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Court Awards $330,000 to Insurance Company in Home Insurance Fraud CaseLock Icon

2 min read

A U.S. District Court judge last week awarded nearly $330,000 to an insurance company that said it was duped by two of its clients into paying a claim for a house they didn’t own.

Travelers Personal Insurance Co. of Hartford, Connecticut, sued Dianna Rathbun and her husband Marvin Rathbun of Searcy in federal court in Little Rock over allegations of fraud.

In November 2021, Travelers paid the couple nearly $290,000 for the loss of their home in Beebe, which burned and was a total loss.

About a month later, the couple bought a 1,759-SF, $225,000 house built in 2011.

“If that were the end of the matter, this case would present nothing more than your typical insurance-claim process,” wrote U.S. District Judge Lee P. Rudofsky. “As it turns out, there is much more to the story.”

Upon further investigation, Travelers learned that the Rathbuns’ Beebe home had been foreclosed on and the couple had been served an eviction notice to get out in August 2021.

The Rathbuns left the home four days before the fire on Sept. 13, 2021, according to the court records.

“It isn’t as though the Rathbuns sat on their hands and just let Travelers erroneously cut a check,” Rudofsky wrote.

“They affirmatively lied to Travelers during the investigation.”

The couple also did their best to undermine Travelers’ investigation by ignoring requests for documents and canceling interviews at the last minute, the order said.

Travelers filed the lawsuit against the couple in October.

“Neither of the Rathbuns has done anything in this Court since — no answers, no motions to dismiss, no notices of appearance by counsel,” Rudofsky wrote.

Rudofsky entered the default judgment against the couple for $289,475, plus another $39,792 for pre-judgment interest.

The judgment will accrue interest at a 5.42% rate.

The judge said he would consider a request from Travelers to cover attorneys fees and costs.

Travelers is represented by attorneys E.B. “Chip” Chiles IV and Laura L. O’Hara of Quattlebaum Grooms & Tull of Little Rock.

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