Dentist's wife embezzles from husband; employee dishonesty insurance will not cover steal of $325K because she wasn't an employee

It gets interesting when a dentist's wife embezzles. The insured in Chancey v. Cincinnati Insurance Co. was an Alabama dentist who had “married the wrong woman.”

Dentist's Wife Embezzles

Dr. Chancey’s wife managed his dental office, but in the course of running that office, she ran up over $300,000 of credit-card debt and stole over $25,000 from his dental practice. The two divorced, and Dr. Chancey later sought coverage for his wife’s misdeeds under a bond that covered loss resulting from employee dishonesty.

The insurer denied coverage because his wife was not an “employee.” A federal district court in Alabama agreed with the insurer. The bond defined employee as a “natural person [w]hom you compensate directly by salary, sages or commissions,” but the record was clear that the wife had never received a salary, wages, or commissions for her work at the dental practice. The court entered summary judgment in favor of the insurer.

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Related reading: It’s Not Just Cash That Gets Embezzled!!

Related Cases: Washington's Katherine Hargarten Pleads Guilty to Steal of $17K by Filing $17K False Insurance Claims | Bothell, WA dental office manager Josie Morey convicted of steal from practice including cash, insurance thefts; 9 months of house arrest