Zalma’s Insurance Fraud Letter – April 15, 2023
ZIFL – Volume 27, Issue 8
Barry Zalma
Apr 14, 2023
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Obesity, Diabetes and Covid Not Basis For Compassionate Release
The US Congress, feeling sorry for federal prisoners, amended the law to create The First Step Act to allow a District Court to shorten a sentence when there exist extraordinary and compelling reasons to release the Prisoner. In United States Of America v. Earl Lee Planck, Jr., Criminal No. 5:20-CR-24-KKC-MAS-1, United States District Court, E.D. Kentucky, Central Division, Lexington (March 1, 2023) Earl Lee Planck, Jr moved the USDC for compassionate release under the statute.
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The Special Investigative Unit Investigator
Insurance companies now retain the services—either by employing them directly or by use of independent contractors—of investigators whose expertise relates exclusively to insurance claims and suspected insurance fraud. The experienced claims investigator is usually a part of, or vendor to, a Special Investigative Unit (SIU) set up to protect the insurer and mandated by most states as a means to reduce the amount of fraud perpetrated against insurers.
The fact that an insured is contacted by a claim investigator does not, however, mean that the insured is suspected of committing fraud. By virtue of his or her training and experience, the claim investigator is more skilled than the claim adjuster in discerning facts and evidence that can be used in a court of law if a fraud has been attempted.
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More McClenny Moseley & Associates Issues
This is ZIFL’s fourth installment of the saga of McClenny, Moseley & Associates and its problems with the federal courts in the State of Louisiana and what appears to be an effort to profit from what some Magistrate and District judges indicate may be criminal conduct to profit from insurance claims relating to hurricane damage to the public of the state of Louisiana.
Chutzpah Defined
“Chutzpah” is a Yiddish term that has found its way into the English language. It is defined as “unmitigated gall” and is usually explained as a person convicted of murdering his parents who pleaded with the judge for mercy because he is an orphan. The latest actions by McClenny Moseley & Associates are a better definition of the term.
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Free Insurance Videos
Barry Zalma, Esq., CFE has published five days a week videos on insurance claims, insurance claims law, insurance fraud and insurance coverage matters at https://www.rumble.com/zalma.https://rumble.com/c/c-262921.
He 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 he practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 55 years in the insurance business. He is available at http://www.zalma.com and [email protected].
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The Problem with Different Degrees of Crime
Fraud by any Other Name is Still Fraud
Pursuant to the New Jersey Code of Criminal Justice (Code), one can be charged with the offense of insurance fraud for knowingly making a false or misleading statement of material fact in connection with an insurance claim. That third-degree offense may be elevated to the second degree by aggregating five “acts” of insurance fraud, the total value of which exceeds $1,000.
In State Of New Jersey v. Randi Fleischman, A-4 September Term 2006, Supreme Court of New Jersey (March 26, 2007) the Supreme Court of New Jersey was provided with its first opportunity to construe N.J.S.A. 2C:21-4.6’s penalizing of a false “statement” as an “act of insurance fraud” that can be accumulated to elevate insurance fraud to a second-degree offense.
The State indicted defendant Randi Fleischman for second-degree insurance fraud. The factual underpinnings for the charge were based on various items of false information contained in defendant’s statements to the police and to her automobile insurer in connection with a stolen car claim.
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Good News From the Coalition Against Insurance Fraud
A home healthcare company has paid $9M for allegedly submitting false claims. United Energy Workers Healthcare, Corp. and related entities settled a claim with several entities including Ohio, to the U.S. Department of Energy employees and its contractors. An investigation alleged: between January 2013 and March 2021, defendants submitted claims for payment for in-home healthcare services that were never provided or were medically unnecessary, in violation of the False Claims Act. Various of the violations included: billing for case management services not actually provided, instructing caregivers to charge for more time than actually spent with patients, providing and billing for services to beneficiaries that were not covered, and providing services without possessing required licenses. Plus many more convictions for fraud.
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OBLIGATION OF LAWYERS WHEN A CLIENT IS SUSPECTED OF FRAUDULENT CONDUCT
A lawyer who suspects that his or her client is lying about the facts to cover up fraudulent or criminal activity the lawyer is placed in a professional dilemma. The client may be faking injuries after an automobile accident or fabricating the cause of a fire at his or her home. Or the client provides the lawyer with intentionally vague information about their finances to avoid reporting the information to the IRS or other governmental agency.
In July 2021, the Colorado Bar Association Ethics Committee adopted Formal Opinion 142, addressing a lawyer’s duty to inquire when the lawyer knows a client is seeking advice on a transactional matter that may be criminal or fraudulent. Like the Model Rules of Professional Conduct counterpart, Colorado’s rule 1.2(d) provides that a lawyer “shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent . . .”
The opinion specifically discusses what happens when the lawyer suspects but does not actually know, that the client may be using the legal services to engage in criminal or fraudulent conduct. While the term “know” denotes “actual knowledge of the fact in question” under Colorado Rule 1.0(f), the Committee interpreted the actual knowledge standard to include “willful blindness.”
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Health Insurance Fraud Convictions
Santa Rosa Doctor Sentenced To 2.5 Years in Prison for Unlawfully Prescribing Controlled Substances
Thomas Keller, formerly a pain management doctor in Santa Rosa, was sentenced to 30 months in prison for distributing Schedule II and IV controlled substances outside the scope of his professional practice and without a legitimate medical need. The sentence was handed down by the Hon. Vince Chhabria, United States District Judge, after a jury found Keller was guilty of the crimes at trial in November 2022. Read about this and dozens more convictions.
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Other Insurance Fraud Convictions
Richfield Woman Sentenced To 10 Years Behind Bars for Insurance Fraud
The Department Of Insurance Became Aware That She Was Again Misappropriating Funds With The New Agency.
Charlotte Sheppard of Richfield, Idaho is headed to prison after committing insurance fraud. Sheppard allegedly stole her clients’ insurance premium to pay her personal and business bills and obligations.
She was sentenced to the Idaho Department of Corrections for 10 years, with five years fixed and five years indeterminate.
Sheppard was first prosecuted and found guilty in Blaine County for grand theft in 2020. But while awaiting criminal sentencing and administrative penalties, she took over the management of a second agency in Lincoln County. The Department of Insurance became aware that she was again misappropriating funds with the new agency. The DOI issued a cease-and-desist order on March 18, 2020, and revoked her license two days later. Also many more reports of convictions.
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Barry Zalma
Over the last 55 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 https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ to consider more than 50 volumes written by Barry Zalma on insurance and insurance claims handling.
Read the full issue of ZIFL-04-15-2023 Read the full issue of ZIFL https://lnkd.in/g7Q9iuVd
Subscribe to Zalma on Insurance at locals.com
Go to the Insurance Claims Library – https://lnkd.in/gKCTg53
Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://lnkd.in/gV9QJYH; Go to the Insurance Claims Library – https://lnkd.in/gFKp5WhW consider more than 50 volumes written by Barry Zalma on insurance and insurance claims handling.
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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 ...
