Insurers Act to Defeat Fraud

GEICO Continues it Proactive Actions Against Insurance Fraud

Post 4821

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Insurers have found that states, like New York, will do little or nothing to deter insurance fraud. Determined to protect its assets and its insureds, many GEICO brand insurance companies have acted proactively against people and health care providers who are attempting to defraud them and their insureds. In Government Employees Insurance Company, et. al. v. Colin Clarke, M.D., Colin Clarke Md P.C., Svetlana Kovaleva a/k/a Melana Kay, Medical Evaluation Services & Billing, Inc., Medical Consultation Services & Billing, Inc., and John Doe Defendants, No. 1:23-CV-04605 (FB) (SJB), United States District Court, E.D. New York (June 20, 2024) the fraud perpetrators attempted to defeat GEICO’s RICO action by counterclaiming that GEICO committed fraud.

GEICO moved to dismiss the Clarke Defendants’ counterclaims and to strike twelve of their affirmative defenses.


GEICO sued Defendants for submitting allegedly fraudulent no-fault insurance claims to GEICO for services performed at Dr. Clarke’s healthcare practice, among other things. It brought claims for civil RICO violations, common law fraud, and unjust enrichment. GEICO also seeks a declaratory judgment that the Clarke Defendants have no right to receive payment for any pending bills submitted to GEICO.

In response, the Clarke Defendants counterclaimed against GEICO on allegations that GEICO has – through its insurance-claim verification process, committed fraud by reporting Dr. Clarke to the New York State Department of Health, and by bringing two RICO cases against Dr. Clarke, including this lawsuit.

The Clarke Defendants counterclaimed for: (i) common law fraud; (ii) aiding and abetting fraud; (iii) breach of the covenant of good faith and fair dealing; (iv) violation of N.Y. Gen. Bus. Law § 349; (v) abuse of process; (vi) and attorneys’ fees. GEICO moved to dismiss all counterclaims and to strike twelve of the Clarke Defendants’ affirmative defenses.


Under New York law, the elements of a common law fraud claim are: (i) material misrepresentation of a fact, (ii) knowledge of its falsity, (iii) intent to induce reliance, (iv) justifiable reliance by the claimant, and (v) damages.

The fraudulent conduct the Clarke Defendants allege is simply the non-performance of GEICO’s contractual duties to process no-fault and regarding the alleged thefts committed by the Kay Defendants, and GEICO’s alleged non-disclosure of those thefts. Since the Clarke Defendants’ conclusory allegations are insufficient to plead a claim for fraud and because vague and conclusory allegations that a defendant committed theft are insufficient to plead a cognizable fraud claim.


GEICO argued that the Clarke Defendants’ breach of contract claim must be dismissed because they have not alleged sufficient details about the underlying contracts or how their implicit duties were violated.

The Clarke Defendants conclusory allegations that they were assigned the contractual rights that GEICO owed to its insureds without any specific facts about those policies, when they were assigned, who they belonged to, what terms they contained, or on what basis GEICO denied claims submitted pursuant to their terms. Absent even minimal detail about the underlying contracts, the Clarke Defendants cannot sustain a claim that GEICO violated the implicit duties of good faith and fair dealing contained therein. Accordingly, this claim is dismissed.


To the extent that their abuse of process claim is predicated on this case or any other civil RICO action, the mere commencement of a lawsuit cannot serve as a basis for a cause of action alleging abuse of process.


GEICO’s motion to dismiss the Clarke Defendants’ counterclaims was granted; accordingly, those claims were dismissed. Its motion to strike the Clarke Defendants’ affirmative defenses was granted with respect to the Clarke Defendants’ Third, Twenty-Second, and Twenty-Third affirmative defenses; it is denied in all other respects. GEICO’s request to stay discovery pending adjudication of this motion is denied as moot.


States like New York have made insurance fraud – like that brought in the suit against the Clarke Defendants – only to do little or nothing to prosecute the crime. GEICO, frustrated as a victim of fraud, has become proactive and works to take the profit out of the crime of insurance fraud. They, and other proactive insurers, are becoming successful in New York and other states and should be emulated by other victims of insurance fraud.

(c) 2024 Barry Zalma & ClaimSchool, Inc.

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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