Zalma on Insurance Fraud – September 15, 2019


Zalma’s Insurance Fraud Letter  

The Reason for the Examination Under Oath

 Zalma’s Insurance Fraud Letter, Volume 23, No. 18

Some of the articles you can read in this issue of ZIFL follow:

The Reason for the Examination Under Oath

Courts that construe submission to an EUO as a condition precedent to recovery generally do not require the insurer to prove that it suffered actual prejudice from an insured’s unexcused refusal to submit to an examination. Lorenzo-Martinez v. Safety Ins. Co., 58 Mass. App. Ct. 359, 790 N.E.2d 692, 695-96 (2003). The EUO provides a mechanism for the insurer to corroborate the claim by obtaining information that is primarily or exclusively within the possession of the insured.

The adjuster, the independent adjuster, the Special Investigation Unit (“SIU”) investigator, the independent insurance adjuster and, in complex cases, the attorney retained to represent the insurer questions the person interviewed in a manner similar to a deposition in a legal proceeding. Because of the formality of the proceeding – it includes an oath, and the presence of a certified shorthand reporter – the task of establishing rapport with the person interviewed so that relevant information may be obtained from the insured is more difficult than in an informal interview. Unlike legal proceedings where questions are limited to those seeking a “yes” or “no” or brief answer the EUO seeks narrative responses from the person questioned.
The person taking the EUO, therefore, must be capable of transitioning from lawyer like questions in litigation to the broad, inquisitive, narrative seeking questioning. An EUO should never be conducted as if it is an adversarial activity but merely a fact seeking activity that is directed to the needs of an insurance policy and the need to prove a loss is either compensable or not.
Because the EUO is a tool for gleaning the maximum amount of information the EUO is an effective weapon against insurance fraud. This is because the person taking the EUO is knowledgeable about insurance and insurance law while the person being questioned is only aware of the claim presented and the fraud he or she may be attempting.
Often, however, the purpose of the EUO is not to stop fraud but to allow an insured the opportunity to prove his or her claim of loss in cases where evidence has been destroyed by a casualty or is otherwise unavailable.

From the Coalition on Immunity for Fraud Reporting


New York’s immunity law shields against defamation suits aimed at insurers by medical providers who are reported in good faith to the state for suspected fraud, urges an amicus brief filed by the Coalition Against Insurance Fraud and National Insurance Crime Bureau (NICB).
“A statute conferring presumptive immunity is, by its very nature, intended to function as a litigation shield, not as a litigation sword,” the anti-fraud groups contend in a case before the state’s highest court.
The decision could affect all states with similar immunity laws.
“Protecting good-faith immunity reporting is vital to a rigorous system of physician discipline that fights fraud and ensures consumers receive honest medical care from ethical providers,” says Matthew Smith, the Coalition’s director of government affairs.
“Health care fraud committed by unethical health care providers is estimated to cost consumers billions of dollars each year. The statute in question is meant to provide immunity to reporters of suspected fraud,” says Andrew Sosnowski, NICB’s general counsel. “This immunity is intended to act as a litigation shield, and encourage the reporting of suspected professional misconduct, deterring medical provider fraud, and saving consumers a great deal of money.”
A physician alleges he has an implied private right of defamation suit after Nationwide Mutual reported him for alleged misconduct.
New York law grants insurers and others immunity from defamation suits for reporting suspected medical provider misconduct in good faith to the state medical board, the Coalition and NICB counter.

 Starr Insurance Sues to Rescind Coverage for Plane Used by Lawyer Avenatti

A company part of Starr International Company Inc. has sued Michael Avenatti, the lawyer known for his battles with U.S. President Donald Trump to rescind coverage of an airplane that Avenatti used.
Starr Indemnity & Liability Company alleged that policies the company wrote for the plane should be rescinded because of allegations in a U.S. indictment against Avenatti appear to be able to be substantiated according to a complaint filed in the U.S. District Court in Los Angeles
Avenatti, 48, was indicted on April 11 on charges of defrauding clients, including allegations that he used $2.5 million of a client’s $2.75 million settlement payment to buy a portion of the $4.4 million Honda HA-420 jet, while falsely telling the client that the settlement would be paid out over an eight-year period.
California law is clear that a material misrepesentation of fact or a concealment of a material fact is sufficient to allow an insurer to rescind the policy. If Starr proves that – as the government has alleged – the plane was purchased with embezzled funds or as a result of a fraud against a client, it has a reasonable chance of success and will return the premium collected an the policy will be declared void from its inception.

Staged Collision not an Accident 

Those who attempt insurance fraud and are caught will usually attempt to disappear rather than litigate to recover for a claim an insurer can prove is fraudulent.
In Progressive Northwestern Insurance Co. v. Derrick Burnett, et al., Case No.: 2:18-cv-04243-NKL, United States District Court Western District of Missouri Central Division (August 27, 2019) Progressive Northwestern Insurance Co.’s moved for summary judgment against defendants Travis Bush and Laquent Palmer.
The case arose out of a vehicle collision that occurred at approximately 11:36 p.m. on July 14, 2018 in Columbia, Missouri involving Defendants Derrick Burnett, Jeanette Allen, Lorell Lawhorn, Courtney Lawhorn, Javion Lawhorn, Travis Bush, Laquent Palmer and Dakota Fogle. Plaintiff Progressive Northwestern Insurance Company sought a declaratory judgment regarding any duty it has to indemnity and defend under the liability provisions of its insurance policy with Allen.
On motion, a court must grant summary judgment when the “movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
Typically, the moving party submits a statement of facts that support judgment in the movant’s favor, and any opposing party responds by admitting or denying those facts. Local Rule 56.1 additionally provides that “[u]nless specifically controverted by the opposing party, all facts set forth in the statement of the movant are deemed admitted for the purpose of summary judgment.”
Neither Mr. Bush nor Mr. Palmer responded to or contested Progressive’s statement of facts or filed opposition of any kind to Progressive’s motion. Thus, all admissible facts asserted by Progressive were deemed admitted by Defendants, and the Court adopted the Statement of Uncontroverted Material facts submitted by Progressive.
The Uncontroverted facts established that Progressive is entitled to judgment as a matter of law.

Health Insurance Fraud Convictions

West Virginia Physician Sentenced for Illegal Opioid Distribution to Patients

Dr. Felix Brizuela, Jr., of Harrison City, Pennsylvania, was sentenced September 3, 2019 to 48 months incarceration for illegally distributing opioids.
Following a six-day trial in January 2019, the jury found Brizuela, age 58, guilty of 15 counts of “Distribution of Controlled Substances Outside the Bounds of Professional Medical Practice.” The jury acquitted Brizuela of anti-kickback counts and six other distribution counts in the indictment.
The controlled substances illegally distributed by Brizuela included Oxycodone, Fentanyl, and Oxymorphone. They were distributed without legitimate medical purpose and outside the scope of professional practice in Monongalia County, West Virginia between 2013 and 2015. settlement were originally alleged in two cases filed under the whistleblower, or qui tam, provision of the False Claims Act.  The act permits private parties to sue for fraud on behalf of the United States and to share in any recovery.  The act also permits the government to intervene in such actions, as the government previously did in the two whistleblower cases.

Other Insurance Fraud Convictions

Houston Woman Found Guilty in 2012 Capital Murder of Arlington Couple, Sentenced to Life

Dephne Wright, a Houston woman was sentenced to life without parole for her involvement in the 2012 killing of an Arlington couple.
A Tarrant County, Texas jury found 47-year-old Wright guilty of capital murder. Wright received the automatic life sentence.
Jurors believed that Wright paid two people to kill Long Nguyen, 72, and his wife Huong Ly, 63, in their Arlington home.
Willie Guillory, 24, testified in the trial that he was a Houston-area teenager in 2012 when he traveled to Arlington with his uncle Bobby Guillory, 56 – and bludgeoned Nguyen and Ly with a baseball bat he had made in high school wood shop class.
The younger Guillory faces a capital murder charge in the case but has agreed to cooperate with authorities for a reduced charge. He was a key witness in the trial.
Wright had been hired by Nguyen and Ly, who were both of Vietnamese descent, to cast spells and help the family business, prosecutors have previously said. Wright was found guilty of hiring the uncle and nephew to kill the couple and collect their life insurance.
Guillory, who was offered a chance to plead guilty to a reduced charge of aggravated robbery with a potential sentence of up to 20 years, said he was adopted by his uncle as a young boy and endured years of physical and sexual abuse.

Read the rest of this article and multiple convictions here.

Insurance Claims Library 

Everything Needed by the Insurance Claims Professional

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals. Mr. Zalma’s books are available for purchase at with details describing all of the materials at

The Current Issue Contains the Following:

  • The Reason for the Examination Under Oath
  • Barry Zalma
  • From the Coalition on Immunity for Fraud Reporting
  • Starr Insurance Sues to Rescind Coverage for Plane Used by Lawyer Avenatti
  • Good News from the Coalition Against Insurance Fraud
  • Staged Collision not an Accident
  • Health Insurance Fraud Convictions
  • Other Insurance Fraud Convictions
  • Excellence in Claims Handling Courses From 
  • Insurance Claims Library

Zalma on Insurance blog

The Zalma on Insurance blog has posted over 2650 digests of insurance appellate decisions and other important insurance materials and articles published five days or more a week and are available at
Zalma’s Insurance 101 that consists of 1022 three to four minute videos starting with “What is Insurance” and moving forward to insurance fraud investigations explaining the basics of insurance and insurance claims handling in a painless fashion that can be viewed every morning with the first cup of coffee at  Zalma’s Insurance 101.
If you start at Volume 1 at the bottom of the blog’s first page and view one or two videos a day you will have approximately 12 to 24 hours of training a year until you get to the last video.
The videoblog is adapted from my book, Insurance Claims: A Comprehensive Guide available at the Zalma Insurance Claims Library

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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