Don’t Ty to Defraud GEICO It Bites Back
Barry Zalma
Oct 4, 2023
Read the full article at https://lnkd.in/gDen3YwR and see the full video at https://lnkd.in/guDjSd8r and at https://lnkd.in/gQ-CqYPx and at https://zalma.com/blog plus more than 4600 posts.
GEICO (collectively, “GEICO” or “Plaintiffs”) sued Defendants ALP Supply, Inc. (“ALP”), PV Supply, Inc. (“PV”), and Pal Vakula, alleging common law fraud and unjust enrichment claims.
In Government Employees Insurance Company, GEICO Indemnity Company, Geico General Insurance Company, and GEICO Casualty Company v. ALP Supply, Inc.; PV Supply, Inc.; and Pal Vakula, No. 22-CV-79 (LDH)(MMH), United States District Court, E.D. New York (September 29, 2023) GEICO sought, and obtained, default judgments against health care fraud perpetrators.
The GEICO Plaintiffs' moved the USDC for default judgment pursuant to Federal Rule of Civil Procedure 55(b)(2). For the reasons set forth below, the Magistrate Judge recommended that Plaintiffs' motion should be granted as to their common law fraud claims. The Court further recommended that Plaintiffs should be awarded damage.
BACKGROUND
In sum, the allegations focus on Defendants' multi-faceted scheme to defraud GEICO by falsely representing material information to collect benefits under New York's “no-fault” insurance laws. Healthcare service providers that do not comply with state or city licensing requirements are ineligible to collect no-fault benefits. Further, the relevant laws prohibit licensed providers from paying or accepting kickbacks for referrals.
The Fraudulent Scheme
ALP and PV, both New York corporations based in Brooklyn, are retailers of Durable Medical Equipment (DME) and OD. Vakula, a New York resident, owns and operates both businesses, but is not and has never been a licensed healthcare provider.
From July 2019, Vakula used ALP and PV to submit and cause to be submitted to GEICO thousands of fraudulent no-fault insurance claims for medically unnecessary, illusory, and otherwise non-reimbursable DME and OD.
GEICO relied on this false information to process Defendants' claims promptly pursuant to statutory and contractual obligations, resulting in payments of over $267,000. Defendants not only submitted claims to GEICO knowing that they included materially false information but also hired law firms to pursue collection of the fraudulent claims from GEICO, which resulted in expensive and time-consuming litigation against GEICO if the charges were not promptly paid in full.
JOINT AND SEVERAL LIABILITY
GEICO seek to hold ALP and Vakula jointly and severally liable and PV and Vakula jointly and severally liable. Here, GEICO sufficiently alleged Vakula's joint and several liability as to PV and ALP. According to the Complaint, Vakula owns and controls both PV and ALP and was directly involved in submitting fraudulent claims to GEICO through those entities. The alleged harm to GEICO is indivisible between Vakula as the owner and operator of each corporate defendant. Accordingly, the Magistrate found that joint and several liability is appropriate as to (1) ALP and Vakula and (2) PV and Vakula.
COMMON LAW FRAUD
In the Second and Fourth Causes of Action in the Complaint, GEICO alleges that Defendants committed common law fraud. Under New York law, a plaintiff asserting a claim of common law fraud must plausibly allege:
a material misrepresentation or omission of fact
made by defendant with knowledge of its falsity
intent to defraud;
reasonable reliance on the part of the plaintiff; and
resulting damage to the plaintiff.
DECLARATORY JUDGMENT
Here, GEICO established that an actual controversy exists and that a declaratory judgment would afford specific and conclusive relief as to pending claims with respect to all Defendants. GEICO alleges that ALP and PV have pending bills submitted to GEICO that GEICO has no obligation to pay. Additionally, GEICO has submitted documentation of pending collections actions that ALP and PV are actively prosecuting against GEICO in New York state courts. GEICO has provided a list of the actions, including the amounts involved, the claim numbers, and the status of each action.
CONCLUSION
In sum, Plaintiffs established liability on their common law fraud claims only. The Magistrate judge recommended:
a default judgment should be entered against Defendants for common law fraud; Plaintiffs should be awarded compensatory damages in the amounts of $112,201.74 jointly and severally against ALP Supply, Inc. and Vakula and $188,799.94 jointly and severally against PV Supply, Inc. and Vakula, with prejudgment interest to accrue at an annual rate of nine percent until entry of judgment, with revised calculations to be provided to the Court to determine the specific amount due; and a declaratory judgment should be entered that Plaintiffs have no obligation to pay any pending claims submitted by ALP Supply, Inc. and PV Supply, Inc.
ZALMA OPINION
GEICO seems to have given up on Departments of Insurance and prosecutors to defeat insurance fraud by proactively suing fraudsters and taking the profit out of the crime of insurance fraud. Its success in this case and others should be emulated by the insurance industry who sits back and allows fraudsters to profit from claims.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
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Policy Limits Demand Accepted Settles Claim
Post 5434
Posted on August 26, 2026 by Barry Zalma
See the full video at https://lnkd.in/g-ZtsSgK and at https://lnkd.in/ghMBdYWR
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FACTUAL BACKGROUND
Archer rear-ended Kathleen Ann Wood at a red light, causing Wood to assert a bodily injury claim against him. Wood’s counsel sent Farmers a pre-litigation settlement demand offering to resolve Wood’s claim for the available policy limits, stating that if the $100,000 demand exceeded the policy, the offer was for the policy limits.
Farmers timely responded in writing, agreed to pay Wood the $15,000 per-person policy limit, and provided the requested ...
Policy Limits Demand Accepted Settles Claim
Post 5434
Posted on August 26, 2026 by Barry Zalma
See the full video at https://lnkd.in/g-ZtsSgK and at https://lnkd.in/ghMBdYWR
A Contingent Offer Accepted Ends the Dispute
In Farmers Insurance Exchange, a California Reciprocal Insurance Exchange, The Superior Court For The County Of San Bernardino, Kathleen Ann Wood, E087128, California Court of Appeals, (July 9, 2026) Farmers Insurance Exchange insured Doyle Archer under an automobile policy with bodily injury limits of $15,000 per person and $30,000 per accident.
FACTUAL BACKGROUND
Archer rear-ended Kathleen Ann Wood at a red light, causing Wood to assert a bodily injury claim against him. Wood’s counsel sent Farmers a pre-litigation settlement demand offering to resolve Wood’s claim for the available policy limits, stating that if the $100,000 demand exceeded the policy, the offer was for the policy limits.
Farmers timely responded in writing, agreed to pay Wood the $15,000 per-person policy limit, and provided the requested ...
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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 ...
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Post 5488
Posted on September 11, 2026 by Barry Zalma
ACE Was Not Required To Produce Any Disputed Document Because Each Was Protected By The Attorney-Client Privilege, or The Work-Product Doctrine.
See the full video at and at https://rumble.com/v7fbzvo-arson-for-profit-is-ground-to-deny-claim.html
In Rubesne Resources LLC, a Colorado Limited Liability Company v. ACE Property And Casualty Insurance Company, a Foreign Corporation, Civil Action No. 1:24-cv-02300-DDD-SBP, United States District Court, D. Colorado (August 30, 2026) Rubesne Resources LLC sought insurance coverage from ACE Property and Casualty Company after a January 5, 2024 fire destroyed its business.
South Metro Fire Rescue classified the ignition as intentional, and ACE’s retained expert concluded that gasoline had been poured in multiple areas and ignited. ACE retained coverage and subrogation counsel, National Subrogation Services, and a cause-and-origin expert ...
Arson for Profit is Ground to Deny Claim
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Communications with Arson Investigation is Privileged
Post 5488
ACE Was Not Required To Produce Any Disputed Document Because Each Was Protected By The Attorney-Client Privilege, or The Work-Product Doctrine.
See the full video at and at https://rumble.com/v7fbzvo-arson-for-profit-is-ground-to-deny-claim.html
In Rubesne Resources LLC, a Colorado Limited Liability Company v. ACE Property And Casualty Insurance Company, a Foreign Corporation, Civil Action No. 1:24-cv-02300-DDD-SBP, United States District Court, D. Colorado (August 30, 2026) Rubesne Resources LLC sought insurance coverage from ACE Property and Casualty Company after a January 5, 2024 fire destroyed its business.
South Metro Fire Rescue classified the ignition as intentional.
After reviewing the disputed documents in camera, the court found that each was protected.
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Under Rule 12(b)(6), a complaint must plead facts supporting a facially plausible claim. Article III standing requires a concrete injury, ...
