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October 08, 2024
Qualified Immunity to Report Suspected Fraud

Failure to Plead Actual Malice Defeats Suit

Post 4906

Read the full article at https://www.linkedin.com/pulse/qualified-immunity-report-suspected-fraud-barry-zalma-esq-cfe-ayarc, See the full video at https://rumble.com/v5ht5fh-qualified-immunity-to-report-suspected-fraud.html and at https://youtu.be/x3GnP0BgjYM, and at https://zalma.com/blog plus more than 4900 posts.

In Bond Pharmacy v. The Health Law Partners, P.C., No. 23-cv-13069, USDC Michigan (September 23, 2024) Plaintiff Bond (“AIS”), sued The Health Law Partners, P.C. (“HLP”).

FACTUAL BACKGROUND

In Bond Pharmacy Inc., d/b/a AIS Healthcare v. The Health Law Partners, P.C., No. 23-cv-13069, United States District Court, E.D. Michigan (September 23, 2024) Plaintiff Bond Pharmacy Inc., d/b/a as AIS Healthcare (“AIS”), sued The Health Law Partners, P.C. (“HLP”). In its Complaint, AIS alleged that HLP tortiously interfered with its contracts and business relations/expectancies and a declaration that HLP tortiously interfered with AIS’s contractual and business relations. HLP successfully moved to dismiss.

FACTUAL BACKGROUND

AIS is a private compounding pharmacy and a leading provider of home infusion therapy (“HIT”) services. HIT involves the dispensing and infusion of medication by non-oral means. AIS’s specialized HIT enables patients to receive custom medications through surgically implanted intrathecal pumps that deliver continuous targeted relief without requiring patients to leave home. HIT is typically prescribed for patients with chronic pain resulting from cancer, multiple sclerosis, spinal cord injuries, or other debilitating conditions.

Intrathecal pumps can administer medication to a patient daily for up to 180 days before needing to be refilled. This may occur at a physician’s office or the patient’s home.

AIS entered into provider agreements with insurance companies which pay for their members’ HIT services. Anthem is one of those entities. According to AIS, the provider agreements are in accordance with the National Home Infusion Association’s per diem reimbursement model. Under that model, AIS bills a specific billing code-HCPCS Code S9328-each day a patient has access to a prescribed therapy (i.e. AIS medication).

Beginning at some point in 2020, HLP contacted Anthem entities by telephone and in writing accusing AIS of improper billing practices. In its communications, HLP indicates that its “[c]lients have become aware of certain alleged practices/billings of AIS” which, in HLP’s “opinion, reasonably indicate[] that AIS may not be in compliance with [the payor’s] coverage standards and its [agreement with AIS].”

HLP emphasized that neither it nor its clients “are privy to all information regarding AIS and cannot make this determination ourselves.” HLP further conveyed that “[a]lthough our clients had a good-faith suspicion that AIS was involved in improper billing and other improper practices, they (and we) lack the investigative methods that are available to large insurers, like you and like BCBS of Michigan.” HLP encouraged the payors to investigate the matter.

AIS alleges that HLP’s statements to the payor entities were false and that HLP knew they were false when it made them. AIS further allegeD that HLP was aware of AIS’s contracts and business relationships with payors, and that HLP made the false statements to induce the payors to breach those contracts and relationships.

An Overview of the Parties’ Arguments

HLP raises several arguments in support of its motion to dismiss. First, it is entitled to qualified immunity under the Michigan Insurance Code, Mich. Comp. Laws § 500.4509. Second, HLP contends that it is entitled to civil immunity under Michigan’s Health Care False Claims Act (“HCFCA”), Mich. Comp. Laws § 752.1008a. HLP next argues that AIS failed to plead facts to show that HLP acted with malice-an essential element of its tortious interference claims. Lastly, HLP argued that AIS failed to allege that HLP engaged in illegal, fraudulent, or unethical conduct, which HLP maintained also is necessary to adequately plead tortious interference.

Applicable Law & Analysis

The statute reads, in relevant part: “A person acting without malice is not subject to liability for filing a report or requesting or furnishing orally or in writing other information concerning suspected or completed insurance fraud, if the reports or information are provided to or received from the insurance bureau, the national association of insurance commissioners, any federal, state, or governmental agency established to detect and prevent insurance fraud, as well as any other organization, and their agents, employees, or designees, unless that person knows that the report or other information contains false information pertaining to any material fact or thing.”

Michigan courts have adopted the defamation definition of the term “actual malice,” finding that it best comports with the Michigan legislature’s purpose in enacting the qualified immunity provision. That purpose, the state courts have found, is to foster the free exchange of information in investigations of insurance fraud and to protect persons who have provided information of suspected insurance fraud from liability.

Under the actual malice definition, requires that malice exists when a person supplying information or data to the appropriate authorities, as set forth in the statutes, does so with knowledge of its falsity or with reckless disregard of its truth or falsity.

The Court found that HLP is entitled to qualified immunity under the Michigan Insurance Code. Also the failure to adequately plead malice doomed AIS’s tortious interference claims even without considering qualified immunity.

A wrongful act per se is an act that is inherently wrongful or an act that can never be justified under any circumstances. Reporting suspected fraud is hardly “inherently wrongful” or “unjustified under any circumstances.” AIS needed to plead facts to show that HLP acted with malice and without legal justification, which, it did not do so plausibly.

AIS did not allege sufficient facts to evade HLP’s qualified immunity under the Michigan Insurance Code or to plead tortious interference under Michigan law. AIS, therefore, is not entitled to a declaratory judgment. Accordingly Defendant’s motion to dismiss was granted.

ZALMA OPINION

Michigan, like most states, provide a qualified immunity to people or entities who report, without malice, suspected insurance fraud. HLP did so, and reported its clients suspicions to the insurers who could be the victims of fraud. The insurers did so and reduced its payments to the plaintiff and sued HLP in an attempt to recover its losses the report caused when the insurer found it was paying for services not covered. Because HLP was provided a qualified immunity and the Plaintiffs were unable to allege actual malice.

(c) 2024 Barry Zalma & ClaimSchool, Inc.

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00:10:54
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May 01, 2026
Zalma’s Insurance Fraud Letter – May 1, 2026

Happy Law Day

ZIFL – Volume 30, Issue 9 – May 1, 2026

Read the full article at https://www.linkedin.com/pulse/zalmas-insurance-fraud-letter-may-1-2026-barry-zalma-esq-cfe-2tywc, see the video at at and at https://zalma.com/blog plus more than 5300 posts.

THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL

ZIFL – Volume 30, Issue 9 – May 1, 2026

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 and is written by Barry Zalma.

DOJ Creates National Fraud Enforcement Division

Will the Feds Take on Insurance Fraud? Possibly as Part of a National Anti-Fraud Effort

On April 7, 2026, the Acting Attorney General, Todd Blanche, issued a memorandum establishing the Department of Justice National Fraud Enforcement Division (NFED). The memo describes an ambitious, but perhaps redundant, vision for this ...

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April 30, 2026
The Efficient Proximate Cause Doctrine Saves a Claim

When Abalone Died As a Result of Multiple Causes The Efficient Proximate Cause Requires Payment

Post number 5345

Read the full article at https://www.linkedin.com/pulse/efficient-proximate-cause-doctrine-saves-claim-barry-zalma-esq-cfe-yndlc, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.

In American Abalone Farms, LLC v. Star Insurance Company et al., H052643, California Court of Appeals, Sixth District (April 27, 2026) the Court of Appeals dealt with an insurance coverage issue that required application of the efficient proximate cause doctrine.

FACTS

American Abalone Farms, LLC ("American Abalone" ) operates an aquaculture farm in Santa Cruz County, California, raising abalone in tanks. In August 2020, the CZU Lightning Complex Fires led to a prolonged power outage and road closures near the farm. As a result, the farm’s water pumps failed, causing the death of most of the ...

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April 29, 2026
Breach of a Specific Condition Precedent Is a Complete Defense

Breach of a Specific Condition Precedent Is a Complete Defense

See the video at and at and at https://zalma.com/blog plus more than 5300 posts.

In United Services Automobile Association and State Farm Mutual Automobile Insurance Company v. Anthony Wenzell, 2026 CO 25 (Colo. Apr. 27, 2026) Anthony Wenzell was rear-ended in a car accident. He had a significant prior 2014 accident that required back surgery.

Wenzell claimed underinsured-motorist (UIM) benefits under three policies: (1) the tortfeasor’s liability policy, (2) his own primary UIM policy with State Farm, and (3) an excess UIM policy issued by USAA (under his brother’s policy, which contained an “other insurance” clause making USAA’s coverage excess over any collectible insurance).

After receiving the claims, both USAA and State Farm repeatedly requested that Wenzell execute comprehensive medical-release authorizations so they could obtain his full medical records and ...

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12 hours ago

It is Fraud to Make the Same Claim Twice

Read the full article at https://www.linkedin.com/pulse/fraud-make-same-claim-twice-barry-zalma-esq-cfe-c4g8c and at https://zalma.com/blog.

Chutzpah: After Being Paid for a New Roof Insured Makes Second Claim For Same Damages

Post number 5347

No One is Entitled to be Paid for the Same Loss Twice

In Mohammed Ali Khalili v. State Farm Lloyds, No. 14-25-00611-CV, Court of Appeals of Texas (April 30, 2026) Khalili maintained a State Farm Lloyds homeowners insurance policy for decades. In 2008 he filed a roof-damage claim; State Farm paid him to replace the entire roof (shingles and gutters). Khalili never replaced the roof and repeated his claim.

BACKGROUND

In 2021 he filed a second roof claim. State Farm’s inspectors found the roof “very old” with extensive non-storm-related damage. The claim was denied because (1) the damage did not exceed the deductible and (2) State Farm had already paid for a full roof replacement.

PROCEDURAL HISTORY

State Farm filed motion for summary...

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12 hours ago

It is Fraud to Make the Same Claim Twice

Read the full article at https://www.linkedin.com/pulse/fraud-make-same-claim-twice-barry-zalma-esq-cfe-c4g8c and at https://zalma.com/blog.

Chutzpah: After Being Paid for a New Roof Insured Makes Second Claim For Same Damages

Post number 5347

No One is Entitled to be Paid for the Same Loss Twice

In Mohammed Ali Khalili v. State Farm Lloyds, No. 14-25-00611-CV, Court of Appeals of Texas (April 30, 2026) Khalili maintained a State Farm Lloyds homeowners insurance policy for decades. In 2008 he filed a roof-damage claim; State Farm paid him to replace the entire roof (shingles and gutters). Khalili never replaced the roof and repeated his claim.

BACKGROUND

In 2021 he filed a second roof claim. State Farm’s inspectors found the roof “very old” with extensive non-storm-related damage. The claim was denied because (1) the damage did not exceed the deductible and (2) State Farm had already paid for a full roof replacement.

PROCEDURAL HISTORY

State Farm filed motion for summary...

post photo preview
April 30, 2026
Investigation of First Party Property Claims

What Must be Done after Notice of a Claim is Received by the Insurer

Read the full article at https://lnkd.in/gzvvdkMZ and at https://zalma.com/blog.

Below you will read from this post until you reach the the end of this blog post as the free part of an Excellence in Claims Handling post. To read the full article and receive all articles for members of Excellence in Claims Handling you should consider joining as a paid member to get full access to articles for members only, to our news, analysis, insurance coverage, claims, insurance fraud and insurance webinars, by clicking at the subscription link below.

A first party property policy does not insure property: it insures a person, partnership, corporation or other entity against the risk of loss of the property. Before an insured can make a claim for indemnity under a policy of first party property insurance the insured must prove that there was damage to property the risk of loss of which was insured by the policy. The obligation imposed on the insured ...

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