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July 10, 2024
No Coverage for Anti-Kickback Settlement

D & O Policy Professional Services Exclusion - Post 4830

Read the full article at https://lnkd.in/g-Srqy6m, see the full video at https://lnkd.in/gvhVhEnY and at https://lnkd.in/gGMGepXT, and at https://zalma.com/blog plus more than 4800 posts.

The California Court of Appeals was asked to resolve a dispute over the applicability of professional services coverage exclusions in directors and officers liability insurance policies. The policies were issued to Practice Fusion, Inc., a company that develops and licenses electronic health record software for use by healthcare providers.

In Practice Fusion, Inc. v. Freedom Specialty Insurance Company et al., A167130, A167886, California Court of Appeals, First District, Second Division (June 21, 2024) it responded.

FACTUAL BACKGROUND

An electronic health record is an electronic version of a patient’s medical history as maintained by a healthcare provider.

Following investigations by the United States Department of Justice, Practice Fusion entered into a civil settlement with the United States that resolved two distinct sets of claims that alleged that Practice Fusion violated the federal Anti-Kickback Statute. Further, although the alerts appeared to healthcare providers as unbiased medical information, in some instances they were designed to encourage healthcare providers to prescribe a specific product or class of products to the benefit of the sponsoring pharmaceutical company.

Practice Fusion sought insurance coverage for the civil settlement under its directors and officers liability insurance policies. The insurers denied coverage on the ground that the policies’ professional services exclusions applied to the losses. Practice Fusion then sued the insurers for breach of contract.

The trial court granted the insurers’ motion for summary adjudication because the claims arose from Practice Fusion providing professional services to the pharmaceutical companies and its claim was barred by the professional services exclusion in the policies.

The Settlement Between the United States Department of Justice and Practice Fusion

In January 2020, Practice Fusion agreed to pay $118,642,000 plus interest to the United States and participating states to resolve claims arising from investigations relating to Practice Fusion’s electronic health record software.

Practice Fusion’s Insurance Coverage

Several insurers relevant to the CDS claims insured Practice Fusion under primary or excess directors and officers (D&O) liability insurance policies. The policies in an “insurance tower” provided a total of $50 million in coverage. All policies contained an exclusion that applies to all “Insureds” and bars coverage for “Loss in connection with any Claim made against any Insured . . . alleging, arising out of, based upon or attributable to an Insured’s performance of or failure to perform professional services for others, or any act(s), error(s) or omission(s) relating thereto; ….”

DISCUSSION

At issue in this case are exclusions that apply to losses connected to claims arising from “professional services for others.” The loss claimed by Practice Fusion as a result of its settlement with the United States as to the CDS alerts falls within the provisions in Practice Fusion’s D&O policies exclude coverage for claims arising out of, based upon or attributable to an Insured’s performance of professional services for others, or any act(s), error(s) or omission(s) relating thereto.

Practice Fusion conceded it agreed to modify its software to include the CDS alerts, which were targeted for particular patients with particular conditions based on selected guidelines. The contracts between Practice Fusion and the pharmaceutical companies are premised upon Practice Fusion providing the companies with professional services. The Court of Appeals concluded that the CDS claims, which Practice Fusion settled, are claims that meet the terms of the exclusion.

Accordingly, the loss connected to the settlement of the DOJ’s claims regarding the CDS alerts was barred by the professional services exclusion. The contracts included as a major objective for Practice Fusion to provide the companies with services by deploying CDS alerts in its software and by “arranging for or recommending” that healthcare providers prescribe their products.

ZALMA OPINION

Health insurance fraud is rampant. If you read Zalma’s Insurance Fraud Letter you will see dozens of convictions for fraud on government funded health care programs and multiple civil settlements like that reached with Practice Fusion. It would be ridiculous to allow a person or entity to insure for its fraudulent conduct and payment to avoid criminal prosecution. To do so would avoid the purpose of the kickback statutes and the crime that Practice Fusion avoided by agreeing to pay the Government and eliminate the fact that D&O insurance was designed to protect against fortuitous losses not intentional criminal conduct.

(c) 2024 Barry Zalma & ClaimSchool, Inc.

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00:08:52
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September 18, 2026
Expert May Only Testify to What Experience Supports

Insurance Expert May Not Testify to Speculative and Contains Unsupported Conclusions.

Posted on September 18, 2026 by Barry Zalma

See the full video at and at https://rumble.com/v7fmifw-expert-may-only-testify-to-what-experience-supports.html

In Michele A. Over, and The Estate Of Paul R. Over v. State Farm Mutual Automobile Insurance Company, and State Farm Fire And Casualty Company, Civil Action No. 23-cv-02243-PAB-STV, United States District Court, D. Colorado (September 14, 2026) Michele and Paul Over sued State Farm Fire and State Farm Auto over hail-damage and stolen-vehicle claims.

The operative dispute concerned State Farm Auto’s motion to exclude or limit opinions from plaintiffs’ insurance-industry expert, Aaron Castillo. Castillo.

Law

The proponent of expert testimony must establish by a preponderance of the evidence that an expert is qualified and that the opinions are helpful, sufficiently grounded, and reliably derived and applied. Experience-based opinions must explain how the...

00:03:10
September 17, 2026
Convicted on 29 Tax-Refund-Fraud Counts

150 Months in Prison for Tax Fraud
Post 4846

Posted on September 17, 2026 by Barry Zalma

See the full video at https://lnkd.in/g8rh3JBX and https://lnkd.in/gmkdy-9C, In United States Of America v. Thomas Addaquay, Nos. 25-10609, 25-10611, United States Court of Appeals, Eleventh Circuit (September 9, 2026) the Eleventh Circuit affirmed all challenged convictions, the 150-month aggregate sentence, and the challenged $4,123,474.55 restitution award.

FACTS

In United States Of America v. Thomas Addaquay, United States Of America v. Thomas Addaquay, Nos. 25-10609, 25-10611, United States Court of Appeals, Eleventh Circuit (September 9, 2026) the Eleventh Circuit affirmed all challenged convictions, the 150-month aggregate sentence, and the challenged $4,123,474.55 restitution award.
FACTS

Thomas Addaquay controlled United Consolidated Accounting and Business Services (UC), nominally a check-cashing business.

The government proved a three-stage tax-refund scheme that converted the resulting refund checks into usable funds through ...

00:05:23
September 14, 2026
Court Enforces Fifth Amendment & Refuses to Compel Answers

Major Fraud Perpetrator Asserts Fifth Amendment Privilege to Avoid Prosecution

Post 5489

Posted on September 14, 2026 by Barry Zalma

Fraudster Refuses to Answer Questions About His Alleged Fraud

See the full video at https://lnkd.in/gvicAMDr and at https://lnkd.in/gvicAMDr

In Great American Insurance Co. v. Gemstone Property Management, LLC, et al., No. 23-cv-9100 (LJL), United States District Court, S.D. New York (September 8, 2026) Great American Insurance Company alleged that it was defrauded through a scheme in which Subin Associates, LLP recruited individuals to stage construction-site injuries, arranged unnecessary medical treatment and litigation funding, and pursued fraudulent personal-injury claims.

Luis Manuel Garcia Salcedo, resulted in a $6 million settlement. Non-party Jose Hernandez allegedly worked as an assistant manager at Subin, operated Hernandez Associates, and owned litigation-funding companies that shared office space with Subin and provided services to its clients.

After Great American ...

00:05:14
October 16, 2026

Alleged Defamatory Statements Must be Of and Concerning Plaintiffs

Posted on October 16, 2026 by Barry Zalma

To Prove Defamation the Statement Must be Of and Concerning the Plaintiffs

Post 4867

In Michael Moloney and Sergio Cantu v. United Services Automobile Association, No. 04-25-00519-CV, Court of Appeals of Texas, Fourth District, San Antonio (October 14, 2026) Michael Moloney and Sergio Cantu appealed from the trial court’s granting of a traditional motion for summary judgment in favor of United Services Automobile Association (“USAA”) on their defamation claim.
BACKGROUND

Moloney and Cantu sued USAA for defamation, alleging that they are the principals of Informed Roofing & Restoration, LLC (“Informed Roofing”), which is primarily engaged in the residential roofing repair and replacement business, and that an employee or agent of USAA had made false and defamatory statements to the San Antonio Police Department (“SAPD”) concerning them.

Specifically, Moloney and Cantu alleged that an employee of ...

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October 15, 2026
Zalma’s Insurance Fraud Letter – October 15, 2026

ZIFL – Volume 30, Issue 20 Subscribe to ZIFL here https://lnkd.in/gfpn78FM

Posted on October 15, 2026 by Barry Zalma

THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL

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 is written by Barry Zalma.

It is provided FREE to anyone who visits the site at https://lnkd.in/gVT5G9s

Six Insane Fraud Schemes the Trump Administration Has Uncovered Stealing from the taxpayer has now become a multi-billion-dollar industry in America. Obamacare has been a magnet for scammers.

Florida Insurance Agent Pleads Guilty in $300,000 Premium Finance Scheme

Daniel Raney, 41, who managed Raney Insurance and Raney Ventures in Pensacola, was arrested after AFCO Direct.

RIFE WITH FRAUD ALLOWS DEMANDS TO ESTABLISH RESTITUTION

Six Insane Fraud Schemes the Trump Administration Has Uncovered

Stealing from the taxpayer has now become a multi-billion-dollar industry in America – and the ...

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October 14, 2026
District Court has Wide Discretion in Sentencing

Sentence for Stealing from Veterans Administration Reasonably Considers State Insurance Fraud & Arson Convictions

Post 4863

Posted on October 14, 2026 by Barry Zalma

In United States Of America v. Anthony Curtis Brewer, No. 26-10745, United States Court of Appeals, Eleventh Circuit (October 8, 2026) Anthony Curtis Brewer became the fiduciary for an incapacitated recipient of Department of Veterans Affairs survivor benefits and agreed to use her funds solely for her care and support without commingling them with his own.

The VA determined that he misused $67,232.33 and removed him as fiduciary in 2022. Brewer pleaded guilty to theft of more than $1,000 in government property under 18 U.S.C. § 641. At sentencing, the district court attributed $53,567 in loss to him, producing an advisory Guidelines range of 15 to 21 months.

Citing the victim’s vulnerability, Brewer’s attempts to avoid responsibility, and his other fraudulent conduct — including state convictions for arson and insurance fraud — the court ...

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