In a recent unreported opinion by the Maryland Appellate Court, the case of Sarpong v. Nationwide Mutual Fire Insurance Company (Case No. CAL21-09252), the court, presided over by Judges Reed, Ripken, and Salmon, upheld a previous decision by the Circuit Court for Prince George’s County.
This decision confirmed the Maryland Insurance Administration’s (MIA) ruling that supported Nationwide’s denial of Mr. Sarpong’s insurance claim. The claim was filed following the loss of his personal property during an eviction.
MIA Appeals Process
Let’s talk first about MIA appeals of insurance decisions. If you receive an unfavorable decision from the Maryland Insurance Administration (MIA) regarding your insurance complaint, you can request a formal administrative hearing.
During the hearing, claimants can testify, present evidence supporting their complaint, and point out relevant insurance laws they believe the insurance company violated. It is sort of like a regular trial but with relaxed rules of evidence that make it easier for people who are not represented by a lawyer. Still, the procedural aspects of filing and arguing an appeal with the MIA can be daunting. Specific deadlines, forms, and procedures must be followed precisely. Failure to adhere to these can result in dismissal or weakening of the appeal.
The insurance company will also present its defense, likely through witnesses and documents. After the hearing, usually about a month later, the MIA or OAH will issue a written decision. This decision will include the hearing officer’s findings of fact and a determination of whether the insurance company violated Maryland law.
(The regulations governing these hearings are detailed in COMAR 31.02.01.01 to 31.02.01.14 for MIA hearings and COMAR 28.02.01.01 to 28.02.01.27 for OAH hearings.)
Background of the Case
In June 2016, Mr. Sarpong filed a claim with Nationwide for personal property loss, claiming that his belongings were either damaged or stolen during his eviction and subsequent removal from his Bowie, Maryland, residence. The insurance policy covered theft but excluded losses due to the insured’s neglect to protect the property after a loss. After a comprehensive investigation, Nationwide denied the claim, stating Mr. Sarpong failed to secure or retrieve his property.
Unsatisfied with the decision, Mr. Sarpong approached the MIA, which sided with Nationwide after an investigation. An administrative hearing in May 2021 upheld this decision, agreeing that Nationwide’s actions were justified as Mr. Sarpong had not taken adequate steps to protect his property.
Mr. Sarpong, who represented himself, had financial difficulties in 2016 led to his home being auctioned off and purchased by W.F. Chelsey Real Estate, LLC. The eviction process was initiated, and despite Mr. Sarpong’s belief that a bankruptcy filing would stay the eviction, he was evicted, and his property was removed from the premises.
Post-eviction, Mr. Sarpong hired individuals to return his property to the house, resulting in his arrest. He claimed confusion about the legal process – which you can especially understand under the circumstances – and did not move his property, which was eventually disposed of by Chelsey. The total value of the lost property, as per Mr. Sarpong’s estimation, was around $579,944, according to a 140-page inventory he submitted to the court.
It is hard to buy into that number, right? But you also have to wonder why Chelsey would get rid of that much of value even if it was worth 10% of that estimate. What did they do with it? Did they sell it or toss it? I’d be curious if he thought to sue Chelsey and whether there would be grounds for such a claim.
Court’s Analysis and Decision
After thorough analysis, the court affirmed the ALJ’s proposed decision and the MIA’s final order. The judges found substantial evidence supporting Nationwide’s decision, citing Mr. Sarpong’s prior knowledge of the eviction and his failure to take preventive measures to protect his property. The court also noted that his subsequent actions, like returning to the property post-arrest, contradicted his claim of being barred from the property.
The court addressed Mr. Sarpong’s arguments, including the alleged constitutional violation due to the eviction, the request to rehear the Agency’s order, and Nationwide’s supposed misrepresentation of facts. However, it found these arguments either irrelevant, not preserved for review, or unsupported by the evidence presented.
Deference to the MIA
The problem with all MIA appeals is the deference given to the agency. The court underscores this point:
We accept the agency’s factual findings if supported by substantial evidence but
exercise de novo review over the agency’s legal determinations. Christopher v.
Montgomery County Dep’t of Health and Human Servs., 381 Md. 188, 198 (2004).
“Substantial evidence” is “defined as relevant evidence that a reasonable mind might
accept as adequate to support a conclusion.” Piney Orchard Cmty. Ass’n v. Md. Dep’t of
Env’t, 231 Md. App. 80, 91-92 (2016) (quotation marks and citations omitted), cert. denied,
452 Md. 18 (2017). Drawing inferences from the evidence and resolving conflicting
evidence is exclusively within the province of an agency. Prince George’s Doctors’
Hosp., Inc. v. Health Services Cost Review Comm’n, 302 Md. 193, 200-02 (1985). In
applying the “substantial evidence test,” we “review the agency’s decision in the light most
favorable to the agency[.]” Paul, 237 Md. App. at 210-11 (quotation marks and citation
The case highlights the importance of understanding and adhering to insurance policy terms, especially in property protection and eviction situations. While the court acknowledged the hardship faced by Mr. Sarpong, it reiterated that the focus was on deferring to the MIA absent something really compelling. So, the take-home message is MIA appeals are challenging.