Farber v. American Family Mutual Insurance

46 F. Supp. 3d 903, 2014 U.S. Dist. LEXIS 120102, 2014 WL 4269034
CourtDistrict Court, E.D. Missouri
DecidedAugust 28, 2014
DocketNo. 4:13-CV-1266-JAR
StatusPublished
Cited by2 cases

This text of 46 F. Supp. 3d 903 (Farber v. American Family Mutual Insurance) is published on Counsel Stack Legal Research, covering District Court, E.D. Missouri primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Farber v. American Family Mutual Insurance, 46 F. Supp. 3d 903, 2014 U.S. Dist. LEXIS 120102, 2014 WL 4269034 (E.D. Mo. 2014).

Opinion

MEMORANDUM AND ORDER

JOHN A. ROSS, District Judge.

This matter is before the Court on Defendant American Family Mutual Insurance Company’s Motion for Summary Judgment. (Doc. No. 21) The motion is fully briefed and ready for disposition.1 For the following reasons, the motion will be granted.

Factual background2

In 2011, American Family employed Plaintiff Ronald G. Farber (Farber) as a Commercial Farm/Ranch Field Claim Manager with responsibility over nine to ten claims adjustors, one of whom was Ron Smith. (Defendant’s Statement of Uncontroverted Material Facts (SOF), Doc. No. 26, ¶¶ 1^4) In September 2011, American Family received an anonymous tip that Smith was involved in an embezzlement scheme with Protech, an outside [906]*906vendor owned by Chad Bowen, and CRB Enterprises, another company associated with Protech that received fraudulent payments from American Family. (SOF, ¶¶ 5-6; PSOF, ¶ 14) Calvin Cole, Farber’s supervisor, notified Farber of the issue, and the two of them analyzed an initial run of American Family’s files listing Pro-tech as the payee. (SOF, ¶ 7) American Family began an internal investigation and hired an outside firm, Farmington Risk Management to determine the extent of the embezzlement, identify those involved, document American Family’s loss, and determine if the facts met guidelines for criminal indictments of those involved. (SOF, ¶¶ 51-52, 55).

Farber claims that prior to the anonymous tip, he had no knowledge of any issues with Protech. (Plaintiffs Additional Statement of Uncóntroverted Material Facts (“PSOF”), Doc. No. 26, ¶ 17) However, it is undisputed that on August 17, 2009, Farber made a note in Smith’s Performance Management Administration notebook3 reflecting an email he sent Smith stating:

Ron,
Insured called on this claim and the draft went to the old address.
I reissued and sent her a copy of your estimate. She doesn’t know about the payment including Protech. Says they didn’t do any work. This draft has been reconciled. Please follow up on this ASAP!

(SOF, ¶ 9) The next day, August 18, 2009, Farber entered a second note to Smith’s Performance Management Administration notebook that shows Farber sent Smith a second email stating:

First order of business please look into this file. Insured has called twice. I have reissued the draft to her. She says you said the amount should be $5,300 area. I sent her a copy of your estimate. Finally, what is the check with Protech. She knows nothing about Protech and said they have not done any work. No estimate or bill from Protech in the file. Get with the insured. If 'this has been forged we need to do sometime (sic). Was this suppose (sic) to be on another file. If so we need to get the payment off this file.
Call me first thing on this. Took up a lot of time trying to figure this out.

(SOF, ¶ 10) After questioning Smith about Protech in August 2009, Farber never followed up with Smith, and never reported any concerns about the Protech payments to anyone at American Family. (SOF, ¶¶ 12) Farber later explained he had been “working long hours and dealt with a large volume of large payment claims,” such that “he must just have missed” the file entries pertaining to Smith and Protech and failed to follow up on those files. (PSOF, ¶ 27, 33).

American Family terminated Smith on October 20, 2011, for his role in the embezzlement scheme,4 (SOF, ¶¶ 17-18) and, effective November 19, 2011, demoted Far-ber to the position of Property Claims Desk Senior Adjustor for failing to properly supervise Smith.5 (SOF, ¶¶ 20-23, 37) Farber appealed his demotion by letter to Joe Guldan, American Family’s Human [907]*907Resources Regional Manager, dated February 29, 2012. (SOF, ¶ 40) In his letter, Farber claims he complained or reported that proper systems were not in place to uncover theft. (PSOF, ¶ 35) American Family disputes Farber’s characterization of his letter. In point of fact, Farber’s letter states in pertinent part:

“In my managers notes it states that the reviewing parties found five coaching audits involving the identified companies. I am not sure which reviews these are. I will state that our department was one of the last to utilize the ICS system. This is the system in which claim documentation is stored and which the coaching audit system is located. During the stages of the implementation and use of this process it was noted that there were particular problems with the placement of documents in our ICS. This had been noted during our manager audit in 2009. There was no formal education training in our area on the use of ICS system. A member of our unit participating as a member on team for ICS matters. The member then reported to the unit. We were at this time unsure where documents were being filed by the scanning center. Training was offered in 2011 by Education and Q & A departments in regard to proper placement of documents in ICS folders.” (Emphasis added).
“The next note mentions no specific follow up on files noted with deficiencies on PP and QA audits. Specific follow [sic] on individual files was not instructed to be a practice in our department following our peer to peer or QA audits. We were not instructed to go back into the file with deficiencies and address individual issues on each file. We were to utilize the information to review with our adjusters and to make action plans as needed. See the enclosed note from past manager regarding action plans. In the meeting with our department manager on November 10, 2011, he stated that we now needed to go back into files with noted deficiencies in audits and to correct areas noted, in the particular files. This had not been the instructions to the managers in our department previously. I am also enclosing a copy of a memo that was forwarded by our department manager.” (Emphasis added).
“It should be noted that the incident in question was not discovered by internal auditing or any department in American Family Claims area. I have reviewed a listing of the claims and payments following notification of the incident. The payments that were issued were made payable to the insured and the contractor. They were addressed to be mailed to the insured. A Tax identification number was listed with the draft entry in our COPS system. The company is also entered in our TIN system. I would assume that the companies would receive 1099 tax form for payments made by American Family. I am enclosing a copy of a draft payment involved. I have erased the insured name and claim number due to file confidentiality. I can supply you a listing of the claims involved in this incident.” (Emphasis added).

(PSOF, ¶ 35) American Family responded to Farber’s letter on April 5, 2012, notifying him that the decision regarding his demotion would stand. (SOF, ¶ 50).

As part of the investigation into the embezzlement scheme, investigator Harold Copus interviewed Farber on April 20, 2012. (SOF, ¶¶ 60-61, 68, 73) Doug Cran-dall, American Family’s Special Investigations Manager, and Ken Licht, Employee [908]*908Relations Specialist, attended the interview as observers.

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46 F. Supp. 3d 903, 2014 U.S. Dist. LEXIS 120102, 2014 WL 4269034, Counsel Stack Legal Research, https://law.counselstack.com/opinion/farber-v-american-family-mutual-insurance-moed-2014.