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December 27, 2023
Go to Jail, Do Not Pass Go

Fraudster Must Serve Time and Lose His Residence to Pay Restitution

Barry Zalma
Dec 27, 2023

Read the full article at https://lnkd.in/g-uXceWV and see the full video at https://lnkd.in/gT3RJHMs and at https://lnkd.in/gk3ubpM5 and at https://zalma.com/blog and more than 4690 posts.

Post 4698

Armando Valdes appealed his 60-month sentence for health care fraud after he pleaded guilty. Valdes’s conviction and sentence arose out of his scheme to submit millions of dollars in fraudulent medical claims to United Healthcare and Blue Cross Blue Shield for intravenous infusions of Infliximab, an expensive immunosuppressive drug. These infusions, purportedly given to patients at Valdes’s medical clinic, Gasiel Medical Services (“Gasiel”), were either not provided or were medically unnecessary.

In United States Of America v. Armando Valdes, No. 22-12837, United States Court of Appeals, Eleventh Circuit (December 19, 2023) the Eleventh Circuit disposed of the arguments asserted by Valdes.

LOSS AMOUNT

Federal Courts sentence convicted defendants based upon offense levels set by federal statutes. The sentences are increased with the amount of “loss” caused by the offense. In Valdes’s case, his base offense level was increased by 22 levels because the district court found that the loss amount was $38 million, and thus more than $25 million.

Section 2B1.1(b)(1)(L) provides that a defendant’s base offense level is increased by 22 levels if the loss from the fraud offense was more than $25 million but less than $65 million. Intended loss includes harm “that would have been impossible or unlikely to occur.”

ANALYSIS

Valdes did not show the Eleventh Circuit that the district court’s loss amount of $38 million was clearly erroroneous. Valdes admitted that through Gasiel, he submitted approximately $33 million in fraudulent claims to United Healthcare and approximately $5 million in fraudulent claims to Blue Cross Blue Shield.

Even if United Healthcare was unlikely to reimburse Valdes for the entire amount billed or for duplicate claims those claims were nonetheless properly included in the intended loss amount. At the sentencing hearing, Valdes’s own fraud analyst testified that, even accounting for duplicate claims, the total loss amount was above $25 million, the threshold for the 22-level increase in Valdes’s offense level.

SOPHISTICATED MEANS ENHANCEMENT

If a defendant’s fraud offense involved sophisticated means, his offense level is increased by two levels. Whether conduct is sophisticated is based on the conduct as a whole, not on the individual steps. The Eleventh Circuit reviews a district court’s factual findings for clear error and its application of the guideline provision to those facts.

Since the Eleventh Circuit found no error in the district court’s application of the two-level sophisticated means enhancement that part of the sentence was affirmed. The Eleventh Circuit noted that Valdes operated an elaborate, years-long scheme to defraud insurance companies for expensive Infliximab infusions, obtaining over $7 million as a result. The large amount of money defrauded and the six-year period the scheme went undetected supported a finding of sophisticated means.

Valdes hid behind two licensed doctors, Hilario Isaba and Ramon Santiago, who claimed no ownership interest in Gasiel and did not prescribe Infliximab. In light of these facts, the district court properly applied a two-level sophisticated means enhancement.

FORFEITURE OF VALDES’S RESIDENCE

Valdes argued the district court erred by ordering the forfeiture of his home as substitute property. Valdes admitted, however, that as part of his plea agreement, he agreed to forfeit his primary residence as substitute property.

Valdes’s statements made during the plea colloquy are taken to be true. In these statements, Valdes acknowledged he had read and understood his indictment and plea agreement.

Because Valdes failed to show any plain error in the district court’s accepting his guilty plea as to the forfeiture allegations, he has not shown the district court erred in ordering the forfeiture of his primary residence as substitute property.

ZALMA OPINION

People who earn millions by defrauding health insurers find it difficult to believe that they were found guilty of a crime and were required to serve time in jail and pay restitution to their victims. Valdes admitted his crime only to be so shocked by his sentence that he filed an appeal to eliminate or reduce the sentence to the crimes he admitted by asserting a plea of guilty. He wasted the time of the trial court and the Eleventh Circuit and should have been punished further for attempting the appeal. He was lucky that the Eleventh Circuit only affirmed the sentence.

(c) 2023 Barry Zalma & ClaimSchool, Inc.

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00:08:19
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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 ...

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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.

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13 hours ago

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

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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...

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13 hours ago

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...

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April 30, 2026
Investigation of First Party Property Claims

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.

Below you will read from this post until you reach the the end of this blog post as the free part of an Excellence in Claims Handling post. To read the full article and receive all articles for members of Excellence in Claims Handling you should consider joining as a paid member to get full access to articles for members only, to our news, analysis, insurance coverage, claims, insurance fraud and insurance webinars, by clicking at the subscription link below.

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 ...

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