ZALMA’S INSURANCE FRAUD LETTER

A ClaimSchool? Publication ? 2020

Barry Zalma & ClaimSchool, Inc.. Go to my blog: Zalma on Insurance at https://zalma.com/blog,  Go to the Insurance Claims Library, Volume 24, Issue 10 – May 15, 2020, Subscribe to e-mail Version of ZIFL, it’s Free! Read last two issues of ZIFL here. Go to the Barry Zalma, Inc. web site here, Videos from “Zalma on Insurance” on YouTube

 Quote of the Issue

“We Avoid Risks in Life So We Can Safely Make It to Our Deaths.” Avrumy Jordan

SIU E-Blast 2020-15 from the California Department of Insurance

On April 20, 2020 the California DOI issued a Significant Training Noncompliance This Past Year

During SIU compliance field examinations conducted this past year, the Fraud Division observed an alarming trend related to required anti-fraud training. We found some insurers did not conduct training, only partially conducted sections of their required anti-fraud training, or did not maintain documentation of this required training. These insurers were aware of the training requirements which meant the noncompliance was considered willful. These training findings resulted in some of the highest noncompliance penalties approved by the Insurance Commissioner this past year.

These examples follow:

Insurer #1- Our review found 96% of the integral anti-fraud employees we tested did not receive a new hire anti-fraud orientation.

Insurer #2- Our review found 90% of the integral anti-fraud employees we tested did not receive annual anti-fraud training.

Insurer #3- Our review found 70% of the SIU personnel we tested did not receive continuing anti-fraud training on any of the required topics.

Insurer #4- Our review found the insurer did not substantiate that 100% of their new integral anti-fraud hires received a mandated antifraud orientation.

Insurer #5- Our review found 60% of the insurer’s SIU personnel did not substantiate they received training that covered any of the required topics.

Insurer #6- Our review found 43% of the integral anti-fraud personnel we tested did not receive annual training, or the insurer did not substantiate they received training. Of these employees, about 50% indicated they received training; however, training records did not substantiate this fact.

As a reminder, California Code of Regulations, Section 2698.39 states:

(a)   The insurer shall establish and maintain an ongoing anti-fraud training program, planned and conducted to develop and improve the anti-fraud awareness skills of the integral anti-fraud personnel.

(b)   The insurer shall designate an SIU staff person to be responsible for coordinating the ongoing anti-fraud training program.

(c)   The anti-fraud training program shall consist of three (3) levels:

                                i.     All newly-hired employees shall receive an anti-fraud orientation within ninety (90) days of commencing assigned duties. The orientation shall provide information regarding:

                               ii.     the function and purpose of the SIU;

                               iii.     an overview of fraud detection and referral of suspected insurance fraud to the SIU for investigation;

                                  iv.     a review of Fraud Division insurance fraud reporting requirements:

                                   v.     an organization chart depicting the insurer's SIU; and

                                   vi.     SIU contact telephone numbers.

(d)   Integral anti-fraud personnel shall receive annual anti-fraud in-service training, which shall include:

a.      review of the function and purpose of the SIU;

b.      introduction/review of the written procedures established by the SIU regarding the identification, documentation and referral of incidents of suspected fraud to the SIU;

c.      identification and recognition of red flags or red flag events;

d.      any changes to current procedures for identifying, documenting and referring incidents of suspected insurance fraud to the SIU;

e.      Fraud Division insurance fraud reporting requirements; and

f.       introduction/review of existing and new, emerging insurance fraud trends.

(e)   The SIU personnel shall receive continuing anti-fraud training that includes;

a.      investigative techniques;

b.      communication with the Fraud Division and authorized governmental agencies;

c.      fraud indicators;

d.      emerging fraud trends; and

e.      legal and related issues.

(f)    Records of the anti-fraud training provided to all staff shall be prepared at the time training is provided and be maintained and available for inspection by the Department on request. The training records shall include the title and date of the anti-fraud training course, name and title and contact information of the instructor(s), description of the course content, length of the training course, and the name and job title(s) of participating personnel.

Prior SIU E-Blasts are available on the California Department of Insurance internet website and can be viewed at the following link:https://www.insurance.ca.gov/0300-fraud/0100-fraud-division-overview/12-SIU.

If you wish to comply with the SIU Regulations consider The State of California Imposes Control on the Investigation of Insurance Fraud

California SIU Regulations is designed to assist California insurance claims personnel, claims professionals, independent insurance adjusters, special fraud investigators, private investigators who work for the insurance industry, the management in the industry, the attorneys who serve the industry, and all integral anti-fraud personnel working with California admitted insurers to comply with the requirements of California SIU Claims Regulations.

The state of California, by statute, requires all admitted insurers to maintain a Special Investigative Unit (an “SIU”) that complies with the requirements set forth in the Special Investigative Unit Regulations (the “SIU Regulations”) and train all integral anti-fraud personnel to recognize indicators of insurance fraud.

Available as a Kindle Book or Available as a paperback.

Barry Zalma

Barry Zalma is the principal of Barry Zalma, Inc. He is available for consultation on any and all insurance issues faced by you or your clients.

Barry Zalma founded the firm to help resolve every insurance claim problem faced by you or your clients. His experience and skill as a consultant can make the difference before a jury or other trier of fact. For more than 45 years as a claims person and insurance coverage attorney, Barry Zalma has represented insurers, advised insurers on claims handling, interpreted coverages and testified as an insurance coverage, insurance bad faith, insurance claims handling and insurance fraud expert on behalf of insurers and policy holders’ suing insurers.   

Mr. Zalma has been rated “AV Preeminent” and is an internationally recognized expert on insurance, insurance claims handling, insurance coverage, insurance fraud, and insurance bad faith. Barry Zalma will promptly review your file materials and advise you about the viability of your decision to sue or your defenses. He can help you narrow the scope of discovery.

Consultation with Mr. Zalma can save you or your client thousands of dollars in the defense or prosecution of an insurance dispute. Mr. Zalma will assist you in the effort to find a solution to an insurance claims dispute that is fair, intelligent, beneficial and economical.

He is available to provide expert advice to individuals and their counsel.

Mr. Zalma’s rates are all inclusive. Mr. Zalma’s hourly fee of $600 per hour, portal to portal, takes account of all incidentals from telephone calls to postage.

Cease and Desist Order to Protect Californians from illegal Extended Warranties Sales

The California Department of Insurance (CDI) issued a Cease and Desist Order effective immediately upon Omega Vehicle Services, LLC doing business as Delta Auto Protect, and its controlling manager, Charles Seruya, for allegedly selling illegal Vehicle Service Contracts (“VSCs”) to over twenty California consumers.

The Cease and Desist Order alleges both Delta Auto Protect and Seruya were not licensed by the Department of Insurance and improperly denied claims, illegally sold contracts they did not first file with the Department directly to consumers, and used an unapproved backup insurer.

Under the Order, Delta and Seruya are to immediately stop selling VSCs in any capacity and cease acting as an insurance agent or producer or in any other capacity in the State of California for which they do not hold a valid license, permit, or Certificate of Authority.

Generally, VSCs, often called ‘extended warranties’, are offered to consumers by car dealers when they buy a car. Most typically provide coverage for repairs due to mechanical failure. Others offer coverage for routine services, such as oil changes and tire rotation, or other services such as paintless dent removal, glass or key replacement, or tire and wheel repair.   

VSCs may be sold legally to Californians only when specific criteria are met, which Delta and Seruya failed to do.

1. Every VSC must be filed with CDI before it can be sold.
2. Companies responsible for paying the claims on VSCs must be licensed by CDI, unless the company is a vehicle manufacturer, distributor or dealer. 
3. These companies must carry CDI-preapproved backup insurance insuring every VSC they sell, unless they receive an exemption from CDI by proving their company has a net worth of at least $100 million.
4. VSCs can only be sold through dealerships licensed by the Department of Motor Vehicles. Direct sales to consumers are illegal.

According to public records, including a civil complaint filed by the Pennsylvania Attorney General, Delta maintains addresses at 600 Eagleview Blvd, Suite 300, Exton, Pennsylvania and 1735 Market Street Suite 3750, Philadelphia, Pennsylvania. Public records also indicate that Charles Seruya maintains an address at 1 Ross Court, Oakhurst, New Jersey.

Wisdom

"The highest manifestation of life consists in this: that a being governs its own actions. A thing which is always subject to the direction of another is somewhat of a dead thing." — Saint Thomas Aquinas

If successful people have one common trait, it's an utter lack of cynicism. The world owes them nothing. They go out and find what they need without asking for permission; they're driven, talented, and work through negatives by focusing on the positives. — Mike Zimmerman

“Nobody grows old merely by living a number of years. We grow old by deserting our ideals.” — Samuel Ullman

“Friendship is like a treasury: you cannot take from it more than you put into it.” — Benjamin Mandelstamm

"We should be unfaithful to ourselves if we should ever lose sight of the danger to our liberties if anything partial or extraneous should infect the purity of our free, fair, virtuous, and independent elections." —John Adams

"During the Great Depression, when people laughed their worries disappeared. Audiences loved these funny men. I decided to become one." – Jerry Stiller (June 8, 1927 - May 11, 2020).

“A learned bastard stands higher than an ignorant high priest.” — Midrash

"Dignify and glorify common labor. It is at the bottom of life that we must begin, not at the top." — Booker T. Washington

"We lay it down as a fundamental, that laws, to be just, must give a reciprocation of right; that, without this, they are mere arbitrary rules of conduct, founded in force, and not in conscience." — Thomas Jefferson

"The deterioration of every government begins with the decay of the principles on which it was founded." —Charles de Montesquieu

Hallelujah: Texas Allows a Fraud Exception to the Eight Corners Rule

Texas Finds a Chink in the Eight Corners Rule

The eight-corners rule of insurance contract interpretation about duty to defend directs Texas courts to determine a liability insurer’s duty to defend its insured based on:

• the pleadings against the insured and
• the terms of the insurance policy.

For many years plaintiffs’ lawyers have taken advantage of the rule and with careful pleading have required an insurer to defend a suit that was probably not covered by the insurance policy.

In Loya Insurance Company v. Osbaldo Hurtado Avalos And Antonio Hurtado As Assignees of Karla Flores Guevara, No. 18-0837, Supreme Court of Texas (May 1, 2020) the Texas Supreme Court, in the face of an obvious fraud, was asked to create an exception to the eight corners rule.

BACKGROUND

Loya Insurance Company (the insurer) sold an automobile liability insurance policy to Karla Flores Guevara. Guevara’s husband, Rodolfo Flores, was explicitly excluded from the policy’s coverage. While moving Guevara’s car, Flores collided with another car carrying Osbaldo Hurtado Avalos and Antonio Hurtado (collectively, the Hurtados).

The Hurtados, Guevara, and Flores agreed to tell both the responding police officer and the insurer that Guevara was driving the car rather than Flores so their injuries could be paid for by the insurer.

The Hurtados sued Guevara sought coverage from the insurer, claiming damages resulting from Guevara’s negligent operation of her vehicle. The insurer furnished an attorney to defend Guevara. Early in the discovery process, Guevara disclosed the lie to her attorney and identified Flores as the driver. The insurer responded to this information by denying her both a defense and coverage. The trial court granted the Hurtados’ motion for summary judgment and rendered judgment against Guevara, awarding the Hurtados $450,343.34.

Guevara assigned her rights against the insurer to the Hurtados. The Hurtados then sued the insurer, alleging its denial of a defense and coverage was negligent, breached the insurance contract, breached the duty of good faith and fair dealing, and violated the Texas Deceptive Trade Practices-Consumer Protection Act (DTPA). The insurer deposed Guevara, who recanted her initial statement that she, rather than Flores, was driving.

The trial court granted summary judgment for the insurer, remarking at the hearing on the motion that the Hurtados were “asking this Court to ignore every rule of justice and help [them] perpetuate a fraud.” The court of appeals reversed the trial court’s judgment, holding that, “as logically contrary as it may seem,” the insurer had a duty to defend under the eight-corners rule. One justice concurred in the judgment, urging the Supreme Court to adopt a narrow exception to the eight-corners rule for instances of undisputed fraud and collusion designed solely to create a duty to defend.

ANALYSIS

The duty to defend is a creature of contract arising from a liability insurer’s agreement to defend its insured against claims or suits seeking damages covered by the policy. Generally, only the four corners of the policy and the four corners of the petition against the insured are relevant in deciding whether the duty applies. Under this eight-corners rule, a court should not consider extrinsic evidence from either the insurer or the insured that contradicts the allegations of the underlying petition.

Twice the Supreme Court noted that collusive fraud by the insured might provide the basis for an exception. As to falsity, there is no dispute on this record regarding who was driving the vehicle that collided with the Hurtados. The evidence shows conclusively that the insured (Guevara) was not driving; an excluded driver (her husband) was.

There is no dispute regarding whether the Hurtados agreed with Guevara and her husband to make false statements about who was driving in order to trigger Guevara’s insurance coverage and the insurer’s duty to defend. To the contrary, given Guevara’s own admissions under oath in this suit, the record shows conclusively that these parties to the underlying case conspired to lie about who was driving to trigger insurance coverage.

Given the contractual foundations of the eight-corners rule the Supreme Court concluded it does not bar courts from considering such extrinsic evidence regarding collusive fraud by the insured in determining the insurer’s duty to defend. Neither Loya nor any insurer agreed to undertake, and the insured does not pay for, a duty to defend the insured against fraudulent allegations brought about by the insured itself. When there is conclusive evidence that groundless, false, or fraudulent claims against the insured have been manipulated by the insured’s own hands in order to secure a defense and coverage where they would not otherwise exist.

When Confronted with Undisputed Evidence of Collusive Fraud, An Insurer Need Not Pursue A Declaratory Judgment Action to Determine Its Duty to Defend Before Terminating Its Representation.

Hurtados contend the Supreme Court should require an insurer to obtain a declaration that it has no duty to defend its insured before it may withdraw the defense. But an insurer faced with undisputed evidence of collusive fraud should not be required to pursue a declaratory judgment action before withdrawing its defense for two reasons.

First, an insurer in this position could well conclude there is no justiciable controversy between it and its insured. Second, an insurer that breaches its duty to defend by withdrawing can be held liable for substantial damages and attorneys’ fees, which will help ensure that an insurer withdraws its defense without first securing a declaratory judgment only in clear-cut cases. Since the eight corners rule was put in place the state has provided multiple ways for an insured to sue, and obtain damages from, an insurer that wrongfully refuses defense.

These consequences, among others, are adequate to ensure that insurers will seek a favorable declaratory judgment before withdrawing a defense in most cases where there is a real controversy regarding the duty to defend. The Supreme Court, therefore, continues to encourage insurers to take that course.

CONCLUSION

To address such cases of collusive fraud, the Texas Supreme Court adopted an exception to the eight-corners rule: courts may consider extrinsic evidence regarding whether the insured and a third party suing the insured colluded to make false representations of fact in that suit for the purpose of securing a defense and coverage where they would not otherwise exist. If the insurer conclusively proves such collusive fraud, it owes no duty to defend. An insurer confronted with undisputed evidence of collusive fraud may choose to withdraw its defense without first seeking a declaratory judgment, though it risks substantial liability if its view of the duty to defend proves to be wrong.

ZALMA OPINION

It is about time that the state of Texas created an exception to the eight corners rule. Hopefully this decision will lead to others allowing the admission of extrinsic evidence to determine the duty to defend as is the case in California and other states. A careful lawyer drafting a suit can always allege something that will allow for a defense. Consider my blog post on how a murder’s estate got a defense when he shot the plaintiff in: “Four Corners Rule Requires Defense for Person who Shot Plaintiff in the Face” at https://zalma.com/blog/four-corners-rule-requires-defense-for-person-who-shot-plaintiff-in-the-face/ and above.

Good News From the Coalition Against Insurance Fraud

* An ortho spine surgeon paid $1.75 million to settle a lawsuit accusing him of taking kickbacks from an ortho equipment maker in Newport News, Va. Dr. Jeffrey Carlson received kickbacks through a sham company for using SpineFrontier products. He received “consulting” payments for the time he spent performing surgeries. He already was paid for those hours by Medicare and other federal programs. Carlson also accepted meals for he and his staff every day he worked with a SpineFrontier product. That added up to thousands of dollars in food. Carlson is president and managing partner of Orthopaedic & Spine Center. He’s the 6th doc to settle a lawsuit alleging kickbacks from SpineFrontier. The feds filed a False Claims Act against the company in March.

* A local lab tested patients’ feces unnecessarily and falsely billed Medicare. Genova Diagnostics will pay $17-43 million to settle those allegations and others. The whistleblower suit highlighted 3 tests— the NutrEval and GI Effects Lab Test, which both analyze stool samples, and IgG allergen, a food-sensitivity test. Genova also engaged in improper billing, and paid 3 phlebotomy vendors in violation of the federal Stark Law, which prohibits physician self-referral.

* Try as she might, Eryn B. Meyers isn’t going anywhere. The Wayland, N.Y. woman is serving 23 years to life for burning down her house — and incinerating her housemate David O’Dell. Meyers and her husband Joseph did the deed for nearly $170,000 of insurance money. They were caregivers for O’Dell, who was mentally slowed by a head injury. Burning the old wooden house would net them $125,000, plus another $40,000 of life insurance they secretly took out on O’Dell. That would let them buy a snazzy new double-wide to live in. The home was reduced to charred rubble, and O’Dell had to be identified from the remains of his bones. Meyers appealed her 2017 conviction for insurance fraud, arson, murder and other crimes. She claimed ineffective lawyers. “Contrary to defendant’s contention, she was not denied effective assistance of counsel by the decision of her first defense counsel to withdraw a request for a Huntley hearing,” the state Supreme Court ruled. “It is well settled that ‘[t]here can be no denial of effective assistance of trial counsel arising from counsel’s failure to ‘make a motion or argument that has little or no chance of success’”

* Farid Fata wants out of federal prison 35 years early, claiming COVID-19 could kill him if he stays. The Detroit-area doc prescribed painful and invasive chemo to cancer-free patients in a $34-million insurance scheme. One cancer-free patient received 155 treatments over two years. Fata also ordered high doses of chemo for up to 70 percent of patients who were near death and beyond hope of recovery. They lived out their final days with painful cancer drugs coursing through their bodies. Some patients were in remission and didn’t need blasting with radiation. Fata seeks compassionate release from his 45-year sentence. He has diabetes, early dementia and gastrointestinal bleeding, he claims. Fata is the latest high-profile federal inmate seeking early release due to claimed COVID-19 worries. Prosecutors are planning their response. Fata is a card-carrying member of the Insurance Fraud Hall of Shame.

* Profligate travel helped bust a postal worker who stole nearly $687,000 in disability benefits after claiming she couldn’t work due to a work injury. Janeide Chillis lied that she suffered disabling injuries from a slip-and-fall accident in Essex County, N.J. She provided a letter from a New Jersey doc who claimed Chillis was “temporarily totally disabled.” She began receiving federal workers comp benefits. Chillis periodically submitted forms for 9 years, certifying she was unemployed though would report income. Yet Chillis earned extra income and travelled extensively, including to Africa and France. She also worked as a home health aide while taking in disability. Chillis didn’t report any of the money or travel. She pled guilty and will spend up to 5 years in federal prison when sentenced Sept. 10.

* An addiction doc ran a pill mill for 4 years in Northern Virginia. Dr. Felicia Lyn Donald signed off on Schedule II opioids worth over $1.2 million on the street. She illegally approved more than 250,000 mg of oxycodone. Donald also prescribed drugs such as Xanax, and even gave prescriptions to employees as part of their salary. And she falsified medical records to make it seem her addicted drug recipients were patients who had medical exams and other care. Her scam bilked Medicaid. Donald could serve up to 30 years in prison when sentenced August 21.

* Dr. Paul Roberts prescribed addictive drugs without a legitimate medical purpose. The Fultondale, Ala. man also let unqualified staff prescribe to patients using prescriptions he re-signed for when he was out of the office. Roberts’ clinic then billed Blue Cross Blue Shield as if he did the work. Roberts illegally teamed with a pharmacist and medical sales rep to fraudulently bill health insurers for medically unneeded compounded drugs. The pharmacy billed $2.2 million for the compound meds Roberts prescribed. The pharmacy billed $10.5 million all told, including for other docs. Roberts pled guilty. He has a 72-month federal jail term, will hand over his medical license and must repay $2.2 million. The pharmacist got 38 months and will give up his license.

Guest Column on Insurance Fraud

In this the third month of the plague I decided that it was appropriate to ask a friend of long standing and experienced claims person to add to the wisdom of readers of ZIFL with the first ever guest column in ZIFL. Read, learn and enjoy.

You Will Never See a Good Fraud – The First Guest Column for ZIFL

I am Thomas McCloskey CPCU, LIC. I am a retired National / Executive General Adjuster. I retired after 45 years in the business. I still consult on claims and litigation on occasion. Barry Zalma has invited me to contribute to his fraud letter; I am honored and pleased.

I will attempt to approach this endeavor with the idea that claims people may find my musings amusing and maybe enlightening. We are all bored to tears with stories of frauds by those evil doers that underwriting failed to filter out of our pool of insureds. We forget that fraudsters are on all sides of this contract. Plaintiffs who plot to present injury claims, agents who will insure buildings if they can get a photo that does not show the firetrucks. The ocean of money the insurance industry represents will draw schemers. Some of whom are quite inventive.

As long as we are willing to suffer miscreants in our midst, we as a profession, will remain in the position given in want ads, between housekeepers and janitors. Adjusting is a profession requiring utmost honesty and an overly developed sense of fairness. Continuing education and professional development are essential. If you cannot commit to your own growth and commitment, please find another way to make a living. People who are too lazy to work and too nervous to steal, may be in our business, never in our profession.

For a vendor looking to make inroads to the company’s surplus fund, some strategy will need to be employed. Sending Stan the Donut Man to the various claims offices will raise your company’s name recognition, perhaps a referral or two. Taking adjusters to lunch and having the best selection of tickets will make your name well known.

A young auto adjuster was offered a case of steaks for every car towed into a specific shop. A young fire adjuster met the love of his life who was employed by a … wait for it… a fire repair contractor. Public Adjusters in Detroit were amazing. One had his name legally changed to Cash McCall. PA’s deserve their own edition. There are two people in a claims department that are gold mines, supervisors and clerical folks. They both have unlimited access to claims information.

In Metropolitan Detroit, a windstorm produced about 9,500 claims for a national carrier. In an effort to reduce the storm of paper flying about. Agents sent in policy number lists. These policy numbers were then entered into a terminal, a four-part form was produced with all the insured’s information required to handle the loss. Operations only used three.

Nancy Clerical was approached by Jimmie The Jet, owner of Disreputable Contracting. Mr. Jet perceptively noted the fourth part of the form was being discarded, farther Nancy Clerical was the lowest paid person in the operation. Slithering up to this less than reputable clerical person, offered her five dollars for each of the copies she was throwing away. This is potentially more money than two years’ salary TAX FREE. 

Jimmie The Jet was an “armchair contractor.” That is, he did not own a hammer. Everything was subbed out, and the Jet screwed his subs and the insureds. However, The Jet or his salespeople could then approach a homeowner.

Hello, I am Jimmie the Jet. Your insurance company Shifting Sands Mutual is remarkably busy. They and your agent Mr. Pita have asked me to help you get your house repaired. I have been authorized to waive the deductible. Sign here. Do you have an insurance check?

This scheme worked well until Nancy Clerical arrived at the office for her morning shift driving a genuinely nice General Motors product. Raising the question of how she paid for the car.

There are many stories on this subject, my personal favorite? The medical office at Shifting Sands Mutual.

I was contacted by a nurse who was employed by General Motors in Pontiac Michigan. She was the administrator of the worker’s compensation program. She was curious about the medical office in the offices of Shifting Sands. I was invited to Pontiac to review her files that had raised her suspicions.

There were commonalities. Each of the injured were about the same age, they suffered from nebulous injuries that cannot be quantified, off on disability for an extended time, all under the care of Dr. White who shared an office address with Shifting Sands Mutual in the western suburbs of Detroit. All the required forms and supporting documents were meticulously prepared and submitted. Nurse tells me she has never spoken directly with Dr. White. The first six digits of the telephone number for Dr. White were the same as mine.

Let’s call Dr. White! I instantly recognized the voice on the other end of the connection. It was Nancy Clerical! “Doctor White was tied up with a patient, the file was immediately available, could the telephone “nurse” answer a question?” Nancy assured the GM nurse that this person was restricted from work for another six weeks.

Nancy Clerical was employed in the worker’s comp unit. I got copies of the GM files. I noted the forms and reports were mailed in Shifting Sands envelopes. Returning to the office I called Dr. White’s telephone and observed that Nancy Clerical answered, the phone was an extra line in the unit. Nancy was providing a service for her husband and a group of friends.

It is true that you will never see a good fraud. A good fraud is as good as a good claim.

One of my many shortcomings is my complete distain for a thief. They are distasteful on many levels. Keep in mind they are after your employer’s money.

Here are a few.

Some Temptations to the Inexperienced

PA’s came about in Michigan in the 1930’s. Banks were looking to hire people to deal with insurance claims on bank owned buildings. Giving a public adjuster 10 percent of the recovery was cheaper than paying an attorney. The PA’s license allows them to discuss damages ONLY.

Giving the public adjuster a commission leads to unintended consequences. It is to the PA’s advantage to exaggerate the claim. The company/independent adjuster is tasked with negotiating a settlement that more closely approaches actual damage scope and costs involved.

In Detroit during the days when an adjuster was the prince of the city, PA losses were common. PA’s would approach each adjuster differently based on that adjuster’s history and experience level. My mentor, Arthur J. Cockrell taught me, if you worked a PA hard, that one would not come back. The PA, s kept track of who “got along with who” They also kept track of the adjuster’s weaknesses.

Bribery was and is a strategy that is employed by some PAs. Nobody reinspects the adjuster’s losses, their report is final. For me it was always an easy decision, “Let me understand, you want me to steal money from my employer and give it to you?”

The five greatest lies come into play here.

1.                                              Nobody will ever find out.

2.                                              I do not do this for everybody.

3.                                              The check is in the mail.

4.                                              You know you are special.

5.                                              I would not do that to you.

A smart PA would provide whatever it took to compromise an adjuster. As I was taught; if you take a bribe, get a big one. If you can get $250,000, he’ll take a check. What do you care who finds out? Know beyond a doubt you will lose your job, never again work in a fiduciary position, lose your reputation and any professional designations and licenses. The form of the bribe is not important, its only important that you sold your soul. You will not get another bribe; they own you and merely need to remind you of the indiscretion.

In my past I dealt with a PA who kept an office on the Westside of Detroit. There was a nice bar where you could get whatever it took to steady your nerves. Sandy Z would get a rookie in the office and overserve the youngster. One thing leading to another and the attractive secretary would be made available for whatever the drunken youngster may think they would like. Photos of the escapade would memorialize the event. From that moment forward in any contentious moment the youngster would be told; “You remember Susan? She asked me to tell say hello.” If I cannot win your heart or mind, I will twist your nose.

Some contractors are less obvious. It is the same game. The strategy is to win your heart and mind. You can be wined and dined twice a week. Some of my favorites:

·        David S. had issues with Peruvian Marching powder. David worked larger losses as he was a senior person. I understand he started soliciting commissions on his losses from the PA’s involved. This grew to a relationship with contractors from that community. These contractors were sent to do the temporary repairs. When they did not do the repairs the contractor would cash a claim check on that file. When the inevitable came and David started working at a lawn service, his files were dumped on my desk. One was a gasoline fire in a union hall in a southern suburb. Big fire. I thought the PA would stab himself, he had already paid David 30K, now here I was…

·        I was assigned to investigate a section II liability auto adjuster. That game was to invent a passenger in the claimant’s car involved with an insured from another state. A police report blank was the tool. The poor passenger was injured. These injuries were documented with the use of other available report blanks. Eventually the adjuster was able to settle the loss for a “fair amount.” Authority granted, a check issued and deposited in a bank account set up for the purpose. This person had retired to Florida. He had an exposed law license. In about a month I could prove nearly $500,000 was stolen with lots more files to review. I was directed to stand down. I suspect his management had morale issues of their own.

Remember if you lose or leave the business those nice dinners and endless supply of good seats and parking passes will dry up. Your buddy contractor, with only rare exceptions, will not have time for your call. The lesson: just don’t!

We will speak more of this in a later ZIFL, assuming Barry invites me back.

Health Insurance Fraud Convictions

DOJ Settles False Claims Act Allegations with Seattle Physician, his Pain Clinics, and his Drug-Testing Lab

Agrees to pay $2.85 million to settle allegations his clinics ordered medically unnecessary urine tests at his lab, paid for by government healthcare programs

Dr. Frank Danger Li agreed to pay $2.85 million to state and federal authorities to settle allegations his companies billed government entities for medically unnecessary urine drug tests. Dr. Li’s seven pain clinics closed in July 2016 when the Washington State Medical Quality Assurance Commission suspended his medical license for improperly monitoring prescriptions of powerful opioids. The settlement is a civil resolution unrelated to any criminal investigation or any action by state health regulators.

The investigation helped stop Dr. Li and the providers he supervised from continuing to prescribe dangerous and excessive amounts of opioids. As a result, the government is reclaiming more than one million Medicaid dollars for the unnecessary drug tests he ordered for his opioid prescription practice.

According to the settlement agreement, in addition to his pain clinics, Dr. Li owned drug-testing labs in Seattle and Everett. Northwest Analytics did urine drug testing for Li’s clinics. In July 2013, Li instituted a policy that, in nearly every instance, each patient being treated at Seattle Pain Centers had to have a full urine drug test panel every time they were seen by a provider. This policy resulted in thousands of medically unnecessary tests. The testing protocol did not follow state standards which recommended random testing of up to four times per year.

The settlement funds are divided as follows: restitution to Medicare of $1,590,265; restitution to TriCare of $123,000; restitution to the Railroad Retirement Board of $2,672, and restitution to Medicaid of $1,134,151 ($453,796 federal funds and $680,354 state funds). The settlement agreement details how the funds are to be paid over five years and various ways that the government claims are secured. The settlement amounts are based in part on Dr. Li’s ability to pay.

Dr. Li does not admit any wrongdoing as part of this settlement.

Woman Sentenced To 10 Months for Soliciting Kickbacks and Obstructing Justice

Theresa C. Merced, 81, of Kentucky was sentenced to five months imprisonment to be followed by five months of home detention, and was ordered to pay a $55,000 fine, by Chief U.S. District Judge Danny C. Reeves, following her convictions for soliciting kickbacks from a toxicology laboratory in exchange for urine drug testing referrals, lying to law enforcement agents about the kickback she received, and then attempting to cover up the kickback by requesting the alteration of certain financial records.

Merced, the office manager of a substance abuse treatment clinic in Jackson, Kentucky previously admitted that, between December 2018 and August 2019, she solicited kickbacks from the CEO of a toxicology lab in exchange for urine drug test referrals. In August 2019 the CEO delivered to Merced a $4,000 check as part of a larger package of promised inducements, which she caused to be cashed. When Merced was questioned about the check by law enforcement agents in September 2019, she denied knowledge of it, and stated that the $4,000 was probably a loan from the lab CEO to her husband. Shortly after her interview with the agents concluded, Merced called the lab CEO and asked that he alter the lab’s financial records so that the entry for the $4,000 check would say “rent/loan,” consistent with the lie she told the agents.

Under federal law, Merced must serve 85 percent of her prison sentence and will be under the supervision of the U.S. Probation Office for three years. As a special condition of her supervised release, Merced is prohibited from working in any capacity in which she influences referrals for medical testing.

Insurance fraud is not a good method of funding retirement.

$4.6 Million Health Care Fraud and Kickback Schemes Related to Genetic Testing

Kacey C. Plaisance, 38, of Altamonte Springs, Florida, pleaded guilty by videoconference before U.S. District Judge Brian R. Martinotti in Newark federal court to an information charging him with two counts of conspiracy to defraud the United States in connection with schemes to commit health care fraud and violate the Anti-Kickback Statute. Plaisance and five co-defendants were previously charged by indictment in September 2019 in connection with the conspiracies.

Plaisance admitted his role in using his company to defraud the Medicare Program in connection with fraudulent orders for genetic tests. According to documents filed in this case and statements made in court:

Plaisance and his conspirators operated Ark Laboratory Network LLC (“Ark”), a company that purported to operate a network of laboratories that facilitated genetic testing. Ark partnered with Privy Health Inc., a company that another conspirator operated, and another company to acquire DNA samples and Medicare information from hundreds of patients through various methods, including offering $75 gift cards to patients, all without the involvement of a treating health care professional. A co-defendant, Matthew S. Ellis, a physician based in Gainesville, served as the ordering physician who authorized genetic testing for hundreds of patients across the country that he never saw, examined, or treated. These included patients from New Jersey and other states where Ellis was not licensed to practice medicine. Ellis, Plaisance, and their conspirators submitted and caused to be submitted fraudulent orders for genetic tests to numerous clinical laboratories. These orders falsely certified that Ellis was the patients’ treating physician and, in some cases, falsely indicated that a patient had a personal or family history of cancer. In 2018 alone, Medicare paid clinical laboratories at least $4.6 million for genetic tests that Ellis ordered in this manner.

Plaisance and his conspirators entered into kickback agreements with certain clinical laboratories under which the laboratories paid Ark bribes in exchange for delivering DNA samples and orders for genetic tests. Ark concealed these kickback arrangements through issuing sham invoices to laboratories that purportedly reflected services provided at an hourly rate even though the parties had already agreed upon the bribe amount, which was based on the revenue the laboratories received from Medicare or an amount paid for each DNA sample. In 2018, the clinical laboratories paid Ark at least $1.8 million in bribes.

Each of the counts to which Plaisance pleaded guilty carry a maximum penalty of five years in prison and a fine of $250,000, or twice the gross grain or loss from the offense. Plaisance’s sentencing is scheduled for Sept. 17, 2020.

Dominican National Pleads Guilty to False Identity Crimes

Robely Eladio De Jesus Guerrero, 32, pleaded guilty before U.S. District Court Judge Richard G. Stearns to one count of aggravated identity theft and one count of false representation of a Social Security number. A sentencing date has not yet been scheduled.

A Dominican national who previously resided in Lawrence, Massachusetts pleaded guilty May 8, 2020 in federal court in Boston to fraudulently applying for a Social Security number.

On Jan. 4, 2016, De Jesus Guerrero used the Social Security number of a U.S. citizen to submit a renewal application for a Massachusetts driver’s license under the victim’s name.

The charge of aggravated identity theft carries a mandatory two-year prison sentence that must run consecutively to any other sentence imposed, up to one year of supervised release and a fine of up to $250,000. The charge of false representation of a Social Security number provides for a sentence of up to five years in prison, three years of supervised release and a fine of $250,000. Sentences are imposed by a federal district court judge based on the U.S. Sentencing Guidelines and other statutory factors.

Physician Pleads Guilty to Distribution of a Controlled Substance Without an Effective Prescription

Dr. Robin Ann Cox pleaded guilty May 6, 2020 to one count of Distribution of a Controlled Substance without an Effective Prescription. According to the plea agreement, Dr.Cox was employed by the Arkansas Medical Clinic (AMC) in Rogers, Arkansas. Cox and the owner of AMC contacted the DEA by telephone to report that prescriptions from Cox' s previous employment had been fraudulently written and filled.

Cox specifically identified a prescription for patient D.S. written on May 19, 2019 and filled on May 20, 2019, and a prescription for F. R. dated May 17, 2019 and filled on May 17, 2019. During the investigation into these prescriptions, the DEA discovered that Cox had written D.S. his/her prescription in the parking lot of a fast food restaurant in Fort Smith, Arkansas, in the Western District of Arkansas, Fort Smith Division.

Substance Abuse Treatment Provider Pays $295k To Settle Improper Billing Allegations

Connecticut Counseling Centers (“CCC”) has entered into a civil settlement agreement with the federal and state governments in which it will pay more than $295,000 to resolve allegations that it caused overpayments to be paid by the Connecticut Medicaid Program.

CCC is a healthcare organization that provides outpatient substance abuse and mental health services in Connecticut, with clinics located in Fairfield and New Haven counties. The government’s allegations against CCC arise out of improper billing for urine drug testing services.

The State of Connecticut Department of Social Services (“DSS”) contracted with CCC to provide behavioral health and substance use disorder services to Medicaid beneficiaries. Medicaid reimburses methadone clinics, such as CCC, utilizing a weekly rate payment for each Medicaid patient provided methadone treatment. Regulations issued by the State of Connecticut in 2013 made it clear that the weekly payment was a “bundled” rate that included intake evaluation; initial physical examination; on-site drug abuse testing and monitoring; and individual, group and family counseling services.

On September 3, 2014, Medicaid issued a Provider Bulletin to all methadone clinics reminding them that the weekly rate payment included reimbursement for on-site drug abuse testing and monitoring.

On February 1, 2015, DSS published on its website an Audit Protocol for methadone clinics. The Audit Protocol stated that if a DSS audit found Medicaid paid another laboratory provider for drug testing within a week of the date a methadone clinic was paid for methadone treatment, Medicaid would reduce the methadone clinic’s payment for the methadone treatment service by the cost of the laboratory service.

DSS conducted an audit of CCC and found that both CCC and an independent laboratory billed Medicaid for drug testing performed by the laboratory, contrary to DSS’ weekly rate payment regulation. In January 2016, DSS issued an Audit Report that warned CCC that continued non-compliance with the weekly rate payment rule would result in financial disallowances in future audits.

The government alleges that despite clear guidance from the Medicaid program and the audit finding indicating that on-site drug testing was part of the bundled rate, CCC routinely referred urine drug tests for CCC’s patients to an outside, independent laboratory. As a result, Medicaid paid for the claims twice, once to CCC pursuant to the bundled rate and a second time to the outside laboratory.

To resolve its liability, CCC will pay $295,211 to the federal and state governments for conduct occurring between January 18, 2016 and December 31, 2016. 

Doctor Pleads Guilty to Opioid Conspiracy and Health Care Fraud

Dr. Felicia Lyn Donald, 65, of Great Falls, Virginia organized, led, and operated a prescription “pill mill” from at least April 2016 through April 2020. Donald practiced medicine at For Women OB/GYN Associates and NOVA Addiction Center. Donald distributed over 1.2 million milligrams (mg) of Schedule II opioids at or above the Centers for Disease Control and Prevention (CDC) guideline for dosages that a practitioner should avoid, with a total street value of over $1.2 million, and illegally distributed at least 325,190 mg of oxycodone and other Schedule II controlled substances. Donald also committed health care fraud on numerous occasions in furtherance of her scheme.

Dr. Donald pleaded guilty May 4, 2020 to leading and organizing an extensive and illegal prescription distribution conspiracy and a related health care fraud scheme. According to court documents, Donald flagrantly violated her oath as a physician and put countless lives at risk. Additionally, Donald fraudulently prescribed Schedule II opioid pills that she illegally distributed to a close associate, knowing that this individual sold the prescriptions on the street for profit. Around the same time, Donald issued prescriptions to the close associate for alprazolam pills, which belongs to a class of drugs known as benzodiazepines. Donald admitted that the use of opioids with benzodiazepines is a dangerous combination of drugs that can make a person stop breathing, and could have killed or caused serious bodily injury to the close associate or to the ultimate users.

Donald admitted that she prescribed opioids to addicts and/or drug dealers who had traveled from out-of-state or long distances to her practice; individuals that informed Donald of their pending drug charges; individuals who Donald knew had failed urine toxicology screens; individuals who Donald knew were selling the pills that she prescribed to them; paying certain employees, in part, with opioid prescriptions rather than through pay checks; and giving blank prescriptions to certain members of her medical office staff and other co-conspirators for their personal use.

Donald attempted to conceal her patterns of illegal prescribing by falsifying medical records to make it appear as though individuals who were never her patients received examinations and medical care, when in fact they had not, and engaging in Medicaid fraud. Donald fraudulently issued prescriptions to others in the names of at least nine unwitting individuals, none of whom were her patients. Donald also issued prescriptions for high doses of oxycodone to multiple women who were pregnant.

Donald pleaded guilty to conspiracy to distribute and dispense controlled substances outside the usual course of professional practice and without a legitimate medical purpose, and health care fraud. She agreed to surrender her medical license and faces a maximum penalty of 30 years in prison when sentenced on August 21. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.

Pain Management Clinic and Physician Agree to Pay At Least $1.35 Million

The Center for Pain Management, S.C. (“CPM”), and its owner, Dr. Nosheen Hasan, agreed to pay at least $1.35 million to resolve allegations that they received kickbacks from a urine drug testing laboratory in exchange for ordering medically unnecessary tests for Medicare and Medicaid patients. CPM and Dr. Hasan also agreed to future contingent payments for the next five years, with the amount of the payments based on specified financial criteria. CPM and Dr. Hasan separately entered into an Integrity Agreement with the Office of Inspector General, Department of Health and Human Services (“HHS-OIG”), to monitor ongoing compliance with applicable Medicare and Medicaid rules. 

CPM operates pain management clinics in the Milwaukee metropolitan area. Dr. Hasan is the sole owner of CPM and provided pain management services through CPM. As alleged in the Complaint-in-Intervention filed by the United States in the case, CPM and Dr. Hasan received illegal remuneration from Midwest Laboratory Sales & Consulting, LLC (“Midwest”), and its owner, Matthew Samuelson, in exchange for ordering urine drug tests performed by Midwest, in violation of the Anti-Kickback Statute and the False Claims Act.

The government further alleged that CPM and Dr. Hasan ordered these tests despite knowing that they were not medically necessary. Over the course of the more than five-year-long arrangement, CPM and Dr. Hasan ordered thousands of unnecessary tests that were paid for by Medicare and Medicaid and received over $1 million in illegal kickbacks from Midwest for ordering the tests. The government previously resolved its claims against Midwest and Mr. Samuelson, who admitted that they violated the False Claims Act and Anti-Kickback Statute.

Owner of Treatment Facility Pleads Guilty to Health Care Fraud

Marcus Anderson (34, St. Petersburg, Florida) pleaded guilty to health care fraud. He faces a maximum penalty of 10 years in federal prison. A sentencing date has not yet been set.

According to court documents, in April 2011, Anderson opened a treatment facility that offered counseling services in St. Petersburg, Florida. Beginning in or about May 2015, and continuing through April 2018, Anderson stole and misused the billing credentials of doctors to submit more than $1.2 million in false and fraudulent claims to the Florida Medicaid program and related managed care organizations. Anderson sought payment for these fraudulent claims long after the rendering providers had left his employment. The bogus claims also included services that patients had never even received. Anderson falsely claimed that some patients had received counseling and related services at his treatment facility, when he knew the patients were not there. Some patients were hospitalized or in residential living facilities when Anderson falsely claiming they were in his care. The treatment facility was shuttered in 2018.

Attorney Agrees to Plead Guilty to Paying Bribes to Two Federal Law Enforcement Officials

Edgar Sargsyan, 39, an attorney with law offices in Beverly Hills, was charged April 28, 2020 with conspiracy to commit bank fraud, two counts of bribing a public official, and two counts of making false statements to federal investigators. In a plea agreement also filed the same day in United States District Court, Sargsyan agreed to plead guilty to the five felony counts, which cumulatively carry a statutory maximum penalty of 50 years in federal prison.

Sargsyan, a Calabasas man has agreed to plead guilty to five federal offenses – one related to a credit card “bust-out” scheme, and the others related to more than $250,000 in bribes he paid to two federal agents for assistance that included sensitive law enforcement information. In the plea agreement, Sargsyan admitted paying tens of thousands of dollars from the beginning of 2015 through early 2017 to a special agent with Homeland Security Investigations (HSI) and a special agent with the Federal Bureau of Investigation.

Sargsyan paid the HSI agent at least $32,000 in checks and at least $45,000 to $50,000 in cash in return for assistance that included the HSI agent searching law enforcement databases to corruptly obtain information that he passed to Sargsyan, according to the plea agreement. The HSI agent also altered a Department of Homeland Security database to make it “more likely” that a foreign national who was a client of Sargsyan’s law firm would be allowed to enter the United States. In another corrupt act detailed in the plea agreement, the HSI agent prepared a document on HSI letterhead in an unsuccessful attempt to have one of Sargsyan’s relatives from Armenia admitted into the United States.

Sargsyan also admitted he paid the FBI agent monthly cash bribes of up to $10,000 beginning in 2015 in exchange for the agent providing “protection,” which included running queries on law enforcement databases and warning Sargsyan to “stay away” from certain individuals who were the targets of criminal investigations. The agent, who worked out of the FBI’s San Francisco Field Office, accepted the cash payments on trips to Southern California, where he stayed at luxury hotels that were paid for by Sargsyan. The FBI agent also accepted from Sargsyan a $36,000 racing motorcycle as a “bonus” for running database checks on a particular person. Sargsyan also gave the FBI agent a $30,000 cashier’s check that was made to appear to be a payment to the agent’s business, according to court documents.

Sargsyan also agreed to plead guilty to two counts of making false statements to federal investigators. These charges stem from interviews in September 2017 by the Department of Justice Office of Inspector General, when Sargsyan falsely stated that the $30,000 check to the FBI agent was a loan, and in December 2018, when he falsely told special agents with the FBI and HSI that he did not pay bribes to the FBI agent.

In his plea agreement, Sargsyan also admitted he participated in a conspiracy that defrauded financial institutions by fraudulently obtaining credit cards in the names of aliens who had previously been in the United States on J1 visitor visas. Once the credit cards were issued by the financial institutions, Sargsyan and his co-conspirator charged “purchases,” including more than $941,000 that Sargsyan personally charged at two businesses he controlled, Pillar Law Group and Regdalin Group.

Sargsyan has been directed to make his initial court appearance in this case on June 9, 2020.

Other Insurance Fraud Convictions

NC Woman Who Killed Stepson, 4, By Shoving Plastic Down His Throat Also Had Her Husband Murdered 20 Years Later

Sylvia Ipock White, a North Carolina mother was found to be responsible for the deaths of her husband and her four-year-old stepson. Billy C White, a North Carolina insurance agent, was reported missing in 1992 by his wife, Sylvia Ipock White. Oxygen's new documentary, 'Snapped', looks at the Kinston murders and how Sylvia was caught for the crimes.

Former Kinston Police assistant chief Wilburn 'Speedy' Ingram recalled Sylvia reporting Billy missing and shared, she’s crying, very hysterical and telling me that Billy went to meet a man somewhere out in the county to sell a large insurance policy and that he had not come home.

The two had married in 1971 and had a large family, including children from past marriages. They were together for around 20 years before Billy vanished.

Billy White Murder

The Kinston Police launched a massive search for Billy, which also included an aerial search. They found Billy's car on a deserted woodland road. It was found that Billy had died from two shotgun blasts, one to his chest and the other to his side. His pockets had been turned out and his wedding ring was missing. White had told investigators that Billy had stepped out to meet a man named Timmy Connors who wanted to purchase an insurance policy. When authorities tried to find the man, they were met with a dead end.

While investigating Billy's death, they came to find that Sylvia had been having an affair with a man named James for over a year. The two had checked into a hotel on the day Billy was killed. Given that Sylvia had an alibi and had no evidence against her, the case came to a standstill until a month later, when an anonymous caller revealed a huge tip. The informant revealed it had been two months since the party but he had run into the same man again. As they spoke, the man had admitted to killing Billy. He was found to be James Lynwood Taylor. After an eight-hour investigation, he confessed to the murder. He revealed that Sylvia had offered him $20,000 and a van to kill Billy as she wanted to claim his life insurance policy, which was approximately $200,000. Taylor then recruited his uncle, Ernest West Basden as a hitman.

Taylor had lured Billy and had posed as Timmy Connors when Basden emerged and shot him. Sylvia was arrested and charged with murder though she maintained her innocence.

Billy Jr Murder

The murder of Billy White led to the re-examination of Sylvia's stepson Billy Jr's death. The 4-year-old had died 20 years before Billy's death. Taylor had told the authorities that while trying to recruit him to kill her husband, Sylvia had said, "It's not that hard to do. I had a stepchild. I put a bag over it until it stopped breathing."

In 1973, Sylvia had taken Billy Jr to the hospital and said he had swallowed plastic. His skin had turned white and he was pronounced dead on arrival. As per court documents, the doctors had taken out a large piece of plastic from his throat, and nurses who checked on him testified that the plastic had no chew marks, bites, or anything to indicate the child had eaten it.

The child's death was ruled as a homicide and Sylvia was charged with first-degree murder. Sylvia, now 83, is currently housed at Raleigh’s North Carolina Correctional Institution for Women.

Fake Boat Fire & Theft

Robert John Mohamad, 53 arranged for his $65,000 boat to be destroyed in a fire, then lied about it being stolen and tried to claim insurance, was sentenced to two years in a Western Australian prison.

Mohamad did not light the fire himself but procured someone else to destroy the boat and a trailer at a Kalgoorlie quarry in January 2018. The father-of-two then made a false complaint to police that the boat and trailer had been stolen, and attempted to fraudulently gain benefit by putting a claim in with Club Marine Insurance.

Commercial gain was a factor in Mohamad's offending, while his wife's health issues and problems with his truck driving business were also factors, the WA District Court heard on Wednesday.

Judge Andrew Stavrianou accepted Mohamad was remorseful and unlikely to reoffend, but also noted the importance of general deterrence.

Mohamad, who pleaded guilty to three charges, will be eligible for parole after serving half his sentence.

Barry Zalma, Inc. Provides the Following Services to its Clients

Consultation with insurers and insureds on claims handling issues; Training on insurance and insurance law for all insurers; Litigation advice to defense or plaintiffs’ counsel; and testimony as an expert witness.

Consultation from Barry Zalma, Inc. can save you or your client thousands of dollars in the defense or prosecution of an insurance dispute. Barry Zalma, Inc. will find a solution to your insurance claims dispute that is fair, intelligent, beneficial and Economical.

Services are billed at $600.00 per hour, portal to portal.

Advice from Barry Zalma, Inc. is indispensable to the resolution of insurance disputes. Consultation from Barry Zalma, Inc. can save you, your counsel or client hundreds of hours of investigative and legal work. Call Barry Zalma at 310-390-4455 or e-mail at [email protected].

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.

Videos on YouTube From Barry Zalma

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 now more than videos on the site. Now available with more than 33 videos at https://www.youtube.com/channel/UCFg7qxC0tVgKcMUqoUfnwPw/videos

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.

Books Available from the Insurance Claims Library

The Homeowners Insurance Policy – How to Buy an Appropriate Homeowners Policy and Successfully Make a Claim to the Insurer; Zalma on Insurance Claims – Second Edition – Ten volumes providing a Comprehensive Review of insurance, insurance claims, the law of insurance and policy interpretation Paperback; Construction Defects and Insurance; Mold Claims; The Law of Unintended Consequences and the Tort of Bad Faith; Insurance Fraud – Volume I & Volume II; The Compact Book of Adjusting Property Insurance Claims – Second Edition; The Compact Book on Adjusting Liability Claims, Second Edition; California Fair Claims Settlement Practices Regulations; California SIU Regulations; Ethics for the Insurance Professional; Rescission of Insurance – 2nd Edition; The Insurance Examination Under Oath; and six Fictionalized True Insurance Crime Books. Available at https://zalma.com/blog/insurance-claims-library.

Books from Full Court Press

“Zalma on Property and Casualty Insurance”, “Insurance Law Deskbook”, “California Insurance Law Deskbook”, and “Insurance Bad Faith and Punitive Damages Deskbook”

Learn Everything You and Your People Need to Know About Insurance at reduced prices now only $95.00.

The Insurance Law Deskbook

The Insurance Law Deskbook is intended to help law students, practitioners, insurance lawyers, professional claims personnel, insured persons, and anyone else involved in insurance. The book, published for the first time under Full Court Press, includes the full texts and digests of insurance-related decisions of the U.S. Supreme Court, the U.S. District Courts of Appeal, state appellate courts, and foreign courts that have molded the American insurance law, as well as vital explanatory chapters, historical context, form letters, and more.

Paperback, only $95.00 available at https://www.fastcase.com/store/fcp/insurance-law-deskbook-2/

California Insurance Law Deskbook

ISBN: 978-1-949884-28-9 (Print) 978-1-949884-30-2(Ebook)

Format: Digital (Epub, Mobi, PDF), Print

California has long led the way when it comes to insurance jurisprudence in the United States, and few know more about California insurance law than Barry Zalma.

Available at https://www.fastcase.com/store/fcp/california-insurance-law-deskbook/ a paperback for only $95.00.

Insurers must bring a new crop of graduates into the insurance profession. Since most insurer-based insurance training departments have been eliminated there is a need for other means to train a new generation of claims professionals. All available at fastcase.com.

Information needed by every claims person and insured. They are available on amazon.com and at https://zalma.com/blog/insurance-claims-library/ or the individual links at each described book. Web based training is available at experfy.com and illumeo.com or you can have Barry Zalma present the training live to your personnel.

Read more about Barry Zalma, Inc. at https://www.zalma.comThe earnings of almost every civil lawyer in the United States are funded by the insurance industry. Insurance can best be described as the mother’s milk of the law profession. The civil defense lawyer is paid by an insurer for each hour he or she works. The civil plaintiffs’ lawyer is usually paid by taking a percentage of any judgment entered in favor of the plaintiff, which judgment is usually paid by the defendant’s insurer.

In almost every situation in which a civil lawyer practices law the funds for that work come, either directly or indirectly, from insurance. Consequently, lawyers must use their wits and energies to avoid or to pursue litigation to the benefit of the client. Both sides understand that an insurer will eventually pay one or both sides in the dispute. Insurance is important to every civil dispute and even some that fall within the criminal courts.

Every lawyer retained to prosecute or defend a civil suit should begin the representation with a serious effort to find insurance coverage for the benefit of the client or the defendant the client is suing. Without that knowledge, the lawyer will find he or she is litigating with duct tape firmly self-placed across his or her mouth.

Books from the American Bar Association

“The Commercial Property Insurance Policy Deskbook” By Barry Zalma

“How to Acquire a Commercial Property Policy and Present and Collect a First-Party Property Insurance Claim

The Commercial Property Insurance Policy Deskbook is a comprehensive resource on acquiring a commercial property policy and presenting and collecting first-party property insurance claims. The book looks at the fundamentals of insurance and a wealth of topics including rules of construction of a policy of commercial property insurance, the commercial first party property insurance policy, different types of property losses, conditions and limitations, specific and blanket cover.” Available here.

The Insurance Fraud Deskbook”

Author: Barry Zalma, ISBN: 978-1-62722-676-9, Product Code: 5190506, 2014, 638 pages, 7 x 10

This book is written for individuals who are focused on the effort to reduce expensive and pervasive occurrences of insurance fraud. Lawyers who represent insurers, claims personnel, prosecutors and their investigators can all benefit from this exhaustive resource.

The Insurance Fraud Deskbook is a valuable resource for those who are engaged in the effort to reduce expensive and pervasive occurrences of insurance fraud. It explains the elements of the crime and the tort to claims personnel, and it provides information for lawyers who represent insurers, so they can adequately advise their clients. Prosecutors and their investigators can use this book to determine what is required to prove the crime and win their case.

The full text of decisions from courts of appeal and supreme courts across the country are provided so the reader can understand what happens after the investigation is completed and can apply that information to undertake their own thorough investigations. It allows claims personnel and their lawyers to understand what errors would cause a defeat or a not-guilty verdict.

The effort to reduce insurance fraud requires the assistance of both civil and criminal courts.

The Insurance Fraud Deskbook can help the prudent fraud investigator, insurance adjuster, insurance attorney, insurance Special Investigation Unit, and insurance company management to attain the information needed to deal with state investigators and prosecutors.

Available from the American Bar Association at: https://shop.americanbar.org/eBus/Default.aspx?TabID=251&productId=214624; or [email protected], or 800-285-2221.

“Diminution in Value Damages”

How to Determine the Proper Measure of Damage to Real and Personal Property

ISBN: 978-1-63425-295-8

Product Code: 5190524

2015, 235 pages, 7 x 10, Paperback

Available from Thomson Reuters

“Property Investigation Checklists Uncovering Insurance Fraud, 12th Edition”

This edition has been totally rewritten and expanded, providing the most extensive and detailed coverage of the issue and a thorough explanation of how to apply diminution in value damages to losses to property. Property Investigation Checklists: Uncovering Insurance Fraud provides detailed guidance and practical information on the four primary areas of any investigation of suspicious claims. The book also examines recent developments in areas such as arson investigation procedures, bad faith, and extracontractual damages. The appendix includes the NAIC Insurance Information and Privacy Protection Model Act. Also included are five appendixes of forms, letters, and other documents.

Available here

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

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

The Little Book on Ethics for the American Lawyer

by Barry Zalma (Author)

The practice of law demands more than knowledge of statutory and case law. It requires more than technical proficiency in the nuts and bolts of legal practice. A lawyer is an officer of the legal system whose conduct should conform to the requirements of the law, both in professional service to clients and in the lawyer’s business and personal affairs.

The practice of law requires that every lawyer treat each client, each adversary, and the court ethically and in good faith.

The practice of law is different from other professions because it requires that the lawyer act for his or her client, not him or herself, only if the actions for the client are ethical and in good faith.

What is Ethical Behavior?

The concept of ethical behavior refers to well-founded standards of right and wrong that prescribe what humans ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific virtues, all of which are essential to the lawyer.

Ethics also refers to the study and development of one’s standards of conduct. Feelings, laws, and social norms can deviate from what is ethical. It is necessary, especially to people involved in the practice of law, to constantly examine one’s standards to ensure that they are reasonable and well-founded conduct that ethically treats a client, an adversary, and the court with the utmost good faith.

There is no single answer to the question of what is ethical behavior by a lawyer. Ethical behavior is subjective and fact dependent.

“Arson-For-Profit Fire at the Cowboy Bar & Grill”

A true crime novel based on the experience of the author, Barry Zalma, who for more than 51 years has acted for insurers who were faced with arson-for-profit, one of the most dangerous insurance fraud schemes. The book explains how an insurance claims adjuster, working with a fire cause and origin expert, a forensic accountant and insurance coverage lawyer, were able to defeat an arson-for-profit scheme and obtain a judgment requiring the perpetrator to take nothing and repay the insurer all of its expenses in defeating the claim.

Available as a paperback. Available as a Kindle book.

Rescission of Insurance – 2nd Edition

Newly updated and expanded, “Rescission of Insurance – 2nd Edition” provides the insurance coverage lawyer, policyholder lawyer and claims professionals with everything needed to understand and enforce the equitable remedy of rescission. Everyone involved in or with the business of insurance must understand that rescission is an equitable remedy as ancient as the common law of Britain. When the United States was conceived in 1776 the founders were concerned with protecting their rights under British common law. They adopted it as the law of the new United States of America modified only by the limitations placed on the central government by the U.S. Constitution approved in 1789.

The viability and ability to enforce contracts was recognized as essential to commerce. Courts of law were charged with enforcing legitimate contracts. Courts of equity were charged with protecting contracting parties from mistake, fraud, misrepresentation and concealment since enforcing a contract based on mistake, fraud, misrepresentation or concealment would not be fair. The common law developed rules that courts could follow to refuse to enforce the terms of a contract that was entered into because of mutual mistake of material fact, a unilateral mistake of material fact, the breach of warranty (a presumptively material promise to do or not do something), a material concealment, or a material misrepresentation. The remedy – called rescission – created a method to apply fairness to the insurance contract and allow an insurer to void a contract and allowed courts to refuse to enforce such a contract entered into by misrepresentation or concealment of material facts.

Available as a paperback. Available as a Kindle book.

The Law of Unintended Consequences and 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.

Most often, however, the law of unintended consequences illuminates the perverse unanticipated effects of legislation and regulation. In 1692 the English philosopher John Locke, a forerunner of modern economists, urged the defeat of a parliamentary bill designed to cut the maximum permissible rate of interest from 6 percent to 4 percent. Insurance is controlled by the courts, through appellate decisions, and by governmental agencies, through statute and regulation. Compliance with the appellate decisions, statutes, and regulations—different in the various states—is exceedingly difficult and expensive.

The business of insurance is, unfortunately, subject to the law of unintended consequences as if it were on steroids.

Available as a paperback Available as a Kindle book

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 possible for insurers and their claims staff to become insurance claims professionals.

“Construction Defects and Insurance”

The Structure, The Construction Contract, and Construction Defect Insurance Barry Zalma has updated and re-edited his seminal work Construction Defects Coverage Guide into is the latest addition to Barry Zalma’s insurance claims series of books and articles that will form the most thorough, up-to-date, expert-authored insurance claims guide available today eight Kindle or Paperback Volumes at reasonable prices.

Thorough, yet practical, this series of books form the ideal guide for any professional who works in or frequently interacts with the insurance industry.

Claims professionals, risk managers, producers, underwriters, attorneys (both plaintiff and defense), and business owners will benefit greatly from the ten-volume guide. It is also the perfect resource for insurance educators, trainers, and students whose role requires an understanding of insurance law.

The Eight volumes include:

Volume One: The Structure, The Construction Contract, and Construction Defect Insurance

Volume Two: The Defects and understanding Insurance and Underwriting 

Volume Three: Construction Defect Policies 

Volume Four: Liability Insurance

Volume Five: The Tort of Bad Faith and Construction Defects 

Volume Six: Construction Defect Suits

Volume Seven: Tort Defenses and the Trial of a Construction Defect Case

Volume Eight: Evaluation and Settlement & Alternative Dispute Resolution

“Heads I Win, Tails You Lose”

A collection of columns originally 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 that have been updated and revised.

The title, “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.

“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

“The Compact Book of Adjusting Property Insurance Claims – Second Edition”

A Manual for the First Party Property Insurance Adjuster

The insurance adjuster is not mentioned in a policy of insurance. The obligation to investigate and prove a claim falls on the insured. Standard first party property insurance policies, based upon the New York Standard Fire Insurance policy, contain conditions that require the insured to, within sixty days of the loss, submit a sworn proof of loss to prove to the insurer the facts and amount of loss.

The Compact Book of Adjusting Property Claims – Second Edition: A Primer for The First Party Property Claims Adjuster.

The Second edition adds new material from 2018 and 2019, is easier to use and more compact than the original.

Available as a Kindle book. Available as a paperback.

“The Compact Book on Adjusting Liability Claims, Second Edition”

A Handbook for the Liability Claims Adjuster

This Compact Book of Adjusting Liability Claims Second Edition: A Handbook for the Liability Claims Adjuster provides the new adjuster with a basic grounding in what is needed to become a competent and effective insurance adjuster. It is also available as a refresher for the experienced adjuster. Available as a Kindle book Available as a paperback.

Read about these and other insurance books by Barry Zalma at https://zalma.com/blog/insurance-claims-library/

Excellence in Claims Handling Courses From Experfy.com

The Excellence in Claims Handling program provides everything a person or entity presenting a claim needs to effectively present the claim and provides the insurance claims person with everything he or she needs to properly represent the insurer.

The insured, risk manager, or corporate counsel will be able to present a first party property claim - whether a fire, theft, or windstorm or some other insured against cause - with little difficulty and professionalism and present a sworn proof of loss acceptable to an insurer.

The insurance claims person completing the course will be able to conduct a thorough investigation of the policy and claim. The insurance claims person will also be able to assist an insured to fulfill all of the promises made by the insured to the insurer and the insurer to provide the indemnity promised by the insurance policy.

The series of courses was designed so that the student can obtain the needed information easily while he or she sits down in the morning for a first cup of coffee or any other time in the day in short, easy to consume lessons. For instance, “Insurance and Claims” is made up of three modules and 27 lectures while “Investigating the Property Claim” is made up of four modules and 65 lectures. You can review each course, each module and each lecture at the links below.

Each person completing the course will be able to claim that he or she is a professional first party property claims person ready to provide excellence in claims handling and be ready to resolve any claims problem that arises for the benefit of the insurer and the policy holder.

A key to every insurance claim is the thorough investigation required by law where the insurer’s adjuster or claims person works with the insured or his, her or its representative, to gather sufficient facts to determine the cause and origin of the claimed loss, whether the loss was due to a cause, the risk of loss of which was insured, and if so to determine the extent of the loss and the indemnity owed by the insurer to the insured.

https://www.experfy.com/training/coursesWhat will students need to know or do before starting this course?

That they want to know how to understand insurance and how the law applies to insurance contracts.

The course is capable of providing information needed without the assistance of material or software. However, it can be supplemented by books written by the author and available at https://www.zalma.com/blog/insurance-claims-library/ with materials like The Homeowners Insurance Policy, Zalma on Insurance Claims - ten Volumes, Construction Defects and Insurance, Mold Claims, and “Insurance Fraud & Weapons to Defeat Insurance Fraud,” The Compact Book of Adjusting Property Insurance Claims-Second Edition; Construction Defects and Insurance (eight volumes); Mold Claims (four volumes); Ethics for the Insurance Professional; Rescission of Insurance; The Insurance Examination Under Oath; Zalma on Property and Casualty Insurance; Insurance Law Deskbook; Insurance Bad Faith and Punitive Damages Deskbook; The Commercial Property Insurance Policy Deskbook; The Insurance Fraud Deskbook; Diminution in Value Damages; and Property Investigation Checklists Uncovering Insurance Fraud, 12th Edition.

 Who should take this course? Who should not?

The course should be taken by risk managers, corporate counsel, insurance claims management, insurance claims executives, insurance claims adjusters, insurance claims representatives, insurance special investigation unit investigators, public insurance adjusters, insurance coverage lawyers, insurance paralegals, and claims personnel of insurance agencies or insurance brokerages.

Insurance and Claims:  https://www.experfy.com/training/courses/insurance-and-claims

Investigating the Property Claims: https://www.experfy.com/training/courses/investigating-the-property-claim

Insurance Law: https://www.experfy.com/training/courses/insurance-law

Solving Claims Problems: https://www.experfy.com/training/courses/solving-claims-problems

Corporate Liability Insurance Certification

A Comprehensive Corporate Liability Insurance Certification Program from Illumeo.com.

Why get a Corporate Liability or Property Insurance Certification?

Everyone involved in insurance – either as an insurer or as an insured – requires excellence in liability claims handling. Businesses need to deal with insurers who have an excellent claims-handling mandate. Insurers who wish to profit need an excellent liability claims-handling program. Everyone in business needs an insurer who has an excellent liability claims-handling program in effect.

Keeping a professional claims staff dedicated to excellence in liability claims handling is cost-effective over long periods of time. The business that must present claims for defense and indemnity of suits brought against it needs experts in corporate liability insurance to obtain the benefits promised by the policy and protect the assets of the business, and this Corporate Liability Insurance certification program fits that bill. 15 Courses available here. 16 Property Courses Available here.

Zalma’s Insurance 101 Videoblog

A FREE, PAINLESS AND THOROUGH INSURANCE VIDEO TRAINING PROGRAM

I have completed 1024 videos dealing with the matters covered in my book “Insurance Claims: A Comprehensive Guide” available from the National Underwriter Company at https://www.nationalunderwriter.com/insuranceClaims

The purpose of this videoblog is to create a complete insurance claims education in three to four-minute increments. It was created to allow the student – whether a novice or experienced insurance professional – to learn painlessly by viewing one or more video a day, five days a week, 50 weeks a year. The videos will provide anyone interested in insurance to painlessly learn everything there is to know about property and casualty insurance claims while having the morning’s first cup of coffee or while munching on the first bagel of the day.

If you start at Video Volume 1 and watch a new video every day, three minutes a day, five days a week, you will have 12.5 hours of insurance education at the end of a year. The entire book has been covered by the videos and nothing new will be added. Start at the bottom of the list and go forward or view whatever video interests you.