Efforts to Deter Insurance Fraud Continue
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and at https://zalma.com/blog plus more than 4100 posts.
Volume 26, Issue 5 – March 1, 2022, Subscribe to e-mail Version of ZIFL, it’s Free! Read last two issues of ZIFL here. Go to the Barry Zalma, Inc. web site here, Videos from “Barry Zalma on YouTube” Go to Barry Zalma videos at Rumble.com at https://rumble.com/zalma
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Quote of the Issue — “It Was a Wise Man Who Said That There Is No Greater Inequality Than the Equal Treatment of Unequals.” — Felix Frankfurter
THOROUGH INVESTIGATION DEFEATS FRAUD
Over the last 54 years in the insurance business, I have faced people with insurance claims who had, shortly before their claim, sworn to a bankruptcy court that they only had $500 in jewelry and minimal amounts of personal property to avoid losing their assets to their creditors. One even testified that he lied on his bankruptcy proceedings because he didn’t want his creditors to get his airplane. (He, by the way, went to jail for bankruptcy fraud and recovered nothing on his insurance claim). It is hard to answer when a person is asked which under oath statement is true: the bankruptcy filing or the claim. I always insist that a thorough investigation requires a review of bankruptcy filings.
In Rick Merechka v. Vigilant Insurance Company, a foreign corporation; Rick Merechka v. Vigilant Insurance Company, a foreign corporation, Nos. 19-3427, 19-3497, United States Court of Appeals, Eighth Circuit (February 16, 2022) the Eighth Circuit was faced with just such a situation and assumed that the statement made in the bankruptcy filing was true.
ZIFL OPINION
Merechka was patibulated in his own gibbet: he could not admit to his insurer or the court that he had lied in his bankruptcy petition since, to do so, would open him up to a federal felony; rather he had to lie to his insurer that he acquired all of his personal property after his bankruptcy – a financial impossibility. Vigilant is subrogated to the rights of the lender and can foreclose on the property and sell the land to regain its payments to the lender. The case will go back to the trial court and it should grant Vigilant’s motion for a judgment in subrogation.
False Swearing About ALE Defeats Entire Claim
When One Lies About an Insurance Claim He Will Never Prosper
John Ruiz, proceeding pro se, sued Liberty Mutual Fire Insurance Company (“Liberty Mutual”), asserting that Liberty Mutual breached two homeowner’s insurance policies by failing to pay plaintiff’s water damage claims. Liberty Mutual asserts two counterclaims, seeking to recover money it paid to plaintiff pursuant to those policies and to investigate plaintiff’s claims. In John Ruiz v. Liberty Mutual Fire Insurance Company, No. 19 CV 4399 (VB), United States District Court, S.D. New York (February 14, 2022) the pro se plaintiff proved the old saw that he had an idiot for a client.
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Man Bites Dog Story: GEICO Obtains Stay of Arbitrations from Pharmacy’s Fraudulent Billing
GEICO Proactive in Fight Against Millions of Dollars of Fraudulent No Fault Claims
No-Fault Insurance a Temptation to Fraudsters
The plaintiffs (GEICO) sued accusing the defendants of submitting fraudulent insurance claims for expensive, medically unnecessary topical pain products prescribed to people with soft tissue injuries, whom the plaintiffs insured. The defendants filed approximately 467 individual arbitrations through the American Arbitration Association and 48 individual lawsuits in New York state courts to collect on the same claims. Many of those actions are pending. GEICO moved to stay the arbitrations and enjoin the defendants from bringing any new arbitrations or lawsuits.
ZIFL OPINION
No-fault insurance was designed to save the public and insurers money. However, as this suit establishes, it also seems to have encouraged fraud by causing treatment for soft tissue injuries that are often cured with aspirin and heating pads by prescribing very expensive compound creams. Since each claim is small it takes a stay to resolve the issues and the USDC recognized that the fraud needs to stop to protect the parties and the intent of the statute that established no fault claims.
Insurance Fraud in Other Countries
The Extent of Insurance Fraud in New Zealand
Insurance Fraud is universal. Even at the other end of the earth, insurance fraud exists on the beautiful islands that make up New Zealand.
An Insurance Council of New Zealand survey in 2007 found that insurance claims fraud was approximately $150 million per annum. International surveys suggest that insurance fraud in most countries is somewhere around 10% of total premiums, which in New Zealand would make it around $450 million.
Somewhere between these 2 figures is a true level of insurance fraud in New Zealand. Obviously, no one is going to admit to a claim being fraudulent for statistical purposes, so any estimate must inevitably be quite subjective.
Health Insurance Fraud Convictions
Massachusetts Hospital Pays $14.6m For Over Billing for Overlapping Surgeries
Massachusetts General Hospital will pay $14.6 million to settle a lawsuit that alleged overbilling for double-booked surgeries that were simultaneously overseen by the same surgeon. It’s the third time since 2019 that the Harvard-affiliated teaching hospital agreed to pay millions to resolve a claim stemming from the same controversial practice.
The three out-of-court settlements reportedly totaled $32.7 million.
Massachusetts health insurers will share in the settlement money according to Attorney General Maura Healey, whose office approved the settlement.
The case stemmed from a whistleblower who said five orthopedic surgeons kept patients under anesthesia longer than necessary because they were juggling procedures in dual operating rooms. Dr. Lisa Wollman, an anesthesiologist, alleged the hospital violated Medicare and Medicaid rules that require surgeons to be present for critical parts of operations and also failed to designate a backup surgeon for trainees who might need immediate help.
The lawsuit alleged government insurance programs were overbilled for anesthesia services because procedures were prolonged by surgeons moving back and forth between operating rooms. Dr. Wollman reportedly said that her career but that she feels she did the right thing by speaking up.
Attempts by Government to Compel Ethical Behavior
Other Insurance Fraud Convictions
Louisiana Department of Insurance Issues Regulatory Actions Against Four Agents
Brandi Crawford was issued a Cease-and-Desist Order and License Suspension for allegedly collecting at least $4,152.64 in policyholder premiums that was not deposited with the insurer. Louisiana Department of Insurance (LDI) records showed Crawford was issued an insurance producer license for Life, Accident and Health or Sickness, and Industrial Fire on Oct. 15, 2019.
Houston Thomas was issued a Cease-and-Desist Order and License Suspension for allegedly creating a fraudulent flood insurance policy declarations page and submitting the fraudulent document to a lender. LDI records showed that Thomas was issued an insurance producer license on Sept. 17, 2016.
Lucas King was issued a Cease-and-Desist Order and License Suspension for allegedly misappropriating over $7,000 in premiums. LDI records showed that King held a non-resident individual producer license in Louisiana effective May 31, 2019, until Aug. 30, 2022.
Wendy Fox-Breaux, an individual producer and owner of Fox Insurance Agency, was issued a License Revocation and $5,000 Fine Notice following several complaints. These alleged violations included collecting policyholder premiums that were not deposited with insurers and failing to return unearned commissions or premiums. LDI records showed that Fox-Breaux was issued a producer license on Nov. 18, 2019, and Fox Insurance Agency, LLC has been a producer agency since Feb. 20, 2013.
All producers listed above have 30 days from the time of service to request an administrative appeal or the actions will become final.
True Crime Stories of Insurance Fraud
There are now available at https://rumble.com/zalma 26 Video True Crime Stories of insurance fraud. The latest is called “Life Insurance Can Be Hazardous to Your Health”.
© 2022 – Barry Zalma
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.
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You may find interesting the podcast “Zalma On Insurance” at https://anchor.fm/barry-zalma; you can follow Mr. Zalma on Twitter at; you should see Barry Zalma’s videos on https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg/featured; or videos on https://rumble.com/zalma. Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims–library/ The last two issues of ZIFL are available at https://zalma.com/zalmas-insurance-fraud-letter-2/
Convicted Criminal Seeks to Compel Receiver to Protect his Assets
Post number 5291
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The Work of a Court Appointed Receiver is Constitutionally Protected
In Simon Semaan et al. v. Robert P. Mosier et al., G064385, California Court of Appeals, Fourth District, Third Division (February 6, 2026) the Court of Appeals applied the California anti-SLAPP statute which protects defendants from meritless lawsuits arising from constitutionally protected activities, including those performed in official capacities. The court also considered the doctrine of quasi-judicial immunity, which shields court-appointed receivers from liability for discretionary acts performed within their official duties.
Facts
In September 2021, the State of California filed felony charges against Simon Semaan, alleging violations of Insurance Code section 11760(a) for making...
When There are Two Different Other Insurance Clauses They Eliminate Each Other and Both Insurers Owe Indemnity Equally
Post number 5289
In Great West Casualty Co. v. Nationwide Agribusiness Insurance Co., and Conserv FS, Inc., and Timothy A. Brennan, as Administrator of the Estate of Pat- rick J. Brennan, deceased, Nos. 24-1258, 24-1259, United States Court of Appeals, Seventh Circuit (February 11, 2026) the USCA was required to resolve a dispute that arose when a tractor-trailer operated by Robert D. Fisher (agent of Deerpass Farms Trucking, LLC-II) was involved in a side-impact collision with an SUV driven by Patrick J. Brennan, resulting in Brennan’s death.
Facts
Deerpass Trucking, an interstate motor carrier, leased the tractor from Deerpass Farms Services, LLC, and hauled cargo for Conserv FS, Inc. under a trailer interchange agreement. The tractor was insured by Great West Casualty Company with a $1 million policy limit, while the trailer was insured by Nationwide Agribusiness Insurance Company with a $2 million ...
Opiod Producer Seeks Indemnity from CGL Insurers
Post number 5288
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Insurers Exclude Damages Due to Insured’s Products
In Matthew Dundon, As The Trustee Of The Endo General Unsecured Creditors’ Trust v. ACE Property And Casualty Insurance Company, et al., Civil Action No. 24-4221, United States District Court, E.D. Pennsylvania (February 10, 2026) Matthew Dundon, trustee of the Endo General Unsecured Creditors’ Trust, sued multiple commercial general liability (CGL) insurers for coverage of opioid-related litigation involving Endo International PLC a pharmaceutical manufacturer.
KEY FACTS
Beginning as early as 2014, thousands of opioid suits were filed by governments, third parties, and individuals alleging harms tied to opioid manufacturing and marketing.
Bankruptcy & Settlements
Endo filed Chapter 11 in August 2022; before bankruptcy it ...
Passover for Americans
Posted on February 19, 2026 by Barry Zalma
“The Passover Seder For Americans”
For more than 3,000 years Jewish fathers have told the story of the Exodus of the enslaved Jews from Egypt. Telling the story has been required of all Jewish fathers. Americans, who have lived in North America for more than 300 years have become Americans and many have lost the ability to read, write and understand the Hebrew language in which the story of Passover was first told in the Torah. Passover is one of the many holidays Jewish People celebrate to help them remember the importance of G_d in their lives. We see the animals, the oceans, the rivers, the mountains, the rain, sun, the planets, the stars, and the people and wonder how did all these wonderful things come into being. Jews believe the force we call G_d created the entire universe and everything in it. Jews feel G_d is all seeing and knowing and although we can’t see Him, He is everywhere and in everyone.We understand...
Passover for Americans
Posted on February 19, 2026 by Barry Zalma
Read the full article at https://www.linkedin.com/pulse/passover-americans-barry-zalma-esq-cfe-5vgkc.
“The Passover Seder For Americans”
For more than 3,000 years Jewish fathers have told the story of the Exodus of the enslaved Jews from Egypt. Telling the story has been required of all Jewish fathers. Americans, who have lived in North America for more than 300 years have become Americans and many have lostthe ability to read, write and understand the Hebrew language in which the story of Passover was first told in the Torah.
Passover is one of the many holidays Jewish People celebrate to help them remember the importance of G_d in their lives. We see the animals, the oceans, the rivers, the mountains, the rain, sun, the planets, the stars, and the people and ...
You Get What You Pay For – Less Coverage Means Lower Premium
Post number 5275
Posted on January 30, 2026 by Barry Zalma
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When Experts for Both Sides Agree That Two Causes Concur to Cause a Wall to Collapse Exclusion Applies
In Lido Hospitality, Inc. v. AIX Specialty Insurance Company, No. 1-24-1465, 2026 IL App (1st) 241465-U, Court of Appeals of Illinois (January 27, 2026) resolved the effect of an anti-concurrent cause exclusion to a loss with more than one cause.
Facts and Background
Lido Hospitality, Inc. operates the Lido Motel in Franklin Park, Illinois. In November 2020, a windstorm caused one of the motel’s brick veneer walls to collapse. At the time, Lido was insured under a policy issued by AIX Specialty Insurance Company which provided coverage for windstorm damage. However, the policy contained an exclusion for any loss or damage directly or indirectly resulting from ...
