After Health Provider Entity's Management is Arrested for Fraud Reporting Suspicion to Beneficiaries is not Defamation
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BrainBuilders, LLC appealed from an order granting summary judgment in favor of defendants Optum, Inc., et al (collectively, defendants) in Brainbuilders, LLC v. Optum, Inc., Optum Services, Inc., et al, No. A-0621-22, Superior Court of New Jersey, Appellate Division (April 19, 2024) resolved claims of defamation.
FACTS
Letters dated July 25, 2017 and August 2017 sent by the Optum entities to BrainBuilders' patients following an investigation into purported fraud by individuals associated with BrainBuilders.
BrainBuilders provides healthcare services to children on the autism spectrum. As an out-of-network or non-participating healthcare provider, BrainBuilders receives reimbursement for claims only if a patient's health insurance plan allowed "out-of-network benefits" or the insurer made a "single case agreement" for the patient's care.
The Optum entities are the health claims administrator for health plans issued or administered by the Oxford entities and UHC entities. The Optum entities do not sell or issue health insurance policies. Rather, they provide support for defendants who issued health insurance policies to individual insureds. The Optum entities also evaluate insurance claims submitted by providers to its affiliated insurers, including BrainBuilders. The Optum entities often investigate whether a provider has requested reimbursement beyond the provider's entitlement, such as by misrepresenting or inflating the services provided.
In June 2017, four individuals related to the management of BrainBuilders were arrested and charged with conspiracy to defraud Medicaid. A criminal complaint, alleging misappropriation of funds, was filed against several individuals affiliated with BrainBuilders. The arrests were reported in the news media and the Optum entities learned of the arrests on July 14, 2017.
Subsequently the Optum entities sent letters to BrainBuilders' patients insured by the Oxford and UHC entities (July 2017 letters). The July 2017 letters explained the Optum entities were suspending payment for services provided by BrainBuilders due to potential insurance fraud and other violations of state and federal law.
BrainBuilders sued defendants asserting the following causes of action:
1 conspiracy;
2 tortious interference with business relations;
3 tortious interference with prospective economic advantage;
4 negligence trade libel;
5 defamation, libel, and slander; and
6 unjust enrichment and
7 quantum meruit.
BrainBuilders alleged the statements in the July and August 2017 letters were false and defamatory. Defendants moved for summary judgment and the motion judge granted defendants' motion and dismissed BrainBuilders' claims with prejudice. Further, around the same time period, the judge noted the Optum entities "separately uncovered evidence suggesting BrainBuilders was engaged in fraud, waste, or abuse." Thus, the judge concluded, "[w]hen read with context, no reasonable person" could interpret the July or August 2017 letters "as fallacious or injurious.
The law of defamation is grounded on the principle that people should be free to enjoy their reputations unimpaired by false and defamatory attacks. To prevail on a defamation claim, a party must demonstrate: (1) the assertion of a false and defamatory statement concerning another; (2) the unprivileged publication of that statement to a third party; and (3) fault amounting at least to negligence by the publisher.
True Statements are not Actionable as Defamation.
Our courts have stated that true statements are absolutely protected under the First Amendment from liability for defamation. The allegedly defamatory statements in the July and August 2017 letters related to BrainBuilders' "potential fraud," potential "violations of state and federal law," and concerns for "quality of care or member safety." It is uncontroverted that several of BrainBuilders' officers were arrested for conspiracy to defraud Medicaid in association with "income they received from BrainBuilders." These individuals were arrested because they potentially committed fraud. Additionally, the arrests raised legitimate concerns regarding the quality of care rendered by BrainBuilders.
Moreover, BrainBuilders claimed it conferred only benefits to the insured members and not defendants. Under these circumstances, the Appellate Division was satisfied BrainBuilders failed to proffer any support for its unjust enrichment and quantum meruit claims.
ZALMA OPINION
It takes a certain amount of unmitigated gall to sue for defamation an entity that reported that the plaintiffs officers were arrested for Medicaid fraud, a major felony. Their officers were arrested - albeit I could find no report on the result of the charges - for insurance fraud, telling their customers about the arrests in good faith is not defamation since the statements were true.
(c) 2024 Barry Zalma & ClaimSchool, Inc.
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Formulaic Recitation Of The Elements Of Civil Conspiracy Are Insufficient
Post number 5320
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In Hassan Fayad v. Liberty Mutual Insurance Company, et al., No. 2:25-cv-10930, United States District Court, E.D. Michigan, Southern Division (March 24, 2026) Plaintiff Hassan Fayad, the owner of several businesses providing transportation, diagnostics, testing, and therapy services, regularly billed insurance companies for these services, was arrested and tried for fraud, convicted, had the conviction overruled and sued the insurers and prosecutors he found responsible.
FACTUAL BACKGROUND
By January 2020, Liberty Mutual, Progressive, Allstate, and Esurance suspected fraudulent activity and filed a complaint with the Michigan Department of Attorney General (MDAG). The insurers alleged that Fayad and others billed Michigan auto insurance policies for profit without actually providing medically ...
Federal Courts Have Limited Jurisdiction
When all Parties Refuse Removal There is No Jurisdiction
Post number 5319
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In Beth Mayhew and Matthew Mayhew v. Vladimir Sadovyh, et al., No. 2:26-CV-04029-WJE, United States District Court, W.D. Missouri (April 6, 2026) Mayhew was involved in a trailer-truck accident with Vladimir Sadovyh, who was employed by Nova First, LLC and Globex Transport, Inc. Both companies owned the tractor-trailer involved.
FACTUAL BACKGROUND
Chubb and Mohave Transportation Insurance Company jointly issued an insurance policy covering Nova First, Globex, and Sadovyh, with EMA Risk Services acting as a third-party administrator.
Beth Mayhew sued Nova First, Globex, and Sadovyh for negligence in Missouri state court, and following a jury trial, a nuclear judgment was awarded to the Mayhews totaling ...
Ordinary Negligence is What Medical Professi0nal Liability Insures
Post number 5319
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Sexual Conduct Exclusion Doesn’t Apply When Doctor Negligently Uses His Own Sperm
In Integris Insurance Company v. Narendra B. Tohan, No. AC 47222, Court of Appeals of Connecticut (April 7, 2026) Integris Insurance Company, a medical professional liability insurer, initiated a declaratory action to determine its duty to defend and indemnify Narendra B. Tohan, a physician licensed in Connecticut, in a separate negligence action alleging medical misconduct.
FACTUAL BACKGROUND
In 2019, Kayla Suprynowicz and Reilly Flaherty (civil action plaintiffs), who were strangers for most of their lives, discovered through a genetic testing company that they are half siblings.
INSURANCE POLICY
The policy defines “Professional Services” in relevant part as “any professional medical services within the ...
ZIFL – Volume 30, Issue 7 – April 1, 2026
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
Post number 5314
Posted on April 1, 2026 by Barry Zalma
Zalma’s Insurance Fraud Letter (ZIFL) continues its 30th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ This issue contains the following articles about insurance fraud:
No One is Above the Law – Not Even a Police Officer
Police Officer Convicted for Fraud in Reporting an Accident Affirmed
Police Officer Should never Lie about Results of Chase
In State Of Ohio v. Anthony Holmes, No. 115123, 2026-Ohio-736, Court of Appeals of Ohio, Eighth District, Cuyahoga (March 5, 2026) a police officer appealed criminal conviction as a result of lies about a high speed chase.
Read the following article and the full issue of ZIFL at https://zalma.com/blog/wp-content/uploads/2026/03/ZIFL-04-01-2026-1.pdf...
ZIFL – Volume 30, Issue 7 – April 1, 2026
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
Post number 5314
Posted on April 1, 2026 by Barry Zalma
Zalma’s Insurance Fraud Letter (ZIFL) continues its 30th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ This issue contains the following articles about insurance fraud:
No One is Above the Law – Not Even a Police Officer
Police Officer Convicted for Fraud in Reporting an Accident Affirmed
Police Officer Should never Lie about Results of Chase
In State Of Ohio v. Anthony Holmes, No. 115123, 2026-Ohio-736, Court of Appeals of Ohio, Eighth District, Cuyahoga (March 5, 2026) a police officer appealed criminal conviction as a result of lies about a high speed chase.
Read the following article and the full issue of ZIFL at https://zalma.com/blog/wp-content/uploads/2026/03/ZIFL-04-01-2026-1.pdf...
Posted on March 30, 2026 by Barry Zalma
Insurance Fraud, a Way to Reduce Violent Crime
Post number 5313
A Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story helps 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.
She Taught Her Customers The Swoop And Squat:
Recently the California Insurance Department’s Fraud Division arrested a young woman in Los Angeles County for operating an insurance fraud school. She advertised her classes in the “Penny Saver” an advertising sheet distributed free to the public and a print version of Facebook, X Craig’s list. She had operated for several years teaching methods of committing automobile insurance fraud. Only after a police officer enrolled in one of her classes was she arrested.
Her defense ...