Defendant Must Pay $46 Million Restitution in Installments
Post 4863
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On November 1,2023, Defendant Roman Israilov pled guilty to conspiracy to commit healthcare fraud and aggravated identity theft in connection with a long-running no-fault insurance fraud scheme. On May 23, 2024, the USDC sentenced Israilov to seven years’ imprisonment and three years’ supervised release.
In United States Of America v. Roman Israilov, No. 22 Cr. 20 (PGG), United States District Court, S.D. New York (August 20, 2024) the USDC added restitution to the sentence to reimburse the insurers for their loss.
FACTS
On November 1,2023, Defendant Roman Israilov pled guilty to conspiracy to commit healthcare fraud and aggravated identity theft in connection with a long-running no-fault insurance fraud scheme. On May 23, 2024, the USDC sentenced Israilov to seven years’ imprisonment and three years’ supervised release but deferred its determination as to restitution.
FACTS
The Government sought an order requiring Israilov to make restitution to thirteen insurance companies in the aggregate amount of $46,651,801.04. The purpose of the proposed restitution order was to reimburse the insurers for payments they made to medical clinics that were controlled by non-physicians, including Israilov. Israilov opposed the Government’s application.
BACKGROUND
Israilov was charged in a large multi-defendant case premised on a $40 million no-fault insurance fraud scheme. The Indictment alleged that from approximately 2014 to 2021, Israilov and his co-defendants procured the identity of car accident victims through bribery, steered the accident victims to corrupt no-fault medical clinics willing to pay kickbacks for the referrals, and billed insurance companies for unnecessary medical procedures and medications. The corrupt medical clinics also falsely represented to the insurers that they were owned and controlled by physicians, when in fact they were not.
ISRAILOV’S GUILTY PLEA AND SENTENCING
On November 1, 2023, Israilov pled guilty to conspiracy to commit healthcare fraud and to aggravated identity theft.
From at least in or about 2014 up to and including in or about 2021, the defendant agreed with others to unlawfully own and run clinics and pharmacies located in the New York area. The defendant knew that clinics are unable to bill insurance companies for No-Fault benefits if the medical facilities are controlled by nonphysicians.
DISCUSSION
The Mandatory Victims Restitution Act (the “MVRA”) provides that when sentencing a defendant for an offense “in which an identifiable victim or victims has suffered a … pecuniary loss,” the court “shall order, in addition to … any other penalty authorized by law, that the defendant make restitution to the victim of the offense.” 18 U.S.C. §§ 3663A(a)(1), 3663A(c)(1)(B).
The primary and overarching goal of the MVRA is to make victims of crime whole.
THE GOVERNMENT’S PROPOSED RESTITUTION
The Government seeks a restitution order amounting to $46,651,801.04. The Government argues that under New York’s no-fault insurance law, medical clinics under the control of non-physicians such as Israilov are not entitled to reimbursement from insurers for any medical claims, including for treatments and care that were medically necessary.
Insurers have submitted affidavits or declarations stating that they made payments to medical clinics controlled by Israilov and his co-conspirators, in the listed amounts.
Absent Israilov’s fraudulent representations that his clinics were controlled and operated by physicians, the insurers would have provided no reimbursement for the medical care they rendered. There is thus no amount that the insurer would have paid had the defendant not committed the fraud. The loss to the insurance was enormous, $40 million, and the proceeds of the fraud that the defendant received, $5 million, were substantial.
Israilov requests that any order of restitution require monthly payments of less than twenty percent of his gross monthly income. In determining a payment schedule, ths Court must consider “the financial resources and other assets of the defendant[,]” “defendant [earnings and other income of the defendant[,]” and “any financial obligations of the defendant[,] including obligations to dependents.” 18 U.S.C. § 3664(f)(2).
Israilov states that he will “likely return to work as a barber after imprisonment,” and will “need to support his wife and three children.” Given these circumstances, Israilov contends that installment payments amounting to twenty percent of his monthly gross income would be excessive.
In light of Israilov’s likely future employment and his family obligations, this Court’s restitution order will provide for monthly installment payments amounting to fifteen percent of his gross monthly income. For the reasons stated above, this Court will enter an order of restitution in the aggregate amount of $46,651,801.04.
ZALMA OPINION
The restitution order is a victory for Israilov since, at 15% of his earnings as a barber the restitution amount will be paid off in about 10,000 years after he is released from prison unless he goes back to his fraudulent ways and makes enough from the fraud to pay off the restitution. He will serve the full seven years where he will make no money. Israilov is a serious criminal who profited from the crime and has apparently spent the $5 million he took from the crime.
THE ART OF ADJUSTING
I will be appearing on the “Art of Adjusting” podcast The link below is a preview of the podcast that will be posted in full next week. https://dropbox.com/scl/fi/ldkfrvc
(c) 2024 Barry Zalma & ClaimSchool, Inc.
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Jury’s Findings Interpreting Insurance Contract Affirmed
Post 5105
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Madelaine Chocolate Novelties, Inc. (“Madelaine Chocolate”) appealed the district court’s judgment following a jury verdict in favor of Great Northern Insurance Company (“Great Northern”) concerning storm-surge damage caused by “Superstorm Sandy” to Madelaine Chocolate’s production facilities.
In Madelaine Chocolate Novelties, Inc., d.b.a. The Madelaine Chocolate Company v. Great Northern Insurance Company, No. 23-212, United States Court of Appeals, Second Circuit (June 20, 2025) affirmed the trial court ruling in favor of the insurer.
BACKGROUND
Great Northern refused to pay the full claim amount and paid Madelaine Chocolate only about $4 million. In disclaiming coverage, Great Northern invoked the Policy’s flood-exclusion provision, which excludes, in relevant part, “loss or damage caused by ....
Failure to Name a Party as an Additional Insured Defeats Claim
Post 5104
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Contract Interpretation is Based on the Clear and Unambiguous Language of the Policy
In Associated Industries Insurance Company, Inc. v. Sentinel Insurance Company, Ltd., No. 23-CV-10400 (MMG), United States District Court, S.D. New York (June 16, 2025) an insurance coverage dispute arising from a personal injury action in New York State Supreme Court.
The underlying action, Eduardo Molina v. Venchi 2, LLC, et al., concerned injuries allegedly resulting from a construction accident at premises owned by Central Area Equities Associates LLC (CAEA) and leased by Venchi 2 LLC with the USDC required to determine who was entitled to a defense from which insurer.
KEY POINTS
Parties Involved:
CAEA is insured by Associated Industries Insurance Company, Inc. ...
Exclusion Establishes that There is No Duty to Defend Off Site Injuries
Post 5103
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Attack by Vicious Dog Excluded
In Foremost Insurance Company, Grand Rapids, Michigan v. Michael B. Steele and Sarah Brown and Kevin Lee Price, Civil Action No. 3:24-CV-00684, United States District Court, M.D. Pennsylvania (June 16, 2025)
Foremost Insurance Company (“Foremost”) sued Michael B. Steele (“Steele”), Sarah Brown (“Brown”), and Kevin Lee Price (“Price”) (collectively, “Defendants”). Foremost sought declaratory relief in the form of a declaration that
1. it owes no insurance coverage to Steele and has no duty to defend or indemnify Steele in an underlying tort action and
2. defense counsel that Foremost has assigned to Steele in the underlying action may withdraw his appearance.
Presently before the Court are two ...
ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional
See the full video at https://lnkd.in/gK_P4-BK and at https://lnkd.in/g2Q7BHBu, and at https://zalma.com/blog and at https://lnkd.in/gjyMWHff.
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...
