Failure to Plead Actual Malice Defeats Suit
Post 4906
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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.
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In Hassan Fayad v. Liberty Mutual Insurance Company, et al., No. 2:25-cv-10930, United States District Court, E.D. Michigan, Southern Division (March 24, 2026) Plaintiff Hassan Fayad, the owner of several businesses providing transportation, diagnostics, testing, and therapy services, regularly billed insurance companies for these services, was arrested and tried for fraud, convicted, had the conviction overruled and sued the insurers and prosecutors he found responsible.
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ZIFL – Volume 30, Issue 7 – April 1, 2026
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
Post number 5314
Posted on April 1, 2026 by Barry Zalma
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 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/ This issue contains the following articles about insurance fraud:
No One is Above the Law – Not Even a Police Officer
Police Officer Convicted for Fraud in Reporting an Accident Affirmed
Police Officer Should never Lie about Results of Chase
In State Of Ohio v. Anthony Holmes, No. 115123, 2026-Ohio-736, Court of Appeals of Ohio, Eighth District, Cuyahoga (March 5, 2026) a police officer appealed criminal conviction as a result of lies about a high speed chase.
Read the following article and the full issue of ZIFL at https://zalma.com/blog/wp-content/uploads/2026/03/ZIFL-04-01-2026-1.pdf...
ZIFL – Volume 30, Issue 7 – April 1, 2026
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
Post number 5314
Posted on April 1, 2026 by Barry Zalma
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 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/ This issue contains the following articles about insurance fraud:
No One is Above the Law – Not Even a Police Officer
Police Officer Convicted for Fraud in Reporting an Accident Affirmed
Police Officer Should never Lie about Results of Chase
In State Of Ohio v. Anthony Holmes, No. 115123, 2026-Ohio-736, Court of Appeals of Ohio, Eighth District, Cuyahoga (March 5, 2026) a police officer appealed criminal conviction as a result of lies about a high speed chase.
Read the following article and the full issue of ZIFL at https://zalma.com/blog/wp-content/uploads/2026/03/ZIFL-04-01-2026-1.pdf...
Posted on March 30, 2026 by Barry Zalma
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Post number 5313
A Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story helps 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.
She Taught Her Customers The Swoop And Squat:
Recently the California Insurance Department’s Fraud Division arrested a young woman in Los Angeles County for operating an insurance fraud school. She advertised her classes in the “Penny Saver” an advertising sheet distributed free to the public and a print version of Facebook, X Craig’s list. She had operated for several years teaching methods of committing automobile insurance fraud. Only after a police officer enrolled in one of her classes was she arrested.
Her defense ...