Zalma’s Insurance Fraud Letter – July 1, 2022

ZIFL Volume 26 Number 13

Posted on July 1, 2022 by Barry Zalma

ZIFL-07-01-2022.

See the video explaining what is in the July 1, 2022 issue at https://rumble.com/v1al2t7-zalmas-insurance-fraud-letter-july-1-2022.html?mref=6zof&mrefc=3?and at https://youtu.be/-8orMv2GuSU

In the July 1, 2022 issue of Zalma’s Insurance Fraud Letter you will be able to read the full text of articles including:

Quote of the Issue

“The Creatures Outside Looked from Pig to Man, And from Man to Pig, And from Pig to Man Again; But Already It Was Impossible to Say Which Was Which.” - “Animal Farm” by George Orwell, 1945

Bases for Rescission

Rescission Is an Equitable Remedy First Created in The Ecclesiastical Courts of Elizabethan England.

When the United States was conceived in 1776 the founders were concerned with protecting their rights under British common law.

Common Law is a form of law developed by judges through tribunals and decisions of courts rather than executive branch action and legislative statutes.

Following the common law tradition, legal principles were referred to courts of equity to “mitigate the rigor” of the common law.

The new United States of America adopted British common law as the law once the U.S. Constitution was adopted in 1789. British common law was only modified by the limitations placed on the central government by the Constitution.

The viability and ability to enforce contracts was recognized as essential to commerce. Courts of law, following the British Common Law, were charged with enforcing legitimate contracts and rendering money judgments against the party who breached the contract.

It became clear, however, that some contract disputes cannot be resolved with a money judgment. Rather, it needed the assistance of the courts of equity whose judges, in the Elizabethan era were presided over by priests who were believed to be better able to render fair judgments.

The term “equity” is associated with notions of fairness, morality and justice. It is an ethical jurisdiction. On a more legalistic level, however, “equity” is the branch of law that was administered in the Court of Chancery prior to the Judicature Acts 1873 and 1875.

This was a jurisdiction evolved to achieve justice and to overcome the rigorous and deficiencies of the common-law. Although application of conscience pervades this aspect of the law, equity never bestowed an unfettered jurisdiction on the Court of Chancery to do what was fair in the settlement of a dispute. Embodying aspects of ecclesiastical law and Roman law, equity developed and gradually emerged as a distinct body of law.

It was not until 1875 that equity was practiced in the common law courts. The existence of a dual system entailed that, for example, when a defendant had an equitable defense to a common law action, he would have to go to the Court of Chancery to obtain an injunction to suspend the proceedings in common-law court. He would then begin a fresh action for relief in the Court of Chancery. Facing duality persisted until the Judicature Acts which created the Supreme Court of Judicature and allowed all courts to exercise both a common law and equitable jurisdiction.

The courts of equity were charged with, among other things, protecting contracting parties from mistake, fraud, misrepresentation and concealment where no damages were involved. It was the obligation of the courts of equity to reach a result that was fair to all of the parties to the contract. The founders of the United States, and the British common law, concluded that equity required that enforcing a contract based on mistake, fraud, misrepresentation or concealment would not be fair.

A court of equity is a court which can apply equitable remedies to disputes. These courts operate within the legal system, but rather than focusing on the application of law, they look at cases and determine outcomes based on fairness. They can be found in many regions of the world. In modern usage in the United States trial courts are empowered to handle both legal and equitable remedies.

A court of equity can hand down a judgment which includes an equitable remedy such as an injunction, as opposed to simple monetary damages.

The judge in a court of equity can weigh many different sides to a case and explore different perspectives to arrive at a judgment. This gives the judge an opportunity to use discretion and judgment, rather than having to rely on the narrow confines of the law. The outcome is expected to be more fair, or equitable, in those cases heard in a court sitting as a court of equity.

At one time, the maxims of equity were regarded as the fundamental principles of equity on which the whole of the equitable jurisdiction was based. As indicators of the approach that equity takes to particular problems the maxims are informative. Twelve maxims are now commonly referred to and include:

1.??????Equity will not suffer a wrong to be without a remedy.

2.??????Equity follows the law in enforcing a trust.

3.??????Where the equities are equal, the first in time prevails. This maxim is sometimes quoted in its Latin form, Qui prior est tempore, potior est jure. It deals with priority of competing interests.

4.??????Where equities are equal, the law prevails.

5.??????He who comes into equity must come with clean hands.

6.??????He who seeks equity must do equity.

7.??????Delay defeats equities or equity assists the diligent not the tardy, or, in Latin, Vigilantibus non dormientibus aequitas subvenit.

8.??????Equality is equity.

9.??????Equity looks to the intent rather than the form.

10.???Equity looks on that has done which ought to be done.

11.???Equity imputes an intention to fulfil an obligation.

12.???Equity acts in personam. Equity enforced its decrease by a personal order against the defendant breach of the order would be a contempt of court.

The primary elements that must be proved to effectively rescind a policy of insurance are:

1.?????????misrepresentation or material fact(s), or

2.?????????concealment of material fact(s), or

3.?????????mistake of material fact(s), or

4.?????????mistake of law, or

5.?????????fraud,

6.?????????reliance on the misrepresented or concealed fact,

7.?????????to the detriment of the insurer.

In California these bases are codified.

An insurance claims professional, with knowledge of the remedy of rescission, can then complete a total investigation so that the factual bases can be presented to a competent, experienced insurance coverage lawyer for advice and counsel. The adjuster and claims management must understand that to prove a rescission they need the kind of thorough and extensive evidence of misrepresentation or concealment of material facts as were presented by Berkley in the Wiseblood case.

Before Electing to Rescind

Before a party considers rescission of an insurance policy, whether insured or insurer, the following must be established with admissible evidence, regardless of the jurisdiction:

???????????????The facts that were represented in the effort to acquire the policy.

???????????????Evidence that establishes whether a material fact was misrepresented.

???????????????Evidence that establishes that a material fact was concealed.

???????????????Evidence that establishes that the fact(s) misrepresented or concealed was material to the decision to insure or not insure.

???????????????Evidence that the person seeking rescission did not have better knowledge of the facts claimed misrepresented or concealed.

???????????????A sworn declaration from the underwriter who made the decision to insure or not insure concerning the effect true facts would have had on the underwriting decision.

???????????????A review of the policy, application process, investigation results and applicable law by a competent insurance coverage lawyer in the jurisdiction where the policy was made or was to be performed.

???????????????A thorough investigation of the negotiations for the policy.

???????????????A sworn statement from the underwriter who made the decision to insure or not insure, as to his or her reliance on the material facts presented and what different decisions would have been made had the truth been told.

Adapted From My Newest Book The Equitable Remedy Of Rescission Of Insurance available as: A Kindle book A Paperback or a hardcover .

Wisdom

“The foundation of national morality must be laid in private families. ... In vain are schools, academies, and universities instituted, if loose principles and licentious habits are impressed upon children in their earliest years.” — John Adams

“We are all visitors to this time, this place. We are just passing through. Our purpose here is to observe, to learn, to grow, to love… and then we return home.” — Aboriginal Australian proverb

“There’s power in looking silly and not caring that you do.”— Amy Poehler

“Abstract art is a product of the untalented, sold by the unprincipled to the utterly bewildered.” —?Al Capp

“The life of the nation is secure only while the nation is honest, truthful, and virtuous.” – Frederick Douglass

“If you’re not making mistakes, then you’re not doing anything. I’m positive that a doer makes mistakes.”– John Wooden

“Recent school shootings have lured ill-informed Americans into a war on our Second Amendment guarantees, led by the nation’s tyrants and their useful idiots. ... The Second Amendment was given to us as protection against tyranny by the federal government and the Congress of the United States.” —Walter E. Williams (1936-2020)

“A multitude of words is no proof of a prudent mind.” – Thales of Miletus

“My father didn’t tell me how to live. He lived and let me watch him do it.” — Clarence Budington Kelland & Me

“A long life is not good enough, but a good life is long enough.” — Rebbetzin Esther Jungreis

“When you know what you are willing to die for, then you will know what to live for.” —?Jewish saying

Another Florida Insurer Goes Broke

Southern Fidelity Insurance Company has entered into receivership and is being liquidated, according to the Florida Office of Insurance Regulations (FLOIR).

Insurance fraud is rampant in Florida. New statutes have been enacted in Florida to try to stop the fraud. Insurers can determine the potential for losses due to wind, rain, fire and hurricanes but they cannot actuarially calculate fraud. As a result, insurers doing business in Florida seem to have a difficult time making a profit. Others, like Southern Fidelity Insurance Company simply lose their assets. The state’s insurance office found that the insurer was impaired, insolvent or likely to become insolvent and that further transactions would be potentially hazardous to policyholders, creditors, stockholders or the public. The insolvency came less than a month after Florida enacted insurance reforms in hopes of stabilizing the turbulent market.

On June 3, 2022, Demotech, Inc. withdrew its financial stability rating for Southern Fidelity, as the insurer had failed to secure reinsurance for the 2022 hurricane season prior to June 2.

The company had filed a plan on June 8 that outlined how it could transition policies to another insurer, fund a solvent run-off of current and incurred (but not reported) liabilities, address potential reserve inadequacy issues and manage its policies and losses outside of Florida. The state’s insurance office rejected that plan, noting it didn’t meet requirements of the consent order, which mandated, among other provisions, financial protections for policyholders during the period of time it would take to implement the plan.

Lawyer Admits to Insurance Fraud & Theft from Clients

Convicted of Fraud & Theft Enough for Disbarment

On September 7, 2021, the Office of Disciplinary Counsel (ODC) requested this Court place Respondent Richard Alexander Murdaugh on interim suspension based upon information indicating Respondent had stolen funds from the law firm that employed him. Respondent consented to the relief and on September 8, 2021, the Supreme Court issued an order suspending Respondent from the practice of law. In re Murdaugh, 434 S.C. 233, 863 S.E.2d 335 (2021) and, in In the Matter of Richard Alexander Murdaugh, Supreme Court of South Carolina, June 16, 2022 the Supreme Court was faced with the obligation to render a final order re Murdaugh’s license to practice law.

FACTS

On September 16, 2021, Respondent Murdaugh was arrested and charged with Attempted Insurance Fraud and Filing a False Police Report. The false report was related to an attempted assisted suicide that Respondent reported as an attempted murder because he believed his life insurance policy contained an enforceable suicide exclusion.

Respondent appeared at bond hearings and, through counsel, admitted in court that he had, in fact, engineered the events that supported the arrest. On November 22, 2021, Respondent filed an Emergency Motion for a Gag Order in Satterfield v. Murdaugh, Case No. 2021-CP-25-00298, in which Respondent admitted to misconduct related to the theft of money from the law firm that employed him.

Over the course of several months, Murdaugh was indicted and charged with over seventy criminal counts involving the theft of funds from various clients, including the Satterfield plaintiffs. On May 27, 2022, he signed a Confession of Judgment and Stipulation in the amount of $4,305,000.00, admitting liability for the theft of settlement funds in the Satterfield matter in which Respondent was the named defendant.

ANALYSIS

The South Carolina Constitution requires the Supreme Court to regulate the practice of law in South Carolina. The jurisdiction of this Court to discipline attorneys for acts of professional misconduct is exclusive. This constitutional duty includes the duty and the authority to remove unfit persons from the legal profession for the protection of the public and the administration of justice, and to do so through disbarment.

Disciplinary matters call into question whether a lawyer is no longer worthy to bear the Court’s imprimatur and continue to practice law.

Disciplinary proceedings ordinarily follow a course of investigation, pleading, limited discovery, and a contested hearing before the Commission on Lawyer Conduct. The Commission then submits a report to this Court with findings of fact, conclusions of law and recommendations for disposition.

Since Murdaugh admitted to conduct that amounts to clear and convincing evidence of dishonesty in violation of the Rules of Professional Conduct presenting testimony about his conduct would be redundant. His conduct involved dishonesty, fraud, deceit, or misrepresentation. The Supreme Court concluded that Respondent is bound by the admissions contained in the documents he filed in the Satterfield case.

Respondent is also bound by the statements his counsel made at the bond hearings in which counsel admitted Respondent staged a suicide attempt to appear as a murder so as to defraud the life insurance company and subsequently filed a false police report to that effect.

Based on these admissions, there is no factual dispute about whether Respondent engaged in dishonest conduct. Respondent’s admissions in the criminal proceedings that he engaged in conduct that violates the Rules of Professional Conduct satisfies the Disciplinary Counsel’s burden of proving that same misconduct in connection with the pending disciplinary proceedings. As a result, it was obvious to the Supreme Court that an evidentiary hearing is unnecessary for disposition of the pending discipline, as the only remaining issue to be decided is the legal question of determining the appropriate sanction, a matter left to the discretion of the Supreme Court under the Constitution.

In this unique case, Respondent’s admissions in the public record led to only one conclusion-that Respondent’s egregious ethical misconduct subjects him to the most significant sanction available- disbarment. Accordingly, there is no need to expend additional resources to proceed through the normal disciplinary process. Instead, the Supreme Court concluded that it may act under the Court’s constitutional authority to regulate the practice of law in South Carolina and may remove an unfit lawyer from the practice of law to ensure the public, and the administration of justice, are protected. Therefore, the Supreme Court dispensed with further proceedings before the Commission and ordered that Murdaugh appear in the Supreme Court Courtroom at 11:00 a.m. on June 22, 2022, to present legal argument on the question of whether this Court should disbar Respondent from the practice of law.

ZIFL OPINION

The Supreme Court was technically required to allow Murdaugh to appear and explain why he believes he should not be disbarred. I hope he does not add to his egregious and unethical conduct by appearing and that the Supreme Court immediately disbars him.

Free Insurance Videos

Barry Zalma, Esq., CFE has published five days a week videos on insurance claims, insurance claims law, insurance fraud and insurance coverage matters at https://www.rumble.com/zalma.https://rumble.com/c/c-262921

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 54 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 54 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.

See the more than 400 videos at https://www.rumble.com/zalma

Chutzpah: Murder for Insurance Money Life Sentences Affirmed

Killers Try Again to Reduce Sentence & Fail Again

INSURANCE FRAUD IS A VIOLENT CRIME

When convicted of murder in the first degree and conspiracy to commit murder for life insurance money, the defendants require a great deal of chutzpah (unmitigated gall) to file multiple appeals to reduce or eliminate the life without parole sentences. In the latest effort, The People v. Leny Peterson Galafate, F081563, California Court of Appeals, Fifth District (June 9, 2022) the Court of Appeal wrote a detailed opinion discussing all of the arguments filed by the murderer expending more time and paper than a convicted murder who had already appealed unsuccessfully to different courts that was not deserved.

FACTS

In 1989, appellant Leny Peterson Galafate and her then-husband, codefendant Roman Galafate III, were convicted after a joint jury trial of count 1, first degree premeditated murder, with the special circumstance that the murder was intentional and carried out for financial gain; and count 2, conspiracy to commit murder for financial gain.

In 1991, the Court of Appeal affirmed defendants’ convictions and sentences on appeal and the Supreme Court refused to hear their case. Not convinced they appealed again involving Leny’s petition for resentencing pursuant to Penal Code section 1170.95, filed in 2019. Her petition alleged she was entitled to relief because she was not the actual killer, and her murder conviction was based on the felony-murder rule and/or the natural and probable consequences doctrine. The court summarily denied the petition without holding a hearing.

Leny asserts the superior court improperly relied on this court’s prior opinion to summarily deny her petition without a hearing, this court’s prior opinion is likely unreliable, and she made a prima facie case for relief because the instructions allowed the jury to convict of murder her based on an imputed malice theory.

In the mid-1980’s, defendants Roman Galafate (Roman) and his then-wife, Leny Petersen Galafate (Leny), resided with family members in Delano, California. Roman was an agent for Midland National Life Insurance Company (Midland National) and had an office in the MGM Professional Building in Delano.

Roman processed an application for a $250,000 insurance policy on the life of Violeta Petersen. The application was dated February 18, 1986, and named “Leny Petersen” as beneficiary of the proceeds. Leny Petersen was Leny’s maiden name.

Roman transmitted the completed application and money order to Midland National in Sioux Falls, South Dakota. Midland National received the documents sometime between 6:15 a.m. on Friday, February 21, 1986, and 6:15 a.m. on Monday, February 24, 1986.

On February 24, 1986, Dr. Armand L. Dollinger, a forensic pathologist, performed an autopsy on the five-foot three-inch, 102-pound body of Violeta Petersen. Dr. Dollinger concluded Violeta died by asphyxiation caused by ligature strangulation sometime prior to 2:00 p.m. on February 22, 1986. The ligature could have been a rope or cord. Dr. Dollinger testified death by ligature strangulation would have taken several minutes.

On June 11, 1986, Midland National mailed Leny Petersen a check for $76,362.50, representing the proceeds from Violeta’s 1985 policy plus interest.

Convictions

On January 23, 1989, after a joint jury trial, both Roman and Leny were convicted of count 1, first degree premeditated murder, with the special circumstance found true; and count 2, conspiracy to commit murder for financial gain, with two overt acts found true.

The court sentenced both Roman and Leny to life without the possibility of parole for count 1, first degree murder with the special circumstance, and stayed the term of 25 years to life for count 2, conspiracy to commit murder.

A review of the entire record reveals substantial evidence of defendant Leny Galafate’s status as both an aider and abettor and a conspirator. Leny Galafate forged Violeta Petersen’s signature on a $250,000 insurance policy application. The application named defendant, under her maiden name of Leny Petersen, as the policy beneficiary. Someone murdered Violeta Petersen within a week of the execution of the application. Defendant submitted a $250,000 claim, dated April 4, 1986, to Midland National. Midland National received the claim and questioned both the use of defendant’s maiden name and her signature on the application.

Defendant accompanied Leny Peterson to the bank on two separate occasions. On June 25, 1986, defendant extracted $10,000 in cash from Leny Peterson. On July 8, defendant took Leny Peterson to the Presideo Savings and Loan and obtained a cashier’s check for $66,000. That check was deposited to defendant Roman Galafate’s bank account the same day. The People properly note Leny’s actions fully supported the jury’s determination she conspired to commit murder for financial gain.

Writ Petitions

Both defendants filed numerous post-judgment writ petitions challenging their convictions. In 1987 and 1989, defendants filed writ petitions with the Court of Appeal and were denied. In 1997, defendants filed a joint petition for writ of habeas corpus in superior court; the petition was denied because defendants reasserted issues already raised and rejected in their direct appeal.

DISCUSSION

In this case, the jury found true the financial gain special circumstance based on instructions that required the jury to find either that Leny was the actual killer, or she intentionally aided and abetted the actual killer in the commission of the murder.

The true finding on the special circumstance therefore established the jury made the findings necessary to show an intent to kill for her conviction of first degree premeditated murder under the law. Leny is thus ineligible for resentencing as a matter of law, and she was not prejudiced by the court’s summary denial of her petition.

Moreover, under the special circumstance instructions and finding, it is clear the jury convicted Leny of first degree premeditated murder by finding she had the intent to kill. She therefore is ineligible for resentencing as a matter of law.

Leny asserted that the jury at her 1989 trial could have convicted her of murder based on an “uncharged” conspiracy theory based on insurance fraud as the target offense and murder as the nontarget offense. Leny argued the aiding and abetting and conspiracy instructions, combined with the prosecution’s insurance fraud motive theory, allowed jurors to impute malice to Leny from her participation in the insurance fraud.

The Court of Appeal concluded that Leny’s claim that she was convicted of murder based on an uncharged conspiracy theory is specious and refuted by the record that may be considered in making the Prima Facie determination.

CONCLUSION

While the superior court failed to comply with section 1170.95 by summarily denying Leny’s petition for resentencing without conducting a hearing or giving a statement of reasons why it was not issuing an order to show cause, the court’s statutory violations are not prejudicial because Leny is ineligible for resentencing as a matter of law and her arguments to the contrary are meritless.

ZIFL OPINION

People who commit insurance fraud are, by definition, immoral. Those who commit premeditated murder to collect on a life insurance policy are evil and have no morality. Leny proved the lack of morality to file multiple, detailed appeals of her sentence only to have the California Court of Appeal write a lengthy opinion pointing out her criminal conduct and she will serve the rest of her life in gray bar hotel, the California State Prison. Hopefully no court will even consider another appeal. She proves that insurance fraud is a violent crime.

Good News From the

Washington state’s insurance department shares two cases: Attawwaab Fard’s girlfriend was involved in a collision while driving Fard’s vehicle. The Kent, Wash. man’s vehicle didn’t have insurance, so he bought a policy from Progressive Insurance after the wreck. Fard later filed a claim, trying to have the vehicle damage repaired. Progressive denied the claim because Fard bought the policy after the accident. Two weeks later, Fard said his vehicle was stolen and damaged during the theft. The damage was the same damage Fard reported in his prior denied claim. Progressive investigated both claims, then referred them to the insurance department’s Criminal investigation Unit when Fard didn’t cooperate. He received 30 days of electronic home monitoring. Abshir Ali: The Tukwila man was involved in a collision when his vehicle wasn’t insured. Ali bought a policy from The General three days later, saying the collision happened the day after he bought the policy. The General discovered the collision pre-dated Ali’s coverage, and thus denied his $8.6K repair claim.

Pumped up and bodybuilding at the gym, Anthony Ragusa stole more than $200K of disability money by claiming he was too injured to work anymore. The New York City muscle man said he fell while working as an electrician. Ragusa lied he was so banged up he couldn’t bend over to put on his shoes, sit for more than 30 minutes or walk for more than 15 minutes. All the while he pumped weights at the Bev Francis gym, a popular gym on Long Island. Ripped and tattooed, Ragusa trained for bodybuilding competitions. Not so smartly, he posted numerous photos and videos of himself pounding weights. Ragusa even appeared on the Instagram account of his wife Loly, who’s a pro and member of the International Federation of Bodybuilding and Fitness. Ragusa also worked while claiming he was crippled — he ran the WhiteStar Limousine company all the while. Ragusa pled guilty, received three years of probation and must repay the stolen disability money.

A new national estimate of insurance fraud losses — an amazing $308.6B stolen every year.

On June 6-7, the Coalition Against Insurance Fraud held its first in-person Midyear Meeting since 2019 – gathering over 120 attendees from across the country! Over the course of the event, we hosted 28 speakers and panelists with expertise on the latest fraud trends and leaders who delivered incredible insights that provided attendees with a deeper understanding of various anti-insurance fraud topics.

The most significant takeaway from this year’s meeting may be our members’ ability to get a first-hand look at the Coalition’s efforts to update our widely cited 25-year-old “$80B in annual fraud” statistic. The new estimate was revealed along with exclusive access to the accompanying report titled The Impact of Insurance Fraud on the U.S. Economy.

The Coalition worked with “Dr. Fraud,” Dr. J. Michael Skiba, Ph.D. of Colorado State University Global, and his team of researchers to produce the research report and the new estimate. The Coalition extended its most profound appreciation for the support and contribution of our partners in this study: IASIU, APCIA, NICB, and III. The full report and estimate will be published this coming July.

An incorruptible insurance commissioner takes down an insurer exec who tried to bribe him. Better protecting insurer data security and privacy to prevent insurance scams. A trove of 187 state fraud bills being carefully monitored. Encouraging more diversity among fraud fighters. These were just some of the newsmaking presentations during the Coalition’s Midyear Meeting in Orlando. The Coalition updated members about news and ambitious and game-changing projects we’re pursuing in 2022 and beyond, says the latest FraudBlog by A.D. DuVall, the Coalition’s Deputy Executive Director, in recapping our first face-to-face midyear meeting since 2019. “Over the course of the event, we hosted 28 speakers and panelists with expertise on the latest fraud trends and leaders who delivered incredible insights that provided attendees with a deeper understanding of various anti-insurance fraud topics,” A.D. writes. She also plans to leave the Coalition in December to pursue other career opportunities.

Dying may not be the happiest way to wiggle out of arson fraud charges, though for Felix Berjemo it was certainly effective. Prosecutors offered the Pottsville, Pa. man four-12 years for torching his house for an insurance payout. The blaze was intentionally set on the basement couch. Berjemo had just bought a $50K policy and told investigators he wasn’t at home when the fire broke out. Yet his own security camera showed him opening the back basement door, and the fire behind him. A man adds something to the fire, leaves through the back door and shuts the door behind him. When confronted with the video, Bermejo said he would have exited the home through the back door but didn’t see fire or smoke as he left. Berjemo died before his trial started. He was free on bond at the time.

Paul Andrecola sold $2.7M of a pesticide that he claimed was a cure for COVID-19. The Maple Shade, N.J. man said his toxic brew was registered with the EPA as a proven cure for the virus. Andrecola made 150 sales. Among them were a medical clinic in Georgia, police department in Delaware, Virginia fire department — and numerous federal agencies including the Department of Veterans Affairs. Andrecola brewed disinfectant liquids and wipes with the brand name GCLEAN. They were pesticides not registered under FIFRA and not on the EPA’s “List N of Disinfectants for Use Against SARS-CoV-2.” He used another firm’s EPA registration numbers for his products. Andrecola lied his products were EPA-approved to kill Coronavirus by creating numerous false documents to support his claims. Andrecola pled guilty and will spend up to 20 years in federal prison when sentenced.

Iowa has revoked the license of a nurse convicted of conspiring to steal $5M from Medicare. Mark Hill provided telehealth consultations with patients for Integrated Support Plus Inc., a telemed company in Florida. Hill provided telehealth consultations with patients for Integrated Support Plus, a telemed company in Florida. Hill collected bribes from medical-equipment suppliers in exchange for prescriptions for their products. Many prescriptions weren’t based on patient exams or any other personal interview. Hill and a crony ordered 14K orthotic braces over 19 months — an average of 865 orders each month, or 29 orders per day. Hill signed nearly 7,100 brace orders, leading to $10M of charges to Medicare. Hill was paid close to $125K for orders he processed.

Financially strapped romance novelist Nancy Compton-Brophy shot her husband Daniel for $350K of life insurance in Portland, Ore. Daniel was a chef at the Oregon Culinary Institute. He was found dead with chest and back wounds in the institute’s rear kitchen soon after he arrived at 7:30 a.m. Nancy claimed she was home all morning, yet surveillance cameras placed her downtown between 6:30 a.m. and 7:28 a.m. Just days after the shooting, Nancy asked detectives working on the case to send her a letter stating she wasn’t a suspect. She wanted to give it to her life insurers and collect on the policies. The couple also earlier bought a Glock handgun. Nancy then bought ghost gun parts on eBay. She reassembled the parts on the Glock so it wouldn’t be traced, then shot Daniel. Next, she put the original gun parts back together so the Glock wouldn’t match the shell casings connected to Daniel’s murder. Nancy also self-published numerous novels — including “The Wrong Husband.” And she wrote an essay, “How to Murder Your Husband.” She also bookmarked an article, “10 ways to cover up a murder,” on an iTunes account she shared with Next, Daniel. Brophy got life in prison. Now 71, she’s eligible for parole in 25 years.

Anxious to bolt his marriage and scam $1.7M of life insurance, Joe Fitzpatrick drowned his wife Annemarie in a creek then said she died when they crashed their ATV in the water, prosecutors say in York, Pa. Hours before her death, Annemarie wrote, dated and signed a note in her day-planner at work saying “If anything happens to me — Joe.” She also wrote an email to herself: “if something happens to me” saying the couple had marital problems. Suspiciously, a huge log also nearly fell on her the night before. The trial judge set aside the jury verdict, saying prosecutors didn’t present enough evidence to support a conviction. An appeals court reinstated the conviction. Annemarie’s note was allowed as evidence to show the victim’s state of mind, an exception to the hearsay rule. Yet the note did more than reflect the woman’s fear, it also asserted that her husband would be responsible “if something untoward or violent happened to her,” the state Supreme Court ruled. Offering the note as proof would be inadmissible hearsay. Fitzpatrick awaits a new trial back in lower court.

The pandemic has triggered a rash of dodgy claims against California’s employment disability agency — overwhelming the system and delaying claims to legitimately disabled workers. Calls to the Employment Development Department’s call centers surged to 12 times their normal volume in late 2021 and early 2022, with large volumes of claim calls suspect. Many calls went unanswered, leaving some Californians in the lurch for months. Less than half of unique phone numbers calling the agency’s disability insurance call centers were answered on average between November 2021 and April 2022. That’s down from about 80% between May and October 2021. In January, the department said it suspended about 27K suspicious medical provider registrants and 345K claims from those supposed providers or other suspicious activity. The department also typically receives 70 new medical provider registrations per week. Yet the department received about 30K registrations from late November to early December 2021.

Health Insurance Fraud Convictions

Molina Healthcare Agrees to Pay Over $4.5 Million To Resolve False Claims Act Violations

Molina Healthcare, Inc. (Molina) and its previously owned subsidiary, Pathways of Massachusetts (Pathways), have agreed to pay $4.625 million to resolve allegations that it violated the False Claims Act by submitting reimbursement claims while violating several regulations related to the licensure and supervision of staff.

Molina is a managed care health services company that provides health care plans to various state and federal health care programs including MassHealth, the joint federal and state Medicaid program. Between November 2015 and March 2018, Molina owned and operated Pathways, a group of mental health centers located in Springfield and Worcester. During that period, the government contends that Molina and Pathways improperly submitted claims for reimbursement to MassHealth and care entities managed by MassHealth while failing to properly license and supervise mental health center staff, including social workers and psychological associates, and failing to provide and timely document the provision of adequate clinical supervision to clinicians requiring supervision.

The settlement also resolves allegations brought in a lawsuit filed by whistleblowers under the qui tam provisions of the False Claims Act, which allow private parties, known as relators, to bring suit on behalf of the government and to share in any recovery.

Paducah Doctor Admits to Violating the False Claims Act and Being Liable for Millions for His Role in A Telehealth Scheme by Ordering Durable Medical Equipment (DME) And Genetic Tests

Patrick C. Finney, M.D., located in Paducah, Kentucky, agreed to pay $561,800 to resolve allegations that he violated the False Claims Act by knowingly causing the submission of false or fraudulent claims to Medicare, knowingly making, using, or causing to be made or used, false records and statements to obtain payment from Medicare, and conspiring to defraud Medicare by causing the submission and payment of false or fraudulent claims.

The government’s complaint alleged that, between November 16, 2017, through August 28, 2020, Dr. Finney knowingly caused to be submitted, and conspired to submit and cause the submission of, more than three million dollars in false claims to Medicare. He did so by:

(a) ???????entering into financial arrangements with Barton Associates, a locum tenens physician staffing firm, to provide telehealth services for clients of Barton Associates, related to the referral of Medicare patients for the furnishing of DME and genetic testing items and services and ordering or arranging for the ordering of DME and genetic testing items and services;

(b) ???????receiving illegal remuneration from Barton Associates and its telehealth clients in exchange for referring Medicare patients and ordering or arranging for the ordering of DME and genetic testing items and services, in violation of the Anti-Kickback Statute (AKS), 42 U.S.C. § 1320a-7b; and

(c) ???????causing to be billed to Medicare false claims for DME and genetic testing, because the claims were tainted by kickbacks and were not medically necessary, as he did not engage in the treatment of the Medicare beneficiaries, had no physician-patient relationship with the beneficiaries, often did not speak with the beneficiaries, and knew his prescribed goods and services were not medically necessary.

Through the Stipulation and Order signed by the parties and to be entered by the Court, Dr. Finney has admitted that he violated the False Claims Act, 31 U.S.C. §§ 3729-3733, by knowingly causing the submission of false or fraudulent claims to Medicare. He also admitted to knowingly making, using, or causing to be made or used, false records and statements to obtain payment from Medicare, and conspiring to defraud Medicare by causing the submission and payment of false or fraudulent claims.

Finally, he admitted that these actions caused damages for which he is liable to the United States in the amount of $11,025,088 under the False Claims Act (which allows for damages in the amount of three times the government’s loss, plus penalties). The terms of the Stipulation and Order allows Dr. Finney to fulfill his obligation to pay the Consent Judgment by paying $561,800.

Nurse Pleads Guilty in Covid-19 Vaccination Record Card Fraud

Bethann Kierczak, 37, of Southgate, Michigan, a registered nurse from the Veteran’s Hospital in Detroit, pleaded guilty June 16, 2022 to charges related to Covid-19 Vaccination Record Cards fraud.

Pleading guilty Kierczak appeared before United States District Judge David M. Lawson and pleaded guilty to theft of government funds.

According to court records, Kierczak admitted to stealing or embezzling authentic Covid-19 Vaccination Record Cards from the VA hospital—along with vaccine lot numbers necessary to make the cards appear legitimate—and then reselling those cards and information to individuals within the metro Detroit community. Kierczak’s theft of Covid-19 Vaccination Record Cards began at least as early as May 2021 and continued through September 2021. Kierczak sold the cards for $150-$200 each and communicated with buyers primarily via Facebook Messenger.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

Medical Director of Baltimore County Pain Management Clinic Pleads Guilty to Conspiracy to Distribute and Dispense Oxycodone

Norman Rosen, age 84, of Towson, Maryland, pleaded guilty June 16, 2022 to conspiracy to distribute and dispense oxycodone in connection with his operation of Rosen-Hoffberg Rehabilitation and Pain Management Associates, P.A., where he was Medical Director and part owner.

According to his guilty plea, Norman Rosen, is a doctor and was licensed to practice medicine in the State of Maryland. He served as the Medical Director and part-owner of Rosen-Hoffberg Rehabilitation and Pain Management (the “Practice”). Rosen primarily worked at the Practice’s Towson, Maryland locations. Rosen’s partner in the business and the Practice’s Associate Medical Director was Howard Hoffberg.

According to Rosen’s guilty plea, patients at the Practice were often prescribed high doses of oxycodone, and other opioid medications. Some patients were issued prescriptions for opioids after routinely providing aberrant urine toxicology screens, including positive results for cocaine, heroin, and other street drugs; positive results for controlled substances that were not prescribed by the Practice (which indicated the patient was likely buying medications off the street or was doctor-shopping); and/or negative results for the controlled substances prescribed by the Practice (which indicated prescribed substances were either not taken, being consumed too quickly, or sold by the patients). Rosen knew that the Practice received complaints about the behavior of patients, including reports of suspected drug transactions in the parking lots near the Practice. At times, patients were observed “nodding out” in the waiting area of the Practice. Some patients tried to bring in urine that was not theirs in order to pass urine toxicology screens. Some patients of the Practice overdosed and some of these patients required hospitalization and some died. Several major pharmacies refused to fill any prescriptions issued by the Practice because of the high doses being prescribed.?Both Rosen and Hoffberg were aware of the conditions at the Practice and yet continued to prescribe medications to these patients.

As detailed in his plea agreement, as the Medical Director, Dr. Rosen established the rules for the Practice. One of his rules was that the customer, i.e., the patient, is always right. Sometimes, when other providers at the Practice discharged certain patients, Rosen continued to treat the patients at the Towson location. At times, if a patient failed a urine toxicology screen because of illicit substances in their system such as heroin or cocaine, Rosen declined to discharge the patient and instead required the patient to return to the Practice more frequently for follow-up, sometimes as much as three times a week.

Rosen admitted that he issued prescriptions to some patients outside the bounds of the usual medical practice and not for a legitimate medical purpose. For example, Rosen prescribed large doses of oxycodone and clonazepam to a patient who had eight toxicology screens that were positive for cocaine and whose children had been taken from her because of her drug problems. Similarly, Rosen ignored the red flags and prescribed oxycodone and methadone to a patient who admitted to illicit drug use; had previously been criminally charged for prescription fraud and drug trafficking; had overdosed; had urine toxicology screens that were positive for heroin, cocaine, and marijuana; and had been accused of selling her pills.

Rosen faces a maximum of 20 years in prison.

In related cases, Rosen’s partner, Howard Hoffberg, age 65, of Reisterstown, Maryland pleaded guilty to conspiracy to violate the anti-kickback statutes, in connection with a scheme to accept payments from a pharmaceutical company in exchange for prescribing a fentanyl-based drug. He was sentenced to eight months in federal prison. Also, a physician’s assistant at the Practice, William Soyke, age 69, of Hanover, Pennsylvania, pleaded guilty to conspiracy to distribute and dispense oxycodone, fentanyl, methadone, and alprazolam and was sentenced to 37 months in federal prison.

Kentucky Psychiatrist Sentenced for Health Care Fraud Related to Referrals for Drug Testing

Varanise C. Booker, 67, a resident of Louisville, Kentucky, was sentenced in federal court June 15, 2022 for one count of health care fraud.

United States District Judge David S. Cercone sentenced. Booker to 36 months of probation and ordered that she pay restitution totaling $24,217.26 to the Kentucky Medicaid program.

During the defendant’s plea hearing on October 5, 2021, Booker admitted that she was a licensed psychiatrist who operated a medical practice, Family and Children Behavioral Health Services, in Louisville, Kentucky. Between approximately October 2011 and August 2013, the defendant further admitted that she referred patients for drug testing and related services performed by Universal Oral Fluid Labs (“UOFL”), a clinical drug testing and drug screening laboratory located in Greensburg, Pennsylvania. The court was further advised that the defendant engaged in health care fraud by causing UOFL to bill the Kentucky Medicaid program for testing based on referrals that were outside the ordinary course of professional practice and not for a legitimate medical purpose. Specifically, the defendant acknowledged that she did not document a legitimate justification for ordering certain drug tests and services, failed to document the results of certain drug tests and services performed by UOFL in her medical files, and failed to address the results of certain drug tests and services in the treatment of her patients. The defendant further admitted that she caused UOFL to pay her a certain portion of the reimbursements the laboratory received from Kentucky Medicaid in connection with her referral of unlawful drug tests and related services. As a result, the defendant caused losses to Kentucky Medicaid in excess of $20,000.

Owner And Operator of Telemedicine and Telemarketing Companies Sentenced To 14 Years For $20 Million Fraud Scheme And $4 Million Tax Evasion

Marc Sporn, 59, of Delray Beach, Florida was sentenced June 16, 2022 to 14 years in prison for health care and wire fraud that cost Medicare more than $20 million dollars, and for evading taxes.

According to court documents, Sporn owned and operated several telemarketing and telemedicine companies, including CPL Media Group Inc. Medipak, LLC, Real Time Physicians LLC, 24 HR Virtual MD LLC, Medtech Worldwide Inc., New World Holdings Inc., and Ins Cov LLC. Sporn used these companies to market medically unnecessary genetic tests to Medicare beneficiaries, and to sell prescriptions (i.e., doctors’ orders) for medically unnecessary genetic tests to laboratories in exchange for kickbacks and bribes. Sporn knew these laboratories would use these doctors’ orders to bill Medicare for medically unnecessary goods and services.

Through nominee owners, Sporn also operated and controlled Palm Beach companies Medi Biotech LLC and Walmol Holdings LLC. Sporn used Medi Biotech to market compounded prescription creams to customers with certain health conditions. Pharmacies and laboratories associated with Medi Biotech filled the prescriptions, billed the customers’ insurance companies, and paid Sporn kickbacks. In addition to opening bank accounts for Medi Biotech in nominee names, Sporn opened accounts in the name of Walmol Holdings, a shell corporation, and in 2014 and 2015, avoided paying over $1.6 million in personal income taxes by diverting millions through the company’s accounts. Sporn used these company accounts to purchase luxury items such as high-end watches and diamond jewelry, classic and exotic cars, two yachts, and other items.

Sporn also evaded paying over $2.5 million in personal income taxes for other years dating back to 2000. When the IRS attempted to collect back taxes from Sporn, he tried to conceal assets by transferring property to trusts and individuals and by repeatedly opening and closing companies, among other things. In addition to the prison term, Sporn was ordered to pay more than $4 million in restitution to the IRS.

Steward Health Care System Agrees to Pay $4.7 Million To Resolve of False Claims Act Violations

System’s hospital paid physicians and physician practices for services not performed

Steward Health Care System LLC (Steward) and several related corporate entities have agreed to pay approximately $4.735 million to resolve allegations that its relationships with several physicians and physician practice groups violated federal law, including the False Claims Act. Despite its public denials, in the signed settlement agreement, Steward “admits, acknowledges, and accepts responsibility” for the facts underlying the government’s allegations.

Steward is one of the largest, private for-profit health care networks in the nation and the owner of multiple hospitals in Massachusetts. Steward owns and operates Steward Good Samaritan Medical Center, Inc. (GSMC), a for-profit hospital in Brockton.

According to the settlement agreement, in 2011, GSMC entered into an agreement with Brockton Urology Clinic (Brockton Urology) which obligated Brockton Urology to administer a Prostate Cancer Center of Excellence at GSMC. Steward admits that, since at least January 2012, GSMC had no Prostate Cancer Center of Excellence and Brockton Urology did not provide the services specified in the agreement with GSMC. However, from April 2011 through December 2017, GSMC purportedly paid Brockton Urology pursuant to the agreement and Brockton Urology referred patients to GSMC.

The United States reached a separate settlement agreement with Brockton Urology in February 2022 regarding this conduct.

GSMC entered into a similar agreement with a separate physician practice. Steward paid that physician practice from April 2011 through December 2015, purportedly for cancer center services. During a portion of that time, GSMC had an agreement that obligated the practice to provide a physician to serve as the director of GSMC’s Prostate Cancer Program. Steward admits, however, that the physician practice never provided a physician to serve as the director of GSMC’s Prostate Cancer Program and, in fact, did not perform any of the services specified in the agreement. That practice also referred patients to GSMC.

Over the course of the government’s investigation, Steward disclosed facts concerning two other sets of physician relationships that the United States contends violated federal law. First, in October 2010, Steward entered into a compensation arrangement with a physician pursuant to which the physician agreed to serve as GSMC’s Medical Director of Post-Acute Care Services. Steward admits that it has been unable to confirm that the physician performed the services but that it still paid the physician from November 2010 through June 2016 and that the physician referred patients to GSMC during that period. Second, Steward admits that it failed to charge the proper rent on some of its leases with physicians, physician organizations and non-physician organizations, resulting in some of those entities paying rent below fair market value. Steward admits that between January 2010 and October 2015, it leased real property to these physicians and physician organizations and that those entities were referral sources for Steward’s Massachusetts hospitals.

In connection with the settlement, GSMC has entered into a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), which provides for an annual review of its financial arrangements for compliance with the Anti-Kickback Statute and the Stark Law by an Independent Review Organization.

The False Claims Act settlement resolves Steward’s self-disclosures and allegations originally brought by a lawsuit filed by whistleblowers under the qui tam provisions of the False Claims Act, which allow private parties, known as relators, to bring suit on behalf of the government and to share in any recovery. In connection with today’s announced settlement, the relators will receive 17 percent of the recovery.

Jury Finds Doctor Guilty In $10 Million Tricare Scheme

Defendant Convicted of Fraud, Conspiracy, Identity Theft, and Other Crimes

Joe David “Jay” May, 41, an Alexander doctor has been convicted for his involvement in a multi-million-dollar kickback conspiracy at the conclusion of a week-long trial. A federal jury found May guilty on all 22 counts for which he was indicted.

The jury returned their verdict after deliberating for about three hours. United States District Judge Kristine Baker presided over the trial, and Judge Baker will sentence May at a later date.

A grand jury returned an indictment against May in January 2020. The indictment alleged that May signed off on illegitimate prescriptions for pain cream in order to trigger a payout from TRICARE, the nation’s insurance for veterans. A pharmacy promoter paid recruiters to find TRICARE beneficiaries, regardless of whether they needed the drugs, and then paid others to get medical professionals, including Jay May, to rubber stamp prescriptions for TRICARE beneficiaries.

TRICARE paid over $12 million for compounded drugs prescribed through this scheme. Evidence at trial indicated that May wrote 226 prescriptions over the course of ten months, for which TRICARE paid $4.63 million. All but one of those prescriptions were supplied by drug sales representatives, Glenn Hudson and Derek Clifton, both of whom have pleaded guilty in the scheme, and directed to prescribers, May and a nurse practitioner named Donna Crowder, who has also pleaded guilty. May accepted cash bribes totaling nearly $15,000 and signed off on the prescriptions without consulting patients and without determining whether or not the prescription was needed.

One recruiter hosted a meeting at Fisher Armory in North Little Rock. At that meeting, he signed people up for the drugs and offered to pay them $1,000. Thirteen of those patients were routed to Dr. May, who signed each prescription, and this group alone cost TRICARE $370,000. The conspirators learned that reimbursements from TRICARE might fall in May 2015, so April was the last opportunity to profit from the program. In the last ten days of April 2015, May signed 59 prescriptions, for which TRICARE paid $1.4M. During a single 9-week period at the height of the scheme, May deposited $9,925 cash; an FBI forensic accountant testified this was more cash than he deposited in 2014 and 2016 combined.

The statutory penalties for May’s convictions are: wire fraud, mail fraud, and falsifying records, not more than 20 years imprisonment; violation of the anti-kickback statute, not more than 10 years imprisonment; and conspiracy and making false statements, not more than five years imprisonment. In addition to any sentence imposed, May will also serve an added four years for convictions on two counts of aggravated identity theft. All offenses of conviction include a potential penalty of not more than a $250,000 fine and not more than three years of supervised release.

Los Angeles Doctor to Pay $9.5 Million To Resolve Allegations of Fraud Against Medicare and Medi-Cal

Minas Kochumian M.D., a physician previously practicing in the Los Angeles area, has paid $9,486,287 to resolve allegations that he submitted false claims to Medicare and Medi-Cal for procedures and tests that were never performed. These payments include nearly $5.5 million paid by Kochumian as criminal restitution following his guilty plea to one count of health care fraud, in a separate criminal case filed in the Central District of California.

The civil settlement resolves contentions by the United States and the State of California that Kochumian, over a period of more than six years ending in April 2018, submitted claims to Medicare and Medi-Cal for procedures, services, and tests that were never conducted or administered to patients, including injections of medication designed to treat osteoarthritis and osteoporosis, drainage of tailbone cysts, and the removal and destruction of various growths. As part of the settlement agreement announced today, Kochumian admitted that he intentionally submitted false claims for payment with the intent to deceive the United States and California. In doing so, Kochumian violated both the federal False Claims Act and the California False Claims Act. Those statutes allow the government to recover damages and penalties for the presentation of false claims for payment to the United States and the State of California, respectively.

The civil settlement with Kochumian resolves allegations originally brought in a lawsuit filed by relators Elize Oganesyan and Damon Davies, Kochumian’s former medical assistant and former informational technology consultant, under the whistleblower provisions of the False Claims Act. The Act permits private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery. The whistleblowers who filed the case against Kochumian will receive more than $1.75 million as their share of the recovery announced today. The whistleblowers’ claims for attorneys’ fees are not resolved by this settlement.

When doctors misuse the state’s Medi-Cal funds, they violate their Hippocratic Oath by harming a program which exists to help California’s Medi-Cal population, including the elderly, the sick and the vulnerable. Dr. Kochumian’s misconduct violated the trust of the patients in his care, and he selfishly pocketed funds that would otherwise have gone towards critical publicly funded healthcare services.

ZIFL notes that Dr. Kochumian’s ability to almost $9.5 million means he probably stole and still has a great deal more than he was willing to pay to avoid prosecution and jail.

New York A.G. James Recovers $26.8 Million From Mallinckrodt for Medicaid Fraud

Mallinckrodt to Pay $26.8 Million for Years of Underpaying Medicaid Drug Rebates to New York’s Medicaid Program

Mallinckrodt PLC, and its U.S. subsidiary Mallinckrodt ARD, LLC (Mallinckrodt), for cheating Medicaid requirements that help offset rising drug prices. For years, Mallinckrodt underpaid rebates to federal and state Medicaid programs for its drug, H.P. Acthar Gel (Acthar), which treats numerous conditions, including multiple sclerosis. The company failed to pay millions in required rebates that protect Medicaid programs from price surges. This agreement resolves claims against the company on behalf of all 50 states, Washington D.C., Puerto Rico, and the federal government.

In 2020, the federal government and 26 states, Puerto Rico, and the District of Columbia, filed complaints-in-intervention against Mallinckrodt after a whistleblower filed a lawsuit against the company for cheating Medicaid programs. In the multistate complaint-in-intervention, New York alleged that Mallinckrodt defrauded the state’s Medicaid program and violated the New York State False Claims Act.

Under the Medicaid Drug Rebate Program, the Medicaid program is protected from certain drug price increases because manufacturers are required to repay those increases in the form of rebates. When a manufacturer increases the price of a drug faster than the rate of inflation, it must pay the Medicaid program a per-unit rebate of the difference between the drug’s current price and the price of the drug if its price had gone up at the general rate of inflation since 1990, or the year the drug first came to market, whichever is later.

The governments alleged in their complaints that starting in 2013, Mallinckrodt and its predecessor, Questcor, misrepresented Acthar’s approval history with the U.S. Food and Drug Administration (FDA). In 2013, Mallinckrodt began to pay Medicaid rebates for Acthar as if the drug had just been approved rather than as a drug that was first introduced to the market in 1952. In particular, Mallinckrodt took advantage of the FDA’s assignment of an administrative tracking number to Acthar when that drug was submitted to the FDA for approval of an efficacy supplement in 2006 to suggest to the federal government that Acthar was a new drug with a new FDA number. Mallinckrodt’s practice meant it ignored all pre-2013 price increases when calculating and paying Medicaid rebates for Acthar from 2013 until 2020, when Mallinckrodt revised its Medicaid reporting to pay the correct rebate. Acthar’s price had already risen to more than $23,269 per vial from $1,650 per vial in August 2007. By ignoring all pre-2013 price increases for Acthar, Mallinckrodt significantly lowered its Medicaid rebate obligations.

The agreement resolves allegations that from January 2013 through June 2020, Mallinckrodt knowingly failed to report and return hundreds of millions of dollars in overpayments it received from the Medicaid Program for Acthar because it knowingly underpaid rebates owed to the program.

Under the agreement, Mallinckrodt admitted that Acthar was not a new drug as of 2013, but rather was approved by FDA in 1952, and represented that it revised its reporting to the Centers for Medicare & Medicaid Services accordingly. Mallinckrodt agreed to refrain from changing the relevant date giving rise to its rebate obligation for Acthar in the future.

As part of the settlement, New York will receive $16.1 million in restitution and the federal government will receive $10.7 million for New York’s Medicaid Program. The Medicaid Fraud Control Unit (MFCU) receives 75 percent of its funding from the U.S. Department of Health and Human Services under a grant award totaling $59,918,216 for the fiscal year (FY) 2022. The remaining 25 percent, totaling $14,979,552 for FY 2022 is funded by New York state. Through its recoveries in law enforcement actions, MFCU regularly returns more to the state than it receives in state funding.

The settlement, which is based on Mallinckrodt’s bankruptcy proceedings, required final approval of the U.S. Bankruptcy Court for the District of Delaware, which approved the settlement on March 2, 2022. Mallinckrodt made its first settlement payment today.

A team from the National Association of Medicaid Fraud Control Units participated in the litigation and conducted settlement negotiations on behalf of the states. The team included representatives from the offices of the attorneys general for New York, California, Florida, Massachusetts, Michigan, Nevada, Texas, and Wisconsin.

Medford, Massachusetts Man Found Guilty, Sentenced to Jail for Defrauding Masshealth

Defendant Caused MassHealth to Pay Over $100,000 for Personal Care Attendant Services That Were Not Provided

Abdikadir Maow, 50, a Medford man was found guilty and sentenced to one year in the Middlesex House of Correction for his role in a scheme to falsely submit claims to MassHealth for Personal Care Attendant (PCA) services that were not rendered, Attorney General Maura Healey announced today.

After a three-day trial, a Middlesex Superior Court jury found Maow guilty of Medicaid False Claims and Larceny by False Pretenses over $1200. Middlesex Superior Court Judge Christopher Barry-Smith sentenced Maow on Tuesday to one year in the Middlesex House of Correction, followed by three years of probation and ordered him to pay $112,000 in restitution. While on probation, Maow will be prohibited from having any role or responsibilities with the PCA program and will instead be required to receive services from a home health company.

Maow was indicted in October 2020 as part of a coordinated sweep charging seven individuals in PCA fraud cases. The AG’s Office alleged that, from 2015 to May of 2020, Maow and his PCA participated in a scheme to falsely submit timesheets for PCA services that were not actually rendered to Maow. According to the AG’s Office, Maow’s PCA was billing and getting paid for PCA hours purportedly provided during times when the PCA was working at a secondary employer or while the PCA or Maow were traveling or residing out of the country separately for long periods of time. During Maow’s trial, the AG’s Office presented evidence that Maow caused more than $112,000 in fraudulent billing to MassHealth.

The conclusion of this trial follows years of efforts by AG Healey’s Medicaid Fraud Division to combat fraud and misconduct in the PCA program. In March, the AG’s Office secured indictments against four individuals in another PCA false billing scheme, and in July 2021, the Division indicted a New Bedford man who allegedly defrauded the program by falsely billing for services he did not receive.

Oklahoma Attorney General O’Connor Announces Settlement with Tri-State Medical Supplies

Tri State Medical Supplies, LLC, has agreed to resolve allegations that the company violated the Oklahoma Medicaid False Claims Act by inflating prices and shipping charges of durable medical equipment. Tri-State Medical Supplies has agreed to pay $363,116 to resolve the allegations.

Tri-State Medical Supplies provided durable medical equipment and other services to Oklahoma Medicaid beneficiaries through a program administered by the Oklahoma Department of Human Services Developmental Disabilities Services Division. The settlement resolves certain allegations that Tri-State submitted claims to the Oklahoma Medicaid program, known as “SoonerCare,” based on inflated pricing and shipping charges.

The Oklahoma Medicaid Fraud Control Unit (MFCU) began investigating Tri-State after receiving a referral from a program manager at OKDHS Developmental Disabilities Services Division (DDSD). The DDSD works with clients who are physically challenged. The program manager became suspicious when the claims of Tri-State were compared to claims from other companies that provided similar services and equipment.

The Oklahoma Attorney General’s Office Medicaid Fraud Control Unit has statewide jurisdiction to investigate and prosecute violations of state and federal laws pertaining to provider fraud in the administration of the Oklahoma Medicaid program. Additionally, the MFCU investigates and prosecutes qui tam, or “whistleblower” allegations in Oklahoma and nation-wide, and frequently partners with other states’ MFCUs and United States Attorneys’ offices.

Alabama Convicts Nurse for Theft of Narcotics from Butler County Nursing Home

Samantha Noel Kelley, 32, of Greenville was convicted for the theft of 638 narcotics pills from a Georgiana nursing home where she had been employed as a licensed practical nurse.

Kelley appeared before the Butler County Circuit Court on June 9, 2022, and pleaded guilty to four counts of second-degree theft of property, a class C felony, as charged in the indictment returned against her by a Butler County Grand Jury on September 14, 2021.

The Attorney General’s Medicaid Fraud Control Unit (MFCU) conducted an investigation after being contacted by the Georgiana Police Department. The investigation determined that Kelley, while employed at Georgiana Health and Rehabilitation, had diverted 638 narcotics pills, including Hydrocodone, Oxycodone, Tramadol and Lorazepam, from nursing home residents for whom the medications were intended. The thefts occurred between November 5, 2020, and January 19, 2021.

Kelley’s sentencing has been set for July 7. She faces one to 10 years imprisonment and up to a $15,000 fine for each of the four convictions.

North Carolina Obtains $2.1 Million Health Care Settlement

Healthkeeperz, Inc., a Pembroke, North Carolina behavioral health care provider, will pay $2.1 million to resolve allegations that the company violated the False Claims Act by billing claims that were not reimbursable to Medicaid programs.

Healthkeeperz provides case management services for Medicaid beneficiaries under the North Carolina Medicaid Community Alternatives Program for Disabled Adults (CAP/DA). The settlement resolves allegations that from January 1, 2016, through October 31, 2019, Healthkeeperz submitted reimbursement claims to North Carolina Medicaid and received payments for services that weren’t covered by Medicaid.

This settlement was reached in partnership with the Department of Health and Human Services Office of the Inspector General and the United States Attorney’s Office for the Western District of North Carolina. The North Carolina Department of Health and Human Services, Division of Health Benefits – Office of Compliance and Program Integrity and Clinical Policy Section also provided assistance. The allegations arose from a lawsuit filed by a whistleblower under the qui tam provisions of the federal False Claims Act and the North Carolina False Claims Act. The claims resolved by this settlement are allegations only and there has been no determination of liability.

Canada Removes License of Toronto Doctor

?Ayokunle Fagbemigun, a Nigerian doctor based in Etobicoke, a district in Toronto, Ontario, Canada, has been stripped of his medical license for defrauding the Ontario government through its Ontario Health Insurance Plan (OHIP).

Fagbemigun, a family physician, billed the Ontario government for $42,000 for tests he never performed on patients, between 2014 and 2018.

During the period, the Nigerian physician was said to have billed the government for supposedly drug-screening patients as young as nine. He also allegedly claimed to have conducted eight pregnancy tests in one year on another patient who had, all through the period, not been sexually active.

The Ontario Physicians and Surgeons Discipline Tribunal said in a statement that Dr. Fagbemigun took hundreds of thousands of dollars from the health care system to which he was not entitled. He did so intentionally, and for his personal gain. He defrauded the government many times over an extended period. The panel also stated that the physician was in the habit of sending his patients, who were largely from Africa and the Caribbean, for cardiac tests so he could benefit from referral fees.

Apart from losing his license, Fagbemigun has been ordered to pay back $35,000 to the government. Medical experts in Canada however believe the fine is a slap on the wrist compared to the estimated hundreds of thousands of dollars he stole from taxpayers.

The Ontario government is yet to declare whether it would still pursue a court case to get the doctor to refund all other monies he fraudulently claimed during the four-year period.

The question that is not being asked is whether Dr. Ayokunle Fagbemigun was arrested for his criminal conduct. It is time for Canada to wake up about the losses the National Health Service paid to this fraud perpetrator.

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The promises made by an insurance policy are kept by the professional claims person. Keeping a professional claims staff dedicated to excellence in claims handling is cost-effective over long periods of time. A professional and experienced adjuster will save the insurer millions by resolving disputes, paying claims owed promptly and fairly, and by so doing avoid litigation.

The professional claims person is an important part of the insurer’s defense against litigation by insureds against insurers for breach of contract and the tort of bad faith. Claims professionals resolve more claims for less money without the need for either party to involve counsel. A happy insured or claimant satisfied with the results of his or her claim will never sue the insurer.

Insurers who believe they can professionally, fairly, and in good faith with young, inexpensive, inexperienced and untrained claims handlers should be accosted by angry stockholders whose dividends have plummeted or will plummet as a result. When an insurer compromises on staff, profits, thin as they may have been previously, will move rapidly into negative territory. Tort and punitive damages will deplete reserves. Insurers will quickly question why they are writing insurance. Those who stay in the business of insurance will either adopt a program requiring excellence in claims handling from every member of their claims staff, or they will fail.

Insurance is a business that must change if it is to survive. Insurers must rethink the firing of experienced claims staff and reductions in training to save “expense.” Insurers should, if they wish to succeed, adopt a program to promote excellence in claims handling that can help insurers keep the promises made by the insurance policy and avoid charges of breach of contract and the tort bad faith in both first and third party claims.

Other Insurance Fraud Convictions

Ex-Surrey Banker Faked Cancer as Part Of ￡1.8m Fraud

A Former Banker Who Faked Terminal Pancreatic Cancer as Part of a Series of Scams Worth ￡1.8m Was Jailed.

Rajesh Ghedia, 42, said he would be dead in a year in a ￡1.2m insurance scam, Southwark Crown Court heard.

He also swindled seven people - including a relative - out of huge sums of money by encouraging them to invest in non-existent financial products.

Ghedia, of Addlestone, Surrey, United Kingdom, admitted more than 30 counts of fraud at an earlier hearing.

Judge Deborah Taylor told him he was a persistent fraudster who caused victims devastation and had left them scarred.

The court was told Ghedia faked medical letters from a consultant to claim insurance. He made fraudulent claims about his Bank of America position to encourage people, including a cousin, to invest in non-existent products with the company and Goldman Sachs, the court heard.

Ghedia had also falsely claimed his daughter had been killed in a car crash to avoid communicating with victims, the court was told.

‘No Moral Compass’

Jailing Ghedia for six years and nine months, the judge said the offences were significant, with extensive planning.

On the investment fraud, she said: “You have caused them (victims) devastation, showing utter disregard for their mental wellbeing and finances.”

Police said Ghedia would now face confiscation proceedings.

Louisiana Woman Latest to Be Sentenced in Staged Auto Accident

Ishais Price, age 41, of New Orleans, Louisiana, was sentenced for Conspiracy to Commit Mail Fraud, in violation of Title 18, United States Code, Section 371, before United States District Court Judge Sarah S. Vance, arising out of a staged automobile accident with a tractor-trailer occurring in New Orleans.

According to documents filed in federal court, Price, along with her co-defendants, Doniesha Gibson (Gibson), of New Orleans, Louisiana; and Chandrika Brown (Brown), of Harvey, and a co-defendant driver conspired to commit mail fraud in connection with a staged accident with a co-defendant driver. Thus far, the total number of defendants convicted in “Operation Sideswipe” is thirty-seven (37).

Price claimed that on October 15, 2015, she was a passenger in a 2014 Dodge Avenger owned and driven by Gibson that was hit by a Hotard bus while traveling on the I-10 near the flyover of the I-510. Also in the vehicle was defendant Brown. In truth, a co-defendant asked Gibson to recruit Brown and Price to ride along as passengers and he then intentionally sought out a commercial vehicle to intentionally hit. After the staged accident, the co-defendant driver switched seats with Gibson, and they called the N.O.P.D. Gibson, along with the passengers, falsely stated that the Hotard bus illegally changed lanes and caused the accident. Thereafter, Brown, Gibson, Price, and the co-defendant driver each retained counsel and made demands against Hotard’s owner and insurer for personal injury damages. As a result of the claims, the insurer utilized the U.S. mails to send the settlement drafts to Brown, Gibson, Price, and the co-defendant driver’s counsel. The total settlement for the Hotard bus accident was approximately $677,500.

U.S. District Judge Sarah S. Vance sentenced Price to one (1) year and one (1) day imprisonment, 3 years of supervised release, and $100 mandatory special assessment fee.

Roofing Contractor Pleads Guilty to Over $250,000 In Workers’ Compensation Fraud

Peter Chardon, owner of DME Construction Associates Inc., pleaded guilty on Wednesday at Suffolk County Supreme Court to charges of petit larceny and fifth-degree insurance fraud. His company pleaded guilty to one count of second-degree grand larceny and second-degree insurance fraud.

Chardon, admitted to cheating insurance companies out of more than $250,000 in a workers’ compensation fraud scheme.

As part of the plea agreement, Chardon and DME have agreed to pay a total of $297,451.13, which represents the amount of funds stolen from the New York State Insurance Fund (NYSIF) and State Farm Fire and Casualty Company.

Inspectors found that DME Construction and Chardon, of Setauket, N.Y., classified its roofing workers as doing “painting and decorating,” a less risky classification that granted access to less expensive workers’ compensation insurance. Officials say DME’s contracts for Long Island shopping mall buildings and a new cancer center building for Southampton Hospital were for roofing, and not for “painting and decorating.” During the period between 2015 and 2019, DME was insured by NYSIF and then State Farm. The Inspector General referred the matter to the Suffolk District Attorney, which served additional subpoenas on other DME clients.

DME allegedly knowingly underreported its payroll to the NYSIF, resulting in an underpayment of premiums in the amount of $65,875.13. Between Feb. 20, 2017 and May 27, 2021, DME knowingly underreported its payroll to State Farm Fire and Casualty Company, resulting in an underpayment of premiums in the amount of $231,576.

DME Construction is also facing proposed $1.2 million penalty from the Occupational Safety and Health Administration (OSHA) due to one of its workers dying after falling 18 feet through an unprotected skylight on Aug. 19, 2021. Prior to this inspection, OSHA had cited DME seven times since 2011 for fall-related hazards, including not providing protection from falls through skylights and from roof edges, with more than $50,000 in unpaid fines.

Convictions From Arkansas

Crystal Glass

?On 21 June 2022, in the Circuit Court of Phillips County (CR21-168), Crystal Glass (38 of West Helena) entered a plea of guilty to one count of Fraudulent Insurance Acts (Class D felony). She was sentenced to two (2) years Suspended Imposition of Sentence (SIS), and was ordered to pay a $500 fine, plus court costs. On 28 October 2020, Crystal Glass filed an insurance claim with GEICO Insurance for damage to her 2017 Hyundai. Glass reported that somebody backed into her car and then fled the scene. Glass provided photographs of the damage to her car, that being to the front left area of the hood. There was no police report completed at the scene. Glass had recently made changes to her insurance policy, adding rental coverage on 20 October 2020. During the claims process, GEICO learned that Glass had filed a previous claim with State Farm Insurance in May of 2020, in which she claimed damage to the front left area of the hood. The claim with State Farm was paid to Glass so that she could fix her car. When the claims file from State Farm was reviewed, it was clear that the damage claimed in the alleged October hit and run was the exact same damage that Glass had claimed with State Farm earlier in the same year. When confronted with the information regarding the previous claim with State Farm, Glass withdrew her GEICO claim and no payments were made.

Nia Bullard

On 14 June 2022, in the Circuit Court of Jefferson County (CR 21-230), Nia Bullard entered a plea of guilty to one count of Fraudulent Insurance Act (Class D Felony). She was sentenced to three years in the Arkansas Department of Corrections concurrent to sentences she is presently serving. On 24 July 2020, Nia Bullard filed a stolen vehicle report on her 2003 Toyota Camry with the Pine Bluff Police Department alleging that she had loaned her vehicle to a friend, Lonnie Pearson. She further alleged that while in the possession of Pearson, a subject named Glendal Hayes took the vehicle from Pearson. It appears the vehicle was damaged during this period, and at the time of the report her vehicle was not covered by insurance. On 31 July 2020, Nia Bullard bound an insurance policy on her 2003 Toyota Camry through Progressive Insurance. On 02 August 2020, she recovered her vehicle. On 03 August 2020, Bullard filed an insurance claim stating her vehicle was stolen on 01 August 2020, and was recovered on 02 August 2020, with damages and clothing missing from the trunk of the vehicle.

Donald Foster

On 06 June 2022, in the Circuit Court of Arkansas County (72CR 20-1282), Donald Foster (63 of Stuttgart) entered a plea of guilty to one count of Fraudulent Insurance Acts (Class D Felony) and one count of Filing a False Police Report (Class A Misdemeanor). He was sentenced to four (4) years of supervised probation and ordered to pay a fine of $1,500, plus court costs. He was also ordered to perform 100 hours of community service. On 28 September 2019, a vehicle belonging to Donald Foster was involved in a two-car hit and run vehicle accident. As a result of this accident, Foster’s Ford Taurus received extensive damage. Foster’s vehicle was being driven by James Roberts. Roberts stated to the other driver that he was leaving to go and get the owner of the vehicle, but Roberts never returned to the accident scene. Later in the day, on 28 September 2019, the Stuttgart Police were patrolling the area and searching for the Ford Taurus that fled the scene. As stated in Stuttgart Police report # 19-01419, the police spotted the Ford Taurus and found Donald Foster laying beside the vehicle. Foster was taken to the hospital as a result of injuries inflicted by James Roberts (according to Foster). At the hospital, Foster gave the police a statement in which he stated that he had given permission to Roberts for Roberts to borrow the vehicle and that Roberts had brought the vehicle back undamaged. Roberts then asked if he could use the car again and “everything just blacked out” … “Roberts came back with the car and it was tore up.” Foster further stated that, then he “went off” on Roberts and beat him up. Foster then told another officer that Roberts had simply run off and he had not beat him up as he had stated earlier. On 30 September 2019, Foster reported the claim to his insurance company, Trexis Insurance, claiming that he had loaned his car to James Roberts and that Roberts had brought it back, undamaged. Foster said that Roberts wanted to borrow his car again, to which Foster said no. At that time, Foster claimed that Roberts knocked him out and stole his vehicle and then got into an accident. A representative asked Foster if he had filed a police report due to the vehicle theft and Foster stated that he had not. When the representative asked if Foster would file a police report on the theft, Foster stated that he would. On 30 September 2019, Foster made another report to the Stuttgart Police, report # 19-01423, in which Foster reported that on 28 September 2019, he allowed Roberts to use his vehicle and that Roberts had brought it back the same day.?Foster stated that Roberts then asked to use the vehicle again and Foster told him no, at which time Roberts struck him and then drove off with the vehicle. Foster said that he kept looking around until he found the vehicle at Buerkle Square Apartments the same day, on the 28th. On 01 October 2019, Foster went to the Police Department and made a supplement to police report #19-01419.?Foster stated that he now remembered what had happened. Foster wrote a statement, in which he stated that Roberts had hit him, knocked him (Foster) out and stole the Taurus. Foster stated that he was taken to the hospital and that when he got out of the hospital, he went to get his car back from Roberts. On 15 January 2020, Foster gave a statement to a Trexis Insurance Representative, in which Foster then stated that he let Roberts use the vehicle and that Roberts had only used it once and brought it back damaged. Foster stated that he didn’t think the insurance company would pay for the claim if the insurance company knew that Roberts had let an unlicensed driver use the vehicle, so Foster claimed it as stolen to get coverage. The claim was denied and no payments were issued.

Kyle Wyatt

On 06 June 2022, in the Circuit Court of Washington County, (72CR 20-1282), Kyle Wyatt (27 of Vilonia) entered a plea of guilty to one count of Filing a False Police Report (Class D Felony).?He received 6 years suspended imposition of sentence (SIS), was assessed court costs of $440, and was ordered to pay restitution in the amount of $39,600.14. The plea was handled by the local Washington County Deputy Prosecutor. On 26 June 2018, Amtrust North America Insurance Company, sent a non-renewal notice to Kyle Wyatt stating his policy would not be renewed as of 12:01am on 24 August 2018. On 27 August 2018, Kyle Wyatt reported to his insurance company that two subjects took his vehicle without his permission between 10:30 p.m. and 11:00 p.m. on 23 August 2018 (prior to his policy expiring). He stated his brother, Trey Wyatt, and Jacob Short came home around that time and saw his vehicle leaving. When they went inside the house, they saw Kyle, tried to wake him up and when they could not, they assumed he loaned his truck to someone. Kyle Wyatt also stated they came home around 8:30 to 9:00 p.m. on 23 August 2018, and he went to bed shortly after that. Based on the facts provided by Kyle Wyatt, the insurance company paid the claim as a stolen vehicle. After the claim had been paid, the insurance company was notified of a lawsuit filed against Kyle Wyatt by Ernesto Giron in the Circuit Court of Washington County.?The lawsuit was filed on 14 November 2018, and is a suit for personal injury arising from an accident with the Wyatt vehicle which, according to the lawsuit, occurred on 24 August 2018 at approximately 2:00 a.m.?Upon investigation, police records showed that on 24 August 2018, at approximately 2:07 a.m., a 2016 GMC Denali, registered to Kyle Wyatt was involved in a hit & run accident in Fayetteville. At approximately 2:11 a.m., the vehicle was involved in a roll-over collision a short distance away from the first collision. The vehicle rolled onto its side in the Radio Shack parking lot. Video from Radio Shack shows two subjects exiting the vehicle through the sunroof. During the collision investigation completed by the police, Kyle Wyatt’s phone and wallet containing his ID were found at the scene. On 24 August 2018, Kyle Wyatt reported to Corporal Hutsell, with the Fayetteville Police Department, that he loaned his 2016 GMC Sierra Denali truck to two males he met at a bar. Kyle Wyatt stated he loaned it to them around 1:30 a.m. that morning (24 August 2018). Kyle Wyatt stated he met them at “Z330” and their names were Dustin and Jeremy. Kyle Wyatt stated he did not know their last names or their phone numbers. Kyle Wyatt told Corporal Hutsell that when he was at the bar, he was wearing a Miller Lite t-shirt. Corporal Hutsell noted Kyle having scratches on his right wrist, which Kyle stated happened the prior night, but he did not know how. Corporal Hutsell noted the injuries were consistent from that of an airbag deploying and hitting the driver’s wrist. The Insurance company was not aware of the actual facts when Kyle Wyatt reported the claim, and as a result of the false information provided by Kyle Wyatt, the insurance company paid $39,600.14 on the claim.

Danny Rice

On 06 June 2022, in the Circuit Court of Clay County (CR 2022-20), Danny Rice (36 of Berryville) entered a plea of guilty to one count of Fraudulent Insurance Acts (Class D Felony), one count of Theft of Property (Class C Felony), and one count of Forgery in the 2nd degree (Class C Felony).?He was sentenced to five (5) years of supervised probation on each count to run concurrently, was assessed court costs of $750, and was ordered to pay the remaining amount of restitution to Allstate Insurance. Throughout the time period of 01 November 2018, through 20 September 2019, Danny Rice was an agent for Allstate Insurance and submitted applications for life insurance policies on behalf of individuals that Rice knew, but without the individuals’ knowledge or consent.?The individuals interviewed stated that they did not give Rice permission to sign their names to any documents and had no knowledge of the same.?As a result of the fictitious applications submitted by Rice, Rice received commissions to which he was not entitled in the cumulative amount of $22,562.50.?An AIDCID investigator interviewed Danny Rice who was cooperative and gave a full confession.?As a result, Rice has already paid a significant amount of restitution back to Allstate Insurance.

Derek Hammonds

On 07 June 2022, in the Circuit Court of Pulaski County (CR 21-3631), Derek Hammonds entered a plea of guilty to one count of criminal attempt, theft of property (Class D Felony). He was sentenced to two years of supervised probation and was ordered to pay a $500 fine, plus court costs.??The sentence was issued pursuant to Act 346. Derek Hammonds’ Progressive Insurance policy cancelled at 12:01am on 1 Feb 2020 for non-payment. On 2 February 2020 at approximately 9:33 P.M., he was involved in a one car accident while his coverage was cancelled.?After the accident Derek Hammonds then went online and made a payment to reinstate the policy on 2 Feb 2020 at 10:53 P.M.?On 3 February 2020 at 10:19 A.M. he made a statement of “no loss” to a Progressive Agent asserting that his vehicle had not been in an accident since his loss of coverage. On 3 February at 1445 hrs., Derick Hammonds filed a claim with Progressive stating that on 2 February 2020 he swerved to avoid an object and struck a tree causing damage to his vehicle (during a period where he had asserted that he had no accidents).

Robert Ingram

On 02 June 2022, in the Circuit Court of Craighead County (CR 22-320), Robert Ingram entered a plea of guilty to one count of Fraudulent Insurance Act (Class D Felony).?He was sentenced to one year of supervised probation and was ordered to pay a $750 fine, plus court costs.??The sentence was issued pursuant to Act 346. On 17 December 2019, Robert Ingram took out an insurance policy with Progressive Insurance for his 2007 Suzuki Motorcycle that only had liability coverage.?According to the Jonesboro police report he called in to report that his motorcycle had been stolen on 02 January 2020, at 11:37 CST.?Mr. Ingram then called Progressive Insurance and added comprehensive coverage to his motorcycle policy on 02 January 2020, at 11:51 CST (14 minutes after the accident). He then reported a theft claim on 02 January 2020, at 12:31pm CST (40 minutes after binding coverage) to Progressive alleging that the theft happened after he bound the comprehensive coverage.

?Zalma on Insurance Blog Posting

• An Assignment of Claim Against Insurer After Insured Signed a Release is Worthless June 29, 2022
• The Problem With Blindly Changing Insurers June 28, 2022
• The Insured is Presumed to Know What His Policy Insures June 27, 2022
• Intentional Act Exclusion Defeats Claim for Defense & Indemnity June 24, 2022
• Chutzpah: Murder for Insurance Money Life Sentences Affirmed June 23, 2022
• A Policy Rescinded Never Existed June 22, 2022
• Insurance Videos to Help Provide Excellence in Claims Handling: Only on Locals.com June 21, 2022
• The Equitable Remedy of Rescission of Insurance: June 21, 2022
• Lawyer Admits to Insurance Fraud & Theft from Clients June 21, 2022
• Failure to Ask for Defense Eliminates Coverage Until Insured Asks June 20, 2022
• Bad Faith Set-Up Suit Fails June 17, 2022
• Accused of Fraud Failed to Promptly File Dispositive Motion June 16, 2022
• Zalma’s Insurance Fraud Letter – June 15, 2022 June 15, 2022
• Explaining Reasonable Conduct of Insurer June 8, 2022
• Reporting on an Accusation of Insurance Fraud Results in Defamation Suit June 8, 2022
• The Effect of the Tort of Bad Faith on the USA June 7, 2022
• A Reefer Trailer is a Vehicle June 7, 2022
• Fairly Debatable or Genuine Dispute Defenses to Bad Faith June 6, 2022
• Denial of Liability is not a Denial of Insurance Coverage June 6, 2022

True Crime Stories of Insurance Fraud

There are now available at https://rumble.com/zalma more than more than 81Video True Crime Stories of insurance fraud.

Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. This Video Blog of True Crime Stories of Insurance Fraud with the names and places changed to protect the guilty are all based upon investigations conducted by me and fictionalized to create a learning environment for claims personnel, SIU investigators, insurers, police, and lawyers better understand insurance fraud and weapons that can be used to deter or defeat a fraudulent insurance claim. You can see all the True Crime Stories of Insurance Fraud and insurance law with a total of more than 420 videos at https://rumble.com/zalma.

Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ Read posts from Barry Zalma at Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/

New Books:

The Equitable Remedy of Rescission of Insurance

An Effective Tool to detect, deter and defeat insurance Fraud Hardcover – June 17, 2022

The Equitable Remedy of Rescission

Rescission is an equitable remedy first created in the ecclesiastical courts of Elizabethan England. When the United States was conceived in 1776 the founders were concerned with protecting their rights under British common law.

Common Law is a form of law developed by judges through tribunals and decisions of courts rather than executive branch action and legislative statutes. Following the common law tradition, legal principles were referred to courts of equity to “mitigate the rigor” of the common law.

The new United States of America adopted British common law as the law once the U.S. Constitution was adopted in 1789. British common law was only modified by the limitations placed on the central government by the Constitution.

The viability and ability to enforce contracts was recognized as essential to commerce. Courts of law, following the British Common Law, were charged with enforcing legitimate contracts and rendering money judgments against the party who breached the contract.

It became clear, however, that some contract disputes cannot be resolved with a money judgment. Rather, it needed the assistance of the courts of equity whose judges, in the Elizabethan era were presided over by priests who were believed to be better able to render fair judgments.

The term “equity” is associated with notions of fairness, morality and justice. It is an ethical jurisdiction. On a more legalistic level, however, “equity” is the branch of law that was administered in the Court of Chancery prior to the Judicature Acts 1873 and 1875.

This was a jurisdiction evolved to achieve justice and to overcome the rigorous and deficiencies of the common-law. Although application of conscience pervades this aspect of the law, equity never bestowed an unfettered jurisdiction on the Court of Chancery to do what was fair in the settlement of a dispute. Embodying aspects of ecclesiastical law and Roman law, equity developed and gradually emerged as a distinct body of law.

It was not until 1875 that equity was practiced in the common law courts. The existence of a dual system entailed that, for example, when a defendant had an equitable defense to a common law action, he would have to go to the Court of Chancery to obtain an injunction to suspend the proceedings in common-law court. He would then begin a fresh action for relief in the Court of Chancery. Facing duality persisted until the Judicature Acts which created the Supreme Court of Judicature and allowed all courts to exercise both a common law and equitable jurisdiction.

The courts of equity were charged with, among other things, protecting contracting parties from mistake, fraud, misrepresentation and concealment where no damages were involved. It was the obligation of the courts of equity to reach a result that was fair to all of the parties to the contract. The founders of the United States, and the British common law, concluded that equity required that enforcing a contract based on mistake, fraud, misrepresentation or concealment would not be fair.

A court of equity is a court which can apply equitable remedies to disputes. These courts operate within the legal system, but rather than focusing on the application of law, they look at cases and determine outcomes based on fairness. They can be found in many regions of the world. In modern usage in the United States trial courts are empowered to handle both legal and equitable remedies. A court of equity can hand down a judgment which includes an equitable remedy such as an injunction, as opposed to simple monetary damages.

The judge in a court of equity can weigh many different sides to a case and explore different perspectives to arrive at a judgment.

Available as: A Kindle book A Paperback or a hardcover.

Insurance Fraudsters Deserve No Quarter

New Book That Explains How to Defeat or Deter Insurance Fraud

What every insurer should know about how it can be proactive in the efforts against insurance fraud by refusing to pay every fraudulent claim.

How Giving No Quarter Worked

Many years ago, a client I represented was offended that an insured tried to defraud him and the people who were names in the syndicate he represented at Lloyd’s, London. I walked the Underwriter through the debris of the house that was burned, showed him some of the remains of the allegedly highly valuable fine arts, and then explained how he was deceived into issuing the policy. I was the attorney for Lloyd’s underwriters for the fine arts and Imperial Casualty for the homeowners policy. Once it became clear to the Underwriter, I was given the following instruction: “Take No Prisoners!” The military instruction to give no mercy to the enemy.

Typically, if you give or grant no quarter, you treat someone—usually an opponent or foe of some kind—harshly. You don’t take pity on them or give them any leeway or concession. That is what I did. The claim was denied, the policy was rescinded, and the bad faith suit that resulted was litigated without quarter or concession. It took more than five years, a motion for summary judgment, an appeal, and eventually a judgment in favor of the insurers that resulted in payment to the insurers of every dollar advanced and every dollar expended in investigation and defense of the bad faith suit. That was followed by suits against the claims adjuster, death threats and a bomb threat that took 15 years of my professional life. The appellate decision can be read at Imperial Casualty & Indemnity Co. v. Sogomonian, 243 Cal.Rptr. 639, 198 Cal.App.3d 169 (Cal. App. 1988).

After Mr. Sogomonian and his co-defendants were compelled to pay fraudulent claims against Imperial and the Lloyd’s underwriters dropped precipitously. Giving no quarter to a fraud perpetrator not only defeated a fraudulent claim but deterred others from attempting fraud.

The Imperial v. Sogomonian case and many similar cases is why I am convinced that giving no quarter to a fraud perpetrator is the best way to deter and defeat insurance fraud and why I wrote this book to convince more insurance professionals to emulate the insurers that defeated the Sogomonian attempt at fraud.

Available as a paperback here. Available as a hardcover here. Available as a Kindle Book here.

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 54 years in the insurance business. He is available at https://www.zalma.com and [email protected].

Over the last 54 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.

Barry Zalma, Inc., 4441 Sepulveda Boulevard, CULVER CITY CA 90230-4847, 310-390-4455;

(c) 2022 Barry Zalma & ClaimSchool, Inc.

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 practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at https://www.zalma.com and [email protected].

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See the last two issues of ZIFL at https://zalma.com/zalmas-insurance-fraud-letter-2/

Write to Mr. Zalma at [email protected]; https://www.zalma.com; https://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/