Am I In Trouble?
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Bankruptcy Fraud Defeats Legitimate Insurance Claim
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Insurance fraud, like any other profession, improves with practice. The beginner, unaware of the tools available to an insurer, makes a stupid error that will destroy him or her.
Abraham MacPherson was an insurance fraud novice. He had succeeded, with ease, in defrauding his bank by submitting a false financial statement as part of the application for a loan. He even convinced an FBI Agent, checking his fraudulent loan application, that he was the victim of a dishonest loan broker. Success made Abraham bold. He decided it was time to branch out into insurance fraud.
The Petition for bankruptcy, like most filed in the Bankruptcy court showed MacPherson to have no equity in any of his property and no money. He reported his assets as only $500 in jewelry and the tools of his plumbing trade since they were exempt from the grasp of his creditors. What he did not tell the Bankruptcy Court was that MacPherson also owned a $150,000 twin engine Cessna Aircraft that he used to go on hunting and ski trips. He did not tell his lawyer about the airplane because he did not want it sold for the benefit of the judgment creditor whom he felt cheated him.
The day his debts were discharged Abraham called his insurance broker. He advised the broker that his home had been burglarized. He claimed the burglars took all of the jewelry on the schedule. He demanded the immediate issuance of a check for $41,960.
MacPherson stuck to his story. He demanded immediate payment or he would complain to the California Department of Insurance and file suit.
Moseby reported to his principal, the insurer, who decided to deny the claim for fraud. Further, following the law, since MacPherson had admitted to Bankruptcy fraud, the insurer instructed Moseby to pass the information he had obtained to the FBI. In addition, as required by California law he presented the information to the California Department of Insurance, Fraud Division.
Moseby was right, MacPherson was not in trouble with him. He simply would not collect on his claim. MacPherson was in serious trouble with the FBI and the U.S. Department of Justice.
The Special Agent of the Federal Bureau of Investigation was upset that MacPherson had fooled him. After verifying the results of Moseby’s investigation the FBI presented the information to a U.S. Attorney. Prosecution followed charging MacPherson with Bankruptcy Fraud, Mail Fraud — for the presentation of a false and fraudulent claim to an insurer by use of the U.S. Postal Service — and for loan fraud.
He went to trial in U.S. District Court in Sacramento on charges of Bankruptcy fraud. The trial took five hours to complete and the jury was instructed on the law at 4:00 p.m. They deliberated for three days and convicted MacPherson, who was sentenced to serve three years in federal prison.
ZALMA OPINION
It doesn’t pay to lie to an insurance company about a claim. Doing so can lose your claim. It is worse to lie to a bankruptcy court because that is a federal crime that could put the liar in jail for as much as five years. This case proves why it is best to always tell the truth.
(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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Concurrent Cause Doctrine Does Not Apply When all Causes are Excluded
Post 5119
Death by Drug Overdose is Excluded
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Southern Insurance Company Of Virginia v. Justin D. Mitchell, et al., No. 3:24-cv-00198, United States District Court, M.D. Tennessee, Nashville Division (October 10, 2024) Southern Insurance Company of Virginia sought a declaratory judgment regarding its duty to defend William Mitchell in a wrongful death case pending in California state court.
KEY POINTS
1. Motion for Judgment on the Pleadings: The Plaintiff moved for judgment on the pleadings, which was granted in part and denied in part.
2. Duty to Defend: The court found that the Plaintiff has no duty to defend William Mitchell in the California case due to a specific exclusion in the insurance policy.
3. Duty to Indemnify: The court could not determine at this stage whether the Plaintiff had a duty to ...
GEICO Sued Fraudulent Health Care Providers Under RICO and Settled with the Defendants Who Failed to Pay Settlement
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Post 5119
Default of Settlement Agreement Reduced to Judgment
In Government Employees Insurance Company, Geico Indemnity Company, Geico General Insurance Company, and Geico Casualty Company v. Dominic Emeka Onyema, M.D., DEO Medical Services, P.C., and Healthwise Medical Associates, P.C., No. 24-CV-5287 (PKC) (JAM), United States District Court, E.D. New York (July 9, 2025)
Plaintiffs Government Employees Insurance Company and other GEICO companies (“GEICO”) sued Defendants Dominic Emeka Onyema, M.D. (“Onyema”), et al (collectively, “Defendants”) alleging breach of a settlement agreement entered into by the parties to resolve a previous, fraud-related lawsuit (the “Settlement Agreement”). GEICO moved the court for default judgment against ...
ZIFL – Volume 29, Issue 14
Post 5118
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You can read the full 20 page issue of the July 15, 2025 issue at https://lnkd.in/giaSdH29
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
This issue contains the following articles about insurance fraud:
The Historical Basis of Punitive Damages
It is axiomatic that when a claim is denied for fraud that the fraudster will sue for breach of contract and the tort of bad faith and seek punitive damages.
The award of punitive-type damages was common in early legal systems and was mentioned in religious law as early as the Book of Exodus. Punitive-type damages were provided for in Babylonian law nearly 4000 years ago in the Code of Hammurabi.
You can read this article and the full 20 page issue of the July 15, 2025 issue at https://zalma.com/blog/wp-content/uploads/2025/07/ZIFL-07-15-2025.pdf
Insurer Refuses to Submit to No Fault Insurance Fraud
...
Rulings on Motions Reduced the Issues to be Presented at Trial
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CASE OVERVIEW
In Richard Bernier v. State Farm Mutual Automobile Insurance Company, No. 4:24-cv-00002-GMS, USDC, D. Alaska (May 28, 2025) Richard Bernier made claim under the underinsured motorist (UIM) coverage provided in his State Farm policy, was not satisfied with State Farm's offer and sued. Both parties tried to win by filing motions for summary judgment.
FACTS
Bernier was involved in an auto accident on November 18, 2020, and sought the maximum available UIM coverage under his policy, which was $50,000. State Farm initially offered him $31,342.36, which did not include prejudgment interest or attorney fees.
Prior to trial Bernier had three remaining claims against State Farm:
1. negligent and reckless claims handling;
2. violation of covenant of good faith and fair dealing; and
3. award of punitive damages.
Both Bernier and State Farm dispositive motions before ...
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 ...
