ZALMA’S INSURANCE FRAUD LETTER

Barry Zalma, Esq., CFE

Insurance claims expert, consultant at Barry Zalma, Inc. and author/Publisher at ClaimSchool, Inc.

发布日期: 2021年1月31日

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Quote of the Issue

“Man is only wise while he searches for wisdom; if he thinks he’s found it, he’s a fool.” -- Rabbi Shlomo ibn Gavrioel

See the full video at https://youtu.be/1Lvbxku45ho

Florida Insurers Actively Pursue Fraud Perpetrators in RICO Suits

Perhaps because Florida’s Insurance Commissioner David Altmiesays claims solicitation is raising the cost of Florida’s property insurance industry for both consumer and provider insurers – frustrated by a lack of criminal prosecution of insurance fraud perpetrators, have taken to civil courts to deter crime by taking the profit out of the criminal schemes.

David Altmaier told lawmakers the losses insurance companies took in 2020 were almost a billion dollars, little over a billion dollars in underwriting losses for Florida’s domestic industry through the first three quarters of 2020, so “that’s not even a full year yet and we’ve almost doubled the underwriting losses from last year.”

Altmaier said, while lawsuits are a main driver—a growing issue is roofing claims. He reported that roofing claims do not appear to be normal roofing claims in which a consumer notices that they incurred a loss and calls their insurance company, but instead solicitations.

RICO Actions

In a suit filed January 13, 2021, Heritage Property and Casualty Insurance Company sed Moisture Rid, Inc., Water Dryout, LLS and Angelica, Albert Sigler in the United States District Court for the Southern District of Florida, Miami Division, there docked as case number 1:21-cv-20134-DPG alleging desire to terminate an ongoing fraudulent scheme committed against Heritage and more broadly, the Florida homeowners’ insurance industry. In addition to money damages, Heritage seeks a declaration that it is not legally obligated to pay reimbursement of more than $75,000.00 in outstanding claims for services that have been submitted, or caused to be submitted by Defendants because the claims were fraudulent, unlawful, orchestrated and otherwise non-reimbursable. The predicate acts for a Racketeer Influenced and Corrupt Organizations Act (RICO) action they claim violation of the Florida Insurance Fraud statute and Florida Statute Section 501.201 et.seq, and Section 772.103 et.seq.,18 USC Section 1962[C]& [D] as well as common law fraud.

On June 18, 2020 Citizens Property Insurance Corporation sued in state court, The Strems Law Firm, P.A., Scott Strems, Contender Claims Consultants, Inc., Guillermo Saavedra; All Insurance Restoration Services, Inc., Cesar I Guerrero and Derek Parsons claiming a conspiracy of the defendants paying for sham first-party property insurance claims, using or acting as runners or cappers, all to defraud Citizens, a governmental entity of the State of Florida, claiming violation of civil RICO with predicate acts of mail and wire fraud; travel in furtherance of scheme to defraud in violation of 18 USC Section 1952; Violation of the Florida RICO Act, Sections 895.02(5), and 895.03(3).

Florida’s Civil RICO statute provides, “It is unlawful for any person employed by, or associated with, any enterprise to conduct or participate, directly or indirectly, in such enterprise through a pattern of racketeering activity or the collection of an unlawful debt.” Fla. Stat. § 895.03(3). Federal RICO provides, “It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity or collection of unlawful debt.” 18 U.S.C. § 1962(c). Since Florida RICO is patterned after federal RICO, Florida courts have looked to the federal courts for guidance in interpreting and applying the act. Therefore, federal decisions should be accorded great weight.

Both actions are civil suits. The Citizens case also includes the The Strems Law Firm and Scott Strems who readers of ZIFL are aware are under investigation and suspension by the Florida State Bar for actions similar to those alleged in the suits.

Whether these actions are successful or not one can only hope that they will deter future criminal or fraudulent activity aimed at insurers doing business in the state of Florida. Of course, as all insurance fraud investigators understand, allegations of insurance fraud are easy to make – whether from an insurer or an insured – but they are also difficult to prove. ZIFL can only hope that the lawyers who brought these RICO actions have collected sufficient admissible evidence that they can bring to the court to establish the two predicate acts and that there was an ongoing scheme to defraud the insurers.

Insurance fraud bleeds those honest people who buy insurance not some evil insurance company living in an ivory tower. Insurance fraud hurts the average person who presents a claim for a legitimate reason. If, as the complaints allege, honest people were duped by public insurance adjusters, lawyers and repair facilities to present exaggerated or fraudulent claims they will be hurt while the defendants named profited and the honest homeowners found their property not repaired.

It is time that the Attorney General of the State of Florida, the local prosecutors and the U.S. Attorney for Florida recognize that insurance fraud is rampant in Florida and it is time that criminal prosecutions are brought under state and federal criminal statutes to deter the alleged villains from further actions defrauding insurers and the citizens of the state of Florida.

In 2018, certain named defendants tried to have the court dismiss a suit brought by State Farm that alleged that violations of Florida Statutes section 817.234(1) —a criminal statute dealing with insurance fraud—serve as predicates supporting its FDUTPA claims. Section 817.234 “explicitly prohibits preparing ... any written statement that is intended to be presented to any insurer in connection with any claim for payment ... pursuant to an insurance policy, knowing that such statement contains any false, incomplete, or misleading information concerning any fact material to that claim. The attempt failed and the court required the defendants to answer the complaint. State Farm, in its complaint, pointedly alleges a defendant, Dr. Lorites was an integral part of the complained of fraud, including his involvement, as a medical director, in the submission of false and misleading bills and records—in direct violation of section 817.234. [State Farm Mut. Auto. Ins. Co. v. Health & Wellness Servs., Inc., 389 F.Supp.3d 1137 (S.D. Fla. 2018)].

The Report “Florida’s P&C Insurance Market: Spiraling Towards Collapse”

The RICO suits may have been filed because a recent report indicates that Florida’s property insurance market is “spiraling towards collapse” and requires immediate attention if there is any chance of protecting the market, consumers, and ultimately, the state’s economy, according to an analysis about to be presented to the Florida Legislature.

According to the Insurance Journal, Guy Fraker of Cre8tfutures Innovation System & Consultancy issued, at the request of the insurance industry in Florida, a report called: “Florida’s P&C Insurance Market: Spiraling Towards Collapse.” Fraker, IJ reported, has worked with the insurance industry for 30 years, including on auto insurance and autonomous vehicles, and with primary carriers, reinsurers and related sectors.

The report reportedly points a finger at the state’s “litigation economy” as the main contributor to insurance market woes— seeing it as more of a direct cause than the many weather events Florida has suffered. The Fraker report claimed roughly 6% of homeowners insurance claims being litigated are excessive.

Florida Insurance Commissioner David Altmaier told the Senate Banking and Insurance Committee on January 12 that carriers were on pace to nearly double their losses in 2020 compared with 2019, as their surpluses fell from $6.7 billion to $6.1 billion in just the first three quarters of the year.

Florida’s insurer of last resort, Citizens Property Insurance Corp., has received a flood of new policyholders over the last year as consumers struggle to find coverage in the private market, and it appears to ZIFL that is one of the reasons for its RICO action.

Insurers have been sued more than 200,000 times since 2013, many of them stemming from non-catastrophe water damage and roofing claims brought by assignors of the claims.

Analyzing more than 3,000 insurance cases, Fraker found that litigation costs are 17% higher for Florida insurers than in other catastrophe-prone states. The fees paid to attorneys by Florida carriers for this litigation are on average more than 750% of the damages paid to the plaintiffs/insureds. In one case Fraker examined, the plaintiff attorney was awarded 21,041% of the damages in fees.

The first page of the report contains the following from a policyholder’s lawyer that points out the reason for the expanding costs in Florida:

“See the attached recent order awarding$725.00 per hour with a 1.8 multiplier on a Hurricane Irma denial. I have twice the experience and three times the trial experience as Ben Alvarez. Please advise your carrier that these are the fees they will pay us, if not more, if they want to keep litigating Hurricane Irma cases.”—Attorney Joseph W. Ligman in email sent to insurance defense firms.

Fraker, stated that his first objective is: “As an unintended consequence of Florida multiple legislative acts and Fl Supreme Court Decisions, litigation practices have placed Florida’s P&C market in a state of crisis re viability, accelerating towards collapse, at the expense of Floridian’s financial security.”

In addition, Fraker noted that focusing on claim payments with greater granularity, payments include loss damage payments, and the expenses associated with paying those damages known as Loss Adjustment Expenses (LAE) and Direct Defense Costs (DDC). Insurance litigation related expenses are split between LAE and DCC. As Chart 1 shows, LAE and DDC expenses are typically 4% of revenues in every hurricane prone state, except Florida where these expenses have grown to 19%. In general, a combined ratio below 110% reflects a stable insurer. However, a combined ratio above 110% is generally indicative of an insurer facing some challenges. Insurers with back-to-back combined ratios in excess of 130% are either fending off, or actually in, crisis mode.

A total reversal of the statute that currently applies to all claim disputes placing responsibility on insurers to pay 100% of litigation costs when a plaintiff prevails by $1. Fraker says the language of the statute should be replaced with former U.S. Supreme Court Justice Antonin Scalia’s opinion that fee multipliers only be used on a “rare and exceptional” basis and never used for punitive measures.

Fraker also quoted a leading analyst group as follows:

The combination of growing litigation expense, litigation uncertainty, with storm uncertainty makes Florida’s P&C market distinct from any other U.S. market. We hear you are asking us for some definition of adequate capitalization for a Florida insurance carrier. As far as we know that number hasn’t been part of any realistic analysis because it cannot be calculated given layers of uncertainty all trending away from viability.

Fraker explains how the law of unintended consequences has effected the problems in the Florida P&C insurance business.

Given all that has been written, reviewed, and examined, regarding the use of an Assignment of Benefits (AOB), fueled by Section627.428, FS (1 Way Attorney Fees), little needs to be rehashed in this market analysis, particularly in light of reform statutes enacted in 2019. However, three quick observations remain highly relevant to this market study.

· First, when an insured is allowed to assign the benefits and rights of the named insured to another party who lacks an insurable interest in the property, the net effect is to double the coverages provided by protecting a party that was never underwritten, nor charged a premium. Most states do allow a named insured to assign policy benefits to a, as in a single, 3rdparty, with significant restrictions upon whom they may choose, as well as which benefits are assignable. Florida allows more simultaneous, or parallel 3rd party assignments to the most liberal list of qualified parties.

· Secondly, given the evolution of AOB applications occurred on a case-by-case basis from 2008 to 2016, the only public policy statutes available as reference points are 2019 reform measures Sections627.7152 & 7153, FS.

· In a classic case study of decisions leading to significant unintended consequences, the intersection of Section 627.428, FS with the growth in use of the AOB, the litigation storm made the jump to landfall as a Cat5.

The report concludes: “The best options to realign Florida Property and Casualty insurance institutions become much clearer once market-wide reform recommendations complete the consideration process, leaving only the enacted reforms. The likelihood of undesired & unintentional consequences grow significantly with institutional reforms based on current market conditions already rendering the P&C industry unsustainable. However, some realigning is needed regardless of other measures.”

Law of Unintended Consequences

The only solution to the problems raised by the law of unintended consequences is to cure the legislation that was intended to help consumers and has resulted in harm to the consumers of Florida who pay to insure their property and the risks of loss of fire, wind, and hurricane. The changes should include, in my opinion:

· Removal the attorney fee multipliers from statutes;

· Change allowable attorney fee arrangements so they are awarded based on policy limits and damages awarded to claimants;

· Change the 3-year First Notice of Loss deadline to one year;

· Require courts to enforce excluded or non-covered damages if clear and unambiguous;

· Consolidate litigated cases so multiple suits are not filed for the same property; and

· Eliminate building tradesman (i.e., roofing contractors) from speaking on behalf of an insured without the insured’s involvement; and

· Prosecute tradesmen who are not licensed lawyers or public adjusters for violation of the licensing laws.

It is up to the Florida Legislature to reform the statutes enacted with good intentions that are being abused. The Legislature and Insurance Regulations must understand that without reform the current litigation and claims situation will be devastating to Florida’s economy. If the state Legislature is unable to fix the problem perhaps the two RICO suits will deter some of the more egregious claims and might prove a model to other states facing increasing litigation by what the RICO suits report are profiteers rather than insureds with actual, easy to investigate and adjust, losses.

Wisdom

“The power of authority is never more subtle and effective than when it produces a psychological ‘atmosphere’ or ‘climate’ favorable to the life of certain modes of belief, unfavorable, and even fatal, to the life of others.” —Arthur Balfour

“Guard with jealous attention the public liberty. Suspect every one who approaches that jewel.” —Patrick Henry

“As to the evil which results from a censorship, it is impossible to measure it, for it is impossible to tell where it ends.” —Jeremy Bentham

“The Lord gave us two ends – one to sit on and the other to think with. Success depends on which one we use the most.” — Ann Landers

“And if all others accepted the lie which the Party imposed – if all records told the same tale – then the lie passed into history and became truth.” – Winston Smith, 1984, by George Orwell

“Do not hold the delusion that your advancement is accomplished by crushing others.” —Marcus Tullius Cicero

“If it be admitted that a man, possessing absolute power, may misuse that power by wronging his adversaries, why should a majority not be liable to the same reproach? Men are not apt to change their character by agglomeration; nor does their patience in the presence of obstacles increase with the consciousness of their strength.” —Alexis de Tocqueville

“Either you think — or else others have to think for you and take power from you, pervert and discipline your natural tastes, civilize and sterilize you.” —F. Scott Fitzgerald

“The toughest thing about success is that you’ve got to keep on being a success. Talent is only a starting point. You’ve got to keep on working that talent.”— Irving Berlin

“Wherever the real power in a Government lies, there is the danger of oppression.” —James Madison

“Some people seem to think that the answer to all of life’s imperfections is to create a government agency to correct them. If that is your approach, then go straight to totalitarianism. Do not pass “Go.” Do not collect $200.” – Thomas Sowell

New York Proposes a Flawed Method to Obtain Whistleblowers to Turn in Insurance Fraud Perpetrators

The New York Legislature has proposed the following as a means to help the police defeat insurance fraud:

Add §405-a, Ins L

Provides that any person who provides information to the attorney general, a district attorney or the insurance frauds bureau concerning a fraudulent insurance transaction or with information about a fraudulent insurance transaction that is about to take place may be entitled to an award of forty percent of the action or claim relating to such fraudulent action.

The statute was designed to reward whistleblowers in NY. Anyone who provides info to the state attorney general, district attorney, or insurance frauds bureau would get 40% of any recovery from an insurance fraud crime. This bill, as written, needs a great deal of rewriting since people convicted of insurance fraud seldom pay anything from actions brought by the state. At best it would allow a share of criminal fines or orders of confiscation. If that is the intent it should say so. If not, it should be modified as a reward paid for by the state or the defrauded insurer.

The intent is a good idea but ZIFL wonders, even if enacted, it will have an effect, and it needs clarification. First it is written in the disjunctive. Providing information should not be rewarded unless there is an arrest and conviction. Second, if they defeat a fraudulent claim, where is the money coming from to pay 40% of the false claim that is defeated. With such weak language ZIFL can see fraud perpetrators taking advantage of it by having a co-conspirator report a potential fraud, then withdrawing the claim, and the whistleblower gets 40% of the claim that was never made.

ZIFL is shocked that anyone with a high school education would propose this statute and post it on Twitter as @FraudNY.

Good News From the

Nearly two decades in federal prison await pharmacy owner Wade Walters for his central role in a $510-million attempted theft from the health program for military service members. It was likely the largest insurance scheme in Mississippi history, the feds say. Walters ran the pharmacy in Hattiesburg. It was the distribution hub for expensive and unneeded compound creams. Walters and his cronies maneuvered the highest reimbursements without regard for medical need. Recruiters obtained prescriptions for high-margin compound meds. Docs were bribed to issue the scripts. The ring illegally waived or reduced copays to convince beneficiaries to take part. Shell firms and overseas accounts hid the stolen money. Walters’ ring stole so much money that TRICARE had to cut back its healthcare offerings and ask the feds for more money. Walters pled guilty, was handed 18 years in federal prison and must repay $287.7 million.

Trying to boost prescription sales, two pharmacies paid illegal kickbacks to have prescriptions routed through the firms in the Bronx and Union City, N.Y. About $65 million of reimbursement payments from Medicare, Medicaid and private insurers were for meds that Prime Aid Pharmacies didn’t give to patients, and didn’t order or have in stock. Bribes included expensive meals and designer bags, plus cash, checks and wire transfers. Alex Fleyshmakher is the pharma owner Igor’s son. Alex and cronies cashed millions of dollars of insurance checks at a Brooklyn check-cashing firm, or diverted them through Canadian bank accounts back into U.S. accounts he owned. Fleyshmakher pled guilty to federal charges and will be sentenced in May. Igor earlier pled guilty, along with others. More suspects await trial.

Eight months behind in her mortgage, Melissa Keller torched her family’s house in a bid to steal insurance money and escape debt, prosecutors charge in Knox County, Maine. The raging fire displaced two other couples who rented space. One tenant gave birth in the hospital the night of the fire, rendering her and the baby homeless. The insurer paid for the ruined house. Prosecutors allege this happened: Keller said she awoke at 2 a.m. to find the home afire. Yet photos were removed from the bedroom walls before the fire — there was no dark smoke outline on the wall around the photos to suggest they were present during the blaze. A woman with whom Keller’s husband was having an affair overheard Keller say she planned to burn down the place, during a heated conversation over a speaker phone. Keller also had two bags of dog food in her car trunk, plus a box of insurance paperwork, hair from a baby in a plastic bag, a baby’s tooth and photo album. The fire started around the dishwasher, Keller said. Yet the dishwasher didn’t cause the blaze nor were there “naturally present ignition sources,” investigators determined. Keller is charged with arson and insurance fraud. She faces up to 30 years in state prison if convicted.

A former broker can recover part of the value of his motorcycle. Roger Goodwin sold life policies to clients in Des Moines, Iowa and in Dallas. He deposited more than $1 million of client funds into a private account, and spent much of the money on personal expenses. Goodwin received 8 years in prison, must repay $935,000 and forfeit assets that include his Harley Davidson motorcycle. Goodwin appealed. He made no headway on limiting his sentence, though the court gave Goodwin a partial victory. He didn’t use the stolen money to buy the cycle, he argued on appeal. Goodwin said he bought it before the scheme and so shouldn’t have to forfeit the machine. The court partly agreed. The court ordered forfeiture of the motorcycle to be limited only to that portion of Goodwin’s equity consisting of payments made with stolen insurance money. It isn’t clear how much stolen money he used to buy the motorcycle, and whether the court will return Goodwin’s motorcycle, or just the balance of its value after calculating the forfeiture.

Deadly and medically unneeded cocktails of addictive drugs were handed out to patients by Dr. Roger D. Anderson and his staff. The Columbus, Ohio man distributed opioids like oxycodone and hydrocodone without medical need. Anderson pre-signed scripts for staff to complete and give to patients in his absence. Patients received pills on days that Anderson didn’t examine them, and from staff who weren’t legally qualified to give prescriptions. The drugs were distributed at a kiosk after-hours inside the office complex. Anderson prescribed dangerous combinations of controlled pills, including the so-called Holy Trinity (an opioid, a benzodiazepine and muscle relaxant) and Speedballs (a stimulant and an opioid). One patient received 4 prescriptions on the same day for 10 fentanyl patches, 120 Xanax pills, 180 oxycodone pills and 180 pills of a painkiller blend. Anderson already gave the patient 2 other prescriptions for fentanyl the same day. Anderson was handed 8 years in federal prison.

The owner of an Orlando-area telemarketing call center helped run a kickback scheme for expensive genetic tests and fraudulent telemed services that stole $2.8 million from Medicare. Ivan Andre Scott owned Scott Global, a telemarketing call center in Orlando. He targeted seniors with telemarketing phone callers who lied that Medicare covered expensive cancer genetic testing. The tests cost up to $6,000 each. Scott paid bribes and kickbacks to telemed firms to obtain doctors’ orders authorizing the tests. Telemed docs approved the expensive testing even though they weren’t treating the seniors for cancer or symptoms of cancer — and often without even speaking with the senior. Scott then sold the genetic tests and doctors’ orders to labs for illegal kickbacks. He invoiced the labs and other marketers, making it appear as though he was paid for hourly marketing services instead of per referral. Scott was federally convicted and will be sentenced later.

Chase Adam Conway fraudulently obtained and sold 2,400 oxycodone pills by having cohorts pass fake prescriptions at Portland-area pharmacies. The Oregon man sent the women into pharmacies to fill the bogus prescriptions, obtaining 90-180 pills at a time. The DEA tracked Conway’s car in 2018, and found he used doctors’ DEA registration numbers without their knowledge. Conway also obtained medical prescription paper, used his printer to fraudulently place the doctors’ names and their registration numbers on the prescriptions, and provided his runners with bogus IDs to obtain the pills. Conway was driven by a long-term addiction to opiates and meth, his lawyer admits. Conway’s arrest “probably saved his life and others too and he recognizes that,” his lawyer adds. Conway received four years in federal prison.

Six home-health agencies employed Janet Olatimbo Akindipe to care for D.C. Medicaid beneficiaries. She had to document her supposed care on timesheets. This included helping with daily living such as getting in and out of bed, bathing, dressing and eating. The agencies then billed Medicaid for her supposed services. Medicaid issued $269,808 for services she didn’t provide. Akindipe submitted false timesheets for times when she worked as a full-time employee at the National Institutes of Health. She also claimed she worked more than 20 hours in a given day on more than 300 occasions. And she billed for days when she wasn’t even in the U.S. Akindipe paid Medicaid beneficiaries to sign false timesheets. She was handed 13 months in federal prison and must repay the stolen Medicaid money.

When State Fails to Prosecute Insurance Fraud Insurer May Bring Qui Tam Action

Insurance Fraud Victims Who Get No Justice May Sue Fraud Perpetrators on Behalf of State

The California Legislature created the Insurance Fraud Protection Act (IFPA) to combat insurance fraud. When, as here, a private insurance company contracts with a surgical center to provide medical services for its insureds the contract contains an arbitration clause to settle disputes. However, the insurance company brought a qui tam action to recover damages and fees occasioned by the surgical center’s fraudulent billing practices.

In State of California ex rel. Aetna Health of California, Inc. et al. v. Pain Management Specialist Medical Group et al., 2d Crim. No. B299025, Court of Appeal of The State of California Second Appellate District Division Six (December 21, 2020) the Court of Appeal was asked to determine that the qui tam action is not subject to arbitration because it is brought on behalf of the state which is not a party to the contract between the insurance company and the surgical center.

The Defendants (collectively Pain Management) appealed the trial court’s order denying their petition to compel arbitration of a qui tam action filed by Aetna Health of California, Inc. and Aetna Health Management, LLC (collectively Aetna) on behalf of the State of California (State).

Aetna claimed fraudulent insurance billing practices by Pain Management and its healthcare billing services in violation of the IFPA. (Ins. Code § 1871 et seq.) Pain Management filed a motion to compel arbitration of Aetna’s qui tam claim as well as Aetna’s asserted individual claims. The trial court decided that the State is the real party in interest of the qui tam claim and cannot be compelled to arbitrate.

FACTUAL HISTORY

Aetna filed a complaint against Pain Management and other defendants, alleging a qui tam cause of action on behalf of the People of the State of California as well as individual claims of fraud, among other causes of action. The complaint alleged that Pain Management performed surgeries at its in-network-contracted ambulatory surgery centers but billed Aetna as though the surgeries had been performed at its out-of-network-non-contracted surgery centers. As a result, Aetna paid Pain Management higher fees.

The qui tam cause of action alleges that Pain Management violated the IFPA by creating an unlawful insurance fraud billing scheme in violation of Penal Code section 550. Aetna served copies of the sealed complaint on the California Department of Insurance and the San Luis Obispo County District Attorney. Neither agency sought to intervene and, as a result, the trial court ordered the qui tam complaint unsealed. Aetna later dismissed the individual causes of action and proceeded to prosecute only the qui tam cause of action.

Pain Management moved to compel arbitration of the qui tam cause of action. To support its motion, Pain Management relied upon arbitration clauses contained in its contracts with Aetna. Although the clauses differed slightly from contract to contract, generally they provided for mandatory binding arbitration administered by the American Arbitration Association and application of the Federal Arbitration Act, 9 United States Code sections 1-16, to the exclusion of inconsistent state laws that would yield a different result. The trial court denied the motion to compel arbitration. In a reasoned and thoughtful written ruling, the court ruled that “the state, as owner of the IFPA claim, is not a party to the contracts containing the arbitration provisions.”

DISCUSSION

The party seeking arbitration bears the burden of proving the existence of an arbitration agreement; the party opposing arbitration bears the burden of proving any defense to arbitration.

The Legislature enacted the IFPA to combat insurance fraud committed against insurers by individuals, organizations, and companies. It is in the government’s interest to have insurers investigate and prosecute qui tam proceedings. The government serves to gain both in terms of fraud prevention and financially from such actions, especially given limited investigative and prosecutorial resources available to it.

The person bringing the qui tam action, the relator, stands in the shoes of the People of the State of California, who are deemed to be the real party in interest. The relator in a section 1871.7 qui tam action does not personally recover damages, but, if successful, receives a substantial percentage of the recovery as a bounty.

The procedural requirements of IFPA reflect that the State retains primacy. The State can dismiss the action, intervene in the action, or permit the relator to continue. As a result, the State cannot be compelled to arbitrate a qui tam IFPA action because it is not a signatory to the contracts.

It is a cardinal principle that arbitration is a matter of consent, not coercion.

The purpose of section 1871.7 is to prevent and remedy insurance fraud. Insurers, not the state government, are the direct victims of the fraud. Insureds are the indirect victims who pay higher premiums due to the prevalence of insurance fraud. The government does not necessarily recover funds lost to it because of a fraud perpetrated on it.

The Court of Appeal, after analysis affirmed the order denying the motion to compel arbitration.

ZIFL OPINION

If an insurer is the victim of a fraud by an individual, or with regard to multiple claims, as were the plaintiffs, faced with inaction or total lack of interest of state police or prosecutorial agencies the California IFPA allows the filing of a whistleblower action in the name of the state. State Insurance Departments are inundated with reports of suspected insurance fraud and do not have the staff to investigate and prosecute all reported. It is incumbent on insurers in states like California with an IFPA to proactively work to defeat fraud as did the plaintiffs by bringing a qui tam case in state courts. Perhaps insurers doing business in the state of Florida can force action by the state’s lawyers by also using the qui tam suit.

Health Insurance Fraud Convictions

Former Pharmaceutical Executive to Pay NJ $5 Million To Settle Opioid Lawsuit, Grewal Says

John N. Kapoor, 77, of Phoenix, Arizona, was already sentenced last January to more than five years in federal prison for his role in fueling the nation’s opioid crisis. A former pharmaceutical executive, Kapoor, will pay New Jersey $5 million to settle a lawsuit that claimed his company bribed health care professionals to write improper prescriptions for a powerful opioid, state authorities said Thursday.

Now he will also make two payments to New Jersey — a lump sum of $1 million followed by another of $4 million — to settle allegations that he directed and approved a campaign that fraudulently marketed the sublingual fentanyl spray Subsys, which is 50 times stronger than heroin.

Seeking Withdrawal of Medicaid Fraud Guilty Pleas

Dana Trandahl, a Butte, Montana mental health counselor is trying to withdraw her guilty pleas to two felony counts of Medicaid fraud, saying she was emotionally fragile and felt bullied by her attorney into accepting a plea deal with prosecutors. Prosecutors say Dana Trandahl made her guilty pleas last February voluntarily, telling the court she understood her rights and consequences and was satisfied with her attorney at the time, longtime public defender Ed Sheehy.

Both sides have outlined basic stances on the plea issue in court documents, though Darrow asked for and received another two weeks to flesh out some issues and file an amended motion. Each fraud count carries a maximum penalty of 10 years in prison but as part of the plea deal, prosecutors agreed to drop 13 additional felony charges alleging that Trandahl billed Medicaid tens of thousands of dollars for services she never provided and listed people who were never her patients.

Under the plea deal, prosecutors were recommending Trandahl be sentenced to 10 years with the Department of Corrections, with all but 45 days suspended. She would face years of probation supervision, too, but she can argue for a lesser or deferred sentence.

But under the agreement, Trandahl also agreed to pay $100,000 in restitution for the tax dollars she allegedly bilked from Medicaid, the federal health-care program for the needy, aged, blind and disabled.

Trandahl was initially charged in May 2018 with one count of Medicaid fraud, but prosecutors later added 13 additional counts that included identity theft and tampering with evidence.

Just before the initial fraud charge was filed, prosecutors dropped remaining charges against Trandahl for allegedly trying to get a client to plant meth and other drugs on her ex-husband, his wife, and the attorney representing him in a long-running child-custody dispute with Trandahl. Those were dropped because the client, 33-year-old Aimee Hardesty, died in March 2017 after the case had been filed. That meant Trandahl could not exercise her constitutional right to confront and question her accuser. Regardless, Trandahl denied any wrongdoing.

The county coroner ruled Hardesty’s death was caused by a seizure disorder. But Hardesty’s mother has since filed a civil lawsuit saying Trandahl caused her daughter severe and emotional distress by trying to coerce her to plant drugs on others. State Medicaid investigators began reviewing Trandahl’s billing practices based on Hardesty’s claims that instead of receiving any actual counseling, Trandahl spent their time talking about her own “family discord” and efforts to regain custody of her children.

Several sessions and contacts were fraudulently billed to the Medicaid insurance of a man who attended counseling sessions with Hardesty in 2016, prosecutors said. Based on additional complaints, they say Trandahl was billing significant counseling sessions coded “‘without patient present” to several developmentally disabled consumers and child recipients, as well as other clients.

The two prosecutors in the case — Ann Shea for Butte-Silver Bow and Michael Gee with the Montana Attorney General’s Office — said Judge Krueger advised Trandahl of her rights, possible penalties and consequences of the guilty pleas before she made them in 11 months ago. She was satisfied with her attorney and made the pleas voluntarily, they said in court documents, and was under no duress or threats. A licensed psychologist determined she was competent and understood the legal process and evidence against her, they said. She also acknowledged terms of the plea agreement and “received a significant benefit” from it, including dismissal of 13 additional felony charges, they said.

Gee told Krueger on Tuesday the state was “anxious to get to sentencing in this matter.” But he said he was also OK with giving Darrow more time to flesh out his arguments for withdrawing the guilty pleas.

Mississippi Pharmacy Owner Gets 18 Years

Wade Ashley Walters, 54, of Hattiesburg, Mississippi, an owner of pharmacies and pharmacy distributors was sentenced to 18 years in prison and ordered to repay the government nearly $287.7 million for his part in what prosecutors described as a $510 million health care fraud involving high-priced pain cream. Walters was also ordered to forfeit nearly $56.6 million that he gained personally from the scheme.

Walters had been charged in a 37-count indictment. He pleaded guilty in July to one count each of conspiracy to commit health care fraud and conspiracy to commit money laundering. Sentencing was conducted in January 2021 before U.S. District Judge Keith Starrett.

The fraud committed by Walters and others in this investigation wasted hundreds of millions of taxpayer dollars and deprived individuals of needed medical care, according to the prosecutors.

Between 2012 and 2016, Walters orchestrated a scheme to defraud Tricare, the insurance program for U.S. military, veterans, and their families, and private health insurers by distributing compounded medications that were not needed, prosecutors said.

Walters said he objected to being called the kingpin of what is most likely the state’s largest fraud case, saying he didn’t start the fraud but got involved once it had begun. Starrett, however, told Walters the fraud would never have gotten so big if it had not been for Walters’ involvement.

The Judge, sentencing Walters, advised him that: “You organized and orchestrated the fraud by your management skills. . . You involved so many people — good people. Maybe they would not have been involved if they hadn’t been recruited.”

Walters apologized for his actions, saying he didn’t really know what he was getting involved in until it was too late and his pride would not let him back out. “By then the stakes were too high,” he said. “I thought I should get out of it. I regret that I didn’t see that right away.” “I’m tired,” he concluded. “I’m ready to move on and serve my time.” Walters was taken into custody immediately following the hearing.

Pharmacy Owner’s Son Admits Role In $24.8 Million Kickback Scheme And $9 Million Conspiracy

Alex Fleyshmakher, 34, of Morganville, New Jersey, pleaded guilty by videoconference before U.S. District Judge Michael A. Shipp to a superseding information charging him with conspiring to violate the federal anti-kickback statute and conspiring to defraud the IRS.

The son of a former a co-owner of a Union City, New Jersey, pharmacy admitted on January 14, 2021 his role in multimillion-dollar conspiracies to pay kickbacks and bribes to health care professionals and to defraud the IRS.

The superseding information alleged that Fleyshmakher conspired to solicit and pay kickbacks with seven other individuals, three of whom were previously charged with him by superseding indictment: Samuel “Sam” Khaimov and Yana Shtindler, both of Glen Head, New York; and Ruben Sevumyants, of Marlboro, New Jersey. Fleyhsmakher is the first of these four codefendants to plead guilty.

His other alleged conspirators in the kickback scheme included his father, Igor Fleyshmakher, of Holmdel, New Jersey, who previously pleaded guilty for his role in the conspiracy; and Eduard “Eddy” Shtindler, of Paramus, New Jersey, who previously pleaded guilty in a related kickback conspiracy. Their respective sentencings are pending.

According to documents filed in this case and statements made in court:

Prime Aid Pharmacies – now closed – operated out of locations in Union City and Bronx, New York, as “specialty pharmacies,” which processed expensive medications used to treat various conditions, including Hepatitis C, Crohn’s disease, and rheumatoid arthritis. Alex Fleyshmakher worked at Prime Aid Union City and was an on-paper owner of Prime Aid Bronx. Igor Fleyshmakher, was a co-owner of Prime Aid Union City. Khaimov was the other co-owner of Prime Aid Union City and the lead pharmacist of Prime Aid Bronx. Khaimov’s wife, Yana Shtindler, was Prime Aid Union City’s administrator, and Sevumyants was Prime Aid Union City’s operations manager. Eddy Shtindler, Yana Shtindler’s brother, was a Prime Aid Union City employee.

In order to obtain a higher volume of prescriptions, Khaimov, Yana Shtindler, Igor Fleyshmakher, Alex Fleyshmakher, Sevumyants, Eddy Shtindler, and other Prime Aid employees paid kickbacks and bribes to doctors and doctors’ employees to induce doctors’ offices to steer prescriptions to the Prime Aid Pharmacies. From 2008 to August 2017, these bribes included expensive meals, designer bags, and payments by cash, check, and wire transfers. The bribes and kickbacks were paid to, among others, doctors and doctors’ employees in New Jersey and New York. The prescriptions that just one of those New Jersey medical practices steered to Prime Aid Union City as part of the scheme resulted in Medicare and Medicaid payments to Prime Aid Union City of approximately $24.8 million.

From 2011 to August 2018, Alex Fleyshmakher, working with others, surreptitiously took insurance reimbursement checks totaling millions of dollars from the Prime Aid Pharmacies. Aided by his conspirators, Alex Fleyshmakher then cashed the checks at Brooklyn check cashing businesses or diverted them through Canadian bank accounts back into U.S. accounts that he owned and controlled. He concealed these funds and failed to report them on his personal income tax returns, resulting in a $9.1 million tax loss to the IRS.

The conspiracy and tax evasion charges to which Alex Fleyshmakher pleaded guilty each carries a maximum penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for May 27, 202

Patient Recruiter Convicted In $2.8 Million Telemedicine Scheme Against Medicare

Ivan Andre Scott, 34, of Kissimmee, Florida, the owner of an Orlando-area telemarketing call center was convicted for his role in a kickback scheme involving expensive genetic tests and fraudulent telemedicine services that resulted in the payment of approximately $2.8 million in false and fraudulent claims to Medicare.

Scott was convicted after a four-day trial of one count of conspiracy to commit health care fraud, three counts of health care fraud, one count of conspiracy to defraud the United States and pay and receive health care kickbacks, and three counts of receiving kickbacks.

According to evidence presented at trial, Scott was the owner of Scott Global, a telemarketing call center located in Orlando. The evidence showed that Scott targeted Medicare beneficiaries with telemarketing phone calls falsely stating that Medicare covered expensive cancer screening genetic testing, or “CGx.” The tests could cost as much as $6,000 per test. After beneficiaries agreed to take the test, the evidence showed Scott paid bribes and kickbacks to telemedicine companies to obtain doctor’s orders authorizing the tests.

The evidence showed that the telemedicine doctors approved the expensive testing even though they were not treating the beneficiary for cancer or symptoms of cancer, and often without even speaking with the beneficiary. According to the evidence presented at trial, Scott then sold the genetic tests and doctor’s orders to laboratories in exchange for illegal kickbacks. To conceal the illegal kickbacks, Scott submitted invoices to the laboratories and other marketers making it appears as though he were being paid for hourly marketing services, rather than per referral.

Between November 2018 and May 2019, labs submitted more than $2.8 million in claims to Medicare for genetic tests Scott referred to them, of which Medicare paid over $880,000. In that timeframe, Scott personally received approximately $180,000 for his role in the scheme.

Texas Company Agrees to Reimburse Medicare For Improper Billing Related to Neurostimulators

Spinal Decompression Clinic of Texas (“SDCT”) agreed to pay $330,898.00 to resolve liability under the False Claims Act for the alleged improper billing of electro-acupuncture device neurostimulators.

From August 21, 2018 through June 26, 2019, SDCT billed Medicare for the implantation of 41 neurostimulators – a surgical procedure which usually requires an operating room and is reimbursed by federal healthcare programs. SDCT received reimbursement from Medicare in the amount of $177,051.15 for these procedures. SDCT, however, did not perform these surgeries, and instead applied P-Stim devices in an office setting, without surgery or anesthesia. P-Stim is an electric acupuncture device that, pursuant to manufacturer’s instructions, is affixed behind a patient’s ear using an adhesive. Needles are inserted into the patient’s ear and affixed using another adhesive. Once activated, the device then provides intermittent stimulation by electrical pulses. It is a single use, battery-powered device designed to be worn for approximately four days until its battery runs out, at which time the device is thrown away.

Medicare does not reimburse for acupuncture or for acupuncture devices such as P-Stim, nor does Medicare reimburse for P-Stim as a neurostimulator or as implantation of neurostimulator electrodes.

When services provided are excluded from Medicare reimbursement, some providers may be tempted to falsely claim payment for covered treatments. Such schemes, however, can result in hefty fines and prosecution.

Autogenomics, Inc. Agrees to Pay Over $2.5 Million For Allegedly Paying Kickbacks

AutoGenomics, Inc. has agreed to pay the United States $2,538,000 to resolve allegations that it violated the False Claims Act and Anti-Kickback Statute by engaging in a scheme to bill Medicare for molecular genetic testing performed for nursing home patients that were induced by the payment of remuneration (which includes money or anything of value), or a “kickback,” for the referral of those genetic tests.

AutoGenomics, located in Carlsbad, California, formerly owned and operated a laboratory doing business as PersonalizeDx Labs (collectively “AutoGenomics”). In April 2013 and March 2015, AutoGenomics entered into agreements with a California-based health care marketing company to utilize AutoGenomic’s laboratory services for tests ordered by the health care marketing company’s clients. Pursuant to these agreements, AutoGenomics paid the health care marketing company a specified monetary kickback for each test that was reimbursed by Medicare, but only if Medicare paid the claim. Under these agreements, the amount of the kickback was based either on a percentage or fixed amount of Medicare’s reimbursement for each test. As explained below, such agreements violate federal law.

Prestige Administrative Services, LLC, doing business as Prestige Healthcare (“Prestige”), owned and operated residential nursing homes in Wisconsin and other states. In 2014 and 2015, Prestige provided the health care marketing company information to identify its Medicare patients, and authorized access to its patients to obtain buccal cell samples and submitted the samples to AutoGenomics for the molecular genetic testing to be performed and claims submitted to Medicare for payment. Prestige, while not admitting liability, previously settled its alleged role in the conduct for nearly $1 million for causing the submission of medically unnecessary tests.

According to this settlement, the United States alleged that AutoGenomics’s submission of genetic testing claims to Medicare that were predicated by the payment of kickbacks negotiated in the agreements violated the Anti-Kickback Statue and the False Claims Act because a claim for reimbursement that is the result of a kickback is a false claim. The United States further alleged that the false claims resolved by the settlement were for the payment of kickbacks for the submission of laboratory genetic testing performed for patients residing at 76 nursing homes, at both Prestige and non-Prestige owned and operated facilities.

The claims resolved by the settlement are allegations only; there has been no determination of liability.

Two More Individuals Plead Guilty in Connection with Health Care Kickback Conspiracy

Kimberly Willette, 59, of Friendswood, Texas, and Edwin Chad Isbell, 48, of McKinney, Texas, pleaded guilty to conspiracy to commit illegal remunerations on January 25, 2021 before U.S. Magistrate Judge Caroline Craven.

Nicolas Arroyo of Newport Coast, California, previously pleaded guilty for his involvement in the conspiracy.

According to information presented in court, the defendants conspired with others to pay and receive kickbacks in exchange for the referral of, and arranging for, health care business, specifically pharmacogenetic (PGx) tests. Pharmacogenetic testing, also known as pharmacogenomic testing, is a type of genetic testing that identifies genetic variations that effect how an individual patient metabolizes certain drugs. The illegal arrangement concerned the referral of PGx tests to clinical laboratories in Fountain Valley, California, Irvine, California, and San Diego, California. More than $28 million in illegal kickback payments were exchanged by the defendants and others during the conspiracy.

The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remunerations in exchange for the referral of or arranging for items or services payable under federal health care programs. Under federal statutes, violations of the Anti-Kickback statute are punishable by up to five years in federal prison.

Videos on YouTube And Zalma On Insurance from Barry Zalma

--- Over 110 Videos describing important insurance issues described by Barry Zalma and available to anyone who views or subscribes to the YouTube account. Issues include insurance fraud, definition of insurance, insurance as a contract of personal indemnity, millions for defense and not a dime for tribute and the tort of bad faith. Please subscribe. There are 62 Videos are at https://www.youtube.com/channel/UCFg7qxC0tVgKcMUqoUfnwPw/videos but I have had some difficulty posting new videos to my YouTube channel and have decided to post all future videos on insurance, insurance claims, insurance law, and insurance fraud to this YouTube Channel my Rumble channel https://rumble.com/c/c-262921 and my blog, https://zalma.com/blog.

---Fake Accident Places Defendant in Jail for 12-24 Months

In State Of North Carolina v. Abu Bakr Rahman, No. COA19-928, Court of Appeals Of North Carolina (November 17, 2020) the North Carolina Court of Appeal was asked to reverse the conviction of Abu Bakr Rahman. Rahman had been convicted of attempted obtaining property by false pretenses for his involvement in a scheme to stage a two-vehicle accident and then collect insurance proceeds for fake injuries.

The court dismissed his first claim of an inadequate indictment because asserted facts supporting every element of the offense, couched in the language of the statute. The State presented substantial evidence of each essential element of the offense—that Rahman made false representations about the accident and his resulting injuries that were calculated to deceive the authorities and insurance companies, and did deceive them, and by which Rahman attempted to obtain an insurance payment for fake injuries.

Facts

In 2015, a highway patrol trooper responded to a two-vehicle accident in Robeson County. At the scene, the trooper saw what appeared to be the aftermath of a collision between a car and a mini-van. Shalonda McLellan, the driver of the mini-van, had five other passengers, including Defendant Abu Bakr Rahman. Malika Baldwin, the driver of the car, had two other passengers with her.

After investigating the accident and interviewing the two drivers, the trooper concluded that the car made a left turn onto the highway from a private driveway and collided with the mini-van, which was traveling on the highway. The trooper spoke only with the drivers, but his accident report lists Rahman as an injured party.

Baldwin, the driver of the car that turned onto the highway, submitted a claim to her insurer, Sentry Insurance Company. Her insurance policy included liability coverage for injuries to the occupants of the mini-van, including Rahman. Rahman asserted that he suffered injuries related to a bulging disc in the accident and contacted Sentry Insurance to inquire about the status of his claim for payment under the policy.

During Sentry Insurance’s investigation of the claims on its policy, the company discovered through social media posts that all occupants of the car and mini-van involved in the accident were relatives of each other or in relationships with relatives of each other. The company also discovered that all the vehicle occupants also were connected to the owner of the property on which the accident occurred. Ultimately, after further investigation by an accident reconstruction expert, Sentry Insurance concluded that the accident was staged. Sentry Insurance reported their findings to the North Carolina Department of Insurance, which began an investigation. The State ultimately brought multiple charges against many of the people involved in the accident on the grounds that they had all cooperated to stage the accident, fake resulting injuries, and collect insurance proceeds.

After a trial, the jury convicted Rahman of attempted obtaining property by false pretenses. The trial court sentenced Rahman to 12 to 24 months in prison. Rahman appealed.

Analysis

The essential elements of obtaining property by false pretenses, are: “(1) a false representation of a subsisting fact or a future fulfillment or event, (2) which is calculated and intended to deceive, (3) which does in fact deceive, and (4) by which one person obtains or attempts to obtain value from another.” [State v. Cronin, 299 N.C. 229, 242, 262 S.E.2d 277, 286 (1980); N.C. Gen. Stat. § 14-100].

By alleging that Rahman obtained “U.S. Currency from Sentry Insurance Company” by “lying about the circumstances of a vehicle accident in which he was involved for financial benefit,” the indictment advised Rahman of the conduct that is the subject of the accusation and identified the transaction at issue sufficiently. The indictment informed Rahman of the charges against him, enabled him to prepare a defense to those charges, and enabled the court, upon conviction, to pronounce a judgment sufficiently defined to protect against the risk of double jeopardy.

Motion to Dismiss

In order to survive a motion to dismiss based on the sufficiency of the evidence, the State must present “substantial evidence (1) of each essential element of the offense charged . . . and (2) of defendant’s being the perpetrator of such offense.” [State v. Fritsch, 351 N.C. 373, 378, 526 S.E.2d 451, 455 (2000) (citation omitted).] Substantial evidence is such relevant evidence that a reasonable mind might accept as adequate to support a conclusion.

The Court of Appeal concluded the State presented ample evidence of each of the essential elements. First, the evidence showed that Rahman was involved in staging a car accident. The State presented detailed evidence from a relative of Rahman’s girlfriend who was present when the accident was faked, described how it was staged, and explained how Rahman and others intended to use the fake accident to collect insurance proceeds. An accident reconstruction expert also testified that the damage to the vehicles could not have occurred from the accident described by those involved. In addition, an insurance investigator described how he ultimately uncovered the fake accident scheme.

Specifically, the State presented evidence that Rahman told a Sentry Insurance agent that he had been injured in the accident and that Rahman contacted Sentry Insurance to check on when his claim for personal injuries would be paid. This evidence, taken in the light most favorable to the State, is substantial evidence of all the essential elements—Rahman made false representations about the accident and his resulting injuries that were calculated to deceive the responding authorities and Sentry Insurance Company, and which did deceive them (at least until the insurance company uncovered the scheme), and by which Rahman attempted to obtain an insurance payment for fake injuries. The Court of Appeal, therefore, concluded that the trial court properly denied Rahman’s motion to dismiss.

ZIFL OPINION

---Insurance Fraud is a simple crime to commit and a difficult crime to prove. In this case the staged accident was committed by a group of relatives and friends in a sloppy fashion that allowed an excellent investigation by Sentry Insurance to conclude that Rahman and his friends and relatives had staged the accident and tried to profit from it with false claims of injury. It failed and much to the surprise of Rahman and his friends and relatives who staged the accident a North Carolina prosecutor charged, tried and convicted him of the crime. He, of course appealed, because insurance fraud is a crime that must succeed, only to find that the Court of Appeal did not share his belief and was not convinced by his spurious arguments in the face of overwhelming evidence. ZIFL can only hope he does not enjoy his 12 to 24 months in the gray bar hotel.

Other Insurance Fraud Convictions

Insurance Fraud in South Africa Fails

Roland Williams a former Nelson Mandela Bay spokesman will spend four years in prison after his suspended sentence was activated by the Port Elizabeth Commercial Crimes Court, the Directorate for Priority Crime Investigation reported.

Williams, who defrauded Santam Insurance by submitting a false claim stating that his car was involved in a road accident in Port Elizabeth on August 19, 2014, has had his initial suspended sentence of four years converted to direct imprisonment, Eastern Cape Hawks spokesperson Captain Lloyd Removal said in a statement.

At the time of the offence, the now convicted fraudster Roland Williams aged 50, was reportedly going through financial woes. His black BMW had broken down owing to mechanical issues. He then reportedly intentionally damaged the vehicle and submitted a claim to his insurance, purporting to have been involved in a motor vehicle accident along the Addo Road in Motherwell in Port Elizabeth. The insurance consequently suffered a loss to the tune of R96,000 as a result of Williams’ crime.

About two years after the incident an informant approached the insurance company and alerted them of the swindle. Subsequently, the Hawks’ serious commercial crime investigation unit’s probe resulted in the arrest of Williams on July 6, 2017. He was consequently convicted on March 9, 2018. In January 2020, the court sentenced Williams to 36 months correctional supervision, a fine or 24 months imprisonment, and a further four years imprisonment suspended for five years. He was further ordered to reimburse Santam R96,000 before May 21, 2020, which he failed to do.

The Hawks’ rearrested him on 16 October 2020 for failure to comply with a court order. The court, on Friday, 22 January 2021, activated his suspended sentence of four years jail term to start with immediate effect.

Unlicensed Lake Forest Agent Ordered to Pay $20,000 After Judge Affirms Cease and Desist Order

Karen Marie Dondanville, 53, a former insurance agent, of Lake Forest, was ordered to pay the California Department of Insurance (CDI) $20,000 in penalties after a judge’s decision that affirms the Cease and Desist Order issued against Dondanville for illegally transacting insurance without a license was adopted.

On January 11, 2021, the Department adopted an Administrative Law Judge’s proposed decision which affirmed the Department’s Cease and Desist Order and ordered Dondanville to pay a penalty of $20,000 within 90 days for her unlawful insurance transactions and fraud.

The Department issued a Cease and Desist Order in March 2020 against Dondanville, doing business as Broadstreet Insurance Services and Streamline Insurance Services, Inc., after a consumer complained to CDI that Dondanville had taken premium money, but failed to place coverage on the consumer’s property. The Department conducted an investigation that discovered that Dondanville continued to sell insurance after her insurance license was revoked on November 6, 2019.

When the investigation uncovered another victim, the Department issued an Amended Cease and Desist Order in September 2020. The investigation revealed that Dondanville collected insurance premiums and provided her customers proof of insurance, however, she failed to secure her customers’ insurance coverage, and the proof of coverage she provided was fraudulent. Dondanville’s actions left her customers without coverage, resulting in more than $100,000 in uncovered losses to one victim.

Investigators believe other California consumers may have also purchased insurance from Dondanville, doing business as Broadstreet, and may be at risk for potential uncovered losses. CDI urges financial institutions, mortgage companies, and consumers who have received certificates of insurance from Dondanville and/or Broadstreet to directly contact the named insurer on their policy to verify it is valid.

Anyone with additional information or questions regarding this investigation can contact the Department at (714) 712-7660.

Title Insurance Company Agrees to Pay $50,000 Following Illegal Inducement Allegations

First American Title Company agreed to pay the California Department of Insurance $50,000 to resolve allegations that one of its employees violated state law that protects consumers from conflicts of interest in real estate transactions.

An investigation by the California Department revealed that Steven Patrick Thomas, a representative employed by First American Title Company in Santa Ana, owned a separate business with a direct connection to the real estate industry. Using the name “Reports on Housing,” Thomas allegedly provided housing market information not related to title insurance to real estate agents.

Under the anti-inducement provisions of the California Insurance Code, a title insurance representative cannot own, be employed by, or otherwise be affiliated with a business or entity that provides real estate services to anyone considered a property owner or real estate agent.

An unlawful inducement occurs when a lender or real estate agent receives free or discounted services, property, or money in exchange for steering business to a title company. Such rebates act to inflate title insurance premium rates for all consumers. Thomas’ alleged violation is considered an inducement and is prohibited under the California Insurance Code.

The agreement included a $25,000 penalty to resolve the enforcement action and $25,000 for recovery of the Department’s investigative costs.

In a separate agreement with the Department, Thomas will not market title insurance in California.

Participants in Staged Crash Schemes Sentenced to Prison

Roderick Hickman, 49, of Baton Rouge; Bernell Gale, 43, of Raceland; and Troy Smith, 56, of Houma, have pleaded guilty to charges of Conspiracy to Commit Mail Fraud arising out of staged automobile accidents with tractor-trailers occurring in New Orleans.

According to the guilty plea, on March 27, 2017, Hickman, along with four defendants who have also been charged by indictment, intentionally collided with a tractor-trailer at the intersection of Chef Menteur Highway and Downman Road. Hickman intentionally struck the 18-wheeler and then fled the scene with Damian Labeaud, who pled guilty to a previous indictment charging him and seven others with staging automobile accidents.

Labeaud participated in another staged accident in the vicinity of Louisa Street and Chickasaw Street. Gale and Smith were participants in the Louisa Street staged accident along with two others, the U.S. Attorney’s Office said.

According to documents filed in federal court, the passengers were referred to attorneys who paid Hickman and Labeaud to stage the accidents. In some cases, the attorneys knew that the participants were uninjured but referred them to medical providers for treatment to increase the value of subsequent lawsuits. In total, the victim trucking and insurance companies paid out $277,500.00 for these fraudulent claims.

Hickman, Gale, and Smith face a maximum sentence of five (5) years.

A man named Solomon, who acted as a “spotter” for the scheme was sentenced for Conspiracy to Commit Wire Fraud, in violation of Title 18, United States Code, Section 371, arising out of staged automobile accidents with tractor-trailers in the New Orleans area. The “Operation Sideswipe” staged accidents are believed to have begun in June 2017 and is ongoing.

At least 33 defendants have been charged in the federal probe the staged accidents. As of early November 2020, 11 of the 33 indicted defendants had tendered guilty pleas in relation to the scheme. Among those who have pleaded guilty and admitted their participation are Solomon’s codefendants — Larry Williams, Lucinda Thomas, Mary Wade, Judy Williams, Dashontae Young, and Labeaud.

According to documents filed in Federal Court, Solomon, along with his co-conspirators and others, beginning in approximately June 2017 conspired to commit wire fraud in connection with staged accidents, including two that occurred on June 6, 2017, and June 12, 2017. T

As a “spotter,” Solomon would follow Labeaud in a separate vehicle as Labeaud prepared to stage accidents with 18-wheeler tractor-trailers. After the accidents, Solomon would pick up Labeaud after he exited the vehicle in which he had staged an accident. Solomon was paid in exchange for serving as a “spotter.” Solomon served as a spotter in at least two car accidents that Labeaud staged with 18-wheeler tractor-trailers. Solomon’s codefendants received a total of $43,000 as a result of the fraudulent lawsuits that were filed on their behalf, according to federal prosecutors.

U.S. District Judge Eldon Fallon sentenced Solomon to 21 months imprisonment followed by three years supervised release. Additionally, Solomon was ordered to pay restitution in the amount of $71,816.00 to the victims in this case.

Six People Sentenced for Stealing $8.4 Million From Insurance Company, Bank

Ernie Perkins, 40, of Zionsville, IN received the longest prison sentence of the six, at 70 months. In addition, five others – five from Indiana and one from Michigan – have been sentenced for their roles in a fraud scheme that defrauded both a bank and an insurance company. One of the other sentenced was Shalonda Coleman, 45, of Indianapolis, IN. Coleman was a former employee of the victimized insurance company, and was sentenced to two years for her role in the fraud. She also was convicted of tax evasion and filing false tax returns. The four other sentenced were John L. Williams, 52; Robert Finch, 73; Donald Landis, 59; and Walter Watson, 72. Williams received a nine-year sentence, Finch got four years, Landis got three years, and Watson received 18 months.

The US Attorney’s Office for the district court in Indianapolis said that the six people stole over $8.4 million from a bank and an insurance company, both based in Pennsylvania. The office would not disclose the names of the bank and the insurance company.

Perkins was the most prominent of the accused due to his involvement in both fraud cases. Perkins was sentenced January 05, 2021.

Coleman used her position as a claims processor to defraud the insurance company she worked for, investigators said. She accomplished this by accessing the company’s computer system and sending checks disguised as work payments to Remarkable Creative Enterprises (RCE). Perkins would then deposit the checks into RCE accounts and pay Coleman a cut of the money pocketed. According to investigators, Williams used his position as a construction project manager at the victim bank’s Indianapolis regional office to identify construction and renovation projects that were projected to come in under budget. He would then notify Perkins, Finch, Watson and Landis, who would submit fraudulent invoices for work that was never performed, as well as for materials that were never supplied.

Kansas Insurance Agent to Repay $86k After Guilty Plea

Armond R. Peghee, 42, pleaded guilty in Johnson County District Court to one count of fraudulent insurance act, one count of theft, one count of unlawful acts concerning computers, and three counts of identity theft. Peghee, a former Kansas insurance agent from Johnson County has pleaded guilty to insurance fraud charges and agreed to repay nearly $86,000 in restitution, the state’s attorney general’s office reported.

Kansas Attorney General Derek Schmidt said Peghee also agreed to repay $85,897.87 in restitution.

Johnson County District Court Chief Judge Thomas Kelly Ryan accepted the plea agreement and set a sentencing date of March 17.

The AG’s office reported that a Kansas Insurance Department investigation found that Peghee had submitted false applications for insurance policies for his customers without his customers’ knowledge. Peghee would receive the commission for the sale of the policies. The customers were unaware of the policies and the premiums went unpaid. The policies were eventually canceled for nonpayment, but investigators found Peghee kept the commissions.

Former Personal Care Organization Owner Who Defrauded Medicaid Program of Over $400,000 Convicted

Lolita Begay-Yazzie, according to New Mexico Attorney General Hector Balderas, pleaded guilty to one count of Fraud in excess of $20,000, a second degree felony, and one count of Failure to Retain Documents, a fourth degree felony for defrauding New Mexico’s Medicaid program of over $400,000.

Begay-Yazzie owned and operated a personal care agency in Gallup, New Mexico. Begay-Yazzie billed New Mexico Medicaid as if her employees were providing care services in excess of 24 hours in a day. Begay-Yazzie also overbilled Medicaid for more services than each patient required to meet their needs according to their care plan. Begay-Yazzie made withdrawals at ATMs in casinos in excess of $85,000.00 from the personal care agency account.

The Court has ordered a pre-sentence report and will hold a sentencing hearing in the coming months. According to the terms of the plea, Begay-Yazzie faces up to five years of incarceration, and will be excluded from providing any Medicaid services in the future.

Canadian Adjuster Sentenced to Two Years’ Jail After Stealing Over $420k from ICBC

Paul Martin Punter, 31, a former ICBC claims adjuster was sentenced to jail for stealing over $420,000 from the Crown corporation. Punter, defrauded the Crown corporation to pay for a gambling addiction.

Punter, was sentenced in North Vancouver provincial court December 23, 2020 after pleading guilty to a charge of theft over $5,000.

According to an agreed statement of facts read by Crown counsel Peter Campbell, Punter was hired by ICBC as a claims adjuster in January 2017. Over two years between Aug. 14, 2017 and July 28, 2019, Punter fraudulently issued 156 cheques on active claims to reimburse expenses that did not exist, said Campbell. Using a cellphone app, Punter then deposited those cheques into his own TD Canada Trust bank account.

When Punter applied for a mortgage with TD in August 2019, a bank employee noticed numerous third-party cheques had been deposited digitally into his account, said Campbell. When questioned, Punter said they were reimbursements from his employer for legitimate business expenses and that he hadn’t paid attention to not being the payee named on the cheques.

But that explanation seemed “implausible,” said Campbell, and TD put a hold on Punter’s accounts and began an investigation. The bank also notified ICBC. The insurance company discovered codes for the cheques indicated they had all been printed on Punter’s office printer and had been issued under his adjuster number.

Bank records also showed numerous purchases through playnow.com, which is the sports betting site owned by the British Columbia Lottery Corp., said Campbell. Transaction amounts ranged from $100 to $2,000. In August 2018 alone, according to the statement of facts, Punter spent $52,570 on playnow.com.

Adjuster Placed Bets of Up To $2K On Playnow.Com

Money stolen from his employer all went to fund Punter’s gambling addiction, rather than an extravagant lifestyle, according to information read in court. RCMP arrested both Punter and his wife at their Richmond home on October 1, 2019.

Both provided statements and Punter made a full confession. Punter’s wife didn’t know about his gambling addiction until after he’d been arrested, said Campbell. Punter had told her he’d been laid off from ICBC and that their bank account had been frozen because of a compromised credit card. TD recovered about $55,000 of its loss through money that Punter and his wife had on deposit in a joint account. The rest of the money hasn’t been recovered, said Campbell.

Punter grew up in England and became a permanent resident of Canada when he married his wife in 2018, said his lawyer Harkirat Khosa. As a child, Punter’s family struggled with poverty. Punter’s father managed a betting shop and had significant gambling problems, said Khosa, adding Punter often spent time betting with his father on sports. According to a report submitted by a counsellor, “It is clear that Mr. Punter suffered from a severe gambling addiction,” said Khosa. She added Punter will likely face the additional consequence of being deported from the country after he serves his sentence. In a tearful statement to the court, Punter apologized for his actions, saying, “I couldn’t be more disappointed in myself. ... There are no words to describe how terrible I feel.”

Gambling Addiction Took Over His Life

Punter described how the gambling addiction took over his life:

“I needed to bet as soon as I woke up. And until I went to bed, I made my day around when, where and how I could bet,” he said. Some days he even snuck off to the bathroom just so he could place a bet, he said, adding now, “It is truly amazing to me to look back and see how this addiction caused the line between right and wrong to become so blurred.”

In addition to the jail term, Judge Patricia Janzen ordered Punter to pay back $8,700 owing to ICBC and $356,000 owing to TD Canada Trust, with 20 years to pay it. In making the restitution order, the judge rejected a request by the Crown to require payment in a shorter period of time, saying the victims in this case are large institutions, and Punter has no ability to pay back a large sum of money while he’s in jail.

Multiple Arson’s Over a Three Year Period Establishes Wire Fraud

Wire Fraud Conviction and 90 Month Sentence Affirmed

Michael Thomas set fire to numerous properties in a mobile home park and then used the mail to collect insurance money. The government charged Thomas with mail fraud under 18 U.S.C. § 1341, which requires proof of a “scheme to defraud.” At trial Thomas argued the fires were not part of a scheme because they were not a chain of continuous and overlapping events, but rather discrete episodes of alleged criminality, so evidence of the fires as “other acts” was improperly admitted. In United States of America v. Michael Thomas, No. 19-2969, United States Court of Appeals for the Seventh Circuit (January 22, 2021) dealt with the claim that the jury convicted Thomas improperly, and on appeal he argued that all but one of the fires were inadmissible character evidence. Thomas ignored the fact that he was charged with mail fraud, not arson.

BACKGROUND

The Born’s mobile home park is a one-square-mile residential community of less than one hundred dwellings, located in North Judson, Indiana. The park does not experience many fires—aside from those in this case, only three in the last 26 years. Thomas was connected to eight blazes there.

Thomas confided in his friend Kyle Nissen that Thomas had a family member start the fire. Less than three weeks before, Thomas took out an insurance policy on the home. He also secured a second policy with another company that went into effect September 17, 2004—the day of the fire. When Thomas requested payment, the insurance companies paid him $75,000.

The next fires occurred on four properties during the night of November 14, 2010. Thomas had recently purchased a new mobile home with a garage at 5081 South 275 West. He originally planned to lease the property to tenants. Thomas also could access the mobile home owned by his mother-in-law at 5326 South A Street. In the months leading up to the fires, Thomas pressured his former wife Jennifer to purchase insurance on both properties, but she refused.

According to Nissen, he and Thomas had already been planning to burn the two homes and later that same day Thomas urgently approached him with the news that Jennifer wanted to cancel the policy. Thomas and Nissen each burned two properties. The authorities determined that all four fires were intentionally set. Nevertheless, Thomas collected over $50,000 from the two insurance policies.

For another fire Thomas received four checks totaling $426,227.31 in insurance money. These four checks served as the basis for four counts of mail fraud on which Thomas was indicted in April 2018. A jury convicted Thomas on all counts and he was sentenced to 90 months’ imprisonment.

DISCUSSION

Thomas was charged with mail fraud under 18 U.S.C. § 1341, which requires “(1) a scheme or artifice to defraud, (2) the use of the mailing system for the purpose of executing the scheme, and (3) the defendant’s participation in the scheme with the intent to defraud.” [United States v. Seidling, 737 F.3d 1155, 1160 (7th Cir. 2013).]

The fires at Thomas’s properties in 2010 and January 2013

The district court ruled that these fires were evidence of the “scheme or artifice to defraud” required by § 1341. Thomas argued these fires were distinct events, separated by several years, and with unique participants. Thomas asserts only the April 2013 fire can be part of the scheme because that is the discrete event to which the four charged mailings relate. He contends evidence of any other fire is impermissibly tainted by a propensity inference.

The government is “entitled to prove the scheme as a whole” and a scheme is not limited to an isolated instance of conduct. The Seventh Circuit concluded that the district court correctly concluded that the fires in November 2010 and January 2013 on Thomas’s properties were part of the scheme to defraud. They were similar occurrences designed to defraud in a similar way and took place over a relatively short period of time. The fires took place within a span of less than three years (with three on the same day), each property was located within the Born’s mobile home park, and each fire involved a property Thomas owned or in which he had an interest. Even more, less than thirty days before each fire Thomas or his wife took out a new insurance policy on the property, experts reported and testified that each of the fires was arson, and shortly after each fire Thomas requested and received money from the insurance company. Given the overwhelming similarity of these events and their proximity in time, the Seventh Circuit found that the district court did not abuse its discretion in determining that these fires were part of the same scheme.

Because the fires in 2010 and January 2013 on Thomas’s properties were direct evidence of Thomas’s mail fraud scheme. As part of the charged scheme, evidence of these fires was highly probative of proving the crime charged, which was not substantially outweighed by the risk of unfair prejudice to Thomas.

Distinctiveness is key to whether something is proper modus operandi evidence. Events that share singular methods, locations, participants, and scope. The paradigmatic example is the robber who holds up banks in the same geographic area, in a specific manner, wearing the same type of mask or clothing. Because those events are more distinct, they are more probative and less likely to provoke a propensity inference.

As the district court aptly described, the prejudice to Thomas from evidence of the 2004 fire stems from its inclusion with the other fires. On its own, the fire is not particularly prejudicial. The evidence of Thomas’s guilt was overwhelming. The 2010 and 2013 fires were all properly admitted as part of Thomas’s scheme. The testimony of Jennifer Thomas, Nissen, a fire marshal, and insurance experts about these fires was more than enough for a reasonable jury to convict Thomas of mail fraud.

ZIFL OPINION

Arson is a violent and dangerous crime. When it is done just to collect money from an insurance company it adds danger to the fraudulent act. I am concerned that it took the insurance industry and the local police agencies that allowed Thomas to successfully defraud a group of insurers multiple times before his greed got to him and he was finally prosecuted. Those of us involved in the investigation of insurance fraud must do better.

New Book: “It’s Time to Abolish The Tort of Bad Faith“

The concept of unintended consequences is one of the building blocks of economics. Adam Smith’s “invisible hand,” the most famous metaphor in social science, is an example of a positive unintended consequence.

INSURANCE AS A NECESSITY

Neither the courts nor the governmental agencies seem to be aware that in a modern, capitalistic society, insurance is a necessity. No prudent person would take the risk of starting a business, buying a home, or driving a car without insurance. The risk of losing everything would be too great. By using insurance to spread the risk, taking the risk to start a business, buy a home, or drive a car becomes possible.

Insurance has existed since a group of Sumerian farmers, more than 5,000 years ago, scratched an agreement on a clay tablet that if one of their number lost his crop to storms, the others would pay part of their earnings to the one damaged. Over the eons, insurance has become more sophisticated, but the deal is essentially the same. An insurer, whether an individual or a corporate entity, takes contributions (premiums) from many and holds the money to pay those few who lose their property from some calamity, like fire. The agreement, a written contract to pay indemnity to another in case a certain problem, calamity, or damage that is fortuitous, that is that occurs by accident, is called insurance.

In a modern industrial society, almost everyone is involved in or with the business of insurance. They insure against the risk of becoming ill, losing a car in an accident, losing business due to fire, becoming disabled, losing their life, losing a home due to flood or earthquake, or being sued for accidentally causing injury to another. The insurers, insureds, or people damaged by those insured are dependent on one another. In a country where human interactions are governed solely by the terms of written contracts, insurance would be a simple means of spreading risk and providing indemnity based on the promises made by the contract of insurance. But, in this the real world, insurance contracts are controlled by statutes enacted to ostensibly protect the consumer of insurance, regulations imposing obligations on the conduct of insurers and the decisions of trial and appellate courts interpreting insurance contracts.

A simple insurance contract between two parties might say: “I insure you against the risk of loss of your engagement ring valued at $15,000 by all risks of direct physical loss except wear and tear for a premium paid by you of $15.00.” Anyone who could read would understand that contract. If something happens to damage, destroy or lose the ring the insurer will pay you $15,000.00. However, insurers cannot write such a simple contract because the state requires many terms and conditions that complicate the policy wording and confuse the common person. The states and courts that did so had nothing but good intentions to protect the consumer against the insurer and control the actions of the insurer.

The tort of bad faith was created because courts felt that insurers treated their insureds badly and defeated the purpose for which insurance is acquired. It has served its purpose. Fair Claims Settlement Practices laws and regulations are now available to control insurers who do not act in good faith. Insurance fraud statutes and Regulations provide assistance to insurers who have been deceived by those they insure or who are victims of attempted insurance fraud.

It is time that all contracts, including insurance contracts, are treated like any other contract, and insureds who believe the insurer breached the contract of insurance can sue to recover the benefits promised by the policy.

Available as a paperback here. Available as a Kindle book here.

Legal Disclaimer

ZIFL is made available by the publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using ZIFL you understand that there is no attorney client relationship between you and the publisher. ZIFL should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

Consider Books to Show Your Appreciation to Your Insurer Clients or Claims Employees

Many insurers refuse to allow their employees to receive gifts from vendors.

If you wish to thank your insurance company clients for allowing you to represent their interest or if you wish to honor your claims personnel it is time to give them something that will be useful to them throughout the coming year and that will not offend insurer’s rules to avoid attempts to extort clients for business from insurer employees.

The Insurance Claims Library

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it for insurers and their claims staff to become insurance claims professionals.

Consider the Insurance Claims Library where, for a small investment you can provide each claims office – rather than individual adjusters – a group of insurance books that will help them throughout the year.

By providing clients, claims departments, or claims personnel with any one or more of the books offered by the Insurance Claims Library. By so doing you can add to the insurance claims professionalism of your clients, employees and claims personnel. With delivery handled by Amazon.com any one or more of the following books, all available from amazon.com and https://zalma.com/blog/insurance-claims-library/, will gain the respect and gratitude from each recipient and their employers.

New and Now Available from the Zalma Insurance Claims Library

The Insurance Examination Under Oath Second Edition

A Tool Available to Insurers to Thoroughly Investigate Claims and Work to Defeat Fraud

The insurance Examination Under Oath (“EUO”) is a formal type of interview authorized by an insurance contract. It is taken under the authority provided by the agreement of the insurer, when he, she or it acquires a policy of insurance, to submit to a condition of the insurance contract that compels the insured to appear and give sworn testimony at the demand of the insurer. Failure to appear and testify is considered a breach of a material condition.

The EUO is conducted before a notary and a certified shorthand reporter who is present to give the oath to the person interviewed. The reporter will record the entire conversation and prepare a transcript to be read, reviewed, corrected and signed by the witness under penalty of perjury or by an oath taken before a notary or judge.

The EUO is a tool only sparingly used by insurers in the United States. A professional insurer will only require an insured to submit to an EUO when a thorough claims investigation raises questions: About the application of the coverage to the facts of the loss, the potentiality that a fraud is being attempted, or to assist the insured in the obligation to prove to the insurer the cause and amount of loss.

Although seldom used the EUO is an important tool needed by insurers when there is a question of coverage, destruction of evidence needed to prove a compensable loss or the amount of loss or evidence indicating the potential that a fraud is being attempted. The EUO and Legal Action provisions in an insurance policy are conditions precedent to an insured’s ability to file suit, and that since the insured failed to substantially comply with the terms of those provisions, the appropriate remedy is dismissal without prejudice. The insured’s failure to comply with these conditions does not bar his ability to bring suit to recover, but merely suspends his ability to bring suit until he has fully complied with those conditions.

Available as a paperback here or Available as a Kindle book here

“Insurance Fraud Costs Everyone"

This book started as a collection of columns I wrote and published in the magazines “Insurance Journal,” “Insurance Week,” and “The John Cooke Insurance Fraud Report” insurance trade publications serving the insurance community in the United States.

Since the last edition I have added more stories that were published in my twice monthly newsletter, Zalma’s Insurance Fraud Letter which is available free to anyone who clicks the links.

The original title was “Heads I Win, Tails You Lose” and was meant to describe insurance fraud as it works in the Unites States. It means that whenever a person succeeds in perpetrating an insurance fraud everyone who buys insurance is the loser.

If the fraud succeeds the insurer must charge more premium to cover the expense of defending the fraud and payment of funds to the fraud perpetrator. If the fraud fails the insurer must charge more premium to cover the expense of defending the fraud. Everyone, except the lawyers, lose.

As you read the stories, I hope they help you understand the effect that insurance fraud has on the perpetrators, the insurers, the people who need insurance, the people who buy insurance, and the people who keep the promises made by insurance policies.

Over the last 53 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

The subtitle, “Heads I Win, Tails You Lose” is meant to describe insurance fraud as it works in the Unites States. It means that whenever a person succeeds in perpetrating an insurance fraud everyone who buys insurance is the loser.

Available as a Kindle Book and Available as a Paperback from Amazon.com.

“Insurance Fraud”

How Lawyers & Claims People Defeat Insurance Fraud

In Two Volumes

Insurance fraud continually takes more money each year than it did the last from the insurance buying public. No one knows the actual amount with any certainty because most attempts at insurance fraud succeed. Estimates of the extent of insurance fraud in the United States range from $87 billion to more than $300 billion every year. No one will ever be able to place an exact number on the amount lost to insurance fraud. Everyone who has looked at the issue knows – whether based on their heart, their gut or empirical fact determined from convictions for the crime of insurance fraud – that the number is enormous.

Volume One available as a Kindle book and a paperback.

Volume Two Available as a Kindle book and a paperback

Zalma on Insurance Videos

Over the last 53 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created a library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals available at https://zalma.com/blog/insurance-claims-library/. My original channel does not allow me to add posts so I have created a new channel, Barry Zalma available at Zalma on Insurance Videos and at https://rumble.com/search/video?q=zalma where I post a new video almost every day

Some of the more than 100 videos available include:

A Video Explaining the Requirement For Insured To Reside At The Residence Premises

A Video Relating to Domicile v. Residence in Insurance Claims

A Video Explaining Insured Should Not Take “The Fifth”

The Creation of Insurance and the Ethical Insurer

A Video Explaining the False Swearing Defense to an Insurance Claim

A Video Explaining the Three Major Responses to Insurance Fraud

The California Fair Claims Settlement Practices Regulations 2020

A Video Explaining Why Rescission Is a Remedy That Must be Used with Care

Some Cases Where Insurers or Insurance Agents or Brokers Were Convicted of Insurance Fraud

The California Fair Claims Settlement Practices Regulations 2020

A Video Explaining Why Rescission Is a Remedy That Must be Used with Care

Some Cases Where Insurers or Insurance Agents or Brokers Were Convicted of Insurance Fraud

A Video Explaining the Consideration for Early Settlement of a Construction Defect Suit

A Video Explaining the Statutes of Repose

A Video Explaining the Need to Apply the 14th Amendment to the Tort of Bad Faith

A Video Explaining “Collapse” Coverage

A Video Explaining Intentional Acts Exclusions

A Video Explaining The Duties of the First Party Property Adjuster

A Video Explaining Some Advertising Injury Coverage

A Video Explaining the Need for Excellence in Claims Handling

A Video Explaining Exclusions for Inherent Vice, Latent Defects and Wear and Tear

A Video Explaining Exclusions for Mysterious Disappearance and Loss Discovered after Inventory

Interpretation of First- and Third-Party Insurance Policies

A Video Explaining “Other Insurance” Clauses in Liability Insurance Policies

A Video Explaining the Tax Consequences of Bad Faith Punitive Damages

A Video Explaining What Happens When a Lawyer Acts Unethically

A Video Explaining Insurance Contract Law and the Law of Unintended Consequences

A Video Explaining Why Insurance is a Necessity to Everyone in a Modern Society

A Video Explaining How to Read Your Homeowners Insurance Policy

A Video Explaining the Controls on Punitive Damages

A Video Explaining the First Party Property Insurance Adjuster’s Duties and Obligations

A Video Explaining How To Become a Professional Liability Claims Adjuster

A Video Explaining the Preparation Necessary for a Statement or an Examination Under Oath

A Video Explaining the Statutes of Repose

A Video Explaining Some Grounds for the Tort of Bad Faith

A Video Explaining What Mold Inspections Cannot Do

A Video Explaining Some Grounds for the Tort of Bad Faith

A Video Explaining How To Deal With Insurance Fraud And Innocent Co-Insureds

A Video Explaining An Insurer’s Dispute Or Denial Of A Claim

A Video Explaining Ethics and the Development of the Covenant of Good Faith

A Video Explaining Some Appellate Decisions on the Equitable Remedy of Rescission

A Video Proposal to Defeat Insurance Fraud Because It Takes Courage to Fight Insurance Fraud

A Video Explaining Insurance Fraud by “Staged” Losses

A Video Explaining the Preparation Necessary for a Statement or an Examination Under Oath

A Video Explaining The Role of the Insurer’s Attorney After Ending the EUO

? 2021 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at https://www.zalma.com and [email protected].

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ Read posts from Barry Zalma at https://parler.com/profile/Zalma/posts; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/

Televero Health

1 年

Just came across the shocking stats in Zalma's Insurance Fraud Letter! ?? It's astounding how the events of Oct 2023 brought behavioral health fraud into sharp focus. This really underlines the need for all of us in the community to remain vigilant and informed. #insurancefraud #ZIFL

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Quote of the Issue

Florida Insurers Actively Pursue Fraud Perpetrators in RICO Suits

RICO Actions

The Report “Florida’s P&C Insurance Market: Spiraling Towards Collapse”

Law of Unintended Consequences

More Problems for Famous Litigator

Thomas Girardi’s $15m Problem with Litigation Funder Sent to Arbitration

Wisdom

New York Proposes a Flawed Method to Obtain Whistleblowers to Turn in Insurance Fraud Perpetrators

When State Fails to Prosecute Insurance Fraud Insurer May Bring Qui Tam Action

Insurance Fraud Victims Who Get No Justice May Sue Fraud Perpetrators on Behalf of State

FACTUAL HISTORY

DISCUSSION

ZIFL OPINION

Health Insurance Fraud Convictions

Former Pharmaceutical Executive to Pay NJ $5 Million To Settle Opioid Lawsuit, Grewal Says

Seeking Withdrawal of Medicaid Fraud Guilty Pleas

Mississippi Pharmacy Owner Gets 18 Years

Pharmacy Owner’s Son Admits Role In $24.8 Million Kickback Scheme And $9 Million Conspiracy

Patient Recruiter Convicted In $2.8 Million Telemedicine Scheme Against Medicare

Texas Company Agrees to Reimburse Medicare For Improper Billing Related to Neurostimulators

Autogenomics, Inc. Agrees to Pay Over $2.5 Million For Allegedly Paying Kickbacks

Two More Individuals Plead Guilty in Connection with Health Care Kickback Conspiracy

Videos on YouTube And Zalma On Insurance from Barry Zalma

---Fake Accident Places Defendant in Jail for 12-24 Months

Facts

Analysis

Motion to Dismiss

ZIFL OPINION

Other Insurance Fraud Convictions

Insurance Fraud in South Africa Fails

Unlicensed Lake Forest Agent Ordered to Pay $20,000 After Judge Affirms Cease and Desist Order

Title Insurance Company Agrees to Pay $50,000 Following Illegal Inducement Allegations

Participants in Staged Crash Schemes Sentenced to Prison

Six People Sentenced for Stealing $8.4 Million From Insurance Company, Bank

Kansas Insurance Agent to Repay $86k After Guilty Plea

Former Personal Care Organization Owner Who Defrauded Medicaid Program of Over $400,000 Convicted

Canadian Adjuster Sentenced to Two Years’ Jail After Stealing Over $420k from ICBC

Adjuster Placed Bets of Up To $2K On Playnow.Com

Gambling Addiction Took Over His Life

Multiple Arson’s Over a Three Year Period Establishes Wire Fraud

ZIFL OPINION

INSURANCE AS A NECESSITY

Legal Disclaimer

Consider Books to Show Your Appreciation to Your Insurer Clients or Claims Employees

The Insurance Claims Library

New and Now Available from the Zalma Insurance Claims Library

“Insurance Fraud Costs Everyone"

“Insurance Fraud”

Zalma on Insurance Videos

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