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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Chutzpah: After Criminal Prosecution Defendant Sues USA
Post 5164
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Dr. Segun Patrick Adeoye, a medical doctor, filed a lawsuit against the United States of America, seeking damages for alleged violations during his criminal prosecution. He was acquitted by a jury but claims to have suffered significant harm, including financial losses, damage to his professional reputation, and personal distress.
In Dr. Segun Patrick Adeoye v. The United States Of America, Civil Action No. 4:25-cv-83, United States District Court, E.D. Texas, Sherman Division (July 23, 2025) the USDC dismissed Adeoye’s suit.
FACTUAL BACKGROUND
Dr. Adeoye was indicted on charges of conspiracy to commit wire fraud and money laundering. The indictment alleged that he and his co-conspirators obtained at least seventeen million dollars through various fraudulent schemes. Despite being acquitted, Dr. Adeoye claims that his ...
Payment of Appraisal Award Defeats Claim of Bad Faith
Post 5163
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Hurricane Damage to Dwelling Established by Appraisal Award
In Homeowners Of America Insurance Company v. Emilio Menchaca, No. 01-23-00633-CV, Court of Appeals of Texas, First District (July 31, 2025) after a hurricane Homeowners of America Insurance Company (“HAIC”) estimated that the cost of covered repair to Menchaca’s house was $3,688.54, which was less than his deductible, and therefore no payment would be made.
FACTS
After Menchaca retained counsel HAIC advised that, under the terms of the policy, Menchaca was required to first invoke the appraisal process prior to filing suit, and that HAIC reserved the right to request that Menchaca and any adjuster hired on his behalf submit to an Examination Under Oath (“EUO”).
On August 23, 2018, Menchaca’s counsel ...
Payment of Appraisal Award Defeats Claim of Bad Faith
Post 5163
Read the full article at https://lnkd.in/dNpKKcYx, see the full video at https://lnkd.in/dNgwRP8q and at https://lnkd.in/dA9dvd-D, and at https://zalma.com/blog plus more than 5150 posts.
Hurricane Damage to Dwelling Established by Appraisal Award
In Homeowners Of America Insurance Company v. Emilio Menchaca, No. 01-23-00633-CV, Court of Appeals of Texas, First District (July 31, 2025) after a hurricane Homeowners of America Insurance Company (“HAIC”) estimated that the cost of covered repair to Menchaca’s house was $3,688.54, which was less than his deductible, and therefore no payment would be made.
FACTS
After Menchaca retained counsel HAIC advised that, under the terms of the policy, Menchaca was required to first invoke the appraisal process prior to filing suit, and that HAIC reserved the right to request that Menchaca and any adjuster hired on his behalf submit to an Examination Under Oath (“EUO”).
On August 23, 2018, Menchaca’s counsel ...
Rulings on Motions Reduced the Issues to be Presented at Trial
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CASE OVERVIEW
In Richard Bernier v. State Farm Mutual Automobile Insurance Company, No. 4:24-cv-00002-GMS, USDC, D. Alaska (May 28, 2025) Richard Bernier made claim under the underinsured motorist (UIM) coverage provided in his State Farm policy, was not satisfied with State Farm's offer and sued. Both parties tried to win by filing motions for summary judgment.
FACTS
Bernier was involved in an auto accident on November 18, 2020, and sought the maximum available UIM coverage under his policy, which was $50,000. State Farm initially offered him $31,342.36, which did not include prejudgment interest or attorney fees.
Prior to trial Bernier had three remaining claims against State Farm:
1. negligent and reckless claims handling;
2. violation of covenant of good faith and fair dealing; and
3. award of punitive damages.
Both Bernier and State Farm dispositive motions before ...
ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional
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Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th 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/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
This issue contains the following articles about insurance fraud:
Health Care Fraud Trial Results in Murder for Hire of Witness
To Avoid Conviction for Insurance Fraud Defendants Murder Witness
In United States of America v. Louis Age, Jr.; Stanton Guillory; Louis Age, III; Ronald Wilson, Jr., No. 22-30656, United States Court of Appeals, Fifth Circuit (April 25, 2025) the Fifth Circuit dealt with the ...
Professional Health Care Services Exclusion Effective
Post 5073
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This opinion is the recommendation of a Magistrate Judge to the District Court Judge and involves Travelers Casualty Insurance Company and its duty to defend the New Mexico Bone and Joint Institute (NMBJI) and its physicians in a medical negligence lawsuit brought by Tervon Dorsey.
In Travelers Casualty Insurance Company Of America v. New Mexico Bone And Joint Institute, P.C.; American Foundation Of Lower Extremity Surgery And Research, Inc., a New Mexico Corporation; Riley Rampton, DPM; Loren K. Spencer, DPM; Tervon Dorsey, individually; Kimberly Dorsey, individually; and Kate Ferlic as Guardian Ad Litem for K.D. and J.D., minors, No. 2:24-cv-0027 MV/DLM, United States District Court, D. New Mexico (May 8, 2025) the Magistrate Judge Recommended:
Insurance Coverage Dispute:
Travelers issued a Commercial General Liability ...
