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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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 ...
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 ...
Breach of a Specific Condition Precedent Is a Complete Defense
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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 ...
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...
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...
What Must be Done after Notice of a Claim is Received by the Insurer
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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 ...
