ZALMA’S INSURANCE FRAUD LETTER
Barry Zalma, Esq., CFE
Insurance claims expert, consultant at Barry Zalma, Inc. and author/Publisher at ClaimSchool, Inc.
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?Quote of the Issue
“Goodness Without Wisdom Always Accomplished Evil.” -- Robert A. Heinlein
Insurance Fraud by Insurers
Insurance fraud is not limited to fraud by insureds against their insurers. Much to the shame of the insurance industry, the reverse also happens.
The poster child of fraud by an insurer was Martin Frankel who created a scheme he masterminded to “loot” more than $200 million from seven insurance companies that he controlled. Franklin American Corporation, and its wholly-owned subsidiary, Franklin American Life Insurance Company were controlled by another entity, a Tennessee trust named the Thunor Trust. The Trust had purchased an 85% interest in Franklin American in 1991. In subsequent years, the Thunor Trust purchased five other insurance companies, which were domiciled in the states of Mississippi, Missouri, and Oklahoma.
Between June 29, 1999 and January 14, 2000, the insurance companies mentioned above were ordered into liquidation by the courts in the four states in which they were domiciled. Martin Frankel, the man who allegedly controlled a financial empire that included the insurance companies, a securities trading firm, a non-profit foundation, and the Thunor Trust, was indicted in both state and federal courts for fraud, criminal conversion, and for allegedly looting at least $215 million from the assets of the insurance companies.
Frankel’s scheme to defraud the insurance companies, those it insured and its investors began in 1991, lasted nearly ten years, involved the participation of dozens of co-conspirators and ultimately resulted in the insolvency of the Insurance Companies. In broad terms, the scheme worked in this way:
Frankel obtained control of the Insurance Companies and once in control, placed two of his co-defendants in positions of authority as CEO and CFO, respectively. Those defendants then stole the Insurance Companies’ money through a series of financial transactions. To commit their fraud without detection, Frankel created sham companies, used alias identities and had numerous mailing addresses for phony companies and identities. These defendants transferred the money from the Insurance Companies to banks or brokerage houses in the United States and from there, transferred the money to foreign banks, usually in Switzerland. They then transferred the money back to the United States where it was converted to untraceable cash for their own use and to fund their fraudulent scheme.
Frankel was convicted of multiple crimes. He appealed his conviction only to have the Second Circuit affirm his conviction.
Frankel took down others and others found it profitable to run a fraudulent insurance company. For example, in U.S. v. KIM, 303 F.Supp.2d 150 (D.Conn. 02/12/2004) in January 30, 2003, following a two-week trial, defendant Mona Kim (“Kim” or “defendant”) was convicted of seven counts of crimes which arose from her participation in a scheme to defraud insurance companies and investors. The Government’s indictment and prosecution of Kim was based on her participation in Martin Frankel’s scheme to defraud various investors, financial institutions, insurance companies, and the shareholders and policy holders of those insurance companies.
The witnesses and documentary evidence established Kim’s involvement in Frankel’s scheme to purchase life insurance companies in various states and to do so without disclosing to regulators or the public that Frankel would own the companies and manage their financial assets. The evidence produced showed that defendant participated in Frankel’s scheme by assisting in the conversion, theft and embezzlement of insurance company assets, by using an alias of “Monica Kim” to assist Frankel in falsely representing that the assets were on account with Liberty National Securities (“LNS”), one of the entities involved in Frankel’s scheme, and by establishing, maintaining and employing bank accounts under Frankel’s control. The facts deemed necessary to an understanding of the issues raised in this motion are set forth in greater detail in the discussion below.
Upon a review of the record, the court found that the government introduced sufficient evidence. From the evidence adduced at trial, a reasonable jury could conclude that the defendant was a separate, culpable party from the Frankel enterprise. Frankel’s enterprise was not limited to the commission of the wire fraud and money laundering transactions, but also included market research, running insurance companies, gathering data concerning financial markets, and conducting “special projects” activities, all of which provide ample links between the members of the enterprise which extend beyond the commission of the charged racketeering activities. Further, the fact that the defendant’s actions were often under the direction of Frankel is not determinative of whether Frankel’s scheme and defendant were separate and distinct entities. Indeed, the Second Circuit has expressly found that “the proof used to establish the `pattern of racketeering activity’ element `may in particular cases coalesce’ with the proof offered to establish the ‘enterprise’ element of RICO.” [United States v. Mazzei, 700 F.2d 85, 88 (2d Cir. 1983) (quoting United States v. Turkette, 452 U.S. 576, 583 (1981)].
Because Frankel’s enterprise was not limited and also included market research, running insurance companies, gathering data concerning financial markets, and conducting “special projects” activities, all of which provided ample links between the members of the enterprise which extended beyond the commission of the crime, caused the defendant to be convicted and the conviction to be affirmed.
In Chao v. Day, 436 F.3d 234 (D.C.Cir. 01/24/2006) the District of Columbia Circuit dealt with a case brought by the Secretary of Labor under the Employee Retirement Income Security Act of 1974 (ERISA). The Secretary filed a complaint in the United States District Court for the District of Columbia against Day, alleging that he violated his fiduciary responsibilities through an illegal scheme to misappropriate insurance assets. Specifically, the Secretary alleged that Day accepted hundreds of thousands of dollars from twenty-nine ERISA-covered employee benefit plans for the purpose of purchasing insurance for the plans. Under his brokerage scheme, Day sent invoices to the plans for various insurance policies, the plans paid the bills by sending checks to Day, and Day deposited the checks into his corporate account. Instead of using the plans checks to purchase insurance, however, Day kept the money and provided the plans with fake insurance policies.
The District Court granted the Secretary summary judgment and ordered Day to pay over $1 million in damages. Day claimed he was not a fiduciary subject to the law and appealed on that issue only, apparently having no defense to the issuance of fake insurance policies. The D. C. Circuit found:
As the plan’s agent, Day was bound by a brokers common law fiduciary duty to faithfully deliver the plan’s assets to the insurer. The court found that there is a fiduciary relationship between them, and the agent or broker has a fiduciary responsibility to the insured. The D.C. Circuit affirmed the District Court because Day was a broker who solicited, accepted, and then pilfered the plan’s assets by reneging on his promise to purchase insurance for the plan’s members.
In U.S. v. KIM, 303 F.Supp.2d 150 (D.Conn. 02/12/2004) in January 30, 2003, following a two-week trial, defendant Mona Kim (“Kim” or “defendant”) was convicted of seven counts of crimes which arose from her participation in a scheme to defraud insurance companies and investors. The Government’s indictment and prosecution of Kim was based on her participation in Martin Frankel’s scheme to defraud various investors, financial institutions, insurance companies, and the shareholders and policy holders of those insurance companies.
The witnesses and documentary evidence established Kim’s involvement in Frankel’s scheme to purchase life insurance companies in various states and to do so without disclosing to regulators or the public that Frankel would own the companies and manage their financial assets. The evidence produced showed that defendant participated in Frankel’s scheme by assisting in the conversion, theft and embezzlement of insurance company assets, by using an alias of “Monica Kim” to assist Frankel in falsely representing that the assets were on account with Liberty National Securities (“LNS”), one of the entities involved in Frankel’s scheme, and by establishing, maintaining and employing bank accounts under Frankel’s control. The facts deemed necessary to an understanding of the issues raised in this motion are set forth in greater detail in the discussion below.
Upon a review of the record, the court found that the government introduced sufficient evidence. From the evidence adduced at trial, a reasonable jury could conclude that the defendant was a separate, culpable party from the Frankel enterprise. Frankel’s enterprise was not limited to the commission of the wire fraud and money laundering transactions, but also included market research, running insurance companies, gathering data concerning financial markets, and conducting “special projects” activities, all of which provide ample links between the members of the enterprise which extend beyond the commission of the charged racketeering activities. Further, the fact that the defendant’s actions were often under the direction of Frankel is not determinative of whether Frankel’s scheme and defendant were separate and distinct entities. Indeed, the Second Circuit has expressly found that “the proof used to establish the `pattern of racketeering activity’ element `may in particular cases coalesce’ with the proof offered to establish the ‘enterprise’ element of RICO.” [United States v. Mazzei, 700 F.2d 85, 88 (2d Cir. 1983) (quoting United States v. Turkette, 452 U.S. 576, 583 (1981)].
Because defendant has failed to show any miscarriage of justice in her trial, the court declined to exercise its discretion under Federal Rule of Criminal Procedure 33 to grant a new trial.
Because Frankel’s enterprise was not limited and also included market research, running insurance companies, gathering data concerning financial markets, and conducting “special projects” activities, all of which provided ample links between the members of the enterprise which extended beyond the commission of the crime, caused the defendant to be convicted and the conviction to be affirmed.
Kickback Schemes Result in Multiple Insurance Fraud Convictions
Health insurers are usually believers in those health care providers who submit invoices to the insurers for the services provided to the people they insurer. Realizing that insurers try to act fairly and in good faith, amoral people in the health care profession will often succeed in defrauding the insurers. However, when the practitioners get greedy a prosecutor will become interested and might pursue prosecution against the health care providers.
In a lengthy and detailed opinion called The People v. Gonzalo Ernesto Paredes, D076086, Court of Appeal, Fourth Appellate District Division One State of California (February 18, 2021) Paredes appealed the verdict after a jury found Gonzalo Ernesto Paredes guilty of 35 counts of offering or delivering compensation for workers’ compensation patient referrals and 16 counts of concealing an event affecting an insurance claim, insurance fraud.
The trial court sentenced Paredes to an aggregate term of five years in prison, consisting of the upper term of five years on one of the counts of insurance fraud, concurrent five-year upper terms on the other counts charging that same offense, and concurrent three-year upper terms on each of the workers’ compensation fraud counts.
FACTUAL BACKGROUND
In approximately 2002, Ruben Martinez (Ruben), and his son, Alex Martinez (Alex), opened a medical clinic in Calexico. In 2009, a chiropractor, Dr. Steven Rigler, moved his practice into the clinic and examined patients who were referred to him by Ruben and Alex and were receiving workers’ compensation benefits. Dr. Rigler did not pay rent or utilities or contribute to the salaries of clinic staff. In exchange, Dr. Rigler permitted Ruben and Alex to determine the providers to whom Dr. Rigler’s patients would be referred for ancillary medical services. These ancillary service providers compensated Ruben and Alex for the referrals, and Ruben and Alex split the referral fees evenly.
In approximately 2010, Paredes was the office administrator for an entity called Advanced Radiology, owned by Dr. Ronald Grusd. Ruben entered into an oral agreement with Paredes, on behalf of Dr. Grusd, through which Advanced Radiology would pay Ruben a referral fee for patients referred to Advanced Radiology for magnetic resonance imaging (MRI) scans.?Thereafter, Paredes implemented the agreement with Ruben by, among other activities, receiving invoices from Ruben for patient referral fees and arranging payment of those fees to Ruben.
An entity owned by Dr. Grusd billed insurance companies for services provided to the patients referred to Advanced Radiology by Ruben and Alex.
DISCUSSION
Statements of facts not in evidence by the prosecuting attorney in his argument to the jury constitute misconduct. However, prosecutors may make vigorous arguments and fairly comment on the evidence; they have broad discretion to argue inferences and deductions from the evidence to the jury.
Ruben testified that he had a meeting with Paredes and Dr. Grusd during which Ruben reached an oral agreement with Paredes to refer patients for MRI scans to Advanced Radiology in exchange for $180 per scan.
Shortly after Ruben testified about the agreement with Paredes, Ruben said that Paredes had stated that “they wanted a signed contract before we proceed[ed].” Ruben and Paredes had reached an agreement during their conversation and that Paredes had later told Ruben that the written agreement was in effect, according to the prosecutor, a sham marketing agreement designed to be cover for illegal activity.
Paredes claims that the prosecutor committed error by stating that Paredes had “entered into a contract” with Ruben. Paredes argues that this misstatement of fact was highly prejudicial to Mr. Paredes because it imputed a level of knowledge and responsibility to Mr. Paredes that was not only false, but evidentially nonexistent.
However, the prosecutor did not say that Paredes had “entered into a contract” with Ruben, as Paredes argues in his brief. Rather, the prosecutor stated that Paredes and Ruben had reached an “agreement.” The prosecutor’s statement was clearly supported by the evidence. In sum, the prosecutor’s reference to an “agreement” between Paredes and Ruben during the prosecutor’s examination of Ruben was supported by the evidence and did not amount to prosecutorial error.
Paredes claims that there is insufficient evidence in the record to support the jury’s guilty verdicts with respect to either the workers’ compensation fraud counts or the insurance fraud counts.
In reviewing a sufficiency of evidence claim, the reviewing court’s role is a limited one. The proper test for determining a claim of insufficiency of evidence in a criminal case is whether, on the entire record, a rational trier of fact could find the defendant guilty beyond a reasonable doubt.
If the verdict is supported by substantial evidence, an appellate court must accord due deference to the trier of fact and not substitute its evaluation of a witness’s credibility for that of the fact finder.
To prevail on a sufficiency of the evidence argument, the defendant must present his case consistently with the substantial evidence standard of review. That is, the defendant must set forth in his opening brief all of the material evidence on the disputed elements of the crime in the light most favorable to the People, and then must persuade the appellate court that evidence cannot reasonably support the jury’s verdict. If the defendant fails to present all the relevant evidence, or fails to present that evidence in the light most favorable to the People, then he cannot carry his burden of showing the evidence was insufficient because support for the jury’s verdict may lie in the evidence he ignores.
Ruben testified that Paredes told him that Advanced Radiology would provide compensation for referrals. Ruben also stated that he reached an agreement with Paredes pursuant to which Ruben would refer patients to Advanced Radiology for MRI scans in exchange for $180 per scan. Ruben stated further that he signed a written marketing agreement that contradicted the terms of the oral agreement after Paredes assured Ruben that he would not be required to comply with the terms of the written agreement, which required the legitimate marketing of Advanced Radiology. Alex testified that he reached a similar agreement with Paredes concerning patient referrals from clinics in San Diego and Escondido to Advanced Radiology. For example, in discussing the scheme, the prosecutor asked Alex, “Did you refer patients for money?” Alex responded, “Yes.” Alex stated that he sent invoices to Paredes for referral fees that he was owed pursuant to the scheme, and that he communicated with Paredes about those fees.
In accordance with the elements of the natural probable consequences doctrine the People’s theory at trial was that: (1) Paredes conspired with Dr. Grusd to commit the target crime of workers’ compensation fraud by paying referral fees for workers’ compensation patient referrals. Dr. Grusd committed the nontarget crime of insurance fraud by concealing that kickbacks had been paid for the referrals when billing insurance companies. Insurance fraud was the natural and probable consequence of the workers’ compensation fraud.
The appellate court concluded that the People presented ample evidence from which the jury could find that the purpose of providing compensation for patient referrals was to obtain payment from insurance companies for services provided to those patients. The People also presented evidence that it is unlawful for providers to seek reimbursement from insurance companies for services performed on patients referred to them in exchange for compensation, and that insurance companies are forbidden by law from paying claims for services that they know have been referred in exchange for compensation. Thus, Dr. Grusd’s commission of the crime of concealing the kickbacks from the insurance companies was closely related to the conspiracy to pay the kickbacks, since the purpose of the kickback scheme (to obtain money from insurance companies for the provision of services) could not have been accomplished but for the concealment of the kickbacks.
Accordingly, the court concluded, that insurance fraud was a natural and probable consequence of the conspiracy to commit workers’ compensation fraud in which Paredes participated. There was substantial evidence to support the jury’s verdicts finding Paredes guilty of violating Penal Code section 550, subdivision (b)(3) pursuant to the natural and probable consequences doctrine.
ZIFL OPINION
Insurance criminals expect to face no consequences to arise from their criminal activity. They make a great deal of dishonest money from their criminal activity and can, as a result, afford to retain appellate counsel to raise multiple, detailed assignments of error to try to reverse the conviction. Paredes had counsel who worked hard on his behalf in what was an obviously wasted effort because his guilt was established by overwhelming evidence. In so doing he wasted the time of the court of appeal whose analysis of the evidence and the law was extensive and scholarly but should have been written with a single sentence: “Paredes, you lose – enjoy your time in the gray bar hotel.
Wisdom
“He who permits himself to tell a lie once, finds it much easier to do it a second and a third time, till at length it becomes habitual.” —Thomas Jefferson
“Nothing is less productive than to make more efficient what should not be done at all.” —Peter Drucker
“The public welfare demands that constitutional cases must be decided according to the terms of the Constitution itself, and not according to judges’ views of fairness, reasonableness, or justice.” —Justice Hugo L. Black
“Slavery is such an atrocious debasement of human nature, that its very extirpation, if not performed with solicitous care, may sometimes open a source of serious evils.” —Benjamin Franklin
“The principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.” —Thomas Jefferson
“Concentrated power is not rendered harmless by the good intentions of those who create it.” —Milton Friedman
“If the people are capable of understanding, seeing and feeling the differences between true and false, right and wrong, virtue and vice, to what better principle can the friends of mankind apply than to the sense of this difference?” —John Adams
“The more one considers the matter, the clearer it becomes that redistribution is in effect far less a redistribution of free income from the richer to the poorer, as we imagined, than a redistribution of power from the individual to the State.” —Bertrand de Jouvenel
“It was a wise man who said that there is no greater inequality than the equal treatment of unequals.” — Felix Frankfurter
New York State’s Legion of Shame
According to the New York Alliance Against Insurance Fraud, multiple cases of insurance fraud that has helped to do damage to the state, especially during the pandemic.
Fake slip-and-fall injuries defraud innocent businesses, a home burns for $1 million, addicted patients are prescribed strong pain pills for insurance profit. Witness insurance fraud, another costly pandemic in New York. The Empire State’s eight most-brazen insurance fraudsters of 2020 were inducted into New York’s Insurance Fraud Legion of Shame.
The extreme schemes shine public attention on the extensive damage that insurance fraud imposes on honest New Yorkers upstate, downstate and everywhere in between. Consumers pay higher insurance premiums as fraud pass-along costs. Fraud victims can find their credit is damaged, and savings depleted. Scams even can jeopardize people’s health.
The Legion of Shame also reminds New Yorkers of the best fraud pandemic vaccine: stay alert and avoid scams.
Fired-up fraud. Deeply in debt, Barry Goldstein torched his home for $1.3 million of insurance. The Albany-area man even claimed possessions he didn’t own. State sentence: pending.
Slip and stumble. Hundreds of homeless people were coached to fake $31.7 million of painful slips and falls on sidewalks of New York City. Bryan Duncan’s ring made false claims against innocent businesses. Federal sentence: 80 months in state prison.
Lifeless life murders. Karl Karlsen kicked a jack from under a truck his son Levi was repairing, crushing him. The then-Seneca County man falsely claimed $707,000 of life insurance. Karlsen also trapped his wife Christina in their burning house for $200,000, this time in California. State sentences: Life without parole.
Addicted to money. Dr. Eugene Gosy ran one of New York’s largest pain practices. The Buffalo-area doctor handed out pain pills to addicted patients, let unqualified staff prescribe addictive pills, and even billed for times he was out of the country. State sentence: 70 months.
Pills for profit. Addicted himself, Dr. Tameshwar Ammar illegally prescribed more than 19,000 pain pills to a drug dealer to sell on the streets, and to an addicted patient who overdosed and died. The Long Island doctor’s federal sentence: pending.
Bogus billing. Dr. Spyros Panos was serving jail time for unneeded and phantom surgeries in an insurance scam. Yet the Poughkeepsie man kept stealing — from his jail cell. Panos falsely billed $860,000 to review workers compensation cases … even though his medical license was revoked. Federal sentence: pending.
Compound con. Bus drivers with the Metropolitan Transit Authority in NYC were bribed to obtain $8.8 million of expensive, overpriced compound medicines they didn’t even need. Everyone made money from defrauding the transport system’s health plan. Christine Myers led the scam. Federal sentence: pending.
Psychiatric shakedown. Muhammad Cheema was a psychiatrist who billed for 5,000 fake sessions worth more than $813,000 in the Rochester area. Cheem billed for treating 30 or more patients per day, forged medical records and prescribed drugs without examining patients. Federal sentence: 18 months.
Good News From the
Pharmacist James A. Mays III used his pharmacies as fronts to falsely bill for medically unneeded prescription drugs. The Birmingham, Ala.-area man directed employees thusly: Get medically unneeded drugs for themselves, family members and friends; alter prescriptions to add non-prescribed drugs; automatically refill prescriptions regardless of patient need; routinely waive and discount co-pays to induce patients to obtain medically unnecessary drugs; and bill for drugs without patients’ knowledge. When officials audited the transactions, Mays lied to investigators and diverted bills through affiliated pharmacies. At least 26 cohorts have pled guilty. Among them are two nurse practitioners, the pharmacy CEO and COO, a VP of sales, operations manager, district managers and sales reps. Varied insurers were defrauded, including Medicare, Blue Cross Blue Shield of Alabama, and others. Mays pled guilty and will spend up to 40 years in federal prison when sentenced.
A Los Angeles-area compound med pharmacy routed millions of dollars in illegal kickbacks through aligned marketing firms to steer illegal prescriptions to Fusion Rx in a $14-million insurance plot. The owner Navid Vahedi and the two marketing firms gave docs preprinted prescription pads. The forms had check-box options that maximized insurance payouts. To encourage patients to sign up, the marketers didn’t collect required copays from patients, or gave patients gift cards to offset the copays. To further disguise Fusion Rx’s illegal failure to collect copays, the firm bought American Express gift cards that were used to make copays for prescriptions without the patients’ knowledge. Fusion Rx then submitted the claims to insurers, lying that patients had paid the copays. Vahedi pled guilty and will receive up to five years in federal prison when sentenced June 28.
Dozens of medical-supply firms in Florida were illegal fronts for Kelley Wolfe to falsely bill Medicare more than $400M for unneeded back braces. Wolfe sent seniors expensive back braces they never ordered, then over-billed Medicare. She used straw owners to hide her ownership of the firms. Wolfe also bribed docs to approve prescriptions for the braces — the docs had no contact with the seniors. Wolfe used stolen Medicare money from her billing company to pay for personal expenses, and didn’t report the income to the IRS. Wolfe has agreed to repay more than $20M, and faces up to 13 years in federal prison when sentenced.
Coalition Against Insurance Fraud – Fraud of the Month of February
Wade Ashley Walters, a 54-year-old businessman from Hattiesburg, Mississippi has etched his place in state history. In mid-January he was sentenced to nearly 20 years in prison and an eye popping $344M in restitution and forfeitures for running the biggest healthcare fraud scheme Mississippi has ever seen.
Walters constructed a network of compounding pharmacies and pharmaceutical distributors to support his fraudulent enterprise that stretched across the country. In just four years Walters and his two-dozen co-conspirators soaked TRICARE and other health insurance plans for more than $287M from 2012 to 2016. The racket was focused on pushing specific pain cream formulas through Walters’ pharmacy network.
Most of the pain creams cost between $11,000 and $14,000 per prescription. Walters’ criminal enterprise was in the business of mass production. Walters knew which combinations were most expensive and he went out of his way to ensure that the prescriptions he processed contained ingredients that were optimized for profit –– rather than effectiveness. Walters even went so far as to distribute prescription pads with preprinted formulas on them to participating physicians and recruiters so that he wouldn’t miss a penny of ill-gotten gains. He also refilled his patients’ prescriptions, even the ones that had never been seen by a doctor, automatically. This exponentially increased his profits.
It was these activities, as well as his repeated efforts to launder his proceeds through transactions in excess of $10,000 that ultimately caught the attention of the DOJ’s Health Care Fraud Strike Force and the FBI’s Field Office in Jackson, Mississippi. In January of 2016 the feds executed coordinated raids at multiple businesses across the state believed to be involved in the fraud ring. Their investigation uncovered the inner workings of Walters’ criminal enterprise. In addition to modifying prescription formulas to maximize profits, Walters also paid recruiters to find veterans that could procure high-dollar compound meds. He also involved the friends and family of employees that worked for his co-conspirators as patients.
According to prosecutors, Walters paid the recruiters commissions based on the percentage of the reimbursements paid by pharmacy benefit managers and healthcare benefit programs, including commissions on claims reimbursed by TRICARE. And it wasn’t just the recruiters on the dole. Walters also targeted practitioners –– sometimes offering them kickbacks to knowingly prescribe the high dollar compound medications or sign off on prescriptions for patients they never examined. To cover his tracks, Walters manipulated copayment systems to make it seem as if the fraudulent pharmacies were collecting copayments from legitimate patients.?
The conspiracy was a sprawling multi-state operation. An additional $110M has been attributed to Walters and at least 32 others in Mississippi, Louisiana and Florida. More than a dozen have been convicted or pled guilty. Walters is also linked to a case in California in which one of his businesses in Utah pleaded guilty to conspiracy to defraud the U.S. government. The terms of the plea agreement include a $25,000 fine and restitution of $621,978. Authorities expect the investigation into the Mississippi case to continue for months –– if not years –– as they dig deeper into the largest and most wide-ranging fraud scheme the Magnolia State has ever witnessed.
Reprinted with the permission of the Coalition. About the author: Arinze Ifekauche is the Communications Director of the Coalition Against Insurance Fraud. He can be reached at [email protected].
Health Insurance Fraud Convictions
Senior Care Company Agrees to Pay $714,996 To Resolve False Claims Act Allegations
CareOne Management LLC, now known as ABC1857 LLC (CareOne), submitted claims for payment to Medicare for reimbursement of Medicare bad debt from Jan. 1, 2012, to July 2, 2018. Medicare reimburses health care providers for uncollectable deductible and coinsurance amounts from Medicare beneficiaries – known as “bad debts.” The company made false representations of compliance with applicable statutory and regulatory criteria, including “criteria for allowable bad debt,” which require a provider to “be able to establish that reasonable collection efforts were made” of amounts owed by beneficiaries before a provider submits the claim as bad debt to Medicare.
CareOne, a New Jersey senior care company will pay $714,996 to resolve allegations that it violated the False Claims Act by making false representations in connection with submissions to the Centers for Medicare & Medicaid Services. According to the contentions of the United States contained in the settlement agreement: The allegations were originally made in a lawsuit filed by Margaret Gathman under the whistleblower provisions of the False Claims Act. The Act permits private parties to sue for false claims on behalf of the United States and to share in any recovery. Ms. Gathman will receive $143,000 from the federal share of the settlement.
Hospice Administrator Sentenced for Role in Hospice Fraud Scheme
Antonio Olivera, 80, of Norwalk, California the administrator of a Southern California hospice was sentenced to 30 months in prison for his role in a multimillion dollar hospice fraud scheme. Olivera was also ordered to pay $2,193,914 in restitution. Olivera pleaded guilty to one count of conspiracy to commit health care fraud in November 2020. Three co-conspirators have pleaded guilty and are awaiting sentencing.
As part of his guilty plea, Olivera admitted that from 2011 to 2018, while acting as administrator for Mhiramarc Management LLC (Mhiramarc), a hospice located in Downey, California, Olivera and others paid illegal kickbacks to patient recruiters for the referral of hospice beneficiaries to Mhiramarc. Further, when clinical staff at Mhiramarc determined beneficiary referrals did not qualify to receive hospice services, Olivera overruled those determinations and nonetheless caused the beneficiaries to be put on hospice service.
Olivera and co-conspirators caused Mhiramarc to submit approximately $28 million in claims to Medicare, which resulted in the company being paid over $17 million. Olivera was personally responsible for $4,769,982 in false and fraudulent claims to Medicare, resulting in Medicare paying Mhiramarc $2,984,914 for medically unnecessary hospice services for beneficiaries, many of whom had been recruited through illegal kickbacks.
The FBI who investigated the case should be asked what took seven years to catch these people.
Las Vegas Healthcare Provider Sentenced to 12-48 Months - Suspended
Stefan Ryan Flowers, 34, of Las Vegas, and Go with the Flow Behavioral Health, LLC (Go with the Flow), were sentenced in a Medicaid fraud case involving billing for services that were not provided to Medicaid recipients.
Eighth Judicial District Court Judge Eric Johnson sentenced both Flowers and Go With the Flow for a category “D” felony offense of Submitting False Claims, Medicaid Fraud. Judge Johnson sentenced Flowers to 12 to 48 months incarceration, suspended, and placed him on probation for two years. As part of the sentence, Flowers and Go With the Flow were also ordered to pay $257,954.00 in restitution and Flowers was ordered to perform 100 hours of community service. The fraud occurred between November 2017 and June 2018.
The investigation of this case began after the Medicaid Fraud Control Unit (MFCU) received information that Go With the Flow and its owner Stefan Ryan Flowers may have billed Nevada Medicaid for Rehabilitative Mental Health (RMH) services that were not clinically or medically necessary. The investigation revealed that Go With the Flow, through Flowers as its owner and service provider, submitted claims to Nevada Medicaid purporting to have provided RMH services, when in fact the healthcare professionals had never provided such services.
Patient Recruiter Sentenced to Prison for Role in More Than $1 Million Illegal Kickback Conspiracy
Dominic Trumbo, 45, of Lexington, Kentucky, a patient recruiter was sentenced to 60 months in prison yesterday for receiving more than $1 million in illegal kickback payments from numerous home health agencies from around the country in exchange for providing information on Medicare beneficiaries to home health agencies, who then used that information to submit fraudulent claims to Medicare.
Trumbo, was sentenced by Chief U.S. District Judge Denise Page Hood of the Eastern District of Michigan, who also ordered Trumbo to pay $1,010,552 in restitution and forfeit $203,300. In July 2019, after a four-day trial, a federal jury found Trumbo guilty of one count of conspiracy to pay and receive health care kickbacks and three counts of solicitation or receipt of kickbacks in connection with a federal health care program.
According to the evidence presented at trial, Trumbo, owner of Trumbo Consulting Agency of Stafford, Virginia, recruited, or paid others to recruit, more than 4,000 Medicare beneficiaries for multiple home health companies across the country. The evidence showed that Trumbo instructed his employees to cold call Medicare beneficiaries and offer incentives to induce them to sign up for home health care. Trumbo then sold the Medicare beneficiary information to home health agencies in exchange for illegal kickback payments. The evidence at trial further showed that Trumbo and his co-conspirators created sham contracts and fake invoices in an attempt to conceal their scheme to defraud Medicare.
Four Detroit-Area Physicians Found Guilty of Health Care Fraud in Over $150 Million Fraud Scheme
Spilios Pappas, 62, of Lucas County, Ohio, Joseph Betro, 59, of Oakland County, Michigan, Tariq Omar, 62, of Oakland County, Michigan, and Mohammed Zahoor, 53, of Oakland County, Michigan, were each found guilty of one count of conspiracy to commit health care fraud and wire fraud, and one count of health care fraud. A federal jury found the four Detroit-area physicians guilty February 4, 2021 of health care fraud charges for their roles in a scheme to administer unnecessary back injections to patients in exchange for prescriptions of over 6.6 million doses of medically unnecessary opioids. Patients were required to get the injections in order to get the prescriptions, some of which were resold on the street by drug dealers, the evidence at trial showed.
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After a four-week trial the four were convicted and sentencing has been scheduled for July 16 for Pappas, July 17 for Betro, July 24 for Zahoor and July 30 for Omar before Chief U.S. District Judge Denise Page Hood of the Eastern District of Michigan, who presided over the trial. Seventeen other defendants, including eight other doctors, previously pled guilty in connection with the investigation.?
According to evidence presented at trial, from 2008 to 2016, Pappas, Betro, Omar and Zahoor worked at numerous medical clinics in Michigan and Ohio, which were operated under the name of the Tri-County Group (Tri-County) and owned by co-conspirator Mashiyat Rashid. While the defendants worked at Tri-County, they engaged in a scheme to defraud Medicare of over $150 million by billing for medically unnecessary facet joint injections, unnecessary urinary drug screens, home health and a myriad of other unneeded ancillary services. The evidence showed that patients, some of whom were suffering from legitimate pain and others of whom were drug dealers or opioid addicts, were offered prescriptions of oxycodone 30 mg by the defendants, but were forced to submit to unnecessary facet injections in exchange for the prescriptions.?
Testimony at trial established that the patients experienced more pain from the shots, in some case, than from the pain they had purportedly come to have treated, and that some patients developed adverse conditions, including open holes in their back. Patients, including patients who were addicted to opioids, who told the doctors that they did not want, need or benefit from the injections, were denied medication by the defendants and their co-conspirators until they agreed to submit to the expensive and unnecessary injections.?
The evidence further established that the defendants repeatedly performed these unnecessary injections on patients, as Tri-County was paid more for facet joint injections than any other medical clinic in the United States. The four defendants were all ranked in the top 25 doctors for dollars paid by Medicare for facet joint injections, even though they only worked a few hours a week. The defendants practice was described during trial as an assembly line, where the four defendants earned anywhere from $1,100 to $3,500 an hour for performing the same injections on nearly every patient.
In addition to the unnecessary injections, the defendants signed a standing order for urine tests for each patient and for every visit to be sent to National Laboratories, also owned by Rashid, in exchange for tens of thousands of dollars in illegal kickbacks, the evidence showed. The evidence further established that the physicians performed a quantitative test for 56 different drugs for every patient at every visit, regardless of whether the patients presented any reason for the test.
The evidence further established that the physicians provided prescriptions for narcotics, including opioids and benzodiazepines, as an incentive to patients who received the injections. Moreover, the evidence established that the dosage of opioids being provided to patients was suitable only for terminally ill cancer patients. Evidence from Michigan Automated Prescription System showed that the four defendants were among some of the top prescribers of oxycodone 30mg in the state of Michigan.
In 2015, Pappas was the number seven prescriber of oxycodone 30mg in the state of Michigan; Betro 18; Omar 16; and Zahoor 38 the evidence showed. At trial, oxycodone 30mg was described as the “gold standard” of drugs diverted to illegal purposes on the street. Evidence showed that all four defendants were in the top 40 out of 50,000 Michigan prescribers even though they had conspired with Rashid to “stay under the radar” of the U.S. Drug Enforcement Administration by working only a few hours a week. The doctors would see anywhere from 15-25 patients in a two to four hour shift, and then bill Medicare for office visits and procedure codes suggesting that they spent as much as two hours and 22 minutes with each patient. Every piece of the fraud was consistently implemented and applied to over 94 percent of the patients in the clinic.
Anchorage Dentist Seth Lookhart Convicted of Medical Assistance Fraud, Illegal Practice of Dentistry, Reckless Endangerment
Seth Lookhart was convicted of 46 counts of felony Medical Assistance Fraud, felony Scheme to Defraud, and misdemeanor counts of Illegal Practice of Dentistry, and Reckless Endangerment according to the Alaska Department of Law, Medicaid Fraud Control Unit (MFCU). Superior Court Judge Michael Wolverton, following a five-week bench trial, found Lookhart’s corporation “Lookhart Dental LLC, d/b/a Clear Creek Dental,” guilty of all 40 counts alleged against it. Lookhart’s office manager, Shauna Cranford, had previously pled guilty to all of the conduct underlying the counts pursuant to a plea agreement. Judge Wolverton found that the State’s evidence was “simply overwhelming” as to each count.
In a written order accompanying today’s verdict, Judge Wolverton stated that the evidence presented at trial established that Lookhart believed that he could get away with his fraud indefinitely, and that he believed his scheme was foolproof. Judge Wolverton found that Lookhart believed that unless “someone was standing right next to him at the time, no one would ever know.” Judge Wolverton found that the State presented “a substantial amount of forensic evidence,” and that the “overwhelming amount of evidence was often supported, and often in excruciating detail, by Lookhart’s own texts, photos and videos.”
Judge Wolverton found that Lookhart specifically intended to steal from the Alaska Medicaid program, that Lookhart did so by means of illegally practicing dentistry, and that Lookhart placed his patients in substantial risk of serious physical injury while doing so.
The prosecution acknowledges the many law enforcement agencies and civilians who assisted in the prosecution of this case, especially the former patients who testified during the trial.
Dr. Lookhart, as a new dentist, was working for two established dentists in a practice called Alaska Dental Arts. Dr. Lookhart was to be paid the greater of $240,000 a year or 30% of the money he was able to generate. Dr. Lookhart was convinced by Cranford to begin offering IV sedation to Medicaid patients as an alternative to more common and less costly methods of anesthetizing a patient for a dental procedure. Dr. Lookhart and Cranford began to push IV sedation for Medicaid patients. The cost for the IV sedation is generally not included in the patient’s $1,150 annual limit for non-emergency procedures. This practice quickly became very lucrative for Dr. Lookhart resulting in his practice alone being responsible for 31% of the total Medicaid payments for IV sedation in 2016. IV sedation is governed by specific regulations that limit its approved use to a few narrow circumstances that must be properly documented.
Dr. Lookhart devised a scheme to cut out his then partners by billing Medicaid under a different provider ID and sending the money directly to his home. The estimated value of the fraud towards his partners is approximately $250,000 to $350,000. Additionally, private insurance generally does not cover IV sedation, so Dr. Lookhart began offering private pay clients the option of paying a $450 flat fee when he was billing Medicaid as much as $2,049 for the same service. Medicaid regulations specifically prohibit providers from billing Medicaid more than the general public is charged for the same service. Since obtaining his IV sedation license in 2015, Dr. Lookhart has been paid by Medicaid approximately $1.9 million for IV sedation services; he has billed Medicaid approximately $2.5 million.
The felony medical assistance fraud, theft in the first degree, and scheme to defraud charges carry a possible sentence of up to 10 years in prison, a fine of up to $100,000, and restitution to the State of Alaska Medicaid program and to his prior business partners. The top counts carry a potential fine of up to $2,500,000 for Lookhart Dental, LLC. The misdemeanor medical assistance fraud offenses carry a possible sentence of up to a year in jail, a fine of up to $25,000, and restitution to the Alaska Medicaid program for the individuals and a possible fine of up to $500,000 for Lookhart Dental, LLC. The misdemeanor unlawful dental acts offenses carry a possible sentence of up to 10 days in jail and a fine of up to $2,000.”
Physician Sentenced to Two Years in Federal Prison for Defrauding Medicare And Illegally Prescribing Opioid Drugs
Kain Kumar, 56, of Palmdale, California, was sentenced by U.S. District Judge Philip Gutierrez of the Central District of California, who also ordered Kumar to pay $509,365 in restitution, $494,900 in asset forfeiture, and a $72,000 fine. Kumar pleaded guilty on April 4, 2019, to one count of health care fraud and one count of distribution of hydrocodone.
A former Los Angeles-area physician Kumar was sentenced January 6, 2021 to 24 months in prison and three years of supervised release for engaging in a multi-faceted Medicare fraud scheme and for illegally prescribing thousands of opioid painkillers and muscle relaxers.
As part of his guilty plea, Kumar admitted that from February 2011 until May 2016, he defrauded the Medicare health care benefit program by prescribing unnecessary home health services in exchange for the payment of illegal kickbacks to him from a La Verne, California-based home health agency called Star Home Health Resources Inc. Kumar further admitted that in furtherance of this scheme, he submitted false and fraudulent claims for reimbursement to Medicare for Medicare beneficiaries that he did not personally examine or for patients he only briefly examined. Kumar also admittedly prescribed drugs that were not medically necessary and which were paid for by the Medicare Part D program.
Kumar admitted that between February 2013 and January 2016, he prescribed 23,826 pills of the opioid drug hydrocodone (commonly sold under the brand names Vicodin or Norco) and 38,459 pills of the muscle-relaxer carisoprodol (sold under the brand name Soma) without a legitimate medical purpose. Kumar directed his office staff – who were not medical professionals – to issue prescriptions for these drugs to patients even though Kumar had not examined the patients, he admitted. Kumar instructed his office staff to issue prescriptions for opioid drugs by instructing his staff to sign Kumar’s name on prescriptions and by providing his staff with pre-signed prescriptions. In one instance, Kumar examined a patient only on the very first visit and thereafter on a monthly basis, for approximately a year-and-a-half, he caused prescriptions to be issued to the patient for hydrocodone and carisoprodol, even though Kumar did not actually see the patient for a subsequent physician examination.
Kumar was charged along with Errol Lat, 75, Thelma Lat, 74, Elaine Lat, 49, all of Rancho Cucamonga, California, and Corinne Chavez, 36, of Rosamond, California, in a second superseding indictment returned on July 2017. All co-defendants have pleaded guilty and have been sentenced.
ZIFL can only wonder what took almost two years from the guilty plea to sentencing.
Durable Medical Equipment Company Owner Sentenced to Federal Prison for Bribery Conspiracy
Defendant is part of record-setting telemedicine fraud prosecutions in Southern District
Patrick Wolfe, 48, of Belleair Beach, Fla., the operator of Wilmington Island Medical Inc., which does business as WI Medical Inc., was sentenced to 24 months in prison by U.S. District Court Judge William T. Moore Jr. after pleading guilty to one count of Conspiracy. Wolfe also is ordered to pay $549,476.17 in restitution, and after completion of his prison term must serve three years of supervised release.
Wolfe, a Florida man who operated a durable medical equipment company was sentenced to federal prison for participating in a commercial bribery conspiracy that involved a health care program.
There is no parole in the federal system.
In pleading guilty to Conspiracy, Wolfe admitted paying kickbacks in return for “leads,” which were in actuality signed orders from physicians and nurse practitioners, and then billing those orders to a Medicare Advantage plan using WI Medical.
The financial total for orders facilitated through this scheme was alleged to be in the millions of dollars. Medicare beneficiaries were located in the Southern District of Georgia and elsewhere.
The Southern District of Georgia has now charged 31 individuals and companies as part of the nationwide crackdown on fraudulent genetic testing, and prescribing of orthotic braces and pain creams, identifying more than $1.5 billion in losses to Medicare and Medicaid for defendants charged int the Southern District alone.
Man Sentenced for Health Care Fraud in Excess Of $175,000
Christian Anthony Ekberg, 34, a Bethesda, Maryland man was sentenced February 9, 2021 to 18 months in prison for health care fraud. In addition to the prison term imposed, he was also ordered to pay $173,870.12 to the North Carolina Medicaid Fund as restitution.
According to court documents, Ekberg was an officer and minority shareholder of an out-of-state company that entered into an agreement with a North Carolina dentist. Under the agreement, the out-of-state company would provide professional management services to the dentist, including submitting Medicaid claims, and the dentist would provide dental services to patients living in skilled nursing facilities throughout North Carolina.
From September 2, 2015 through April 21, 2017, Ekberg, and others, knowingly submitted fraudulent dental claims to Medicaid. For example, although the dental records showed that only approximately 107 prophylaxes and 24 debridements had been performed for Medicaid recipients living at the skilled nursing facilities, claims were submitted falsely representing that 771 prophylaxes and 611 debridements were performed for these recipients. In total, the health care fraud resulted in Medicaid paying approximately $173,870.12 for services that had not been rendered. These funds were deposited into an account to which Ekberg had access. During the relevant time period, Ekberg signed all the checks from this account. The checks written to Ekberg, to cash, and to the out-of-state company, totaled approximately $177,034.
Other Insurance Fraud Convictions
Merced Agriculture Company Owner and Daughter Sentenced to 10 Years Because of a $2.5 Million Workers’ Compensation Insurance Fraud Scheme
Felipe Saurez Barocio, 63, of Atwater, California, owner of Agriculture Services, Inc., and his daughter, Angelita Barocio-Negrete, 34, of Merced, California were sentenced to 10 years after pleading no contest to six felony counts of insurance fraud each. Pursuant to Penal Code 1170(h), they will both serve six years in custody and four years on mandatory supervision. They have also been ordered to pay $2,582,142 in restitution – the amount of workers’ compensation insurance premium they avoided paying over five years.
Barocio and his daughter underreported employee payroll by $11 million in order to fraudulently reduce the business’s premium for workers’ compensation insurance. The fraud potentially left employed farm workers without insurance coverage and at financial risk.
On October 14, 2019, State Compensation Insurance Fund (SCIF) filed a suspected fraudulent claim with the California Department of Insurance alleging potential insurance fraud. SCIF reported that Barocio, as owner of a farm labor contracting business, underreported employee payroll in order to reduce the proper rate of insurance premium owed to SCIF.
An investigation by the California Department of Insurance revealed that between 2015 and 2019, Barocio and his daughter, who worked as the office manager, provided SCIF with fabricated quarterly employee payroll reports. The Department discovered $11 million in missing payroll when they compared the quarterly reports submitted to SCIF to the quarterly reports submitted to the Employment Development Department. This underreporting of employee payroll resulted in a total loss of $2,582,142 in insurance premium.
Barocio and his daughter, Barocio-Negrete, were sentenced on January 12, 2021, in the Merced Courthouse and ordered to pay restitution on February 22, 2021
LA Woman Sentenced to Probation Only for Involvement in Staged Collision Insurance Fraud Ring
Zandra Monterrozo, 44, of Corona, California pleaded guilty and was sentenced for her involvement in an organized ring that intentionally staged vehicle collisions in order to collect over $135,000 in undeserved insurance payouts. Eleven other suspects have been either charged or prosecuted.
Monterrozo was sentenced on February 19, 2021, to one felony count of insurance fraud, paid $6,000 in restitution and was ordered to serve one year of probation.
The Los Angeles Insurance Fraud Task Force, comprised of California Department of Insurance detectives and California Highway Patrol investigators, began this investigation after stopping at a suspicious vehicle collision, which was determined to be staged and involved a scheme called the “sudden stop.” The collision resulted in serious bodily injury.
A “sudden stop” collision is when one car intentionally brakes quickly, for no apparent reason, giving the driver behind them little time to react and causing a rear-end collision. Insurance fraud investigators recognize the activity as a “swoop and squat” collision.”
The investigation revealed that the suspects were involved in eight innocent victim staged vehicle collisions and two collusive vehicle collisions resulting in a $137,832 loss to victims and various insurance carriers. The suspects utilized identity theft, a capper, an insurance broker, auto body shops, medical providers, and law offices to carry out their scheme.
These types of staged crashes are most often perpetrated by organized rings. Stagers target high-value vehicles such as commercial vehicles, expensive luxury vehicles, and vehicles owned by cities or counties. These vehicles are targeted because there is a virtual guarantee of insurance coverage. Los Angeles makes up nearly 43 percent of all auto-related insurance fraud in California.
List of additional suspects:
Flint Man Pleads Guilty to Insurance Fraud
Dillen Leonard, 25, appeared in Genesee County Circuit Court before Judge David Newblatt and pleaded guilty to four counts of insurance fraud, a four-year felony, and one count of using a computer to commit a crime, which is a seven-year felony in this instance.
Leonard, a former Flint insurance agent pleaded guilty to multiple felony counts of insurance fraud, Attorney General Dana Nessel and the Michigan Department of Insurance and Financial Services (DIFS) announced February 10, 2021.
Leonard sold or offered customers fraudulent certificates of insurance that appeared to be legitimate and knew that his clients were presenting the documents to the Secretary of State as insurance in order to apply for or renew their vehicle registrations. During July 2016, Leonard sold at least 29 fraudulent certificates.
Auto insurance fraud leads to increased costs for every driver, which is why DIFS and the Attorney General are committed to investigating and prosecuting these cases according to DIFS Director Anita Fox. Drivers should know that driving without insurance is illegal and puts their families at risk. What’s more, Michigan’s new auto insurance law give drivers new, lower-cost coverage options, and uninsured drivers can now get coverage without fees or penalties for a prior gap in coverage if they sign up before Jan. 1, 2022. Leonard is scheduled to be sentenced at 9 a.m. March 19.
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.
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.
“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.
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
Podcasts are available at https://anchor.fm/barry-zalma; https://www.breaker.audio/zalma-on-insurance;?https://www.google.com/podcasts?feed=aHR0cHM6Ly9hbmNob3IuZm0vcy8xY2FlYjg1NC9wb2RjYXN0L3Jzcw==; https://overcast.fm/itunes1509583809/zalma-on-insurance; https://pca.st/ujampbxm; https://radiopublic.com/zalma-on-insurance-Wel2lZ; and https://open.spotify.com/show/2VTJCeGmBUkf0IlFV8SWJk.?
Zalma on Insurance Blog Posting
Barry Zalma, Esq., CFE
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.
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.
Absolutely insightful thread on the complexities of insurance fraud! ?? Benjamin Franklin once said - Honesty is the best policy. This couldn't be truer in the context of preventing insurance fraud. Let's advocate for transparency and integrity in all dealings! ????
"Absolutely, navigating the complex world of #insurancefraud is crucial. ???♂? As Warren Buffett wisely said, 'Honesty is a very expensive gift, don't expect it from cheap people.' We at Treegens value transparency and are also branching out to sponsor a truly green initiative, the Guinness World Record of Tree Planting ??. Your insights could enlighten many there: https://bit.ly/TreeGuinnessWorldRecord."