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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The Professional Claims Handler
Post 5218
Read the full article at https://www.linkedin.com/pulse/zalma-philosophy-claims-handling-part-8-barry-zalma-esq-cfe-zdwsc, see the full video at https://rumble.com/v70zl4s-the-zalma-philosophy-of-claims-handling-part-8.html and at https://youtu.be/MIYcF71ffRQ, and at https://zalma.com/blog plus more than 5200 posts.
Claims Commandment X – Thou Shall Not Pretend to be a Lawyer
Some experienced and professional claims people know the law in their area of expertise better than most lawyers.
Adjusters should be adjusters and leave lawyering to lawyers. Similarly, lawyers should be lawyers and never try to be adjusters.
Claims Commandment XI – Thou Shall Empathize With the Claimant
Everyone presenting a claim is unhappy, disturbed, shocked, injured and needs help.
Empathy is identification with and understanding of another’s situation, feelings, and motives. It is the ability to understand another person’s circumstances, point of view, thoughts, and feelings....
HOW TO CREATE AN EXCELLENCE IN CLAIMS HANDLING PROGRAM
See the full video at https://rumble.com/v70wb2i-the-zalma-philosophy-of-claims-handling-part-6.html and at https://youtu.be/tL5nDKPEs40 and at https://zalma.com/blog plus more than 5200 posts.
Post 5217
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry.
An Excellence in Claims Handling program begins with a statement in the insurer’s claims manual or statement of professionalism that it is dedicated to providing excellence in claims handling to every insured who presents a claim.
The excellence in claims handling program should include, at a minimum:
A series of lectures supported by text materials explaining:
A definition of insurance.
How to read and understand an insurance policy.
How to interview an insured, witness, or claimant.
How to assist an insured in the insured’s obligation to ...
The Professional Claims Handler
Post 5216
Read the full article at https://www.linkedin.com/pulse/zalma-philosophy-claims-handling-part-5-barry-zalma-esq-cfe-jde8c, see the full video at https://rumble.com/v70q4x8-the-zalma-philosophy-of-claims-handling-part-5.html and at https://youtu.be/6b9tZQsEkB4, and at https://zalma.com/blog plus more than 5200 posts.
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry.
Standards to be a Professional Claims Adjuster
The Insurance claims professional should be a person who:
1. Can read and understand the insurance policies issued by the insurer.
2. Understands the promises made by the policy.
3. Understand their obligation, as an insurer’s claims staff, to fulfill the promises made.
4. Are competent investigators.
5. Have empathy and recognize the difference between empathy and sympathy.
6. ...
The Professional Claims Handler
Post 5219
Posted on October 31, 2025 by Barry Zalma
An Insurance claims professionals should be a person who:
Can read and understand the insurance policies issued by the insurer.
Understands the promises made by the policy.
Understand their obligation, as an insurer’s claims staff, to fulfill the promises made.
Are competent investigators.
Have empathy and recognize the difference between empathy and sympathy.
Understand medicine relating to traumatic injuries and are sufficiently versed in tort law to deal with lawyers as equals.
Understand how to repair damage to real and personal property and the value of the repairs or the property.
Understand how to negotiate a fair and reasonable settlement with the insured that is fair and reasonable to both the insured and the insurer.
How to Create Claims Professionals
To avoid fraudulent claims, claims of breach of contract, bad faith, punitive damages, unresolved losses, and to make a profit, insurers ...
The History Behind the Creation of a Claims Handling Expert
The Insurance Industry Needs to Implement Excellence in Claims Handling or Fail
Post 5210
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.
My Training to be an Insurance Claims Adjuster
When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.
I was initially sat at a desk reading a text-book on insurance ...
The History Behind the Creation of a Claims Handling Expert
The Insurance Industry Needs to Implement Excellence in Claims Handling or Fail
Post 5210
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.
My Training to be an Insurance Claims Adjuster
When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.
I was initially sat at a desk reading a text-book on insurance ...
