Zalma’s Insurance Fraud Letter – February 15, 2023
Barry Zalma
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ZIFL – Volume 27 Issue 4
Sorry I was Late with The Blog & the Newsletter
On 2/15/2023 I had a transcatheter aortic valve replacement (TAVR) procedure that replaced my poorly functioning Aortic Hart valve. I tolerated the procedure well although the recovery process took a couple days unmoving on my back to avoid bleeding. I’m back at work now.
Read the full ZIFL, in Adobe .pdf format https://lnkd.in/dHnFBrcf
The following are the type of articles you can read in Issue Number 4.
More Problems for Tom Girardi
Tom Girardi, 83, the disgraced former Los Angeles celebrity lawyer was indicted by federal grand juries in Los Angeles and Chicago on charges of stealing more than $18 million from clients, federal prosecutors announced. He faces a maximum 20-year federal prison sentence, according to the U.S. Department of Justice.
The schemes included stealing funds from a couple whose son was paralyzed in a car wreck, a widow whose husband died when a boat unexpectedly sped up to 120 miles per hour (193 kilometers per hour) and flipped, and family members of victims in a 2018 Lion Air crash that killed 189 people, according to the indictments.
Read the full ZIFL, in Adobe .pdf format https://lnkd.in/dHnFBrcf
Fiction: I’m Going Into the Insurance Business
This Is One Of A Series Of Fictionalized True Crime Stories of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The stories 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 Creation of a Fraudulent Insurance Business
Most insurance companies are formed by major corporations with considerable assets. They are capitalized with serious money needed by the Insurer to cover losses until profits are made. The company is staffed with insurance professionals who believe in the concept of spreading risk. The insurers, whether new or old, provide a definite service to the public.
Betty Bruja wanted to start her own insurance company. She had been an insurance broker for ten years. In those ten years she had trained herself with books and training courses from the Insurance Risk Management Institute, the Society of Certified Property and Casualty Underwriters, the Insurance Institute and the Insurance Claims Library. By devoted and lengthy study Betty obtained the designation CPCU in the minimum time allowed by the Society of CPCU.
Read the full ZIFL, in Adobe .pdf format, here.
More Problems for McClenny Moseley & Associates
Lawyers Cannot File Suit Without Being Retained by Client
Attorneys for McClenny Moseley & Associates appeared in a New Orleans courtroom on February 1, 2023 to explain why they claimed to represent a homeowner who says she didn’t hire the law firm but did sign some paperwork handed to her by a restoration contractor.
Magistrate Judge Michael North ordered both MMA founding partner Zach Moseley and Louisiana office manager William R. Huye III to appear personally before him after an insurance defense attorney accused the law firm of working with contractors to sign up new clients. North ordered the law firm to pay attorney fees to attorneys who were forced to contend with a duplicate lawsuit it filed. It was the third time a Louisiana federal judge has sanctioned McClenny Moseley.
That case number refers to a lawsuit that MMA filed Dec. 4 on behalf of “Trichia” Franatovich, even though another law firm had already filed a lawsuit on behalf of Tricia Franatovich (the correct spelling) for the same hurricane damage. The US District Court for Eastern Louisiana scheduled the hearing after Matthew Monson, a New Orleans defense attorney who represents the insurer named in both lawsuits, filed a lengthy motion accusing MMA of soliciting clients by working with restoration contractors who walked door to door in neighborhoods damaged by Hurricane Ida.
Read the full ZIFL, in Adobe .pdf format https://lnkd.in/dHnFBrcf
Citizens Sues the Strems Law Firm and Scott Strems
The suit contends that the Defendants conspired, combined and agreed to create or fraudulently increase policy claims to be submitted on behalf of insureds by falsely inflating the value of the claims and falsely asserting claims of costs for services not actually rendered, in order to induce Citizens to settle the claims and that in furtherance of the scheme, the non-lawyer Defendants, acting in concert with Attorney Strems and the Strems Law Firm, also created false and fictitious invoices of services purportedly rendered and repairs purportedly required that were used to deceive Citizens into believing that the claims should be settled for the sums negotiated, when in fact the damages represented were either grossly inflated or non-existent.
Defendants acted individually and in concert to defraud Citizens. Citizens has been directly damaged by the Defendants’ conduct. Defendants’ scheme to defraud Citizens began in or around 2014 and continues through the present.
Read the full ZIFL, in Adobe .pdf format https://lnkd.in/dHnFBrcf
Only Probable Cause Needed for Arrest
Acquittal is not a Finding of Innocence
Probable Cause is not a High Bar
People who attempt insurance fraud are always upset when the fraud fails. When that failure results in an arrest and trial, the upset grows. When the jury acquits the fraudster it is never enough to give thanks there is no need to go to jail, the fraudster wants – to paraphrase Shakespeare – a pound of flesh from those who stopped the attempt.
In Joseph Fehl v. Borough Of Wallington; et al, No. 21-3019, United States Court of Appeals, Third Circuit (January 25, 2023) Joseph Fehl sued the Borough of Wallington; Witold Baginski, the Borough’s former business administrator; and Sean Kudlacik, a captain in the Borough’s police department, alleging civil rights violations. Finding no material facts in dispute, the District Court granted the Defendants’ motions for summary judgment.
Read the full ZIFL, in Adobe .pdf format https://lnkd.in/dHnFBrcf
Good News from the Coalition Against Insurance Fraud
An airport chef was grounded after lying he hurt his back and then getting caught kayaking with his kids in the UK. Ferenc Sumegi said he needed a cane or crutches after straining his back while lifting a fish tray at Heathrow Airport, where he prepped airline meals. He claimed £2.2M for a “significant and continuing disability.” Sumegi said he couldn’t work as a chef or lift or make sudden movements. The injury kept him on his back 18 hours a day and stopped him from kneeling, squatting and taking his kids to the park, he claimed. Sumegi also had to hold onto furniture to get around his Berkshire home, he told a disability doc. Yet surveillance caught Sumegi kayaking with his two kids, “vigorously throwing a stick for his dog,” and kneeling in the sand while burying his daughter at the beach. Surveillance also found him in a river with a daughter on each shoulder and his arms in the air. And he was seen fishing and paddle boarding, walking, filling up his car and shopping with no seeming difficulty. A court dismissed Sumegi’s claim, disallowed him from appealing, and ordered him to repay £75K.
Read the full ZIFL, in Adobe .pdf format https://lnkd.in/dHnFBrcf
Health Insurance Fraud Convictions
17 Years in Prison for Fraud
Frank Patino, of the Detroit area, was also ordered to pay $30 million in restitution to Medicare and other insurers, the report said.
Patino, a Michigan doctor was sentenced to nearly 17 years in prison for leading a years-long $250 million opioid scheme that made him and others rich, and left patients addicted, The Associated Press reports.
Patino declared his innocence in court Monday. His new attorney, Martin Crandall, is seeking a new trial, claiming Patino’s trial lawyer botched his defense. Crandall also cites Patino’s philanthropic work as at odds with someone who would commit these crimes.
Read about this and dozens more convictions.
Read the full ZIFL, in Adobe .pdf format https://lnkd.in/dHnFBrcf
Other Insurance Fraud Convictions
Guilty of Providing False Insurance Documents
Oscar Sanchez, a former insurance producer from Marshalltown, Iowa was recently sentenced to a pair of five-year suspended prison sentences after pleading guilty to multiple counts of insurance fraud in December following an investigation by the Iowa Insurance Division Fraud Bureau.
An inquiry into the actions of Sanchez, who pleaded guilty on December 8, 2022 began in September of 2020. According to a press release, the investigation concluded that Sanchez provided fictitious insurance documents to multiple individuals in Marshalltown and collected premium payments for insurance policies that did not exist. Sanchez collected illegitimate cash deductibles from insureds, which he used for his own personal gain.
Read this and about many more convictions.
Read the full ZIFL, in Adobe .pdf format https://lnkd.in/dHnFBrcf
(c) 2023 Barry Zalma & ClaimSchool, Inc.
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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]
Write to Mr. Zalma at [email protected]; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com.
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Concealing a Weapon Used in a Murder is an Intentional & Criminal Act
Post 5002
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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
Post 5000
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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
Post 4999
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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
Post 4990
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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
Post 4989
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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 ...
