Defaulting Fraud Perpetrator Lets Insurer Defeat Fraud
Post number 5355
Posted on May 21, 2026 by Barry Zalma
In Transamerica Life Insurance Company v. John Joseph Egan, et al., No. 25-cv-06167-JD, United States District Court, N.D. California (May 12, 2026) Transamerica Life Insurance Company issued John Egan a life insurance policy with a long-term care rider that covered in-home skilled nursing or other professional care if he qualified as chronically ill.
FACTUAL BACKGROUND
In 2023, Egan submitted a claim alleging severe pain, major loss of daily functioning, and limited mobility following an auto accident. Transamerica approved coverage and paid benefits based on those representations and repeated proofs of loss describing in-home care services. After later surveillance in 2024 and 2025 showed Egan working, driving, shopping, and otherwise functioning without visible impairment — and showed no evidence of in-home care — Transamerica concluded that the claim was fraudulent and filed suit.
Transamerica surveilled Egan during each period of surveillance, there was no evidence that an in-home care provider actually treated Egan. Based on the surveillance evidence, an independent medical examiner retracted an initial opinion that Egan suffered from function loss and determined that Egan had no loss.
Transamerica concluded that Egan had engaged in fraud and filed this lawsuit in July 2025. The complaint alleges claims against Egan for insurance fraud, negligence, civil theft, breach of contract, and the like, along with a request for declaration that Egan’s policy coverage is lapsed and void. Transamerica alleges that it paid Egan a total of $148,497.47 in benefits, among other damages incurred in relation to Egan’s conduct.
LAW:
The court evaluated the motion under Federal Rule of Civil Procedure 55(b)(2), which permits default judgment against a defendant who fails to defend.
The court also confirmed subject matter jurisdiction under 28 U.S.C. § 1332 and personal jurisdiction based on service within the district. For relief, the court relied on California Penal Code section 496(c) for treble damages and attorney’s fees on the civil theft claim, and California Civil Code section 3288 for prejudgment interest.
DISCUSSION:
The opinion addressed three main issues: whether the court had jurisdiction over the case and the defendant, whether default judgment should be entered after Egan failed to appear, and what relief Transamerica was entitled to recover.
The court first confirmed both subject matter and personal jurisdiction, then turned to the default judgment framework, and finally calculated the recoverable damages, fees, costs, and interest.
ANALYSIS:
The court found that Transamerica had plausibly alleged fraud and related wrongdoing because the complaint described false statements about Egan’s condition, repeated submissions seeking benefits, and later surveillance evidence contradicting those claims. Because Egan was properly served but never appeared, the well-pleaded allegations were taken as true for purposes of default judgment, except as to damages.
The court determined that Transamerica would be prejudiced without a remedy, the complaint was sufficient, the requested damages were tied to documented losses, and there was no indication of excusable neglect or a meaningful factual dispute.
CONCLUSION:
The court granted Transamerica’s motion for default judgment against Egan. It held that jurisdiction was proper, the complaint adequately alleged fraud and related claims, and the default judgment factors supported relief.
Transamerica recovered trebled damages based on benefits paid and investigation costs, along with attorney’s fees, costs, and prejudgment interest, while punitive damages, waiv premiums, and declaratory relief were denied.
THE RELIEF
Transamerica has established by declaration that it paid Egan $148,497.47 in benefits, and paid $23,801.16 for the surveillance and independent medical examinations. The combined amount of $172,298.63 for these losses is trebled under California Penal Code Section 496(c) for the civil theft claim.
Transamerica has incurred attorney’s fees in the amount of $35,072.50, and costs in the amount of $1,031.17, all of which were documented by declaration. See id. ¶ 8. Attorney’s fees and costs may be awarded for the civil theft claim under California Penal Code Section 496(c). The Court’s review of the fees and costs indicates they are reasonable.
Prejudgment interest is awarded under California Civil Code Section 3288 at the rate of 7% per annum.
ZALMA OPINION
It is not nice to ask an insurer to pay for care to which the insured was not entitled. The insurer, once it determined it had been defrauded, it was proactive, sued the fraudster and served him only to have him give up, default, and a judgment was entered in favor of Transamerica and gave it a judgment it might take ten years or more to collect.
(c) 2026 Barry Zalma & ClaimSchool, Inc.
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