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
Happy Law Day
ZIFL – Volume 30, Issue 9 – May 1, 2026
Read the full article at https://www.linkedin.com/pulse/zalmas-insurance-fraud-letter-may-1-2026-barry-zalma-esq-cfe-2tywc, see the video at at and at https://zalma.com/blog plus more than 5300 posts.
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
ZIFL – Volume 30, Issue 9 – May 1, 2026
Zalma’s Insurance Fraud Letter (ZIFL) continues its 30th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year and is written by Barry Zalma.
DOJ Creates National Fraud Enforcement Division
Will the Feds Take on Insurance Fraud? Possibly as Part of a National Anti-Fraud Effort
On April 7, 2026, the Acting Attorney General, Todd Blanche, issued a memorandum establishing the Department of Justice National Fraud Enforcement Division (NFED). The memo describes an ambitious, but perhaps redundant, vision for this ...
When Abalone Died As a Result of Multiple Causes The Efficient Proximate Cause Requires Payment
Post number 5345
Read the full article at https://www.linkedin.com/pulse/efficient-proximate-cause-doctrine-saves-claim-barry-zalma-esq-cfe-yndlc, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.
In American Abalone Farms, LLC v. Star Insurance Company et al., H052643, California Court of Appeals, Sixth District (April 27, 2026) the Court of Appeals dealt with an insurance coverage issue that required application of the efficient proximate cause doctrine.
FACTS
American Abalone Farms, LLC ("American Abalone" ) operates an aquaculture farm in Santa Cruz County, California, raising abalone in tanks. In August 2020, the CZU Lightning Complex Fires led to a prolonged power outage and road closures near the farm. As a result, the farm’s water pumps failed, causing the death of most of the ...
Breach of a Specific Condition Precedent Is a Complete Defense
See the video at and at and at https://zalma.com/blog plus more than 5300 posts.
In United Services Automobile Association and State Farm Mutual Automobile Insurance Company v. Anthony Wenzell, 2026 CO 25 (Colo. Apr. 27, 2026) Anthony Wenzell was rear-ended in a car accident. He had a significant prior 2014 accident that required back surgery.
Wenzell claimed underinsured-motorist (UIM) benefits under three policies: (1) the tortfeasor’s liability policy, (2) his own primary UIM policy with State Farm, and (3) an excess UIM policy issued by USAA (under his brother’s policy, which contained an “other insurance” clause making USAA’s coverage excess over any collectible insurance).
After receiving the claims, both USAA and State Farm repeatedly requested that Wenzell execute comprehensive medical-release authorizations so they could obtain his full medical records and ...
It is Fraud to Make the Same Claim Twice
Read the full article at https://www.linkedin.com/pulse/fraud-make-same-claim-twice-barry-zalma-esq-cfe-c4g8c and at https://zalma.com/blog.
Chutzpah: After Being Paid for a New Roof Insured Makes Second Claim For Same Damages
Post number 5347
No One is Entitled to be Paid for the Same Loss Twice
In Mohammed Ali Khalili v. State Farm Lloyds, No. 14-25-00611-CV, Court of Appeals of Texas (April 30, 2026) Khalili maintained a State Farm Lloyds homeowners insurance policy for decades. In 2008 he filed a roof-damage claim; State Farm paid him to replace the entire roof (shingles and gutters). Khalili never replaced the roof and repeated his claim.
BACKGROUND
In 2021 he filed a second roof claim. State Farm’s inspectors found the roof “very old” with extensive non-storm-related damage. The claim was denied because (1) the damage did not exceed the deductible and (2) State Farm had already paid for a full roof replacement.
PROCEDURAL HISTORY
State Farm filed motion for summary...
It is Fraud to Make the Same Claim Twice
Read the full article at https://www.linkedin.com/pulse/fraud-make-same-claim-twice-barry-zalma-esq-cfe-c4g8c and at https://zalma.com/blog.
Chutzpah: After Being Paid for a New Roof Insured Makes Second Claim For Same Damages
Post number 5347
No One is Entitled to be Paid for the Same Loss Twice
In Mohammed Ali Khalili v. State Farm Lloyds, No. 14-25-00611-CV, Court of Appeals of Texas (April 30, 2026) Khalili maintained a State Farm Lloyds homeowners insurance policy for decades. In 2008 he filed a roof-damage claim; State Farm paid him to replace the entire roof (shingles and gutters). Khalili never replaced the roof and repeated his claim.
BACKGROUND
In 2021 he filed a second roof claim. State Farm’s inspectors found the roof “very old” with extensive non-storm-related damage. The claim was denied because (1) the damage did not exceed the deductible and (2) State Farm had already paid for a full roof replacement.
PROCEDURAL HISTORY
State Farm filed motion for summary...
What Must be Done after Notice of a Claim is Received by the Insurer
Read the full article at https://lnkd.in/gzvvdkMZ and at https://zalma.com/blog.
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A first party property policy does not insure property: it insures a person, partnership, corporation or other entity against the risk of loss of the property. Before an insured can make a claim for indemnity under a policy of first party property insurance the insured must prove that there was damage to property the risk of loss of which was insured by the policy. The obligation imposed on the insured ...
