The Golden Taxi
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Mischa came to Houston in 1990 directly from the old Soviet Union. His dream was to be a cowboy. He became a cab driver.
Mischa picked up the English language quickly and memorized the convoluted streets of Houston. Within a year of his arrival, he could find with ease any hotel, restaurant or bar in the overgrown small town that was Houston, Texas.
Mischa made a reasonable living driving a cab, making the forty-five-minute run in from the airport at least three times a day. He bought a small three bedroom house outside Houston and was building his way toward the American dream. Mischa was not a criminal. He drove his cab twelve hours a day, six days a week to support himself and his young wife.
Mischa’s life changed when the dispatcher called him to the home of Sophie Mendelson. Sophie, an eighty-year-old Medicare patient, needed a ride to her doctor’s office, four miles from her home.
Upon arrival at the doctor’s office Sophie gave Mischa the information necessary to bill Medicare direct for his services. He complied and within weeks received a check from the US Treasury. It seemed all that Medicare required before it sent a check was information concerning the patient, a Medicare number, and whatever he wanted for the miles driven. Mischa satisfied Medicare if the fare reasonably related to the amount of miles he claimed.
Mischa was an intelligent man. He grew up in the Soviet Union, so he had no respect for government. In fact, as a child and as an adult living in the Soviet Union, he learned that the only way to survive was to deceive the ever-present government.
He was surprised to learn how unlike the Soviet government was the U.S. government. Rather than expecting deceit from its citizens, the U.S. government seemed to believe everything told to it by its residents.
The ride he gave Sophie Mendelson gave Mischa a plan to obtain a fortune. Mischa advised his dispatcher that he would volunteer to take all the Medicare, Medicaid, and welfare patient rides called into his cab. Since the other drivers did not like to wait for the payments from the government, Mischa received all of the calls. Within a month he had created a ledger containing 100 names, addresses and Medicare numbers.
With a calculator, a tax rate table and a pad of receipts, Mischa started on his journey to earn his first million dollars. He created receipts for five doctor visits for every one he actually drove. Mischa extended the distance to each doctor by a factor of three. In his first year he collected more than a million dollars from the United States, state and county governments. The next year his collections (since his number of welfare and Medicare recipients had increased in his ledger) had gone to two million dollars.
Mischa sold his three bedroom house and bought a 500-acre ranch with a four thousand square foot, six bedroom ranch house and stables. He began to live his dream of being a cowboy. Mischa bought 500 head of long horn steers and three quarter horses.
Mischa, the Russian cowboy, continued his profitable taxi business for three more years. An auditor for the State of Texas, Department of Social Services first noticed that Mischa’s cab company had taken a client to the doctor who had died a month before the trip.
The auditor then found each receipt submitted by Mischa to the State of Texas and Harris County. When he was done, the auditor found that in 1994, if the records were accurate, Mischa had driven the 1992 Chevrolet Caprice taxi cab a total of 1,250,000 miles.
The auditor concluded Mischa needed to drive more than 3,000 miles a day, sixteen hours a day, 365 days a year at more than 200 miles an hour to justify his claims. Belatedly, the government caught on to Mischa’s fraud.
The Texas Attorney General arrested, tried and convicted Mischa of defrauding the State of Texas and Harris County Texas. The Judge ordered that he pay a fine of $50,000 and to serve ninety days in jail. Because he was a first offender, Mischa was placed on probation for five years.
Mischa continues to live his dream as a cowboy, breeding Texas long horn cattle on his ranch outside Houston. The United States government, although advised of the crime by Harris County officials, refused to prosecute since the fraud would seriously embarrass the Medicare system.
Everyone involved, especially Mischa, believed that justice had been served.
ZALMA OPINION
When a person is convicted of insurance fraud there is no deterrence shown if the only punishment is to allow the criminal to be placed on probation and allow him or her to keep the fruits of the crime. Justice should never include allowing someone like Mischa to profit from the crime.
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(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
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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...
