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Workers’ Compensation Insurer Sues to Collect Premiums Avoided by Fraud
It’s Fraud to Lie on Application for Insurance
Post 5121
In The Commissioners Of The State Insurance Fund v. Capcon Construction Industries Corp., Capcon Construction Supply Corp., Jab Masonry Corp., Agra Masonry Inc., Agra Industries Usa Corp, A&A Masonry Corp., Alexander Shvartsberg, Darren Caputo, Maryann Furman, 2025 NY Slip Op 32359(U), Index No. 452680/2024, Motion Seq. No. 002, Supreme Court, New York County (July 2, 2025) the court dealt with a fraudulent application for workers’ compensation insurance.
BACKGROUND
On March 3, 2015, A&A Masonry Corp. applied for workers’ compensation insurance coverage from the New York State Insurance Fund (SIF).
On January 15, 2016, Agra Masonry Inc. was incorporated with Maryann Furman as the sole shareholder and President.
On January 4, 2018, SIF canceled the A&A Policy for non-payment.
On March 6, 2018, Masonry applied for workers’ compensation and employer’s liability insurance from SIF.
On November 29, 2018, SIF commenced an action against A&A seeking to recover unpaid insurance premiums.
On October 3, 2019, SIF sent Masonry a notice of cancellation.
On October 9, 2019, the Masonry Policy was reinstated after Masonry paid $6,286.47.
On February 21, 2019, SIF obtained a judgment against A&A for $333,301.65.
On June 30, 2020, Agra Industries USA Corp. was incorporated.
On October 27, 2021, SIF commenced an action against Masonry seeking recovery of unpaid insurance premiums.
On January 12, 2022, SIF obtained a judgment against Masonry in the amount of $5,398,564.69.
On September 27, 2024, SIF commenced the instant action seeking $15,521,316.45 in damages.
DISCUSSION
Insurance Fraud WCL §§ 96(2) And 93
Pursuant to WCL § 96(1), any “person who knowingly … conceals any material fact or engages in any other fraudulent scheme or device for the purpose of obtaining, maintaining or renewing insurance in the state insurance fund … shall be guilty of a class E felony.” Violations of WCL § 96(1) entitle SIF to treble damages, “or five thousand dollars, whichever is greater.” WCL § 96(2).
Here, plaintiff has provided documentary evidence and pled with sufficient particularity that Shvartsberg’s role at Masonry was omitted on the Masonry Application’s question six for the purpose of obtaining insurance, as Shvartsberg was barred from obtaining policies from the SIF Fund due to the A&A judgment under WCL § 93. Thus, defendant’s motion to dismiss the sixth cause of action should be denied.
CONCLUSIONS
Alter Ego Liability: Plaintiff has presented evidence that Masonry’s funds were diverted to make it judgment-proof.
1. Successor Liability: Plaintiff has sufficiently pled that Industries could be liable for the Masonry Judgment as the successor of Masonry.
2. DCL §273: Plaintiff has pled a voidable transfer pursuant to DCL § 273(a)(1).
3. DCL § 274: Plaintiff has alleged that Masonry’s judgment rendered it insolvent.
4. Attorney’s Fees Pursuant to DCL § 276-a: Plaintiff has sufficiently pled the prior DCL causes of action.
5. Insurance Fraud WCL §§ 96(2) and 93: Plaintiff has provided documentary evidence and pled with sufficient particularity that Shvartsberg’s role at Masonry was omitted on the Masonry Application.
ZALMA OPINION
Insurance fraud is a crime in almost every state, including the state of New York. Lying about the management of a company to hide the fact it is controlled by a person who was ineligible for insurance voids the insurance and can be criminal and, at the least, will void the insurance and holds the owners responsible for the premium charged to the various entities. Hiding behind new corporate entities to avoid premium payments is fraud in the inducement the insurer to rescind and obtain a judgment for earned premium.
(c) 2025 Barry Zalma & ClaimSchool, Inc.
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Arrest for False Impersonation Protected Property Owners from Losing Insurance
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In United States Of America v. Christopher J. Gallo and Mehmet Ali Elmas, No. 2:24-cr-00712 (BRM), USDC, D. New Jersey (July 16, 2025) Gallo and Elmas each filed Motions to Dismiss Count Eighteen which charges the CoDefendants with Aggravated Identity Theft.
BACKGROUND
Co-Defendants were charged in a criminal complaint (the “Complaint”) with conspiracy to commit bank fraud. Gallo, as a senior loan officer originated more than $1.4 billion in loans for the Financial Institution.
A grand jury returned an eighteen-count indictment charging Co-Defendants with Conspiracy to Commit Bank Fraud, False Statement to a Financial Institution and Aggravated Identity Theft.
LEGAL PROCEEDINGS
Motions to Dismiss
The court found that the identity theft was central to the fraudulent scheme, as the...
Arrest for False Impersonation Protected Property Owners from Losing Insurance
See the full video at https://lnkd.in/gYYWmkbQ and at https://lnkd.in/gEe2Wc86. and at https://zalma.com/blog plus more than 5100 posts.
In United States Of America v. Christopher J. Gallo and Mehmet Ali Elmas, No. 2:24-cr-00712 (BRM), USDC, D. New Jersey (July 16, 2025) Gallo and Elmas each filed Motions to Dismiss Count Eighteen which charges the CoDefendants with Aggravated Identity Theft.
BACKGROUND
Co-Defendants were charged in a criminal complaint (the “Complaint”) with conspiracy to commit bank fraud. Gallo, as a senior loan officer originated more than $1.4 billion in loans for the Financial Institution.
A grand jury returned an eighteen-count indictment charging Co-Defendants with Conspiracy to Commit Bank Fraud, False Statement to a Financial Institution and Aggravated Identity Theft.
LEGAL PROCEEDINGS
Motions to Dismiss
The court found that the identity theft was central to the fraudulent scheme, as the...
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 ...
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
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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 ...
