Fraudsters Seem to Have Unlimited Funds to Fund Attempts to Change Conviction
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The case involved fraudulently billing of Blue Cross Blue Shield of Texas (“BCBS”) for hearing aids. On March 8, 2018, a jury convicted Terry Anderson of Counts One – Fifteen, and Rocky Anderson of Counts One – Four, Six, and Eight – Fifteen of the Superseding Indictment. The Court later found there was insufficient evidence to convict the Defendants on Counts One and Eight, acquitted the Defendants of those counts, and entered judgment on the other counts of conviction.
The Defendants appealed to the Fifth Circuit, and the Fifth Circuit affirmed the judgment (ECF Nos. 252-53). The Defendants now move for a new trial under Federal Rule of Criminal Procedure 33(b), claiming newly discovered evidence, in United States Of America v. Terry Lynn Anderson (1) Rocky Freeland Anderson, No. 3:17-CR-00222-M, United States District Court, N.D. Texas, Dallas Division (April 15, 2022).
ANALYSIS
The Defendants’ Motion for a New Trial was untimely under Rule 33(b)(1) because the Defendants filed this Motion for New Trial three years and ten months after the jury returned its verdict. The time to file a motion for new trial could not be extended because Defendants did not show excusable neglect.
The Government had more than 38 potential witnesses, who testified or were interviewed about events that took place over a decade ago, and at least one of them is now dead. It is reasonable to assume that the surviving witnesses’ memories of the events in issue have diminished and would continue to deteriorate until a new trial occurred. These factors significantly prejudice the Government.
The Motion Fails on the Merits
Even if the Court reached the merits, the Motion would have been denied.
The Defendants were convicted of health care fraud for submitting insurance claims for hearing aids that were medically unnecessary and for which Defendants did not conduct the requisite examinations.
The Defendants contend that two pieces of information constitute newly discovered evidence that, if admitted, would result in an acquittal: first, they cite the end, in
January 2022, of a DOJ criminal investigation into the hearing aid company, Eargo, Inc.; and second, they reference an FDA rule proposed in October 2021, that would permit some hearing aids to be sold over-the-counter, without requiring an examination by a professional. None of this information is relevant to the Defendants’ convictions, would not be admitted at trial, would not require Brady/Giglio production, and thus, would not probably produce an acquittal.
The unrelated investigation into Eargo is not new evidence that would entitle Defendants to a new trial. Defendants contend that the Government has access to evidence underlying DOJ’s decision not to prosecute Eargo criminally that would exculpate Defendants, because Defendants were also investigated for insurance fraud due to submissions for reimbursement for hearing aids.
DISCUSSION
Evidence from an unrelated DOJ investigation in 2021-2022 is not relevant to the Defendants’ actions, state of mind, and criminal intent during 2011-2014, which was the subject of the case against the Andersons.
The second alleged new evidence, a proposed FDA rule that would establish a new category of hearing aids that could be sold over-the-counter, without a hearing test, also does not constitute evidence that would entitle Defendants to a new trial. First, a change in the law does not constitute newly discovered evidence. Even if it did, the proposed rule is not relevant to Defendants’ fraud scheme, because Defendants were not selling over-the-counter hearing aids, but rather, were providing traditional hearing aids, subject to reimbursement by insurance companies.
Since the proposed FDA rule would not be admissible at trial, and therefore would not result in an acquittal; thus, the Motion failed on the merits.
Because Defendants’ Motion for a New Trial was untimely, and further did not cite newly discovered admissible evidence which would probably result in an acquittal of Defendants, the Motion for New Trial was denied.
ZALMA OPINION
Insurance fraud is a highly profitable and unusually effective crime. Even when the fraud perpetrators are caught, convicted and sentenced they have access to the millions of dollars they took from the insurers and the government from the fraud scheme, they can fund an appeal and when that fails, a tardy motion for new trial based on fairly spurious grounds. The USDC took the motion seriously and wrote a detailed opinion explaining why the motion – obviously not warranted and filed late – was a ludicrous waste of the court’s time and should have resulted in sanctions. It did not.
(c) 2022 Barry Zalma & ClaimSchool, Inc.
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. He is available at http://www.zalma.com and [email protected].
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Jury’s Findings Interpreting Insurance Contract Affirmed
Post 5105
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Madelaine Chocolate Novelties, Inc. (“Madelaine Chocolate”) appealed the district court’s judgment following a jury verdict in favor of Great Northern Insurance Company (“Great Northern”) concerning storm-surge damage caused by “Superstorm Sandy” to Madelaine Chocolate’s production facilities.
In Madelaine Chocolate Novelties, Inc., d.b.a. The Madelaine Chocolate Company v. Great Northern Insurance Company, No. 23-212, United States Court of Appeals, Second Circuit (June 20, 2025) affirmed the trial court ruling in favor of the insurer.
BACKGROUND
Great Northern refused to pay the full claim amount and paid Madelaine Chocolate only about $4 million. In disclaiming coverage, Great Northern invoked the Policy’s flood-exclusion provision, which excludes, in relevant part, “loss or damage caused by ....
Failure to Name a Party as an Additional Insured Defeats Claim
Post 5104
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Contract Interpretation is Based on the Clear and Unambiguous Language of the Policy
In Associated Industries Insurance Company, Inc. v. Sentinel Insurance Company, Ltd., No. 23-CV-10400 (MMG), United States District Court, S.D. New York (June 16, 2025) an insurance coverage dispute arising from a personal injury action in New York State Supreme Court.
The underlying action, Eduardo Molina v. Venchi 2, LLC, et al., concerned injuries allegedly resulting from a construction accident at premises owned by Central Area Equities Associates LLC (CAEA) and leased by Venchi 2 LLC with the USDC required to determine who was entitled to a defense from which insurer.
KEY POINTS
Parties Involved:
CAEA is insured by Associated Industries Insurance Company, Inc. ...
Exclusion Establishes that There is No Duty to Defend Off Site Injuries
Post 5103
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Attack by Vicious Dog Excluded
In Foremost Insurance Company, Grand Rapids, Michigan v. Michael B. Steele and Sarah Brown and Kevin Lee Price, Civil Action No. 3:24-CV-00684, United States District Court, M.D. Pennsylvania (June 16, 2025)
Foremost Insurance Company (“Foremost”) sued Michael B. Steele (“Steele”), Sarah Brown (“Brown”), and Kevin Lee Price (“Price”) (collectively, “Defendants”). Foremost sought declaratory relief in the form of a declaration that
1. it owes no insurance coverage to Steele and has no duty to defend or indemnify Steele in an underlying tort action and
2. defense counsel that Foremost has assigned to Steele in the underlying action may withdraw his appearance.
Presently before the Court are two ...
ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional
See the full video at https://lnkd.in/gK_P4-BK and at https://lnkd.in/g2Q7BHBu, and at https://zalma.com/blog and at https://lnkd.in/gjyMWHff.
Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
This issue contains the following articles about insurance fraud:
Health Care Fraud Trial Results in Murder for Hire of Witness
To Avoid Conviction for Insurance Fraud Defendants Murder Witness
In United States of America v. Louis Age, Jr.; Stanton Guillory; Louis Age, III; Ronald Wilson, Jr., No. 22-30656, United States Court of Appeals, Fifth Circuit (April 25, 2025) the Fifth Circuit dealt with the ...
Professional Health Care Services Exclusion Effective
Post 5073
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This opinion is the recommendation of a Magistrate Judge to the District Court Judge and involves Travelers Casualty Insurance Company and its duty to defend the New Mexico Bone and Joint Institute (NMBJI) and its physicians in a medical negligence lawsuit brought by Tervon Dorsey.
In Travelers Casualty Insurance Company Of America v. New Mexico Bone And Joint Institute, P.C.; American Foundation Of Lower Extremity Surgery And Research, Inc., a New Mexico Corporation; Riley Rampton, DPM; Loren K. Spencer, DPM; Tervon Dorsey, individually; Kimberly Dorsey, individually; and Kate Ferlic as Guardian Ad Litem for K.D. and J.D., minors, No. 2:24-cv-0027 MV/DLM, United States District Court, D. New Mexico (May 8, 2025) the Magistrate Judge Recommended:
Insurance Coverage Dispute:
Travelers issued a Commercial General Liability ...
A Heads I Win, Tails You Lose Story
Post 5062
Posted on April 30, 2025 by Barry Zalma
"This is a Fictionalized True Crime Story of Insurance Fraud that explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help everyone to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime."
Immigrant Criminals Attempt to Profit From Insurance Fraud
People who commit insurance fraud as a profession do so because it is easy. It requires no capital investment. The risk is low and the profits are high. The ease with which large amounts of money can be made from insurance fraud removes whatever moral hesitation might stop the perpetrator from committing the crime.
The temptation to do everything outside the law was the downfall of the brothers Karamazov. The brothers had escaped prison in the old Soviet Union by immigrating to the United...
