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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Read the full article at https://lnkd.in/gziRzFV8, see the full video at https://lnkd.in/gF4aYrQ2 and at https://lnkd.in/gqShuGs9, and at https://zalma.com/blog plus more than 5050 posts.
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
See the full video at https://lnkd.in/gw-Hgww9 and at https://lnkd.in/gF8QAq4d, and at https://zalma.com/blog plus more than 5050 posts.
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 ...
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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
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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
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Professional Health Care Services Exclusion Effective
Post 5073
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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:
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