ZIFL – Volume 30, Issue 10 – May 15, 2026
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
Post number 5352
Read the full article at https://www.linkedin.com/pulse/zalmas-insurance-fraud-letter-may-15-2026-barry-zalma-esq-cfe-iulwc and at https://zalma.com/blog plus more than 5300 posts.
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 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/ This issue contains the following articles about insurance fraud:
Crime Doesn’t Pay
FELONIOUS PUBLIC ADJUSTER SUED FOR FEES ALLEGEDLY EARNED AS PART OF HIS CRIMINAL CONDUCT
Criminal May NotSue in Name of Corporation
In Andrew J Mitchell v. Pandit Law Firm, LLC, Civil Action No. 3:26-cv-00095, United States District Court, S.D. Texas, Galveston Division (April 30, 2026) the magistrate judge issued, on his own motion, a sua sponte memorandum and recommendation addressing whether Mitchell, a convicted felon who abused his license as a public insurance adjuster, concluding that he may not proceed pro se.
Read the full article and the full issue at http://zalma.com/blog/wp-content/uploads/2026/05/ZIFL-05-15-2026-1.pdf
The False Claims Act & Insurance
RECENT DEVELOPMENTS ON FCA INSURANCE COVERAGE
Coverage for FCA Investigations & Quit Tam Suits
Because qui tam complaints are often, if not always, filed under seal, insureds and insurers frequently first learn of a potential False Claims Act (FCA) matter through a civil investigative demand (CID).
Read the full article and the full issue at http://zalma.com/blog/wp-content/uploads/2026/05/ZIFL-05-15-2026-1.pdf
MORE MCCLENNY MOSELEY & ASSOCIATES ISSUES
This is ZIFL’s forty-third installment of the saga of McClenny, Moseley & Associates and its problems with the federal courts in the State of Louisiana and what appears to be an effort to profit from what some Magistrate and District judges indicate may be criminal conduct to profit from insurance claims relating to hurricane damage to the public of the state of Louisiana.
Mitchell, a public adjuster found guilty of multiple counts of insurance fraud apparently joined with the law firm whose honor has been questioned in Louisiana and Texas were sued for his less than honorable work in Andrew J Mitchell v. John Mcclenny, et al., Defendants, Civil Action No. 3:26-cv-00092, United States District Court, S.D. Texas, Galveston Division (April 30, 2026)
Read the full article and the full issue at http://zalma.com/blog/wp-content/uploads/2026/05/ZIFL-05-15-2026-1.pdf
From the Coalition Against Insurance Fraud
The Coalition Against Insurance Fraud reported at https://www.acfe.com/acfe-insights-blog/blog-detail?s=double-whammy-health-care-fraud in part that:
In 2025, the National Health Care Fraud Takedown resulted in criminal charges against 324 defendants for schemes involving more than $14.6 billion in intended losses. While the scheme netted nearly 100 medical professionals, one key aspect that escaped most news headlines was their involvement in multiple fraud schemes.
Read the full article and the full issue at http://zalma.com/blog/wp-content/uploads/2026/05/ZIFL-05-15-2026-1.pdf
Health Insurance Fraud Convictions
National Health Care Fraud Takedown Results in 324 Defendants Charged in Connection with Over $14.6 Billion in Alleged Fraud
Largest Justice Department Health Care Fraud Takedown in History More than Doubles Prior Record of $6 Billion
The 2025 National Health Care Fraud Takedown, which resulted in criminal charges against 324 defendants, including 96 doctors, nurse practitioners, pharmacists, and other licensed medical professionals, in 50 federal districts and 12 State Attorneys General’s Offices across the United States, for their alleged participation in various health care fraud schemes involving over $14.6 billion in intended loss. The Takedown involved federal and state law enforcement agencies across the country and represents an unprecedented effort to combat health care fraud schemes that exploit patients and taxpayers.
Read the full article and the full issue at http://zalma.com/blog/wp-content/uploads/2026/05/ZIFL-05-15-2026-1.pdf
The Department Of Justice Filed A Statement Of Interest In A Lawsuit Filed Against State Farm
The case, Ferrier v. State Farm Fire and Casualty Company, is pending in the Superior Court of Los Angeles County. It was brought by 60 homeowners who lost their homes in the wildfires. They allege that the defendants, which include 16 homeowners insurance companies, conspired to cancel their fire insurance policies in the years leading up to the fires. The homeowners say they were forced to obtain insurance from the California FAIR Plan, which offers less coverage, resulting in higher out-of-pocket expenses for rebuilding.
Read the full article and the full issue at http://zalma.com/blog/wp-content/uploads/2026/05/ZIFL-05-15-2026-1.pdf
The Fraud Division Announces Enforcement Actions from Across the Country Representing Nearly $1 Billion in Fraud
Friday, May 8, 2026: The Justice Department’s National Fraud Enforcement Division continued to advance its mission to fight fraud and protect taxpayers. Just on Monday, two men were sentenced to 151 months and 36 months in prison, respectively, for their roles in submitting over $522 million in fraudulent claims for medically unnecessary genetic tests in a scheme to defraud Medicare, Medicaid, and private health insurance companies.
Read the full article and the full issue at http://zalma.com/blog/wp-content/uploads/2026/05/ZIFL-05-15-2026-1.pdf
ACFE Report to the Nations
The Association of Certified Fraud Examiners (ACFE) is excited to share Occupational Fraud 2026: A Report to the Nations, the 14th edition of the largest and most comprehensive study on the costs and effects of occupational fraud.
Analyzing data from 2,402 real fraud cases across 143 countries and territories, the report provides a global view of how fraud is committed, detected and prevented within organizations in both the public and private sectors.
Read the full article and the full issue at http://zalma.com/blog/wp-content/uploads/2026/05/ZIFL-05-15-2026-1.pdf
DOJ Announces Highest-Ever Annual False Claims Act Recoveries: Over $6.8 Billion in Fiscal Year 2025
The US Department of Justice (DOJ) on January 20, 2026 announced that recoveries from False Claims Act (FCA) settlements and judgments in fiscal year 2025 exceeded $6.8 billion, the highest annual amount in FCA history and more than double the 10-year average a small part of the $308 billion a year reported by the Coalition Against Insurance Fraud.
Read the full article and the full issue at http://zalma.com/blog/wp-content/uploads/2026/05/ZIFL-05-15-2026-1.pdf
California Takes Legal Action Against State Farm After Investigation Finds Widespread Mishandling Of LA Wildfire Claims
Expedited investigation finds widespread violations affecting potentially thousands of wildfire survivors; penalties sought are the largest pursued after a disaster this century.
Read the full article and the full issue at http://zalma.com/blog/wp-content/uploads/2026/05/ZIFL-05-15-2026-1.pdf
The U.S Treasury Department Targets Fraud Schemes Exploiting Government Health Care Benefits
On March 30, 2026, in support of President Trump’s pledge to combat fraud, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an Advisory urging financial institutions to be vigilant about fraud schemes targeting government health care benefit programs such as Medicare and Medicaid.
Read the full article and the full issue at http://zalma.com/blog/wp-content/uploads/2026/05/ZIFL-05-15-2026-1.pdf
Other Than Health Insurance Fraud Cases
This Week in Fraud: DOJ’s New Fraud Division Announces Numerous Fraud Enforcement Actions and a New Strike Force to Investigate and Prosecute Fraud on the West Coast
The National Insurance Crime Bureau Asks Everyone to Report Fraud
The Justice Department’s National Fraud Enforcement Division continued to advance its mission to fight fraud and protect taxpayers this week.
Read the full article and the full issue at http://zalma.com/blog/wp-content/uploads/2026/05/ZIFL-05-15-2026-1.pdf
Barry Zalma, Inc., 4441 Sepulveda Boulevard, CULVER CITY CA 90230-4847, 310-390-4455. Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome.
See the full May 15, 2026 issue of ZIFL at https://zalma.com/blog/wp-content/uploads/2026/05/ZIFL-05-15-2026-1.pdf
The Largest Residential Burglary of All Time
Post 5407
Fraud & the Fear of Bad Faith Suits
Posted on July 22, 2026 by Barry Zalma
See the full video at https://lnkd.in/gWQQEySW and at https://lnkd.in/gyhdK6wv
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.
After ...
Chutzpah is not Enough
Post 5397
Posted on July 20, 2026 by Barry Zalma
See the video and at https://lnkd.in/gNUs2XzT and at https://lnkd.in/g2MawyzX
Magistrate Issues a Search Warrant if there is a Fair Probability that Contraband or Evidence of a Crime will be Found in a Particular Place.
In United States Of America v. Frank Suess, et al., CRIMINAL No. 3:24-308, United States District Court, M.D. Pennsylvania (July 16, 2026) a federal grand jury indicted Frank Suess, Melissa Driscoll, and others in a 55-count health care fraud and anti-kickback prosecution arising from an alleged scheme involving medically unnecessary prescription “foot baths.”
As part of the investigation, the FBI obtained an August 19, 2022 warrant to search Driscoll’s Sterling Pharmacy Yahoo email account for emails from January 1, 2018 through December 31, 2020. Driscoll moved to suppress the resulting evidence, arguing that the warrant lacked probable cause, was overbroad, and rested on material misstatements and omissions.
LAW:
The ...
Fraud Shouldn’t Pay
Post 5396
See the video and at https://rumble.com/v7ctgmq-the-great-jewel-theft.html at https://youtu.be/aRbQ2sJfGwA
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ¬¬¬Perpetrators than any Other Crime.
The Insured purchased, for the first time in his life, a policy of Personal Articles Floater Insurance (PAF) scheduling $125,000 worth of ladies jewelry. He advised the insurer that the jewelry was always kept in a class E safe at his residence. He also told the insurer that he was employed full time as the owner of a gasoline service station and that he had never been canceled or suffered a previous loss.
One month after the policy was ...
Day Care Owner Loses Subsidies Because She Criticized State
Post 5421
Posted on August 11, 2026 by Barry Zalma
First Amendment Right Will be Allowed to Go to Trial
In Betsey J. Grant v. Maine State Department Of Heath And Human Services, No. 1:25-cv-00490-JAW, United States District Court, D. Maine (August 6, 2026), Betsey J. Grant, a licensed childcare provider and operator of Tiny Tikes Daycare in Trenton, Maine, sued Maine DHHS and several employees after she publicly criticized DHHS before Maine’s Government Oversight Committee and alleged that officials retaliated against her.
She claimed DHHS imposed and extended a conditional license, published stigmatizing information, interfered with subsidies and program funding, removed her from a food program, rescinded an expansion grant, and used biased or falsified evidence in licensing proceedings. Following the March 10, 2023, GOC testimony, Ms. Grant alleges that foster children's subsidies (approximately $30,000) were withheld; she was removed from the ...
Rescission for Material Misrepresentation
Post 5418
Posted on August 5, 2026 by Barry Zalma
An Insurer May Rescind An Insurance Policy Where The Applicant Made A Material Misrepresentation In The Application.
In Union Mutual Fire Insurance Company v. 844 Knickerbocker, LLC, et al. No. 2024-10359, Index No. 602824/22, 2026 NY Slip Op 04789, Supreme Court of New York, Second Department (July 29, 2026) Union Mutual Fire Insurance Company issued commercial insurance policies to 844 Knickerbocker, LLC, and Sanjaya Mallick based on applications stating that the insured property contained two apartment units. After an underlying personal injury action was filed, Union Mutual determined that the property actually contained three apartment units and rescinded the policies on the ground that the defendants had made a material misrepresentation in the applications.
LAW:
A misrepresentation is material if the insurer would not have issued the same policy, or would have issued it only on different terms, had the true ...
Rescission for Material Misrepresentation
Post 5418
Posted on August 5, 2026 by Barry Zalma
An Insurer May Rescind An Insurance Policy Where The Applicant Made A Material Misrepresentation In The Application.
In Union Mutual Fire Insurance Company v. 844 Knickerbocker, LLC, et al. No. 2024-10359, Index No. 602824/22, 2026 NY Slip Op 04789, Supreme Court of New York, Second Department (July 29, 2026) Union Mutual Fire Insurance Company issued commercial insurance policies to 844 Knickerbocker, LLC, and Sanjaya Mallick based on applications stating that the insured property contained two apartment units.
LAW:
A misrepresentation is material if the insurer would not have issued the same policy, or would have issued it only on different terms, had the true facts been disclosed. To establish materiality as a matter of law, the insurer must submit documentation of its underwriting practices, such as manuals, guidelines, bulletins, or rules addressing similar risks.
DISCUSSION/ANALYSIS:
As a result, the...
