ZIFL Volume 26, Number 23
Barry Zalma
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The December 1, 2022 issue contains articles and reports of insurance fraud convictions for every insurance claims professional, SIU investigators and everyone interested in the efforts to defeat or deter insurance fraud. The December 1, 2022 issue includes:
The December 1, 2022 issue contains articles and reports of insurance fraud convictions for every insurance claims professional, SIU investigators and everyone interested in the efforts to defeat or deter insurance fraud. The December 1, 2022 issue includes:
It Doesn’t Pay to Try to Cheat Your Insurance Company
Sigismondi Foreign Car Specialists, Inc. appealed the U. S. District Court’s summary judgment in favor of State Auto Property and Casualty Insurance Company on State Auto’s declaratory judgment action and statutory insurance fraud claim.
In State Auto Property And Casualty Insurance Company v. Sigismondi Foreign Car Specialists, Inc., No. 21-2435, United States Court of Appeals, Third Circuit (November 18, 2022) the Third Circuit Court of Appeal dealt with the allegations of the insurer that Sigismondi attempted insurance fraud.
New California Law Means New Obligations for Insurance Agents & Brokers
California Governor Gavin Newsom has signed into law Senate Bill 1242, written by the Senate Insurance Committee and aimed at protecting California consumers by imposing a variety of requirements upon producers.
The omnibus bill is essentially a kitchen sink of unrelated topics covered under a single piece of legislation. It takes effect on Jan. 1, 2023, and addresses, among other things, insurance fraud reporting and education mandates, fingerprinting and licensing disclosures.
Reporting Fraud
At the start of the year, agents and brokers will be required to report fraud to the California Department of Insurance (CDI). More specifically, SB 1242 amends the California Insurance Code to require producers who suspect or know a fraudulent application for insurance is being made to submit to the DOI Fraud Division via the electronic Consumer Fraud Reporting Portal information regarding the factual circumstances of a dubious application and the alleged misrepresentations it contains.
Read the full article at http://zalma.com/blog/wp-content/uploads/2022/11/ZIFL-12-01-2022.pdf
Crime Doesn’t Pay – It Leads to Bankruptcy
North Carolina’s Wake County Superior Court judge ordered the liquidation of two life insurance companies in rehabilitation operated under billionaire insurance and finance executive Greg Lindberg. The judge approved the order to liquidate Colorado Bankers Life Insurance Co. and Bankers Life Insurance Co., which have been in rehabilitation since 2019. The companies were put into rehabilitation after questions arose about Lindberg’s alleged use of reserve funds to support other businesses he operated.
Read the full article at http://zalma.com/blog/wp-content/uploads/2022/11/ZIFL-12-01-2022.pdf
Good News From the Coalition Against Insurance Fraud
A pain doc stuck patients with unneeded injections for knees and other body parts in a $240M scheme in San Antonio, Tex. Area. Dr. Jorge Zamora-Quezada falsely diagnosed patients with degenerative diseases such as rheumatoid arthritis. He gave them batteries of injections, invasive chemo and other toxic treatments they didn’t need. He earned a trip to the Coalition’s Insurance Fraud Hall of Shame in 2020 — and finally is scheduled for federal sentencing May 18. Zamora-Quezada kicked patients out of his office if they questioned his treatments and hid their records from docs the patients next saw. He also laundered the insurance money. And he bought a private jet, owned luxury properties in Aspen and other jet-set locales and bought a fleet of luxury cars. And Zamora-Quezada gave patients knee-buckling doses of chemo and other toxic treatments they didn’t need, all to keep insurance money flowing. Many patients — one aged just 13 — suffered serious physical and emotional damage from the chemo injections and sometimes hours-long intravenous infusions. Zamora-Quezada falsely diagnosed one man with rheumatoid arthritis. The patient later developed burns on his skin, lost both finger and toenails, and later began losing his skin from the toxic medications. His health problems continued until his death.
The Examination Under Oath Is Not a Replacement for the Insurance Claims Professional
An attorney is not an insurance adjuster. The attorney representing an insurer at an EUO is not a “super adjuster.” The attorney is a lawyer who was retained to provide legal advice and counsel after assisting the insurer in gathering facts at an EUO.
Competent outside adjustment services can be obtained for a great deal less per hour than any attorney. The EUO should complement, and be part of, the thorough investigation of the Insurance Claims Professional.
It should provide the information that the Insurance claims professional is unable to obtain because of the recalcitrance of the Insured, because of the lack of records, or because complex legal and factual issues have made resolution of the claim on an adjusting level impossible.
Read the full article at http://zalma.com/blog/wp-content/uploads/2022/11/ZIFL-12-01-2022.pdf
Health Insurance Fraud Convictions
Florida Birth-Related Neurological Injury Compensation Plan and Association to Pay $51 Million to Resolve False Claims Act Allegations
The Florida Birth-Related Neurological Injury Compensation Plan and its administrator, the Florida Birth-Related Neurological Injury Compensation Association (collectively, “NICA”), have agreed to pay $51 million to resolve allegations that they violated the False Claims Act by causing NICA participants to submit their healthcare claims to Medicaid rather than NICA, in violation of Medicaid’s status as the payer of last resort under federal law.
The civil settlement resolves a lawsuit filed and pursued by Veronica N. Arven and the estate of Theodore Arven III against NICA under the qui tam or whistleblower provisions of the False Claims Act, which permit a private party (known as a relator) to file a lawsuit on behalf of the United States and receive a portion of any recovery. Although the United States did not intervene in this case, it continued to investigate the whistleblowers’ allegations, provided substantial assistance to the whistleblowers in defending against a motion to dismiss, and negotiated the settlement announced today. The Arvens will receive $12,750,000 as their share of the recovery in this case.
Read the full article about multiple insurance fraud convictions at http://zalma.com/blog/wp-content/uploads/2022/11/ZIFL-12-01-2022.pdf
Post Loss Underwriting is Rare
When an insurer decides to rescind a policy of insurance it is often accused of “Post Loss Underwriting.” Although considered in some states, post loss underwriting is an oxymoron. Underwriting is the decision, based on information provided by a proposed insured, to accept the risk of certain losses needed by the proposed insured. Underwriting, by definition, must be conducted before a policy comes into existence except in the event when a policy is bound subject to a physical inspection of the property. If the inspection shows the risk to be other than that promised by the insured, the policy will be cancelled. Rescission, on the other hand, happens when an insurer learns, after a policy is written, that it was deceived by a material misrepresentation or a concealment of a material fact or by fraud.
Other Insurance Fraud Convictions
Workers’ Compensation Fraud Convicted
Frances Davis pleaded guilty to one count of attempting to commit workers’ compensation fraud, a fifth-degree felony, and agreed to pay $17,144.79 in restitution, according to the Ohio Bureau of Workers’ Compensation. The BWC Special Investigations Department discovered that Davis potentially earned wages while collecting disability benefits from the BWC.
Davis, a Franklin County, Ohio woman was ordered to pay $17,000 in restitution she defrauded from the Ohio Bureau of Workers’ Compensation.
It was confirmed that while Davis was collecting benefits, she worked for seven different employers over the course of two years and held positions such as manager, assistant manager, packer, and machine operator.
A Franklin County judge found Davis guilty and sentenced her to five years of community control to pay the restitution as well.
Read the full article about multiple insurance fraud convictions at http://zalma.com/blog/wp-content/uploads/2022/11/ZIFL-12-01-2022.pdf
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(c) 2022 Barry Zalma & ClaimSchool, Inc.
Barry Zalma, Esq., CFE is available at
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Concealing a Weapon Used in a Murder is an Intentional & Criminal Act
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In Howard I. Rosenberg; Kimberly L. Rosenberg v. Chubb Indemnity Insurance Company Howard I. Rosenberg; Kimberly L. Rosenberg; Kimberly L. Rosenberg; Howard I. Rosenberg v. Hudson Insurance Company, No. 22-3275, United States Court of Appeals, Third Circuit (February 11, 2025) the Third Circuit resolved whether the insurers owed a defense for murder and acts performed to hide the fact of a murder and the murder weapon.
FACTUAL BACKGROUND
Adam Rosenberg and Christian Moore-Rouse befriended one another while they were students at the Community College of Allegheny County. On December 21, 2019, however, while at his parents’ house, Adam shot twenty-two-year-old Christian in the back of the head with a nine-millimeter Ruger SR9C handgun. Adam then dragged...
Renewal Notices Sent Electronically Are Legal, Approved by the State and Effective
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Washington state law allows insurers to deliver insurance notices and documents electronically if the party has affirmatively consented to that method of delivery and has not withdrawn the consent. The Plaintiffs argued that the terms and conditions statement was not “conspicuous” because it was hidden behind a hyperlink included in a single line of small text. The court found that the statement was sufficiently conspicuous as it was bolded and set off from the surrounding text in bright blue text.
In James Hughes et al. v. American Strategic Insurance Corp et al., No. 3:24-cv-05114-DGE, United States District Court (February 14, 2025) the USDC resolved the dispute.
The court’s reasoning focused on two main points:
1 whether the ...
Rescission in Michigan Requires Preprocurement Fraud
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Lie About Where Vehicle Was Garaged After Policy Inception Not Basis for Rescission
This appeal turns on whether fraud occurred in relation to an April 26, 2018 renewal contract for a policy of insurance under the no-fault act issued by plaintiff, Encompass Indemnity Company (“Encompass”).
In Samuel Tourkow, by David Tourkow v. Michael Thomas Fox, and Sweet Insurance Agency, formerly known as Verbiest Insurance Agency, Inc., Third-Party Defendant-Appellee. Encompass Indemnity Company, et al, Nos. 367494, 367512, Court of Appeals of Michigan (February 12, 2025) resolved the claims.
The plaintiff, Encompass Indemnity Company, issued a no-fault insurance policy to Jon and Joyce Fox, with Michael Fox added as an additional insured. The dispute centers on whether fraud occurred in...
Insurance Fraud Leads to Violent Crime
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CRIMINAL CONDUCT NEVER GETS BETTER
In The People v. Dennis Lee Givens, B330497, California Court of Appeals, Second District, Eighth Division (February 3, 2025) Givens appealed to reverse his conviction for human trafficking and sought an order for a new trial.
FACTS
In September 2020, Givens matched with J.C. on the dating app “Tagged.” J.C., who was 20 years old at the time, had known Givens since childhood because their mothers were best friends. After matching, J.C. and Givens saw each other daily, and J.C. began working as a prostitute under Givens’s direction.
Givens set quotas for J.C., took her earnings, and threatened her when she failed to meet his demands. In February 2022, J.C. confided in her mother who then contacted the Los Angeles Police Department. The police ...
Police Officer’s Involvement in Insurance Fraud Results in Jail
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Von Harris was convicted of bribery, forgery, and insurance fraud. He appealed his conviction and sentence. His appeal was denied, and the Court of Appeals upheld the conviction.
In State Of Ohio v. Von Harris, 2025-Ohio-279, No. 113618, Court of Appeals of Ohio, Eighth District (January 30, 2025) the Court of Appeals affirmed the conviction.
FACTUAL BACKGROUND
On January 23, 2024, the trial court sentenced Harris. The trial court sentenced Harris to six months in the county jail on Count 15; 12 months in prison on Counts 6, 8, 11, and 13; and 24 months in prison on Counts 5 and 10, with all counts running concurrent to one another for a total of 24 months in prison. The jury found Harris guilty based on his involvement in facilitating payments to an East Cleveland ...
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To Dispute an Arbitration Finding Party Must File Dispute Within 20 Days
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EXCUSABLE NEGLECT SUFFICIENT TO DISPUTE ARBITRATION LATE
In Howard Roy Housen and Valerie Housen v. Universal Property & Casualty Insurance Company, No. 4D2023-2720, Florida Court of Appeals, Fourth District (January 22, 2025) the Housens appealed a final judgment in their breach of contract action.
FACTS
The Housens filed an insurance claim with Universal, which was denied, leading them to file a breach of contract action. The parties agreed to non-binding arbitration which resulted in an award not
favorable to the Housens. However, the Housens failed to file a notice of rejection of the arbitration decision within the required 20 days. Instead, they filed a motion for a new trial 29 days after the arbitrator’s decision, citing a clerical error for the delay.
The circuit court ...
