If I read that correctly, the issue with the engine was due to a lifter failure. Now as most of us know, that is and has been a widespread problem going back many years. H-D itself tried to blow people off during the factory warranty, then CNA (H-D ESP) screwed over more than a few by searching for anything they could to deny claims, such as use of non-stock parts totally unrelated to the lifters failing. It appears the problem created by and never corrected by H-D is the root of the problem, and the cost of repairs has caused various ESP companies to try to find a way to wiggle out from under this particular defect. All Harley does is try to find ways to make sure most make it out of the factory two year warranty period, then pass their problem on to the the ESP companies and the customers. We've had many discussions about this and other defects Harley has refused to fix over the years and dumped on the ESP folks and the customers, so it shouldn't be a surprise to anyone who uses this or other forums. When you find out how much of what you pay the dealer for the ESP actually goes to the ESP company (less than half the suggested retail price with the rest going to H-D and the dealership in commissions, and to the administrator), then look at how much one of these lifter failures cost to properly repair, the reason the ESP folks try to wiggle out of paying becomes more obvious. H-D is screwing everyone else involved. Of course that doesn't justify the ESP folks also screwing over the customers, it just illustrates why so many of them seem to be doing so.
Btw, I've got no horse in the race, since I never buy ESP's and I haven't bought a new Harley since 2005 thanks to their lack of quality and ethics and customer service. I have no way of knowing if the OP's claims are true or not, and no way of knowing if Jim Palmer is playing games or not. I do know however of the same kind of failures also being denied coverage by the Harley sponsored ESP, so it's obviously not just a Jim Palmer issue.
Jerry