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Farber v. American Family Mut. Ins. Co.

United States District Court, E.D. Missouri, Eastern Division

August 28, 2014

RONALD G. FARBER, Plaintiff,
AMERICAN FAMILY MUTUAL INSURANCE COMPANY, a Wisconsin corporation, Defendant

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For Ronald G. Farber, Plaintiff: David M. Heimos, LEAD ATTORNEY, LAW OFFICE OF DAVID M. HEIMOS, Clayton, MO.

For American Family Mutual Insurance Company, Defendant: Michael F. Harris, Fred A. Ricks, Jr., HARRIS AND DOWELL, Chesterfield, MO.

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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 background[2]

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

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vendor 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 Protech 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. (Plaintiff's Additional Statement of Uncontroverted 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 notebook[3] reflecting an email he sent Smith stating:

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 Farber 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

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Resources 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 ...

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