Victory Against Insurers Is Not Always Available
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Post 4835
Many people and their lawyers believe that suing an insurance company that denies a claim is a guaranteed multi-million dollar successful lawsuit. However, courts don’t believe in such a certainty and require the litigants to promptly file their suit and allege facts that they can prove that supports their claims.
In Azam Ahmed, individually and on behalf of all others similarly situated v. Cigna Health Management, Inc. et al., No. 23-cv-8094 (AS), United States District Court, S.D. New York (July 8, 2024) the USDC applied the rule of law instead of the hoped for certainty of always profiting from a suit against an insurer.
FACTS
Azam Ahmed claimed that Defendants Wellfleet Insurance, Wellfleet New York Insurance Company, and CIGNA Management, Inc. refused to cover medically necessary procedures in contravention of his health-insurance policy. Ahmed’s breach-of-contract and insurance-law claims came years too late, and his attempt to recharacterize his contract claim as one for fraud or unjust enrichment failed.
BACKGROUND
In August 2016, Azam Ahmed enrolled in New York University’s student health-insurance plan. The plan was issued by what is now Wellfleet New York Insurance Company and administered by what is now Wellfleet Insurance (together, “Wellfleet”).
Years earlier, Ahmed had been diagnosed with a congenital birth defect, resulting in skeletal abnormalities and symptoms like headaches and joint pain. He also suffered from facial asymmetry, as well as issues with chewing, articulation, breathing, and jaw locking.
In May 2017, Ahmed had surgery to address his symptoms. His preauthorization request was approved by Wellfleet via a third-party vendor that had been hired by Wellfleet to perform medical-necessity reviews. The surgery, though partially successful, did not fully resolve his symptoms, and seven months later, Ahmed’s surgeons determined that a second surgery was necessary to further remedy his skeletal deformity and ongoing pain and breathing problems. Ahmed sent a preauthorization request for the second surgery to Wellfleet, which was reviewed by CIGNA Management, Inc. (Cigna) who rejected the request.
Ahmed also alleged that Cigna was unjustly enriched by receiving from Wellfleet a portion of the insurance premiums paid by Ahmed while intentionally and systematically denying coverage of medically necessary services and procedures in contravention of the insurance contract under which he was due benefits. Ahmed also sought to represent a class of others whose preauthorization requests were denied.
Wellfleet and Cigna moved to dismiss.
DISCUSSION
Ahmed brings claims for breach of contract, violation of N.Y. Insurance Law § 4226, fraud, and unjust enrichment. But the first two claims come too late, and Ahmed’s factual allegations are a poor fit for the latter two.
Ahmed’s breach-of-contract and insurance-law claims are time-barred.
Ahmed sues Wellfleet for both breach of contract and violation of N.Y. Insurance law § 4226. Both claims are time-barred. Ahmed’s contract claim is time-barred because the policy imposes a three-year time limit, meaning that Ahmed brought it two years too late.
FRAUD CLAIMS
Just as with the contract claim, Ahmed fails to plausibly allege fraudulent concealment. He had Wellfleet’s reasons for the denial, and the policy that serves as the basis for his claim. More than three years have passed since all of that. So, like Ahmed’s contract claim, his § 4226 claim must be dismissed as untimely.
Ahmed’s Fraud Claims Must Be Dismissed.
A fraud claim will not lie if it arises out of the same facts as plaintiff’s breach of contract claim.
First, Ahmed fails to identify any duties that are “separate” from the duty of performance. Ahmed appears to argue that the “special facts” doctrine imposed a duty on Defendants to disclose their intention to breach the contract. But this argument fails for multiple reasons. To start, the doctrine usually applies in the context of business negotiations where parties are entering a contract.
Second, even if it does, Ahmed does not identify any fact that Defendants failed to disclose.
Ahmed’s Unjust-Enrichment Claim Must Be Dismissed.
Finally, Ahmed’s unjust enrichment claim against Cigna must also be dismissed. Cigna argues that this claim must be dismissed because, among other reasons, it concerns the subject matter of a valid and enforceable contract.
The existence of a contract precludes Ahmed’s unjust-enrichment claim.
Here, by contrast, the dispute derives from conduct “in contravention of the insurance contract by a party that was acting as a subcontractor to the counterparty to the contract. The dispute arises from the actual breach of contract that Cigna allegedly facilitated.
Ahmed’s fraud claim is defective because intention to breach is not the kind of fact required to be disclosed under the special facts doctrine. In addition, Ahmed fails to allege that he had any relationship with Cigna prior to the denials, making it unclear whether the special-facts doctrine even applies.
Ahmed initially brought this case thinking that Defendants used an algorithm to deny his preauthorization request. His claims are either untimely or are a poor fit for the doctrine he tries to cram them into. As such, Defendants’ motions to dismiss were granted with prejudice. Defendants’ motion to strike the class allegations was denied as moot.
ZALMA OPINION
Waiting more than three years to sue was fatal to almost all of Ahmed’s claims. His attempt to avoid the limitation of action by claiming fraud was imaginative but unsuccessful because none of the elements of the tort of fraud applied.
(c) 2024 Barry Zalma & ClaimSchool, Inc.
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Notice of Claim Later than 60 Days After Expiration is Too Late
Post 5089
Injury at Massage Causes Suit Against Therapist
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Hiscox Insurance Company (“Hiscox”) moved the USDC to Dismiss a suit for failure to state a claim because the insured reported its claim more than 60 days after expiration of the policy.
In Mluxe Williamsburg, LLC v. Hiscox Insurance Company, Inc., et al., No. 4:25-cv-00002, United States District Court, E.D. Missouri, Eastern Division (May 22, 2025) the trial court’s judgment was affirmed.
FACTUAL BACKGROUND
Plaintiff, the operator of a massage spa franchise, entered into a commercial insurance agreement with Hiscox that provided liability insurance coverage from July 25, 2019, to July 25, 2020. On or about June 03, 2019, a customer alleged that one of Plaintiff’s employees engaged in tortious ...
ZIFL – Volume 29, Issue 11
The Source for the Insurance Fraud Professional
Posted on June 2, 2025 by Barry Zalma
Post 5087
See the full video at and at
Read the full article and the full issue of ZIFL June 1, 2025 at https://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-06-01-2025.pdf
Zalma’s Insurance Fraud Letter – June 1, 2025
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ZIFL – Volume 29, Issue 11
The Source for the Insurance Fraud Professional
Read the full article and the full issue of ZIFL June 1, 2025 at https://lnkd.in/gTWZUnnF
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 ...
No Coverage if Home Vacant for More Than 60 Days
Failure to Respond To Counterclaim is an Admission of All Allegations
Post 5085
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In Nationwide Mutual Insurance Company v. Rebecca Massey, Civil Action No. 2:25-cv-00124, United States District Court, S.D. West Virginia, Charleston Division (May 22, 2025) Defendant Nationwide Mutual Insurance Company's (“Nationwide”) motion for Default Judgment against Plaintiff Rebecca Massey (“Plaintiff”) for failure to respond to a counterclaim and because the claim was excluded by the policy.
BACKGROUND
On February 26, 2022, Plaintiff's home was destroyed by a fire. At the time of this accident, Plaintiff had a home insurance policy with Nationwide. Plaintiff reported the fire loss to Nationwide, which refused to pay for the damages under the policy because the home had been vacant for more than 60 days.
Plaintiff filed suit ...
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 ...
A Heads I Win, Tails You Lose Story
Post 5062
Posted on April 30, 2025 by Barry Zalma
"This is a Fictionalized True Crime Story of Insurance Fraud that explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help everyone 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."
Immigrant Criminals Attempt to Profit From Insurance Fraud
People who commit insurance fraud as a profession do so because it is easy. It requires no capital investment. The risk is low and the profits are high. The ease with which large amounts of money can be made from insurance fraud removes whatever moral hesitation might stop the perpetrator from committing the crime.
The temptation to do everything outside the law was the downfall of the brothers Karamazov. The brothers had escaped prison in the old Soviet Union by immigrating to the United...