Lawyer Representing 35 Defendants in Fraud Case Has Insurmountable Conflict
Post 5110
Alleged Fraudsters have Obvious Conflicts with Each Other
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In Allstate Insurance Company, et. al v. Robert Matturro, D.C., et al.; New Jersey Department Of Banking And Insurance, Intervenor, No. A-0711-24, Superior Court of New Jersey, Appellate Division (June 16, 2025) Allstate and several related entities sued forty-two defendants, including medical practices, their owners, administrators, and various corporate entities. The plaintiffs alleged that the defendants engaged in an insurance fraud scheme involving unlawfully structured medical practices, self-referrals, kickbacks, and medically unnecessary treatments and tests.
The Allstate plaintiffs sought damages for personal injury protection (PIP) benefits paid to the defendants, compensatory damages for investigating fraudulent bills, arbitration-related costs, a declaratory judgment, treble damages, injunctive relief, and attorneys’ fees.
DEFENSE COUNSEL
The Randolph Firm represents approximately thirty-five of the forty-two defendants, including several medical practices and corporate entities. Plaintiffs moved to disqualify the Randolph Firm from representing these defendants due to significant risks of conflicts of interest.
The Appellate Division found that there are significant risks of conflicts developing among the defendants represented by the Randolph Firm, especially as the case proceeds and liability and damages may need to be apportioned under the Comparative Negligence Act (CN Act).
DISCUSSION
A determination of whether counsel should be disqualified the burden is on the movant to prove a basis for disqualification.
When deciding a motion to disqualify counsel, courts must balance competing interests, weighing the need to maintain the highest standards of the profession against a client’s right freely to choose his or her counsel. Motions for disqualification should be viewed skeptically in light of their potential abuse to secure tactical advantage.
Nevertheless, if there is “any doubt as to the propriety of an attorney’s representation of a client, such doubt must be resolved in favor of disqualification.”
Risk of Conflicts
The Appellate Division concluded that trial court erroneously found that there was no significant risk that potential conflicts could arise among the approximately thirty-five defendants represented by the Randolph Firm.
The Appellate Division held there are significant risks that conflicts will develop among defendants represented by the Randolph Firm. Even more there is evidence that significant conflicts of interest have already developed between and amongst the numerous defendants represented by the Randolph Firm.
The certifications and depositions provided by plaintiffs support that conclusion. Moreover, there are significant risks certain defendants may, as the facts develop further, assert that other defendants had a greater role in the alleged fraud schemes or compelled them to participate in the schemes. If those situations arise, the Randolph Firm could not ethically advise all defendants because of those conflicting interests. Fundamentally, at least some defendants maintain that Rosania or Matturro managed the Rosania entities, and they controlled the finances of the Rosania entities.
In response to plaintiffs’ interrogatories, the Randolph Firm served the expert report of Gary S. Stetz, a certified public accountant. In his report, Stetz made two findings, which are potentially detrimental to the positions advanced by the physicians represented by the Randolph Firm. First, Stetz noted his “investigation found that none of the [Rosania] entities . . . would require a [medical doctor] or [doctor of osteopathic medicine] to perform examinations and procedures [which] were controlled by [doctors of chiropractic.] “Second, Stetz determined there were no medical doctors or osteopaths who were employed by Matturro or Rosania.
In seeking to minimize the liability of some defendants it represents, the Randolph Firm would have to argue that the other defendants it represents were more at fault, or perhaps more involved in the alleged fraud scheme. The record in this matter establishes that there are significant risks that conflicts will develop among defendants. As stated, defendants have a common interest in disputing the allegations against them, but as the case develops, they also may have an interest in seeking to minimize their own liability and maximize their co-defendants’ liability. If plaintiffs’ claims proceed to trial and there is a verdict against defendants, the liability and damages will have to be apportioned among defendants under statute.
Therefore, the Appellate Division held that there are significant risks of conflict arising among the thirty-five defendants represented by the Randolph Firm, especially in light of a pending trial date, requires disqualification of the Randolph Firm.
ZALMA OPINION
A law firm that represents 35 different defendants who are claimed to have defrauded the plaintiff using various schemes where one can, and must, have different interests than other defendants. Disqualification was required since the lawyers, to represent their clients properly, will necessarily find one client adverse to the other and will be unable to fairly represent each of its clients. In the best of all possible worlds each of the 42 defendants should have separate counsel with one lawyer or law firm representing each defendant to the best of each client’s rights.
(c) 2025 Barry Zalma & ClaimSchool, Inc.
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Concurrent Cause Doctrine Does Not Apply When all Causes are Excluded
Post 5119
Death by Drug Overdose is Excluded
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Southern Insurance Company Of Virginia v. Justin D. Mitchell, et al., No. 3:24-cv-00198, United States District Court, M.D. Tennessee, Nashville Division (October 10, 2024) Southern Insurance Company of Virginia sought a declaratory judgment regarding its duty to defend William Mitchell in a wrongful death case pending in California state court.
KEY POINTS
1. Motion for Judgment on the Pleadings: The Plaintiff moved for judgment on the pleadings, which was granted in part and denied in part.
2. Duty to Defend: The court found that the Plaintiff has no duty to defend William Mitchell in the California case due to a specific exclusion in the insurance policy.
3. Duty to Indemnify: The court could not determine at this stage whether the Plaintiff had a duty to ...
GEICO Sued Fraudulent Health Care Providers Under RICO and Settled with the Defendants Who Failed to Pay Settlement
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Post 5119
Default of Settlement Agreement Reduced to Judgment
In Government Employees Insurance Company, Geico Indemnity Company, Geico General Insurance Company, and Geico Casualty Company v. Dominic Emeka Onyema, M.D., DEO Medical Services, P.C., and Healthwise Medical Associates, P.C., No. 24-CV-5287 (PKC) (JAM), United States District Court, E.D. New York (July 9, 2025)
Plaintiffs Government Employees Insurance Company and other GEICO companies (“GEICO”) sued Defendants Dominic Emeka Onyema, M.D. (“Onyema”), et al (collectively, “Defendants”) alleging breach of a settlement agreement entered into by the parties to resolve a previous, fraud-related lawsuit (the “Settlement Agreement”). GEICO moved the court for default judgment against ...
ZIFL – Volume 29, Issue 14
Post 5118
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You can read the full 20 page issue of the July 15, 2025 issue at https://lnkd.in/giaSdH29
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
This issue contains the following articles about insurance fraud:
The Historical Basis of Punitive Damages
It is axiomatic that when a claim is denied for fraud that the fraudster will sue for breach of contract and the tort of bad faith and seek punitive damages.
The award of punitive-type damages was common in early legal systems and was mentioned in religious law as early as the Book of Exodus. Punitive-type damages were provided for in Babylonian law nearly 4000 years ago in the Code of Hammurabi.
You can read this article and the full 20 page issue of the July 15, 2025 issue at https://zalma.com/blog/wp-content/uploads/2025/07/ZIFL-07-15-2025.pdf
Insurer Refuses to Submit to No Fault Insurance Fraud
...
Rulings on Motions Reduced the Issues to be Presented at Trial
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CASE OVERVIEW
In Richard Bernier v. State Farm Mutual Automobile Insurance Company, No. 4:24-cv-00002-GMS, USDC, D. Alaska (May 28, 2025) Richard Bernier made claim under the underinsured motorist (UIM) coverage provided in his State Farm policy, was not satisfied with State Farm's offer and sued. Both parties tried to win by filing motions for summary judgment.
FACTS
Bernier was involved in an auto accident on November 18, 2020, and sought the maximum available UIM coverage under his policy, which was $50,000. State Farm initially offered him $31,342.36, which did not include prejudgment interest or attorney fees.
Prior to trial Bernier had three remaining claims against State Farm:
1. negligent and reckless claims handling;
2. violation of covenant of good faith and fair dealing; and
3. award of punitive damages.
Both Bernier and State Farm dispositive motions before ...
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 ...