Zalma’s Insurance Fraud Letter – May 15, 2019

 Zalma’s Insurance Fraud Letter   

Failure to Appear for EUO is a Breach of a Material Condition

Failure to Appear for EUO is a Breach of a Material Condition 

The examination under oath is one of the most effective tools against insurance fraud. It is a condition precedent to recovery of indemnity on almost every first party property policy. Refusal to appear is usually sufficient to allow an insurer to deny a claim even if the claim is otherwise recoverable.

Staged Accident Can Never Be a Covered Event

In 21st Century Insurance/21st Century Advantage Insurance Company/21st  Century National Insurance Company v. Marie Baptisye et al., Index No.: 156199/2013, 2019 NY Slip Op 30781(U), Supreme Court of the State of New York County of New York: Part 63 (March 29, 2019) the insurer sought summary judgment against the answering Defendants, Doctor Goldshteyn Chiropractic, P.C., Mind & Body Acupuncture P.C., One to One Rehab PT, P.C., Remedial Medical Care P.C., Skillman Medical Diagnostic, P.C., Sharp View Diagnostic Imaging, P.C., and Easy Care Acupuncture P.C., for a declaration that: (a) Defendants Ralph Magny (Magny), Daphne Rympel (Rympel), and Hans Deetjen (Deetjen) because they breached a material condition precedent to coverage by refusing and failing to appear for an Examination Under Oath (EUO). In addition Plaintiff asked for a ruling that it is not obligated to pay, honor, or reimburse any of the answering Defendants for any claims that were submitted for any No-Fault reimbursement on behalf of Magny, Rympel, and Deetjen; and (b) the incident of April 7, 2011 because the reported accident was staged and not a covered event, such that Plaintiff is not required to pay any sums arising out of the alleged incident.

Insurance Fraud Conviction for Issuing Fake Policies Affirmed

When an employee of an insurance company defrauds the insurer by creating false policies and taking commissions from policies never issued or paid and then collecting on claims from the false policies is not only insurance fraud but violation of multiple federal statutes. In United States of America v. Patricia Diane Smith Sledge, No. 17-50363, United States Court of Appeals for the Ninth Circuit (March 11, 2019) Patricia Sledge appealed from her jury conviction and sentence for mail fraud and witness tampering.

Murder for Life Insurance Money Results in Life in Prison

When the Judge Does not Agree to Sentence as Part of Plea There is no Limit on the Trial Court
Kevin Pushia purchased multiple life insurance policies on the life of a disabled person he claimed was his brother. He then, working with others, caused Lemuel Wallace to be murdered violently so he collect on the life insurance policies. He assisted the prosecution by testifying against his co-defendants who participated in the scheme. On August 27, 2010, in the Circuit Court for Baltimore City, Kevin Pushia pled guilty to conspiracy to commit murder and to seven counts of insurance fraud. On October 17, 2011, the circuit court sentenced appellant to life plus 45 years.
In Kevin Pushia v. State of Maryland, No. 00739, Court of Special Appeals of Maryland, Case No. 109162003, 11008057-063 (April 29, 2019) Pushia appealed claiming that the plea deal limited the amount of time he could be sentenced.

Health Insurance Fraud Convictions 

Rehab Doctor Admits Ordering $10 Million in Phony Drug Tests

Domenick Braccia admitted he participated in a ring that targeted out-of-network insurers to maximize reimbursements for unnecessary tests, court records show. In his case, court records show fraudulent claims of more than $9.5 million were sent to Independence Blue Cross of Philadelphia and federal employee health benefit plans, causing losses of more than $2.4 million.
Braccia, a Pennsylvania physician who co-owned a small network of substance abuse rehabilitation centers pleaded guilty to signing orders for nearly $10 million in unnecessary urine and allergy tests, prosecutors said.
He also is one of 11 people facing state charges following a Pennsylvania statewide grand jury investigation into fraudulent health care billing. That investigation is ongoing. In total, Independence Blue Cross was billed for more than $33 million and paid out more than $4 million for unnecessary work, according to Pennsylvania Attorney General Josh Shapiro.
Braccia was the medical director for three Philadelphia-area substance abuse facilities known as Liberation Way, records show. According to the records, Braccia allegedly signed blank forms for drug-testing orders that were handed out by other employees who were not physicians.
He often did not evaluate the patients and did not visit one of the three facilities at all, the court records show.
Liberation Way owners also gave employees cash incentives to ensure every patient submitted as many samples as their insurance would cover. Liberation Way allegedly billed the insurers at “exorbitant” amounts, court records said, and the tests were sent to Florida laboratories that kicked back some of the payments to the owners.
Liberation Way also allegedly operated a cycle of addiction “treatment” that illegally directed patients to live at company-owned, unlicensed ‘sober homes’ to increase the amount of treatment time for which it could bill insurers. Patients who relapsed would reenter treatment at a higher level of care, which resulted in Liberation Way billing for even higher rates of reimbursement so that patients were cycled through treatment as many times as possible, up to eight times.
Court records showed Braccia already made a payment of $1.2 million in penalties.
A sentencing date has not been made public. He still faces the state charges, according to Pennsylvania records.
A New Jersey physician, Ramesh Sarvaiya, pleaded guilty last month in federal court for his role in the scheme.
Patient Recruiter Sentenced for Role In $1.6 Million Kickback Scheme
Yamilet Diaz, 50, of Hialeah, Florida, was sentenced by U.S. District Judge James I. Cohn of the Southern District of Florida.  After a four-day trial in February 2019, which Judge Cohn presided over, Diaz was convicted of one count of conspiracy to defraud the United States and to receive health care kickbacks and four counts of receiving health care kickbacks.
Diaz, a South Florida patient recruiter was sentenced to 87 months in prison May 8, 2019 for her role in a scheme involving approximately $1.6 million in Medicare claims for home health care services that were procured through the payment of kickbacks.
According to evidence presented at trial and at sentencing, from approximately February 2012 to August 2013, Diaz received kickbacks in return for referring Medicare beneficiaries to five South Florida home health agencies to serve as patients.  The evidence established that Diaz and her co-conspirators caused Medicare to make over $1.6 million in payments to the home health agencies based upon claims for home health services submitted on behalf of the beneficiaries recruited by Diaz.  The evidence further established that Diaz personally benefited from the fraud and received at least $710,000.
New York Diagnostic Testing Facility Owners Plead Guilty
Tea Kaganovich, 47, and Ramazi Mitaishvili, 58, a married couple, both of Brooklyn, New York, each pleaded guilty to one count of health care fraud and one count of conspiracy to defraud the lawful functions of the IRS before U.S. Magistrate Judge Steven M. Gold of the Eastern District of New York.  Sentencing has been scheduled for July, 18, 2019, before U.S. District Judge Margo K. Brodie of the Eastern District of New York.
The two New York diagnostic testing facility owners pleaded guilty May 8, 2019 for their roles in a more than $18.5 million health care fraud scheme.
The defendants were the co-owners of several diagnostic testing facilities in Brooklyn, including Sophisticated Imaging Inc., East Coast Diagnostics Inc., East Shore Diagnostics Inc., East West Management Inc. and RM Global Health Inc. As part of their guilty pleas, Kaganovich and Mitaishvili admitted that they executed a scheme in which they submitted fraudulent health care claims for diagnostic testing services.
The defendants admitted that they paid approximately $18.5 million in kickbacks for the referral of beneficiaries who submitted themselves to diagnostic testing and other purported medical services. Kaganovich and Mitaishvili falsely reported to the IRS that the illegal kickback payments were legitimate business expenses, which caused relevant tax forms to falsely under-report business income and claim deductions, they further admitted.
Nigerian Guilty to Role in $8.3 Million Medicare Fraud Scheme
Ayodeji Temitayo Fatunmbi, 47, pleaded guilty to one count of conspiracy to commit health care fraud and one count of conspiracy to commit money laundering before U.S. District Judge Christina A. Snyder of the Central District of California.  Fatunmbi was extradited from Nigeria to the Central District of California in October of 2018 on charges contained in a May 2013 indictment.  Sentencing has been scheduled for Aug. 19, 2019 before Judge Snyder.
The Nigerian man pleaded guilty May 8, 2019 for his role in a durable medical equipment (DME) scheme that fraudulently billed more than $8 million dollars to Medicare for DME that was not medically necessary.
As part of his guilty plea, Fatunmbi admitted that he and others paid cash kickbacks to patient recruiters and physicians for fraudulent prescriptions for DME such as power wheelchairs, which the Medicare beneficiaries did not need.  Fatunmbi and co-conspirators caused Lutemi Medical Supply (Lutemi), a DME supply company that he co-ran, to submit approximately $8.3 million in claims to Medicare, which resulted in the company being paid over $3.5 million.  Fatunmbi further admitted that he was responsible for $2,090,434 in false and fraudulent claims for medically unnecessary DME and that as a result of his conduct, Medicare paid Lutemi a total of $1,076,893.  In furtherance of this scheme, Fatunmbi and a co-conspirator wrote checks from Lutemi’s bank account to Lutemi employees and others, and Fatunmbi instructed that those monies be returned to him to pay the illegal cash kickbacks to the patient recruiters and doctors, he admitted.  Fatummbi admittedly directed others at Lutemi to engage in these transactions to conceal the nature and source of the proceeds of the health care fraud conspiracy.  As part of his plea agreement, Fatunmbi agreed to pay restitution to Medicare in the amount of $1,076,893.
Fatunmbi was charged along with Olufunke Ibiyemi Fadojutimi, 47, of Carson, California, and Maritza Elizabeth Velasquez, 44, of Las Vegas, Nevada.  Velasquez pleaded guilty on July 24, 2013, to one count of conspiracy to commit health care fraud, and was sentenced to 15 months in prison and restitution in the amount of $3,411,428.  Fadojutimi was found guilty after a jury trial on July 31, 2014, of one count of conspiracy to commit health care fraud, seven counts of health care fraud and one count of money laundering, and sentenced to four years in prison and restitution in the amount of $4,372,466.  In her sentencing, Fadojutimi was held responsible for the full amount of over $8 million in intended losses caused by the fraud at Lutemi.

© 2019 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

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 50 years in the insurance business. He is available at and

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

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.

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

A Handbook for the Liability Claims Adjuster

This Compact Book of Adjusting Liability Claims is designed to The Compact Book Of Adjusting Liability Claims Second Edition: A Handbook for the Liability Claims Adjusterprovide the new adjuster with a basic grounding in what is needed to become a competent and effective insurance adjuster. It is also available as a refresher for the experienced adjuster.

The liability claims adjuster quickly learns that there is little difficulty with a claimant (the person alleging bodily injury or property damage against a person insured) if the claim is paid as demanded. The insured may be unhappy if the claimant’s claim is paid as presented since most do not believe they did anything wrong or fear an increase in premiums charged for subsequent policies.

The adjuster must be prepared to salve the insured’s emotions, explain why in the law and the policy it was appropriate to pay the claimant and that the settlement is in the best interest of both the insured and the insurer the adjuster represents.
The adjuster knows, and must be prepared to explain to an insured, that if a claim is resisted or denied the claimant will be unhappy, will probably file suit. If not promptly settled the claimant’s lawyers will rake the insured over the coals to prove that the insured is liable for the claimant’s injuries. The litigation will take time, effort, and money to establish the extent of the injuries and who is responsible for the injuries. Failure to settle promptly can cost the insured his or her reputation and will certainly cost the insurer much more than the claim could have been resolved for had it been resolved before the claimant retained a lawyer.

Available as a Kindle book

Available as a paperback.

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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