Zalma’s Insurance Fraud Letter – June 15, 2022

ZIFL Volume 26 Issue 12

Zalma’s Insurance Fraud Letter Contains articles on the following subjects in great detail at ZIFL-06-15-2022. The following are some of the articles available with the full 20 pages available at the link.

Insurance Fraud & the States

State insurance departments near the turn of the century recognized that insurance fraud is a serious crime taking multiple billions of dollars from the insurance industry. Local police and prosecutors were not concerned, even after insurance fraud was made a felony, because no one suffered physical injury or death. Insurance fraud just cost a lot of money to insurers who were perceived as extremely wealthy and more victimizers than victim.

Since almost no one was being prosecuted for insurance fraud states, like California, enacted statutes that required insurers to thoroughly investigate all claims, institute a special fraud investigation unit whose only purpose was to detect, investigate, gather evidence, and present that evidence to prosecutors to prosecute the crime. The Special Investigation Units (SIU) did the work only to find most of their investigations ignored and their successes received little or no encouragement from the insurers and the state. Both wanted all claims settled quickly and fairly. The sales people could not explain why their fraud perpetrator clients were being placed under oath and asked to prove their loss rather than just receive a quick and unquestioned check.

Reporting On an Accusation of Insurance Fraud Results in Defamation Suit

Fair Report Privilege Protects Reports of Insurance Fraud

Fox Television Stations, LLC (Fox), William Melugin, Daniel Leighton, and Kris Knutsen (collectively, the Fox defendants) appealed from orders denying their special motions to strike (Code Civ. Proc., § 425.16; anti-SLAPP statute) the complaint filed by Dr. Jay W. Calvert, a nationally recognized plastic surgeon, and Jay Calvert, M.D., Professional Corporation (the professional corporation) (collectively, the Calvert plaintiffs). In Jay W. Calvert et al. v. Fox Television Stations, LLC et al., B310772, California Court of Appeals, (May 25, 2022) the Court of Appeal reversed the trial court’s decision.

Person Accused of Fraud Failed to Promptly File Dispositive Motion

Provider To PIP Insured Not a Party to Contract

Plaintiffs Hartford Accident and Indemnity Company, Property & Casualty Ins. Company of Hartford, Trumbull Insurance Company, and Twin City Fire Insurance Company (together, “Hartford”) claim that Defendant Greater Lakes Ambulatory Surgical Center LLC submitted fraudulent claims for no-fault benefits for treatment of individuals who were in auto accidents. Hartford asserts claims of fraud, silent fraud, and unjust enrichment.

In Hartford Accident and Indemnity Company, et al. v. Greater Lakes Ambulatory Surgical Center LLC, No. 18-cv-13579, United States District Court, E.D. Michigan, Southern Division (May 26, 2022) Greater Lakes moved for leave to file a motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c), arguing that Hartford’s tort claims must be dismissed because the parties’ relationship is governed by contract.

Health Insurance Fraud Convictions

Osteopathic Physician Admits Illegally Prescribing Drug

Matthew Steven Miller, 43, pleaded guilty in front of U.S. District Judge Ronnie L. White to one count of obtaining a controlled substance by fraud and one count of making a false statement concerning a health care matter.

Miller, an osteopathic physician from Collinsville, Illinois pleaded guilty in U.S. District Court and admitted illegally prescribing an anti-anxiety drug.

Miller admitted illegally writing prescriptions for the anti-anxiety drug Xanax for six people between 2016 and 2018. He did not have a doctor-patient relationship with them, had not examined them, had not determined that they needed the drug and did not document the prescriptions, his plea agreement says. On some occasions, they sold the drugs and split the money with Miller, his plea says.

Miller wrote the prescriptions despite not being licensed by Missouri’s Bureau of Narcotics and Dangerous Drugs and lacking a Drug Enforcement Administration registration number necessary to do so.

Miller was licensed to practice medicine in Missouri, Michigan and New Jersey.

Other Insurance Fraud Convictions

Jacksonville Contractor Pleads Guilty to Felony Home Repair Fraud

Clint A. Stevens, 45, the owner of a Jacksonville construction company pleaded guilty to home repair fraud May 24, 2022 in Morgan County Court.

Stevens, the owner of C&A Construction, pleaded guilty to home repair fraud, a Class 4 felony. The single charge stems from an arrest by Jacksonville Police on April 12th, 2021 after an investigation.

According to the charges, Stevens misrepresented material facts relating to terms of a contract or promised performance, saying September 28, 2020 that he would start repairs on a home on Pintail Court by October 2020 and then didn’t initiate the work.

Underwriting & Rescission

Rescission as a Weapon Against Insurance Fraud

Since the turn of the century the plaintiffs’ bar has attempted to defeat the remedy of rescission and allow their clients more access to courts of law assessing damages against insurers and avoid equity courts who, if rescission was established, would have no right to damages at law. The plaintiff’s bar created the concept of “post loss underwriting” (an oxymoron) to convince a court that the insurer did not use the remedy of rescission properly and force the insurer to pay a claim on a policy issued by deception even when the attempts to get damages from an insurer that has established all of the elements needed to prove the right to rescission.

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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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