ZIFL-10-15-2022
Barry Zalma
Read the full Zalma's Insurance Fraud Letter at https://lnkd.in/gcwQQ9H2 and see the full video at https://lnkd.in/gv6b4rMU and at https://lnkd.in/gZpaWRWC and at https://zalma.com/blog; and at https://lnkd.in/gzTmZcs7 plus more than 4300 posts.
Short teases about the articles in this issue can be read at
Ethics & Insurance Fraud
Insurance fraud is a crime in most jurisdictions. In California it is a felony subject to five years in prison upon conviction. By definition a person who commits the crime of insurance fraud is not acting ethically. In State v. Whitaker, 175 P.3d 136, 117 Hawai=i 26 (Haw. App. 12/31/2007) Whitaker, after presenting a claim to his insurer, was indicted, convicted, and sentenced for Insurance Fraud in violation of Hawaii Revised Statutes (HRS) ' 431:10C‑307.7(a)(1) and (b)(2) (2005), and Attempted Theft in the Second Degree (Attempted Theft 2) in violation of HRS ' 708‑831(1)(b) (Supp. 2000) and HRS ' 705‑500 (1993).
RICO Judgment Allows Disgorgement Damages
Fraudsters Must Disgorge Profits of Crime - In Diane Creel and Lynn Creel v. Dr. Says, LLC, et al., Civil Action No. 4:18-CV-00615, United States District Court, E.D. Texas, Sherman Division (September 27, 2022) the plaintiffs obtained a verdict against Defendants Dr. Yupo Jesse Chang; MD Reliance, Inc.; Universal Physicians, PA; Dr. Says, LLC; Office Winsome, LLC; and Yung Husan Yao (aka Angela Yao) for violations of the civil Racketeer Influenced and Corrupt Organization Act (“RICO”) and RICO conspiracy. The Court, after the verdict, needs to enter its findings of fact and conclusions of law regarding equitable disgorgement.
New California Fraud Statutes
SB 1040, authored by Senator Susan Rubio, authorizes the Insurance Commissioner to order restitution from persons who sell insurance without the necessary license from the Department of Insurance, including “extended vehicle warranties” sold illegally through robocalls and misappropriation of consumers’ and businesses’ premiums, among other insurance scams.
Good News From the Coalition Against Insurance Fraud
Dead patients couldn’t stop Thomas G. O’Lear from billing taxpayers $3.7M for fraudulent X-rays in the Indianapolis area. O’Lear ran a portable-X-ray firm that zapped patients in nursing homes, skilled nursing facilities and long-term care facilities. He billed for thousands of X-rays that he and his business did not perform. That included 151 X-rays on dates after the patients had died. He also billed Medicare and Medicaid for services at nursing facilities on dates when patients were either hospitalized and not on-site at the facilities. O’Lear took multiple X-rays in one visit and falsely claimed that each was done on a different day, requiring separate reimbursement for transporting the portable equipment on each date. And he falsely billed for multiple images of patients when only one image was done — thus requiring a higher reimbursement. O’Lear covered up his scheme by forging medical records, falsifying X-ray images and forging signatures of his employees and the doc he said had ordered X-rays.
Insurer Takes the Profit out of Fraud
Insured’s Suit for Fire Insurance Benefits Defeated by Qui Tam Claim by Insurer
In Lisa A. McCullough v. Metlife Auto & Home, No. 4:20-CV-01807, United States District Court, M.D. Pennsylvania (September 30, 2022) McCullough sued seeking to force MetLife to pay Plaintiff for an insurance policy on the McCullough’s home, which was destroyed in a fire in 2019.
A Resource for the Insurance Professional
After practicing insurance law for over five decades, Barry Zalma, an internationally recognized and award-winning insurance expert and author, is releasing multiple education books on Amazon.com. The publications are designed to inform claims people, special investigation unit investigators, coverage lawyers, plaintiffs’ bad faith lawyers, insurance management and the insurance buying public on insurance claims procedures and insurance fraud. Each resource leverages key insights and learnings from Zalma’s 55+ years of practical experience as a claims person and insurance coverage attorney.
INSURER AWARDED DAMAGES FOR FRAUD
Insured’s Suit for Fire Insurance Benefits Defeated by Qui Tam Claim by Insurer == In Lisa A. McCullough v. Metlife Auto & Home, No. 4:20-CV-01807, United States District Court, M.D. Pennsylvania (September 30, 2022) McCullough sued seeking to force MetLife to pay Plaintiff for an insurance policy on the McCullough’s home, which was destroyed in a fire in 2019.
Health Insurance Fraud Convictions
Doctor Admits Illegally Prescribing 120,000 Opioid Pills -- Dr. Dzung Ahn Pham of Tustin, California pleaded guilty to writing prescriptions for more than 120,000 opioid pills over a six-year span, including to an impaired driver who struck and killed a bicyclist. In his plea agreement, Dr. Pham admitted distributing the pills without a legitimate medical purpose in exchange for cash and insurance payments. He pleaded guilty in October to conspiracy to distribute controlled substances, the Orange County Register reported. Pham faces up to 20 years in federal prison when he is sentenced on Jan. 6, 2023.
Other Insurance Fraud Convictions
Onetime Brewery Owner and Financial Advisor Found Guilty of Murdering Client for Life Insurance Benefits -- Keith Todd Ashley, 50, was found guilty by federal jurors in the Eastern District of Texas on charges of wire fraud, mail fraud, carrying a firearm in relation to a crime of violence, and bank fraud. Ashley, a North Texas man was found guilty of several fraud-related felonies in federal court earlier this week. Prosecutors say the frauds were part of a wide-ranging series of crimes that eventually came to include a murder and coverup orchestrated to obtain life insurance benefits.
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 also serves as an arbitrator or mediator for insurance related disputes. 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].
Over the last 54 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.
Barry Zalma, Inc., 4441 Sepulveda Boulevard, CULVER CITY CA 90230-4847, 310-390-4455;Subscribe to Zalma on Insurance at locals.com https://zalmaoninsurance.local.com/subscribe. Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome. Write to Mr. Zalma at [email protected]; http://www.zalma.com; http://zalma.com/blog; I publish daily articles at https://zalma.substack.com,
Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921
The Largest Residential Burglary of All Time
Post 5407
Fraud & the Fear of Bad Faith Suits
Posted on July 22, 2026 by Barry Zalma
See the full video at https://lnkd.in/gWQQEySW and at https://lnkd.in/gyhdK6wv
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help 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.
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help 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.
After ...
Chutzpah is not Enough
Post 5397
Posted on July 20, 2026 by Barry Zalma
See the video and at https://lnkd.in/gNUs2XzT and at https://lnkd.in/g2MawyzX
Magistrate Issues a Search Warrant if there is a Fair Probability that Contraband or Evidence of a Crime will be Found in a Particular Place.
In United States Of America v. Frank Suess, et al., CRIMINAL No. 3:24-308, United States District Court, M.D. Pennsylvania (July 16, 2026) a federal grand jury indicted Frank Suess, Melissa Driscoll, and others in a 55-count health care fraud and anti-kickback prosecution arising from an alleged scheme involving medically unnecessary prescription “foot baths.”
As part of the investigation, the FBI obtained an August 19, 2022 warrant to search Driscoll’s Sterling Pharmacy Yahoo email account for emails from January 1, 2018 through December 31, 2020. Driscoll moved to suppress the resulting evidence, arguing that the warrant lacked probable cause, was overbroad, and rested on material misstatements and omissions.
LAW:
The ...
Fraud Shouldn’t Pay
Post 5396
See the video and at https://rumble.com/v7ctgmq-the-great-jewel-theft.html at https://youtu.be/aRbQ2sJfGwA
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help 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.
The Insured purchased, for the first time in his life, a policy of Personal Articles Floater Insurance (PAF) scheduling $125,000 worth of ladies jewelry. He advised the insurer that the jewelry was always kept in a class E safe at his residence. He also told the insurer that he was employed full time as the owner of a gasoline service station and that he had never been canceled or suffered a previous loss.
One month after the policy was ...
Day Care Owner Loses Subsidies Because She Criticized State
Post 5421
Posted on August 11, 2026 by Barry Zalma
First Amendment Right Will be Allowed to Go to Trial
In Betsey J. Grant v. Maine State Department Of Heath And Human Services, No. 1:25-cv-00490-JAW, United States District Court, D. Maine (August 6, 2026), Betsey J. Grant, a licensed childcare provider and operator of Tiny Tikes Daycare in Trenton, Maine, sued Maine DHHS and several employees after she publicly criticized DHHS before Maine’s Government Oversight Committee and alleged that officials retaliated against her.
She claimed DHHS imposed and extended a conditional license, published stigmatizing information, interfered with subsidies and program funding, removed her from a food program, rescinded an expansion grant, and used biased or falsified evidence in licensing proceedings. Following the March 10, 2023, GOC testimony, Ms. Grant alleges that foster children's subsidies (approximately $30,000) were withheld; she was removed from the ...
Rescission for Material Misrepresentation
Post 5418
Posted on August 5, 2026 by Barry Zalma
An Insurer May Rescind An Insurance Policy Where The Applicant Made A Material Misrepresentation In The Application.
In Union Mutual Fire Insurance Company v. 844 Knickerbocker, LLC, et al. No. 2024-10359, Index No. 602824/22, 2026 NY Slip Op 04789, Supreme Court of New York, Second Department (July 29, 2026) Union Mutual Fire Insurance Company issued commercial insurance policies to 844 Knickerbocker, LLC, and Sanjaya Mallick based on applications stating that the insured property contained two apartment units. After an underlying personal injury action was filed, Union Mutual determined that the property actually contained three apartment units and rescinded the policies on the ground that the defendants had made a material misrepresentation in the applications.
LAW:
A misrepresentation is material if the insurer would not have issued the same policy, or would have issued it only on different terms, had the true ...
Rescission for Material Misrepresentation
Post 5418
Posted on August 5, 2026 by Barry Zalma
An Insurer May Rescind An Insurance Policy Where The Applicant Made A Material Misrepresentation In The Application.
In Union Mutual Fire Insurance Company v. 844 Knickerbocker, LLC, et al. No. 2024-10359, Index No. 602824/22, 2026 NY Slip Op 04789, Supreme Court of New York, Second Department (July 29, 2026) Union Mutual Fire Insurance Company issued commercial insurance policies to 844 Knickerbocker, LLC, and Sanjaya Mallick based on applications stating that the insured property contained two apartment units.
LAW:
A misrepresentation is material if the insurer would not have issued the same policy, or would have issued it only on different terms, had the true facts been disclosed. To establish materiality as a matter of law, the insurer must submit documentation of its underwriting practices, such as manuals, guidelines, bulletins, or rules addressing similar risks.
DISCUSSION/ANALYSIS:
As a result, the...
