parties Subject To EUO.
• Chapter 7 Statutory Limitations.
• Chapter 8 The Taking Of The EUO.
• Chapter 9 The Insurance Claims Professional Should Not Expect The EUO To Be More Than A Fact Gathering Session
• Chapter 10 Techniques For Taking The EUO.
• Chapter 11 Six Key EUO Questions.
• Chapter 12 Before The EUO Begins.
• Chapter 13 The Etiquette Of The EUO.
• Chapter 14 Some Approaches That Work.
• Chapter 15 Ending The EUO.
• Chapter 16 The Role Of The Insurer’s Attorney After Ending The EUO.
• Chapter 17 The Need To Understand The Mutability Of Memory.
• Appendix 1 Form Of EUO Demand.
• Appendix 2 Euo Testimony Admitting Fraud.
• Appendix 3 Demand For EUO – 2.
• Appendix 4 Examination Under Oath Outline.
• Appendix 5 Claflin V. Commonwealth.
• Appendix 6 Guebara V. Allstate.
• Appendix 7 Gruenberg V. Aetna.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it for insurers and their claims staff to become insurance claims professionals.

This Article is Adapted from the Preface

The insurance Examination Under Oath (“EUO”) is a formal type of interview authorized by an insurance contract. It is taken under the authority provided by the agreement of the insurer, when he, she or it acquires a policy of insurance, to submit to a condition of the insurance contract that compels the insured to appear and give sworn testimony at the demand of the insurer. Failure to appear and testify is considered a breach of a material condition.

The EUO is conducted before a notary and a certified shorthand reporter who is present to give the oath to the person interviewed. The reporter will record the entire conversation and prepare a transcript to be read, reviewed, corrected and signed by the witness under penalty of perjury or by an oath taken before a notary or judge.

The EUO is a tool only sparingly used by insurers in the United States. A professional insurer will only require an insured to submit to an EUO when a thorough claims investigation raises questions:

1. about the application of the coverage to the facts of the loss,
2. the potentiality that a fraud is being attempted, or
3. to assist the insured in the obligation to prove to the insurer the cause and amount of loss.

Although seldom used the EUO is an important tool needed by insurers when there is a question of coverage, destruction of evidence needed to prove a compensable loss or the amount of loss or evidence indicating the potential that a fraud is being attempted.

The Reason for the Examination Under Oath

As early as 1884, the U.S. Supreme Court explained the purpose of the EUO, as follows:

The object of the provisions in the policies of insurance, requiring the assured to submit himself to an EUO, to be reduced to writing, was to enable the company to possess itself of all knowledge, and all information as to other sources and means of knowledge, in regard to the facts, material to their rights, to enable them to decide upon their obligations, and to protect them against false claims. And every interrogatory that was relevant and pertinent in such an examination was material, in the sense that a true answer to it was of the substance of the obligation of the assured. A false answer as to any matter of fact material to the inquiry, would be fraudulent. If it made, with intent to deceive the insurer, would be fraudulent. If it accomplished its result, it would be a fraud effected; if it failed it would be a fraud attempted. And if the matter were material and the statement false, to the knowledge of the party making it, and willfully made, the intention to deceive the insurer would be necessarily implied, for the law presumes every man to intend the natural consequences of his acts. No one can be permitted to say, in respect to his own statements upon a material matter, that he did not expect to be believed; and if they are knowingly false and willfully made, the fact that they are material is proof of an attempted fraud, because their materiality, in the eye of the law, consists in their tendency to influence the conduct of the party who has an interest in them, and to whom they are addressed. [Claflin v. Commonwealth Ins. Co., 110 U.S. 81, 3 S.Ct. 507, 28 L.Ed. 76 (1884)] (Emphasis added)

The position taken by the U.S. Supreme Court in Claflin has been upheld by every court that has considered it to date. For example, in Gipps Brewing Corp v. Central Manufacturers Mutual Insurance Co., 147 F.2d 6, 13 (C.A. 7, 1945) the Seventh Circuit stated:

We think there is no escape from the conclusion that these witnesses purposefully refused to answer ques-tions upon EUO which were materi-al to the inquiry. We see no basis for refusal to answer upon the ground that they were controversial or that the answers thereto might have been used for the purpose of impeachment. Such a limitation would seriously impair and perhaps destroy defendants’ right under this provision of the policy. We would think that defendants had a right to examine as to any matter material to their liability, as well as to its extent.

In light of the evidence cited by the defendants (of which these are only a few examples), a reasonable juror could conclude that the plaintiff breached the insurance policy by not carrying out her duties as the insured party, thereby rendering the policy void.

Courts that construe submission to an EUO as a condition precedent to recovery generally do not require the insurer to prove that it suffered actual prejudice from an insured’s unexcused refusal to submit to an examination. Refusal to testify at EUO is sufficient to refuse indemnity and deny the claim presented by the insured. [Lorenzo–Martinez v. Safety Ins. Co., 58 Mass. App. Ct. 359, 790 N.E.2d 692, 695–96 (2003)].

The EUO and Legal Action provisions in an insurance policy are conditions precedent to an insured’s ability to file suit, and that since the insured failed to substantially comply with the terms of those provisions, the appropriate remedy is dismissal without prejudice. The insured’s failure to comply with these conditions does not bar his ability to bring suit to recover, but merely suspends his ability to bring suit until he has fully complied with those conditions. [Gerke v. Travelers Cas. Ins. Co. of America, 815 F.Supp.2d 1190 (D. Or. 2011)]

The EUO provides a mechanism for the insurer to corroborate the claim by obtaining information that is primarily or exclusively within the possession of the insured by requiring production of documents and sworn testimony of the insured or the insureds employees and agents.

Recently, in New York, the appellate court stated no recovery of benefits were available to the claimant after refusal to testify:

Defendant contends that the request for the EUOs was improper because plaintiffs failed to show how all the claims were related to an allegedly staged accident involving a single claimant and his passenger, but its principal did not deny knowledge of fraudulent claims or staged accidents, and the EUOs reasonably sought to determine whether defendant’s claims were legitimate. [Country-Wide Ins. Co. v. Power Supply, Inc., 2020 NY Slip Op 38 (N.Y. App. Div. 2020)]

The claim failed as a result of the refusal and there was a similar result in Am. Transit Ins. Co. v. Singh, 2019 NY Slip Op 33721(U) (N.Y. Sup. Ct. 2019).

When an insurer moves for summary judgment dismissing a complaint on the ground that the assignor failed to appear for an EUO, to establish its prima facie case, the insurer need only establish that it twice duly demanded an EUO from the assignor, who had allegedly been injured in a motor vehicle accident, that the assignor twice failed to appear, and that the insurer issued a timely denial of the claims. [Interboro Ins. Co. v Clennon, 113 AD3d 596, 597 [2014])]. Since appearance at a duly demanded EUO is a condition precedent to the insurer’s liability on the policy contrary to plaintiff’s contention, defendant established its entitlement to summary judgment. [Big Apple Med. Supply, Inc. v. Titan & Nationwide, 2019 NY Slip Op 52067(U) (N.Y. App. Term 2019)]

The EUO condition does not limit the insurer to one EUO. It is an open-ended requirement without limitation and even if it were true that a reasonableness principle applies to the subject matter, topic, or scope of the EUO. There was no factual indication in Nati

onal Athletic Sportswear v. Westfield Ins., 528 F.3d 508 (7th Cir. 2008) that the Defendant’s purpose in holding the second EUO was meant to harass the Plaintiff. In fact, the record indicated that the Defendant’s purpose in conducting a second EUO was to inquire into documents that were either requested of and received from the Plaintiff after the first EUO or not discussed during the first EUO. The Plaintiff’s belief that an EUO was meant to harass, a belief does not create a triable issue of fact for a jury to determine. [Moore v. Allstate Ins. Co., 293 Or App 690, 429 P.3d 1045 (Or. App. 2018)]

The authority to take an EUO is provided by the insurance contract and also exists, as a result of statutes establishing a state mandated fire insurance policy that must be incorporated in every policy in the state that insures against the peril of fire. For example, the New York Standard Fire Policy provides as follows:

The insured, as often as may be reasonably required, shall exhibit to any person designated by this company all that remains of any property herein described and submit to EUO by any person named by this compa-ny, and subscribe the same; and as often as may be reason-ably required, shall produce for examination and copying all books of account, bills, invoices, and other vouchers…

Barry Zalma’s Insurance books are all available at amazon.com. If the link above doesn’t work go to https://www.amazon.com and type into the search bar “Barry Zalma” or “Barry Zalma and Examination” and it will direct you to the EUO books.

? 2020 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States. The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at https://www.zalma.com and [email protected].

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the Insurance Claims Library 

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