GEICO Continues it Proactive Actions Against Insurance Fraud
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Post 4821
Insurers have found that states, like New York, will do little or nothing to deter insurance fraud. Determined to protect its assets and its insureds, many GEICO brand insurance companies have acted proactively against people and health care providers who are attempting to defraud them and their insureds. In Government Employees Insurance Company, et. al. v. Colin Clarke, M.D., Colin Clarke Md P.C., Svetlana Kovaleva a/k/a Melana Kay, Medical Evaluation Services & Billing, Inc., Medical Consultation Services & Billing, Inc., and John Doe Defendants, No. 1:23-CV-04605 (FB) (SJB), United States District Court, E.D. New York (June 20, 2024) the fraud perpetrators attempted to defeat GEICO’s RICO action by counterclaiming that GEICO committed fraud.
GEICO moved to dismiss the Clarke Defendants’ counterclaims and to strike twelve of their affirmative defenses.
BACKGROUND
GEICO sued Defendants for submitting allegedly fraudulent no-fault insurance claims to GEICO for services performed at Dr. Clarke’s healthcare practice, among other things. It brought claims for civil RICO violations, common law fraud, and unjust enrichment. GEICO also seeks a declaratory judgment that the Clarke Defendants have no right to receive payment for any pending bills submitted to GEICO.
In response, the Clarke Defendants counterclaimed against GEICO on allegations that GEICO has – through its insurance-claim verification process, committed fraud by reporting Dr. Clarke to the New York State Department of Health, and by bringing two RICO cases against Dr. Clarke, including this lawsuit.
The Clarke Defendants counterclaimed for: (i) common law fraud; (ii) aiding and abetting fraud; (iii) breach of the covenant of good faith and fair dealing; (iv) violation of N.Y. Gen. Bus. Law § 349; (v) abuse of process; (vi) and attorneys’ fees. GEICO moved to dismiss all counterclaims and to strike twelve of the Clarke Defendants’ affirmative defenses.
DISCUSSION
Under New York law, the elements of a common law fraud claim are: (i) material misrepresentation of a fact, (ii) knowledge of its falsity, (iii) intent to induce reliance, (iv) justifiable reliance by the claimant, and (v) damages.
The fraudulent conduct the Clarke Defendants allege is simply the non-performance of GEICO’s contractual duties to process no-fault and regarding the alleged thefts committed by the Kay Defendants, and GEICO’s alleged non-disclosure of those thefts. Since the Clarke Defendants’ conclusory allegations are insufficient to plead a claim for fraud and because vague and conclusory allegations that a defendant committed theft are insufficient to plead a cognizable fraud claim.
THE COVENANT OF GOOD FAITH AND FAIR DEALING
GEICO argued that the Clarke Defendants’ breach of contract claim must be dismissed because they have not alleged sufficient details about the underlying contracts or how their implicit duties were violated.
The Clarke Defendants conclusory allegations that they were assigned the contractual rights that GEICO owed to its insureds without any specific facts about those policies, when they were assigned, who they belonged to, what terms they contained, or on what basis GEICO denied claims submitted pursuant to their terms. Absent even minimal detail about the underlying contracts, the Clarke Defendants cannot sustain a claim that GEICO violated the implicit duties of good faith and fair dealing contained therein. Accordingly, this claim is dismissed.
ABUSE OF PROCESS
To the extent that their abuse of process claim is predicated on this case or any other civil RICO action, the mere commencement of a lawsuit cannot serve as a basis for a cause of action alleging abuse of process.
MOTION TO STRIKE AFFIRMATIVE DEFENSES
GEICO’s motion to dismiss the Clarke Defendants’ counterclaims was granted; accordingly, those claims were dismissed. Its motion to strike the Clarke Defendants’ affirmative defenses was granted with respect to the Clarke Defendants’ Third, Twenty-Second, and Twenty-Third affirmative defenses; it is denied in all other respects. GEICO’s request to stay discovery pending adjudication of this motion is denied as moot.
ZALMA OPINION
States like New York have made insurance fraud – like that brought in the suit against the Clarke Defendants – only to do little or nothing to prosecute the crime. GEICO, frustrated as a victim of fraud, has become proactive and works to take the profit out of the crime of insurance fraud. They, and other proactive insurers, are becoming successful in New York and other states and should be emulated by other victims of insurance fraud.
(c) 2024 Barry Zalma & ClaimSchool, Inc.
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Interpleader Protects All Claimants Against Life Policy and the Insurer
Who’s on First to Get Life Insurance Proceeds
Post 5184
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Interpleader Protects All Claimants Against Life Policy and the Insurer
In Metropolitan Life Insurance Company v. Selena Sanchez, et al, No. 2:24-cv-03278-TLN-CSK, United States District Court, E.D. California (September 3, 2025) the USDC applied interpleader law.
Case Overview
This case involves an interpleader action brought by the Metropolitan Life Insurance Company (Plaintiff-in-Interpleader) against Selena Sanchez and other defendants (Defendants-in-Interpleader).
Key Points
Plaintiff-in-Interpleader’s Application:
The Plaintiff-in-Interpleader...
A Claim by Any Other Name is not a Claim
Post 5182
It is Imperative that Insured Report Potential Claim to Insurers
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In Jeffrey B. Scott v. Certain Underwriters At Lloyd’s, London, Subscribing To Policy No. B0901li1837279, RLI Insurance Company, Certain Underwriters At Lloyds, London And The Insurance Company, Subscribing To Policy No. B0180fn2102430, No. 24-12441, United States Court of Appeals, Eleventh Circuit (August 25, 2025) the court explained the need for a claim to obtain coverage.
Case Background:
This appeal arises from a coverage dispute under a Directors & Officers (D&O) insurance policy. Jeffrey B. Scott, the plaintiff-appellant, was terminated from his role as CEO, President, and Secretary of Gemini Financial Holdings, LLC in October 2019. Following his termination, Scott threatened legal action against Gemini, and ...
A Claim by Any Other Name is not a Claim
Post 5182
It is Imperative that Insured Report Potential Claim to Insurers
Read the full article at https://lnkd.in/gfbwAsxw, See the full video at https://lnkd.in/gea_hgB3 and at https://lnkd.in/ghZ7gjxy, and at https://zalma.com/blog plus more than 5150 posts.
In Jeffrey B. Scott v. Certain Underwriters At Lloyd’s, London, Subscribing To Policy No. B0901li1837279, RLI Insurance Company, Certain Underwriters At Lloyds, London And The Insurance Company, Subscribing To Policy No. B0180fn2102430, No. 24-12441, United States Court of Appeals, Eleventh Circuit (August 25, 2025) the court explained the need for a claim to obtain coverage.
Case Background:
This appeal arises from a coverage dispute under a Directors & Officers (D&O) insurance policy. Jeffrey B. Scott, the plaintiff-appellant, was terminated from his role as CEO, President, and Secretary of Gemini Financial Holdings, LLC in October 2019. Following his termination, Scott threatened legal action against Gemini, and ...
Barry Zalma: Insurance Claims Expert Witness
Posted on September 3, 2025 by Barry Zalma
The Need for a Claims Handling Expert to Defend or Prove a Tort of Bad Faith Suit
© 2025 Barry Zalma, Esq., CFE
When I finished my three year enlistment in the US Army as a Special Agent of US Army Intelligence in 1967, I sought employment where I could use the investigative skills I learned in the Army. After some searching I was hired as a claims trainee by the Fireman’s Fund American Insurance Company. For five years, while attending law school at night while working full time as an insurance adjuster I became familiar with every aspect of the commercial insurance industry.
On January 2, 1972 I was admitted to the California Bar. I practiced law, specializing in insurance claims, insurance coverage and defense of claims against people insured and defense of insurance companies sued for breach of contract and breach of the implied covenant of good faith and fair dealing. After 45 years as an active lawyer, I asked that my license to practice law be declared inactive ...
The Need for a Claims Handling Expert to Defend or Prove a Tort of Bad Faith Suit
© 2025 Barry Zalma, Esq., CFE
When I finished my three year enlistment in the US Army as a Special Agent of US Army Intelligence in 1967, I sought employment where I could use the investigative skills I learned in the Army. After some searching I was hired as a claims trainee by the Fireman’s Fund American Insurance Company. For five years, while attending law school at night while working full time as an insurance adjuster I became familiar with every aspect of the commercial insurance industry.
On January 2, 1972 I was admitted to the California Bar. I practiced law, specializing in insurance claims, insurance coverage and defense of claims against people insured and defense of insurance companies sued for breach of contract and breach of the implied covenant of good faith and fair dealing. After 45 years as an active lawyer, I asked that my license to practice law be declared inactive and became a consultant and expert witness for lawyers representing insurers and lawyers ...
APPRAISAL AWARD SETS AMOUNT OF DAMAGES RECOVERED FROM INSURER
Post 5180
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It’s a Waste of Time to Sue Your Insurer if You Don’t Have Evidence
Evidence Required to Prove Breach of Contract
Read the full article at https://www.linkedin.com/pulse/evidence-required-prove-breach-contract-barry-zalma-esq-cfe-rfelc, see the full video at https://rumble.com/v6yd2z0-evidence-required-to-prove-breach-of-contract.html and at https://youtu.be/2ywEjs3hZsw, and at https://zalma.com/blog plus more than 5150 posts.
It’s a Waste of Time to Sue Your Insurer if You Don’t Have Evidence
In Debbie Beaty and Jonathan Hayes v. Homeowners Of America Insurance Company, No. 01-23-00844-CV, Court of Appeals of Texas, First District (August 26, 2025) Debbie Beaty and Jonathan Hayes filed a claim under their homeowner’s insurance policy with Homeowners of ...
