Zalma`s Insurance Fraud Letter

Transcription

Zalma’s Insurance
Fraud Letter
The Essential Resource For The Insurance Fraud Professional
A ClaimSchool ™ Publication, Written by Barry Zalma, Esq., CFE
© 2015 ClaimSchool, Inc. & Barry Zalma
Volume 19, No. 19
October 1, 2015
Go to Zalma Books – E-Books and Articles by Barry Zalma –
http://www.zalma.com/zalmabooks.htm
Subscribe to e-mail Version, it’s Free! –
http://www.zalma.com/ZIFL-CURRENT.htm
Go to my blog Zalma On Insurance at http://zalma.com/blog
Quote of the Issue
“Never attribute to malice that which can be adequately explained by stupidity.”
Hanlon’s Razor
October 1, 1979 - 2015 Another Anniversary
Thirty six years ago today I left the world of the employed and became an entrepreneur by opening my own law
firm that was incorporated shortly thereafter as Barry Zalma, Inc. When I opened for business on October 1,
1979, I had no clients and no certainty that I would have any in the future. I had borrowed money from the bank
to carry me through the first six months and was concerned about my ability to pay the loan with my second child
about to be born.
Much to my surprise and pleasure, on October 1, 1979, at 8:10 a.m., my friend Alan Worboys called from
London and provided me with my first case as an independent lawyer to represent Certain Underwriters at
Lloyd’s, London. He, and the Lloyd’s Underwriters he represented, showed faith in me as a lawyer and insurance
expert. Alan is now, and will forever be, my law firm’s first client and a good friend.
Since January 2, 1972 I have practiced law in California. To those of you, in addition to Alan, who have honored
me by retaining me as your lawyer, thank you for a long, productive and successful legal career. I am now 73years-old and expect to continue working forever or until I reach the century mark my mother reached before she passed away.
I will, however, limit my work to that as an insurance claims handling, insurance fraud and insurance bad faith consultant, expert witness,
educator and author that should keep me busy 40 hours a week.
I am only slowing down and limiting my work.
I will continue to serve as an insurance claims handling, insurance coverage, insurance bad faith, and insurance fraud consultant and expert
witness operating as Zalma Insurance Consultants (“ZIC”). I will continue to publish, twice a month, Zalma’s Insurance Fraud Letter and
will publish daily to my blog, Zalma on Insurance, summaries of recent cases. I will also continue to contribute to the National Underwriter
Company’s The Zalma Insurance Claims Library, FC&S Bulletin’s, articles for the National Underwriter Company’s National Underwriter
Magazine, books for the American Bar Association and articles for LexisNexis. Finally, I will also continue to publish e-books on my web
site at http://www.zalma.com/zalmabooks.htm.
Thank you again for your faith in me and my law firm.
I hope to continue to serve you and remain available as a claims handling consultant, expert witness
and educator. Consultation with ZIC can save you or your client thousands of dollars in the defense or
prosecution of an insurance dispute. ZIC will assist you in the effort to find a solution to an insurance
claims dispute that is fair, intelligent, beneficial and economical.
ZIC is available to provide expert advice and, if needed, expert testimony to individuals and their
counsel. Advice from ZIC is indispensable to the resolution of insurance disputes. Consultation from
ZIC can save you, your counsel or client hundreds of hours of investigative and legal work.
With comprehensive knowledge of insurance and insurance claims handling Mr. Zalma understands,
and can explain in language a lay jury understands, how and why insurance claims should be resolved.
Since I am the only one here I will always answer the phone or respond to your inquiries by telephone,
e-mail, fax or even via the U.S. Postal Service.
Zalma's Insurance Fraud Letter -- Page 1 of 18
How To Successfully Present a Commercial Property Insurance Claim
No business can operate profitably without insurance to protect it against contingent or unknown catastrophic losses. By
spreading the risk among many businesses, insurers can charge reasonable sums to protect against losses to the business
or its real and personal property. As you listen to an internationally recognized insurance coverage lawyer, author,
consultant and expert witness explain how to gather the information necessary to present a claim to your insurance
company and collect the information required to effectively present a claim to gain full indemnity, you will be convinced
you can do so with minimal or no assistance.
http://www.proformative.com/courses/how-successfully-present-commercial-property-insuranceclaim
Insurance Fraud - An Overview
I have created for Proformative Academy two webinars called “Insurance Fraud - An Overview” that is available
at http://www.proformative.com/courses/insurance-fraud-prevention and “How to Read and Understand Business
Insurance policies. Both come with a 10% Discount for my friends and clients who sign up and enter the discount
code: Zalma10.
Insurance Fraud is estimated to take between $80 and $300 billion a year from the property and casualty insurance
industry, raising the prices each person pays for insurance by more than $300 a year. It explains to those attending what insurance fraud is,
various methods by which insurance fraud is perpetrated, and the various weapons provided by statutory law, legal precedent and
professional claims handling to work to reduce the amount stolen by fraud perpetrators. It explains the use of red flags or indicators of
insurance fraud and the use of an insurance company Special Investigation Unit (SIU) to gather the evidence necessary to assist in the
defeat of insurance fraud.
How to Read & Understand Business Insurance Policies
No business can operate profitably without insurance to protect it against contingent or unknown catastrophic losses. By spreading the risk
among many businesses, insurers can charge reasonable sums to protect against losses to the business or its real and
personal property. In this course you will listen to an internationally recognized insurance coverage lawyer, author,
consultant and expert witness explain why and how an insurance policy provides protection for the business. A business
person with the ability to read and understand the insurance policies they acquire has an advantage over every other
business person who cannot read and understand a such policies.
Continuing Education Credit available for many, including Certified Fraud Examiners with 1.5 CPE Credits, in Fraud
Prevention and Deterrence. I hope you find it interesting and informative.
http://www.proformative.com/courses/how-to-read-understand-business-insurance-policies
It’s Sinful To Defraud Church Mutual
A Proactive Fraud Fight
The attempt to reduce insurance fraud takes more than denying a fraudulent claim and reporting that fraud to police agencies. If fraud is to
be effectively reduced insurance companies must be proactive and take the profit out of the attempted fraud.
In Church Mutual Insurance Company v. Alliance Adjustment Group, — F.Supp.3d —-, 2015 WL 5334358
(E.D.Pa., 9/14/15) an insurer who insures churches found that one of its church insureds was the unwitting participant
in what Church Mutual alleges was a series of fraudulent claims instigated by a public insurance adjuster and group of
lawyers retained by the public adjuster to enforce their attempted fraudulent claim.
Church Mutual Insurance Company (Church Mutual) sued the licensed public adjuster and his public adjustment
group, a law firm and two of its lawyers, and two companies contracted to examine and perform repairs to a property
insured under a policy issued by Church Mutual to non-party African Episcopal Church of St. Thomas (AEC) for
fraud. Church Mutual alleges Defendants Alliance Adjustment Group (Alliance) and James Wagner (together, the
adjusters) filed two fraudulent insurance claims on behalf of AEC with the assistance of DeLong Service Co., Inc.
(DeLong), an HVAC/chiller contractor, and JLD Emergency Services (JLD), an emergency remediation contractor.
When Church Mutual denied one claim in part and the other entirely, the adjusters hired Defendants Claims Worldwide, LLC, Joseph A.
Zenstein, Esq., and Joseph Thiroway, Esq. (together, the lawyers) to pursue the coverage claims in court. Ultimately, AEC dismissed that
litigation with prejudice after hiring alternative counsel. Church Mutual subsequently filed this action against the adjusters, the lawyers,
DeLong, and JLD, asserting claims for negligent misrepresentation, fraud in violation of the Pennsylvania Insurance Fraud Statute, 18 Pa.
Cons.Stat. § 4117 (Count II), and civil conspiracy (Count III).
The Defendants have moved separately to dismiss the Complaint: (1) the adjusters, Alliance and Wagner; (2) the lawyers, Claims
Worldwide, and Thiroway, and Zenstein. All three sets move to dismiss the three-count Complaint for failure to state a claim.
BACKGROUND
Church Mutual has long insured AEC, a church in West Philadelphia, against property damage. Over the course of this relationship, Church
Mutual has processed several claims on AEC’s behalf. For instance, in 1996, AEC’s property suffered extensive damage as a result of
water infiltration, and Church Mutual paid AEC $514,000, of which $140,000 was used to repair the roof. No other repairs were made.
On December 19, 2011, AEC entered into a contract with Alliance, which is
owned by Wagner, a licensed public adjuster. The contract authorized Alliance or
its representative to assist in the adjustment of an insurance claim allegedly arising
from “loss by water” on August 30, 2011. The contract provided AEC would pay
the adjusters 25% of any amount paid by the insurance company in settlement of
the loss. Two days later, the adjusters filed a claim reporting that AEC’s property
had sustained damage due to frozen copper pipes in the property’s HVAC/chiller
system, causing water to leak on August 30, 2011 (hereinafter the chiller claim).
Church Mutual hired two experts to investigate the chiller claim. Colin Seybold, a
forensic mechanical engineer, reported the water damage claimed resulted from
defectively installed or missing insulation, which is not covered by the insurance
policy. The other expert, Dewpoint Mechanical, an HVAC contractor, indicated it
was highly improbable the damage was caused by frozen pipes. As result, Church
Mutual denied coverage on the chiller claim on July 24, 2012.
On January 30, 2012, while the chiller claim was pending, AEC entered into a second contract with Alliance, retaining Alliance to assist in
adjusting a claim arising from “loss by storm” on August 27, 2011. The adjusters filed an insurance claim alleging AEC sustained severe
damage on August 27, 2011, as result of Hurricane Irene (hereinafter the hurricane claim). The adjusters also attached an undated estimate
for $1,147,451.40 in repairs and again listed repair costs for a number of rooms in the property without explaining what work needed to be
done or how the hurricane caused the damage. Church Mutual’s structural engineer, Russ Daniels, determined the damage allegedly caused
by the hurricane was already present during a July 2011 Risk Control Inspection of the property and opined the majority of the damage
resulted from wear and tear, not the hurricane.
Daniels also noted aerial photographs of AEC’s roof taken six weeks after the hurricane and later in 2013 showed no damage. Church
Mutual’s adjuster, Lew Gohean, who handled the 1996 claims for water infiltration, concluded the
interior water damage allegedly caused by the hurricane was identical to the damage presented in
AEC’s 1996 claim. During discovery, the lawyers deposed three individuals affiliated with AEC:
Richard Jones, Randall Blakeney, and LeDon Elliotte. Jones, the rector’s warden, denied seeing the
estimates Alliance submitted to Church Mutual and testified the areas set forth in the estimates had
not sustained damage. Blakeney, the Church’s property chair, testified that other than a leak in the
sanctuary of the church, the hurricane did not damage the property. Elliote testified the roof of
AEC’s sanctuary has leaked since 2010, before the hurricane. Because AEC’s own witnesses
disavowed substantial portions of the damages Alliance sought on AEC’s behalf, AEC subsequently
retained alternate counsel and dismissed both actions with prejudice.
Church Mutual the sued claiming Defendants failed to conduct a proper investigation before
submitting the hurricane and chiller claims, negligently or knowingly submitted claims containing
false information, negligently or knowingly pursued the claims in litigation, and conspired with each
other to profit through the filing of these false claims.
DISCUSSION
To survive a motion to dismiss a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible
on its face. The court must accept all of the complaint’s well-pleaded facts as true, but may disregard any legal conclusions, and must then
determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a plausible claim for relief.
To establish liability a plaintiff must show that the defendant is in the business of supplying information for the guidance of others and the
information provider must have a pecuniary interest in the transaction; the information provided is false; the information was justifiably
relied upon; and the defendant failed to exercise reasonable care in obtaining or communicating the information.
As insurance adjusters, Alliance and Wagner run a business which provides services and/or
information that they know will be relied upon by third parties in their business endeavors. And
the Complaint sufficiently pleads Alliance and Wagner negligently misrepresented information
about the damages suffered by AEC’s property to Church Mutual. Church Mutual has also
alleged these Defendants had a pecuniary interest in the transaction, as they entered into a
contract with AEC to receive 25% of AEC’s recovery.
The Court concluded that the Complaint sufficiently alleges that Church Mutual justifiably relied
upon the information provided by the adjusters. Even though an insurer may customarily conduct
its own investigation before approving or denying an insured’s claim, the insurer may still rely
on the information provided by the insured as the basis for its investigation. Moreover, that the
insurer may investigate the claim “does not give an insured or its representative license to invent,
inflate, or otherwise misrepresent the damages alleged in a claim.” Without the allegedly false
claims filed by Alliance and Wagner, Church Mutual would not have been forced to expend time
and resources investigating the alleged damage to AEC’s property and defending its decision in
the previous litigation.
As to Count II, Church Mutual has also stated a claim for fraud against Alliance and Wagner under the Pennsylvania Insurance Fraud
Statute which creates a private cause of action for insurers to remedy various types of insurance fraud. To state a claim under the statute a
plaintiff must allege the defendant (1) knowingly (2) presented false, incomplete or misleading information (3) concerning any fact or thing
material to a claim (4) to an insurer.
The complaint pleads with particularity that the adjusters knowingly submitted claims for non-existent damages and damages outside of the
policy coverage. Further, Alliance and Wagner knew the damage could not have been caused by the hurricane, as the damage was present
in photographs taken during a July 2011 inspection of the church, several months prior to the hurricane, yet not visible in photographs taken
six weeks after the allegedly date of loss and in 2013.
Finally, as to Count III, Church Mutual has stated a claim against Alliance and Wagner claim for civil conspiracy. To state a claim for civil
conspiracy, a plaintiff must allege a combination of two or more persons to do a criminal act, or to do a lawful act by unlawful means or for
an unlawful purpose.
Church Mutual alleges the adjusters and lawyer Defendants agreed to pursue
fraudulent insurance claims, with the assistance of the two contractors, on a
contingency fee basis and share any profits gained. In furtherance of this scheme,
Alliance and Wagner submitted a claim for water damage knowing the damage
did not occur as a result of frozen pipes. When they were unable to recover on
those claims, the adjusters directed the lawyers to file complaints alleging untrue
facts without AEC’s knowledge or approval. During the course of that litigation,
Defendants refused to produce copies of all the photographs taken by JLD.
Ultimately, AEC demanded the lawyers and the adjusters withdraw or dismiss the
actions multiple times, but they would not. Because Church Mutual has
adequately alleged a civil conspiracy claim against the adjusters, Count III will
not be dismissed.
Claims Worldwide, Zenstein, and Thiroway also seek dismissal of all three counts
of Church Mutual’s Complaint. The Court granted the lawyers’ motion as to Count I, the negligent misrepresentation claim. As pleaded,
Church Mutual’s claim is premised on the lawyers negligently filing complaints and/or pleadings premised on false or misleading
information or containing such information. The Court dismissed Count I as barred by Pennsylvania’s judicial privilege. The judicial
privilege provides immunity for communications which are made in the regular course of judicial proceedings and are material to the relief
sought, whether made by a party, a witness, an attorney, or a judge. Statements contained in pleadings, as well as statements made in the
actual trial or argument of a case, are privileged.
The lawyers also move to dismiss Church Mutual’s claim pursuant to Pennsylvania’s Insurance Fraud Statute. All alleged
misrepresentations made by the lawyers were made during the course of litigation, and, thus, their actions are shielded by the judicial
privilege. The Court therefore will also dismiss Count II as to the lawyers.
Finally, the lawyers seek dismissal of Church Mutual’s civil conspiracy claim, arguing because they acted within an attorney-client
relationship, they cannot be considered conspirators. The lawyers’ actions, as alleged, were not within the context of an attorney-client
relationship with AEC, and they are not entitled to application of the intracorporate conspiracy doctrine.
ZIFL OPINION
Church Mutual has done something that should be emulated by all insurers faced with a false and fraudulent claim – act proactively to take
the profit out of the fraud. It should be obvious to the court that a public adjuster taking 25% contingency fee would, even if the claim is
paid in full, would make it impossible for the church to perform the needed repairs unless they inflated the claim excessively. They tried and
failed. They should be held to pay for all damages incurred by Church Mutual and the local prosecutors should take note of the criminal
aspects of the claims presented by the public adjusters and lawyers.
New from Barry Zalma
“Insurance Law”
Quick Overview
Insurance Law is the most comprehensive, and yet practical, insurance law authority available today. Written by
nationally-renowned insurance coverage expert Barry Zalma, an insurance coverage attorney, consultant, expert
witness and blogger, Insurance Law introduces the new insurance professional to the fundamental principles of
insurance and provides the experienced litigator analyses of today’s leading insurance law decisions nationwide.
Insurance Law is the most comprehensive, and yet practical, insurance law authority available today.
This book is ideal for any professional who works in or frequently interacts with the insurance industry. Claims
professionals, risk managers, producers, underwriters, attorneys (both plaintiff and defense), business owners,
and students will benefit greatly from this all-inclusive reference. It is also the perfect resource for educators and
trainers whose role requires an understanding of insurance law.
In addition to case law, the author has provided countless citations to relevant statutory, regulatory, and judicial
sources which are guaranteed to kickstart your research.
http://www.nationalunderwriter.com/insurance-law.html
Additional books at the Zalma Insurance Claims Library
http://www.nationalunderwriter.com/reference-bookstore/property-and-casualty/zalma-insurance-claims-library.html
In addition the standard FC&S Online published by The National Underwriter Company now includes a Fraud Channel with the majority of
the information taken from my work on insurance fraud. It is available at http://www.nationalunderwriterpc.com/Pages/default.aspx. The
Fraud Channel covers issues like: Fraud Basics, Checklists and Charts, Investigation, Ethics, Reference Materials, Fraud Of The Week, and
both the full text and summaries of insurance fraud Cases.
Chutzpah & the Arsonist
In Hill v. State Farm Fire and Cas. Co., Slip Copy, 2015 WL 5032019 (D.Md., 8/24/15), a pro se action arises out of a fire that occurred
on July 23, 2010, at the residence of Plaintiffs Anthony and Florence Hill (“Plaintiffs” or “the Hills”) located at 153 North Kenwood
Avenue in Baltimore, Maryland (“the Property”). At the time of the fire, Plaintiffs possessed a homeowners’ insurance policy with State
Farm Fire and Casualty Company (“Defendant” or “State Farm”). After investigating the circumstances giving rise to the fire, Defendant
denied coverage due to its conclusion that the Hills intentionally started the fire. In fact, Mr. Anthony
Hill was subsequently convicted in a jury trial before the Circuit Court for Baltimore City, Maryland
for arson and insurance fraud related to the fire. Nevertheless, the Hills, redefining the Yiddish term
“Chutzpah”, filed the present civil action.
State Farm moved the court to dismiss the action.
BACKGROUND
In a ruling on a motion to dismiss, this Court must accept the factual allegations in the plaintiff’s
complaint as true and construe those facts in the light most favorable to the plaintiffs. Moreover, a pro
se litigant’s complaint should not be dismissed unless it appears beyond doubt that the litigant can
prove no set of facts in support of his claim that would entitle him to relief.
The Hills entered into a contract (“the Policy”) with State Farm for homeowners insurance on October 26, 2009. Compl. The Hills filed a
claim with State Farm and received coverage payments for living expenses and advances during the six months following the fire. State
Farm ultimately denied coverage on January 19, 2011, explaining that “it has been determined that this fire was intentionally set by an
insured.” The Maryland Court of Special Appeals subsequently affirmed Mr. Hill’s conviction on July 2, 2014. [Anthony Hill v. State of
Maryland, No. 0987/12 (Md.Ct.Spec.App. Jul. 2, 2014).]
The Hills allege they are not responsible for the fire at their residence, thus State Farm breached the insurance contract. They seek $500,000
in compensatory damages, punitive damages, prejudgment interest, and other unspecified compensation.
ANALYSIS
In moving to dismiss the subject Complaint, State Farm contends that the Hills filed this action well after the
expiration of the applicable statute of limitations. Maryland law requires that a “civil action at law shall be filed
within three years from the date it accrues unless another provision of the [Maryland] Code provides a different
period of time within which an action shall be commenced.” Maryland courts “strictly construe” the statute of
limitations under Md.Code Ann., Cts. & Jud. Proc. § 5–101, and thus do not favor the inclusion of exceptions. In
other words, a plaintiff must file his civil action within three years of the date on which he discovered, or
reasonably should have discovered, the breach.
In this case, State Farm allegedly breached the insurance contract on January 19, 2011, when it informed the Hills
that it would deny coverage for any losses stemming from the fire. To avoid running afoul of the three-year statute
of limitations, the Hills were required to file the present action before or on January 19, 2014. Yet, they did not
file the subject Complaint until December 3, 2014, nearly eleven months after the expiration of the statutory period.
Accordingly, Plaintiffs’ claim was dismissed with prejudice.
ZIFL OPINION
Although they had no case at all the Hills exercised unmitigated gall and filed the suit after Mr. Hill was convicted of arson and insurance fraud.
Then, acting as their own attorney, probably because no licensed attorney would take the case, they sued in pro se eleven months after the
expiration of the statute of limitations. State Farm took the easy out and filed its motion based on the statute of limitations rather than the arson
and fraud grounds, which would have sufficed if the Hills had filed their suit before the running of the statute of limitations. Chutzpah can be
effective but it must be exercised in a viable case.
E-Books from Barry Zalma
“Insurance Fraud and Weapons to Defeat Fraud“
Insurance fraud continually takes more money each year than it did the last from the insurance buying public. There
is no certain number because most attempts at insurance fraud succeed. Estimates of the extent of insurance fraud
in the United States range from $87 billion to more than $300 billion every year.
Insurers and government backed pseudo-insurers can only estimate the extent they lose to fraudulent claims. Lack
of sufficient investigation and prosecution of insurance criminals is endemic. Most insurance fraud criminals are not
detected. Those that are detected do so because they became greedy, sloppy and unprofessional so that the attempted
fraud becomes so obvious it cannot be ignored.
No one will ever be able to place an exact number on the amount lost to insurance fraud. Everyone who has looked at the issue knows – whether
based on their heart, their gut or empirical fact determined from convictions for the crime of insurance fraud – that the number is enormous.
When insurers and governments put on a serious effort to reduce the amount of insurance fraud the number of claims presented to insurers and
the pseudo-government-based or funded insurers drops logarithmically.
The e-book contains the full text of the most important insurance fraud cases in over 2000 pages of material essential to every insurance fraud
professional.
Available at http://www.zalma.com/zalmabooks.htm
“Getting the Whole Truth”
The interview is an essential form of fact gathering for every type of human interaction. Interviews happen everywhere; they are performed by
almost everyone. Interviewing is also an art, and the most effective interviews are conducted by those who are knowledgeable and skilled in
this art.
The purpose of an interview is to uncover the truth; the method of uncovering the truth is the art of the
interview. The standard interview does not have, nor should it be given, the pejorative sense conveyed by
the expression “giving someone the third degree.” Interview professionals do not use rubber hoses or hot
lights, or subject the interviewee to torture. In their limited arsenal, professionals do not have the power
of the state, the reputation of the FBI, the majesty of a court trial, nor the intimidation of a search warrant.
Civil interviewing professionals are, therefore, compelled to get the information they need by intelligence,
wit, skill, and experience. They must be masters of the social graces; they must know how to put people
at ease. The skill of the professional causes the person being interviewed to actually want to give
information to the interviewer. When the interview is successful, the subject becomes a virtual partner with
the professional in the effort to uncover the truth, the whole truth, and nothing but the truth.
This ebook will help anyone who needs to obtain information from anyone else gain the information needed
whether a business person, reporter, interviewer, investigator or lawyer.
The book will be delivered to you by e-mail shortly after purchase.
“Random Thoughts on Insurance - Vol. III“
Since 2010 I have been writing a blog post at least five days a week. This e-book is a collection of those posts that reveal my interest in insurance
case law. Some of the cases reviewed were important. Some were of first impression. Others will be totally unimportant. All were interesting
to me and I hope are interesting to the reader. This e-book is more than 1200 pages of my review of interesting cases from 2013 through January
2014.
After you purchase please wait for the e-book to upload from PayPal. If it does not upload please e-mail zalma@zalma.com and I will personally
send you a copy of the e-mail in pdf format.
The Zalma Insurance Claims Library
The full Zalma Insurance Claims Library is available at
Insurance Claims: A Comprehensive Guide
Insurance Law
Mold Claims Coverage Guide; Construction Defects Coverage Guide
Barry Zalma
Barry Zalma is the principal of Zalma Insurance Consultants. He is available for consultation on any and all
insurance issues faced by you or your clients.
Barry Zalma founded ZIC to help resolve every insurance claim problem faced by you or your clients. His
experience and skill as a consultant and expert witness can make the difference before a jury or other trier of
fact. For more than 45 years as a claims person and insurance coverage attorney, Barry Zalma has represented
insurers, advised insurers on claims handling, interpreted coverages and testified as an insurance coverage,
insurance bad faith, insurance claims handling and insurance fraud expert on behalf of insurers and policy
holders’ suing insurers.
Mr. Zalma has been rated “AV Preeminent” for 25 years and is an internationally recognized expert on
insurance, insurance claims handling, insurance coverage, insurance fraud, and insurance bad faith. Barry Zalma
will promptly review your file materials and advise you about the viability of your decision to sue or your
defenses. He can help you narrow the scope of discovery.
Consultation with Mr. Zalma and ZIC can save you or your client thousands of dollars in the defense or prosecution of an insurance dispute.
ZIC will assist you in the effort to find a solution to an insurance claims dispute that is fair, intelligent, beneficial and economical.
ZIC is available to provide expert advice and, if needed, expert testimony to individuals and their counsel. Advice from
ZIC is indispensable to the resolution of insurance disputes. Consultation from ZIC can save you, your counsel or client
hundreds of hours of investigative and legal work.
With comprehensive knowledge of insurance and insurance claims handling Mr. Zalma understands, and can explain
in language a lay jury understands, how and why insurance claims should be resolved.
ZIC rates are all inclusive. Mr. Zalma’s hourly fee takes account of all incidentals from telephone calls and postage.
Now You Can Protect Yourself Against Fraud
Starr Companies has launched fraudulent impersonations coverage, a new insurance product that covers the various kinds of theft damages that
result from social engineering fraud, such as internet phishing scams.
Fraudulent impersonations coverage complements an insured’s crime & fidelity insurance program, with limits up to $250,000 available.
Starr’s crime & fidelity coverage is offered as part of its Resolute Portfolio Policy, which also
includes directors & officers, employment practices, and fiduciary liability coverages. The
crime & fidelity coverage section may be purchased in conjunction with all or any one of those
coverages, or, on a monoline basis. Limits up to $25 million in limits are available.
According to Vice President & Financial Lines Manager Jim Pittinger, and social engineering
fraud is a growing risk for businesses of all types and sizes. According to the Internet Crime
Complaint Center IC3, some 1,100 U.S. companies have fallen victim to these types of scam,
with losses estimated at over $150 million.
“We introduced Fraudulent Impersonations Coverage to respond to the growing number of scams, which is an important insurance protection
for losses resulting from social engineering schemes,” Pittinger said.
Starr Companies (or Starr) is the worldwide marketing name for the operating insurance and travel assistance companies and subsidiaries of
Starr International Co., Inc. and for the investment business of C.V. Starr & Co., Inc. and its subsidiaries. Starr is an insurance and investment
organization with a presence on five continents; through its operating insurance companies, Starr provides property, casualty, and accident &
health insurance products as well as a range of specialty coverages including aviation, marine, energy and excess casualty insurance.
Wisdom
“Whenever you find yourself on the side of the majority, it is time to reform.” - Mark Twain
“It is not the man who has too little, but the man who craves more, that is poor.” - Seneca
“The greatest mistake we make is living in constant fear that we will make one.” - John Maxwell
“Patience is the best remedy for every trouble.” - Plautus
“Better to trust the man who is frequently in error than the one who is never in doubt.” - Eric Sevareid
Another Kind of Insurance Fraud
Health Republic Insurance of New York, the Affordable Care Act insurer that received $265 million in U.S. loans to provide insurance in
compliance with the Affordable Care Act (Obamacare), will stop selling policies and eventually cease operations under orders from New York
and federal regulators.
The insurer will be wound down because regulators found that it was likely to become financially
insolvent. The New York Department of Financial Services concluded, along with New York’s
health-insurance marketplace and the federal Centers for Medicare & Medicaid Services that the insurer
would fail regardless of the U.S. loans provided to it.
Given Health Republic’s financial situation, commencing an orderly wind down process before the
upcoming open enrollment period is the best course of action, according to Anthony Albanese, New
York’s acting superintendent of financial services. Sixteen other insurers will sell health coverage on New
York’s ACA marketplace this year, according to the statement.
Health Republic, the No. 2 provider of health coverage to individuals on the state’s Affordable Care Act marketplace, is the latest insurer created
under the ACA to face financial trouble. Obamacare helped create the nonprofit co-ops to increase competition as millions of new customers
went shopping for health insurance with U.S. subsidies.
Health Republic received $265 million of U.S. loans. It’s too soon to say how much, exactly, the company will be able to pay back, because
it’s still taking in premiums and paying claims, but its unlikely that it will repay the full sum.
Typically, insurers pay back doctors and hospitals before lenders. The company is also waiting to get funds it’s owed from the U.S. government
under programs designed to help insurers selling coverage in the ACA’s first years.
Others Close
Co-ops in Nevada and Louisiana also are closing after they fulfill obligations under policies they’ve already
sold. CoOportunity Health, which sold coverage in Iowa and Nebraska, was taken over by Iowa’s insurance
regulator this year.
Health Republic posted a net loss of $52.7 million in the first half of this year, after losing $77.5 million in
2014, according to a state regulatory filing. Health Republic provided health coverage for about 209,000
people at the end of June.
Coverage for individuals will continue until their policies end on Dec. 31, and they can purchase new
policies from other providers during the open- enrollment period that starts Nov. 1. Small-business plans,
which don’t all end at the same time, also remain in effect, DFS said.
When an insurer is based upon payment from government guaranteed loans rather than a business plan designed to make a profit, the insurer
is condemned to failure. Obamacare makes no sense if an insurer loses over $120 million in the first two years of operation and obtained its loans
based upon information and a business plan that did not work.
Barry Zalma is On World Risk & Insurance News
Check out my “Who Got Caught” submissions at http://www.wrin.com and scroll down to “Who Got Caught.”
Good News
From the
Mohammad Adnan Khan, convicted 09/26/2015 for disability fraud Stephen Schneider, convicted 09/24/2015 for drug diversion in
in Sutter County, CA
Wichita, KY
Mikhayl Soliman, convicted 09/25/2015 for Medicare or Medicaid Nancy Elaine Horsley, convicted 09/24/2015 for drug diversion in
fraud in Detroit, MI
Knox County, TN
Lawrence Wayne Reese, convicted 09/25/2015 for arson involving a Gary Fields, convicted 09/24/2015 for drug diversion in Charleston,
business in Lorton, VA
WV
Brent Taylor, convicted 09/25/2015 for workers compensation fraud Lionel Scott Ellison, convicted 09/23/2015 for arson-for-profit in
in Nelsonville, OH
Billings, MN
Harold Persaud, convicted 09/25/2015 for Medicare or Medicaid Mary Talaga, convicted 09/20/2015 for medical insurance fraud in
fraud in Westlake, OH
Elmwood Park, IL
Billy Schloss, convicted 09/25/2015 for workers compensation fraud Angela D. Biesecker, convicted 09/19/2015 for Medicare or Medicaid
in Shelby County, OH
fraud in Chester County, PA
Debra Lawrence, convicted 09/18/2015 for workers compensation Paula J. Butterfield, convicted 09/16/2015 for Medicare or Medicaid
fraud in Bucyrus, OH
fraud in Charleston, WV
Mary Talaga, convicted 09/18/2015 for
Medicare or Medicaid fraud in Chicago, IL
Harold Henthorn, convicted 09/15/2015 for life
insurance fraud in Denver, CO
David E. Hunnicutt, convicted 09/18/2015
for disability fraud in Macon, GA
Josh Salisbury, convicted 09/15/2015 for faking
an auto theft in Lincoln County, NE
Connie Robbins, convicted 09/17/2015 for
Medicare or Medicaid fraud in Abingdon,
VA
Arfa Juma, convicted 09/15/2015 for padding or
falsifying an auto claim in Seattle, WA
James Cei, convicted 09/14/2015 for medical
insurance fraud in Wallingford, CT
Falgun Dharia, convicted 09/17/2015 for
arson involving a business in Cheyenne, WY
William Emerson Scruggs, convicted
Kamran Yasin, convicted 09/16/2015 for staging auto crashes in 09/14/2015 for padding or falsifying an auto claim in Bibb County, GA
Manchester, none
Alexander Sakhanskiy, convicted 09/11/2015 for arson-for-profit in
Antelope, CA
Health Insurance Fraud Convictions
One Year & One Day In Prison for Taking Kickbacks
Glen Allan Fine, Humana’s former regional sales director, and James Wenger, a former sales manager,
were sentenced to one year and one day in prison and ordered to pay $100,000 in restitution and forfeit
$900,000 in Kentucky.
Prosecutors advised that Fine and Wenger unlawfully diverted millions of dollars in a kickback scheme
that took advantage of their positions of trust and authority at Humana.
The two pleaded guilty in 2013 to a single count of taking kickbacks while employed as part of Humana’s
sales and marketing division known as the MarketPoint Organization.
The two admitted that they set up a deal with Shep Cutler, the former chief executive officer of Cutler
& Associates, an insurance brokerage in Columbia, S.C., prosecutors said. The pair agreed to steer agents who would sell Humana insurance
products to Cutler’s company and his business partner, Don McNerney, prosecutors said. Wenger and Fine set up fictitious businesses accounts
in the names of their wives to funnel in the kickbacks that were paid out between 2006 and 2010, prosecutors said.
As a result of this kickback arrangement, Humana suffered a loss to its business and had to pay legal and other investigative costs, prosecutors
said.
Neither Cutler nor McNerney have ever been charged. Cutler died after the charges were originally brought against Fine and Wenger in 2013.
Conviction Stands for Criminal Doctor
Howard T. Douglas III, M.D., unsuccessfully appealed his conviction for using his company — Western Medical Evaluators — to deliberately
overbill Texas Mutual for medical exams. The Austin (Texas) Court of Appeals upheld felony
workers’ compensation fraud-related charges against Dr. Douglas.
Douglas, of Frisco, Texas was sentenced by a Travis County District Court to a probated prison term
and was ordered to pay a fine of $5,000 and restitution of $98,411. Douglas appealed that conviction
on the basis that the evidence was legally insufficient. He requested a new trial.
The Austin Court of Appeals denied Douglas’s request and affirmed the court’s decision, noting that
the testimony by three patients and five former employees of Douglas’ company is sufficient
evidence.
Mary Nichols, general counsel and senior vice president for Texas Mutual, said in the company’s
announcement that “intentional overbilling and other workers’ compensation health care fraud
schemes damage the system and can lead to higher premiums for all Texas employers.”
After the Western Medical Evaluators investigation, Texas Mutual uncovered evidence that Douglas then created three additional companies:
North Texas Medical Evaluators, Marconi Physical Performance Testing and Nolan Physical Performance & Neurodiagnostics. These
companies were used to continue the fraudulent overbilling scheme.
Douglas was convicted of these crimes in 2014 and was sentenced to five years imprisonment.
Six Months in Jail For Fake Ambulance Claims
Kurien Palliankal, 48, of Yonkers, New York, owner of Carewell Ambulette, Inc., was sentenced in Westchester County Court today to six
months in jail for stealing from Medicaid. He also was sentenced to five years probation after he serves his jail sentence. The corporation,
formerly based in New Rochelle, was also sentenced to pay a fine of $10,000.
Both Palliankal and Carewell Ambulette, which provided transportation services to Medicaid recipients throughout
Westchester and neighboring counties, pled guilty in March to stealing from the Medicaid program by billing Medicaid
for more expensive transportation than was medically necessary. Palliankal admitted at the time of his plea that between
July 2006 and March 2010, he submitted false claims to Medicaid indicating that ambulette transportation was necessary
for many Medicaid recipients transported by Carewell. In fact, the health care providers only authorized taxi
transportation but their requests were altered by Carewell.
In submitting claims based upon these falsified transportation requests, Carewell was able to submit claims for the ambulette service rate which
was four times higher than taxi service. In doing so Palliankal, through his company, defrauded Medicaid of more than $200,000.
Palliankal and Carewell Ambulette were sentenced before the Honorable Barry Warhit in Westchester County Court.
Palliankal and Carewell made full restitution to Medicaid prior to sentence.
Medicaid Fraud To Get Drugs Found Guilty
Linda Masse, a Licensed Practical Nurse, pleaded guilty to a felony, for illegally obtaining narcotics by presenting
prescriptions to pharmacies with the forged signature of her employer, a Medicaid provider. Masse admitted to being
in possession of forged prescriptions which she used to get Hydrocodone and Oxycodone that were paid for by
Medicaid.
“Forgery and Medicaid fraud are blatant abuse of the trust and privileges afforded to medical professionals,” said New
York Attorney General Schneiderman. “My office will keep working tirelessly to ensure that unscrupulous medical
professionals are held accountable.”
My office will continue to hold medical professionals accountable for the crimes committed by the abuse of their privileges,” said Attorney
General Schneiderman. “Above all, we will not allow Medicaid to pay for drugs that were illegally obtained.”
This plea stems from charges lodged last month by the Medicaid Fraud Control Unit of Attorney General’s Office accusing Masse of using
eighteen forged prescriptions from her employer’s practice from on or about March 2014 through April 2015 to get narcotics from pharmacies
at Walmart and CVS in Rotterdam. During this time, Masse was employed at Women’s Health Care Associates in Latham for a physician
specializing in Obstetrics and Gynecology. The prescriptions were for quantities of Hydrocodone and Oxycodone, Schedule II controlled
substances, ranging from 40 -180 pills for each prescription. The controlled substances were dispensed by the pharmacies for Linda Masse and,
as a result, Medicaid Managed Care paid for the prescriptions on Masse’s behalf. Masse obtained over 2,000 pills of Hydrocodone and
Oxycodone in approximately a one year period.
The investigation revealed that Masse’s former employer did not issue the prescriptions to Masse. The physician knew Linda Masse as an LPN
at the physician’s practice and indicated that Masse had access to prescription pads in her employment capacity.
Ten Years for Medicaid Fraud
Derrell Jackson and Shayla Darrington Jackson pled guilty on September 10th, 2015, to one count of Medicaid
Fraud each. Gwinnett County Superior Court sentenced Derrell Jackson to ten years in jail which he is to serve
three and the balance on probation. Shayla Jackson was sentenced to ten years but to serve two under a work
release program. The court also ordered $605,000.00 in restitution.
From April 28, 2007, through April 16, 2010, the Jacksons acting under the guise of an Intensive Family
Intervention program, a Medicaid program of mental health therapy for children, caused false Medicaid claims to
be electronically submitted to the Georgia Medicaid program. They obtained over $620,000.00 of Medicaid funds
by billing for services which were not rendered. They were both away on trips to Sea Pines Resort, Detroit and New
York on the same dates services were claimed to have been rendered.
The evidence and admissions by defendants showed mutual participation. They both signed documents in support of billing for which no services
were rendered. They attended audits and provided auditors with fraudulent documents.
$118 Million Settlement Of Kickback Scheme in North Carolina
Adventist Health System has agreed to pay $118.7 million to settle a whistleblower lawsuit that accused it of paying kickbacks to doctors in
exchange for referrals, attorneys for the plaintiffs announced on Monday.
The agreement comes in a lawsuit filed by three former employees of Adventist’s Park Ridge Health hospital in Hendersonville, North
Carolina, in 2012. It also resolves claims in a separate 2013 lawsuit containing similar accusations.
The bulk of the settlement, $115 million, will go to the federal government, with $3.4 million going to the
state of Florida and the rest divided among North Carolina, Tennessee and Texas, according Peter
Chatfield, a lawyer for the plaintiffs.
Mr. Chatfield said it was the largest settlement ever paid in a case involving hospitals paying doctors for
referrals. In addition to the kickback accusations, the settlement also resolved claims that Adventist
overbilled government health care programs.
The whistleblowers could ultimately receive 15% to 25% of the settlement, but their share has not yet been
decided, according to their attorneys.
The 2012 lawsuit, filed in North Carolina federal court, alleged that the kickbacks took the form of inflated
salaries, bonuses and a widespread practice of allowing physicians to overbill in exchange for referring
their patients to Adventist facilities.
$118 Million to U.S.
45 Months in Prison to Medical Biller for $4 Million Health Care Fraud
Mary Talaga, 54, of Elmwood Park, Illinois, the medical biller of a Chicago-area visiting physician practice was sentenced September 18, 2015
to 45 months in prison for her role in a $4 million health care fraud scheme.
Talaga was convicted in May 2015 following a jury trial of one count of conspiracy to commit health care fraud, six counts of health care fraud
and three counts of false statements relating to a health care matter. In addition
to imposing the prison term, U.S. District Judge Gary Feinerman of the Northern
District of Illinois ordered Talaga to pay approximately $1 million in restitution.
From 2007 to 2011, Talaga was the primary medical biller at Medicall Physicians
Group Ltd., a physician practice that visited patients in their homes and prescribed
home health care. The evidence at trial showed that Talaga and her
co-conspirators routinely billed Medicare for overseeing patient care plans (a
service known as “care plan oversight” or CPO) when, in fact, the doctors at
Medicall rarely provided the service. The evidence at trial also showed that
Talaga and her co-conspirators billed Medicare for other services that were never
provided, including services rendered to patients who were deceased, services purportedly provided by medical professionals no longer
employed by Medicall, and services purportedly provided by medical professionals who, based on billing records, worked over 24 hours per
day.
According to the evidence presented at trial, during the five-year conspiracy, Medicall submitted bills to Medicare for more than $4 million
in services that were never provided. Medicare paid more than $1 million on those claims.
Rick Brown, 58, of Rockford, Illinois, and Roger A. Lucero, 64, of Elmhurst, Illinois, were also convicted of offenses based on their roles
in the scheme. Brown was convicted along with Talaga at trial and was previously sentenced to serve more than seven years in prison. Lucero,
Medicall’s Medical Director, pleaded guilty and will be sentenced at a later date.
Cardiologist Who Overbilled Medicare & Insurers $7.2 Million Guilty
Dr. Harold Persaud, 56, a Westlake, Ohio cardiologist was convicted of performing unnecessary catheterizations, tests, stent insertions and
causing unnecessary coronary artery bypass surgeries as part of a scheme to overbill Medicare and other insurers by $7.2 million, law
enforcement officials said.
Dr. Persaud was convicted of one count of health care fraud, 13 counts of making false statements and one count of engaging in monetary
transactions in property derived from criminal activity. He was acquitted on one count of making a false
statement.
Inflating Medicare billings alone would be bad enough. Falsifying cardiac care records, making an
unnecessary referral for open heart surgery and performing needless and sometimes invasive heart tests
and procedures is inconsistent with not only federal law but a doctor’s basic duty to his patients.
This doctor violated the sacred trust between doctor and patient by ordering unnecessary tests,
procedures and surgeries to line his pockets and ripped off taxpayers and put patients’ lives at risk.
Persaud had a private medical practice at 29099 Health Campus Drive in Westlake and had hospital
privileges at Fairview Hospital, St. John’s Medical Center and Southwest General Hospital, according
to court documents and trial testimony.
Persaud devised a scheme to defraud and obtain money from Medicare and other insurers. The scheme
took place between Feb. 16, 2006, through June 28, 2012. According to according to court documents
and trial testimony, his activities in furtherance of the scheme included:
Dr. Harold Persaud
Persaud selected the billing code for each customer submitted to Medicare and private insurers, and used codes that reflected a service that was
more costly than that which was actually performed; Persaud performed nuclear stress tests on
patients that were not medically necessary; He knowingly recorded false results of patients’ nuclear
stress tests to justify cardiac catheterization procedures that were not medically necessary; Persaud
performed cardiac catheterizations on patients at the hospitals and falsely recorded the existence
and extent of lesions (blockage) observed during the procedures; he recorded false symptoms in
patient records to justify testing and procedures on patients; Persaud inserted cardiac stents in
patients who did not have 70 percent or more blockage in the vessel that he stented and who did not
have symptoms of blockage; he placed a stent in a stenosed artery that already had a functioning
bypass, thus providing no medical benefit and increasing the risk of harm to the patient; he
improperly referred patients for coronary artery bypass surgery when there was no medical
necessity for such surgery, which benefitted Persaud by increasing the amount of follow-up testing
he could perform and bill to Medicare and private insurers; and Persaud performed medically
unnecessary stent procedures, aortograms, renal angiograms and other procedures and tests.
As a result of this scheme, Persaud overbilled and caused the overbilling of Medicare and private
insurers in the amount of approximately $7.2 million, of which Medicare and the private insurers
paid approximately $1.5 million, according to the indictment.
That Dr. Persaud was able to continue this fraud profitably for six years is an indication of the inadequacy of the effort to defeat all types of
insurance fraud.
Hospital District Will Pay $69.5 Million to U.S. for False Claims
North Broward Hospital District, a special taxing district of the state of Florida that operates hospitals and other health care facilities in the
Broward County, Florida, area, has agreed to pay the United States $69.5 million to settle
allegations that it violated the False Claims Act by engaging in improper financial relationships
with referring physicians, the Justice Department announced today.
Improper financial rewards given to physicians in exchange for patient referrals corrupts
medical decision making and inflates health care costs. The settlement announced September
15, 2015 resolved allegations that the hospital district provided compensation to nine employed
physicians that exceeded the fair market value of their services. The United States contended
that these agreements violated the Stark Statute and the False Claims Act. The Stark Statute
restricts the financial relationships that hospitals may have with doctors who refer patients to
them.
The allegations settled today arose from a lawsuit filed by a whistleblower, Dr. Michael Reilly,
under the qui tam provisions of the False Claims Act. Under the act, private citizens can bring suit on behalf of the government for false claims
and share in any recovery. Dr. Reilly will receive $12,045,655.51 from the recovery announced today.
ZIFL only wonders why it took so long to catch this hospital group so that they could steal over $12 million from the government health
insurance programs.
Other Insurance Fraud Convictions
15 Years In Prison for Arson for Profit Attempt
Lawrence Wayne Reese, 56, and his son, Lance Terrell Reese, 28, both from Fort Belvoir, Virginia were
sentenced September 25, 2015 for their roles in burning down the Sub Shop, a business Lawrence Reese
owned in Lorton. They proved the danger of unskilled arsonists attempting arson fires since they were both
burned in the attempt.
Lawrence was sentenced to 15 years in prison, five years of supervised release, and ordered to pay $34,000
in restitution. Lance was sentenced to five years in prison, two years of supervised release, and ordered to
pay $34,000 in restitution.
Lawrence and Lance Reese were convicted at trial on June 19, 2015, for their respective roles in the
February 6, 2013, arson of the Sub Shop. Lawrence Reese owned and operated the business. Through over
Lance T. Reese
500 hours of financial analysis performed by an ATF Senior Forensic Auditor,
the United States proved at trial that the business was financially insolvent. Specifically, Lawrence Reese’s business
reported losses of approximately $60,000 on its 2012 U.S. income tax return. Due to financial strain, Lawrence
Reese recruited his son and Horace Thompson to burn down the Sub Shop. Thompson was convicted of arson
at trial on October 3, 2013, and was sentenced on December 19, 2013, to five years in prison, two years of
supervised release, and ordered to pay $34,000 in restitution.
The evidence presented at trial established that Lawrence Reese and Thompson, through the use of the accelerant
gasoline, caused an explosion followed by a fire at the Sub Shop. The fire destroyed the business and left Lawrence
Lawrence Reese
Reese and Thompson badly burned. Following the fire, Lawrence Reese submitted a claim for approximately $200,000 to his insurance
company. His submission of this claim, for an intentionally set fire, resulted in his commission of multiple counts of mail and wire fraud.
Convicted of Arson to a Subway Store
Ethan Miller, 23, of Mason City, Iowa was found guilty in September by a Cerro Gordo County jury of setting a Subway restaurant on fire
late last year. Miller was accused of committing arson at the Mason City Subway restaurant on December 29, 2014 to cover up his theft from
the business, where he was an employee at the time.
In addition to the first-degree arson conviction, the panel also handed down guilty
verdicts on second-degree theft and possession of a controlled substance charges. The
jury deliberated for a little more than three hours.
Miller faces a maximum sentence of 55 years in prison. If he is ordered to serve all three
felony sentences concurrently rather than consecutively, the most he would serve would
be 25 years.
Assistant Cerro Gordo County Attorney Blake Norman said there is no mandatory
minimum sentence Miller would have to serve.
Miller, testified that he did not set the fire and did not steal from the business. After
Miller was arrested and booked into the Cerro Gordo Jail on the arson and burglary
charges, Freie, a fellow inmate, befriended him. Freie testified that Miller confessed to him that he started the fire at Subway, where he was an
employee at the time. One of the elements of first-degree arson is that the presence of one or more persons can be reasonably anticipated in or
near the property where the arson took place.
The Subway where the fire was set is in the same building with two other businesses. The business next to Subway in that building was Mega
Coin Laundry, which is open 24 hours a day. U.S. Cellular is the other business in the building, and store manager Mitch Roe went into the store
at 2:30 a.m. on the night of the fire, according to an automated record of when he unlocked the door.
Investigators determined by process of elimination that the three separate fires inside Subway — one in the shelving in the back hallway, one
in the upper portion of the safe and one in the lower portion of the safe — were set intentionally.
Murder for Life Insurance Fails
Harold Henthorn, a Colorado man accused of killing his wife by pushing her off a cliff has been found guilty. A jury returned a guilty verdict
September 20, 2015, after its second day of deliberations in the trial of Henthorn, for the death of his second wife, Toni, in her 2012 death in
Rocky Mountain National Park.
Prosecutor Valeria Spencer portrayed Henthorn during closing arguments as a man who has killed
twice, though he was on trial for just one death. During the trial, prosecutors alleged that Henthorn
also killed his first wife, Lynn, in 1995, but was never charged in the case, which was ruled an
accident. She died when the couple’s Jeep fell off a jack during a tire change on a remote road,
crushing her beneath it.
Henthorn collected more than $600,000 in life insurance in that case. Prosecutors noted during the
trial that Henthorn was the sole beneficiary of his second wife’s life insurance policies totaling $4.7
million in coverage.
Henthorn
Prosecutor Suneeta Hazra told jurors Henthorn made nine trips to Rocky Mountain National Park before September 29, 2012, when Toni
Henthorn plummeted about 130 feet off a cliff in a remote, rocky area where the couple had been hiking while celebrating their 12th wedding
anniversary.
A 911 dispatcher who attempted to coach Henthorn through CPR testified during the trial that she concluded he was not actually attempting
to save his wife’s life, and prosecutors said Henthorn could not explain why he had a park map with an “X’‘ drawn at the spot where the victim
fell.
More on the Hitching Post
Falgun Dharia appeared in a New York courtroom on Sept. 1 and pleaded guilty only to the single fraud
charge among the many with which he was charged and the rest of the counts listed in the indictment will be
dismissed at the time of sentencing.
Dharia said on record that he filed the insurance claim shortly after learning that one of his partners, Ajay
Jariwala, admitted responsibility for starting the fire.
“Although I had no prior involvement in the arson, I participated in filing the insurance claim,” Dharia
reportedly told the court.
Jariwala of Albuquerque, New Mexico, is serving a six-year sentence for conspiring to commit arson.
U.S. Chief District Judge Nancy Freudenthal sentenced Jariwal and also imposed three years of supervised release, fined him $10,000 and
ordered him to pay $50,000 in restitution. The crime to which Dharia pleaded guilty is punishable by zero to 20 years in prison, no more than
three years of supervised release and up to a $250,000 fine. When the renovations became too costly, Jariwala hired Robert Rodriguez to set
fire to the lodge building of the hotel so the company could cash in on its insurance policy. Rodriguez in turn hired another man, identified in
court documents as Marcus Trevino, to help set the fire.
They did so in the early morning hours of Sept. 15, 2010, by pouring gasoline in several places before setting the place ablaze. In addition,
federal court documents in New York show Dharia pleaded guilty in August 2014 to two counts of bank fraud, making a false statement on a
tax return and obstruction of justice.
Documents say the same scenario played out with five hotels in need of renovation that Dharia and his business partners purchased throughout
the U.S.
In November 2008, Dharia reportedly submitted an income tax return for the calendar year of 2006 that claimed
a total loss in income of just over $1 million by submitting approximately $1.5 million in fraudulent deductions.
Agent Steals Premium & Gets Probation
Constance Gail Fortune pleaded guilty on September 14, 2015 to one felony count of grand theft by
embezzlement and one felony count of theft from an elder or dependent adult. Fortune was sentenced to five
years formal probation, one year in county jail, four years in state prison sentence (suspended), and ordered to
pay $179,513.46 restitution to victims, including insurance companies.
Department of Insurance investigators uncovered evidence that Fortune, a licensed agent at the time, sold homeowners, auto and life insurance
policies to numerous consumers, but never actually purchased policies and stole their premiums. Fortune’s alleged illegal activities occurred
over a two-year period and left consumers with no coverage and at considerable financial risk.
Fortune, an employee, trustee and former spokesperson for First AME Church, hosted meetings and met with fellow church members and others
to market insurance products. She fabricated bogus insurance documents on official insurance company letterhead in an effort to give consumers
the appearance that the policies were legitimate. Fortune used consumers’ premiums to pay for her personal expenses, including lease payments
for her insurance office and rent for her apartment.
The Los Angeles County District Attorney’s Office Elder Abuse Unit prosecuted the case.
Guilty of $13.64 Million Fraudulent Fire Claim
Falgun Dharia was accused of engaging in mail and wire fraud to file an insurance claim for $13.64 million in damages caused by an
intentionally set fire. Dharia, a New Jersey man charged with aiding and abetting arson and several other crimes after the Hitching Post Inn
caught fire five years ago has pleaded guilty to conspiring to commit insurance fraud.
A federal grand jury in the U.S. District Court of Wyoming charged Dharia a year ago with six counts: conspiring to commit insurance fraud
by mail and wire; aiding and abetting wire fraud; conspiring to commit arson; aiding and abetting arson; conspiring to use fire in the commission
of another felony offense; and aiding and abetting the use of fire in the commission of another felony.
His case was transferred to the U.S. District Court of Eastern New York in July after he and federal prosecutors reached
a plea agreement.
A notice filed in federal court indicated Dharia would plead guilty in New York but did not say to which charge.
Dharia appeared in a New York courtroom on September 1 and pleaded guilty only to the fraud charge.
Dharia
Dharia said on record that he filed the insurance claim shortly after learning that one of his partners, Ajay Jariwala,
admitted responsibility for starting the fire.
“Although I had no prior involvement in the arson, I participated in filing the insurance claim,” Dharia reportedly told the court.
Jariwala of Albuquerque, New Mexico, is serving a six-year sentence for conspiring to commit arson.
He pleaded guilty to the crime and was sentenced by U.S. Chief District Judge Nancy Freudenthal in September 2013.
Freudenthal also imposed three years of supervised release for Jariwala, fined him $10,000 and ordered him to pay $50,000 in restitution.
The crime to which Dharia pleaded guilty is punishable by zero to 20 years in prison, no more than three years of supervised release and up
to a $250,000 fine.
The indictment filed against Dharia says he purchased the Hitching Post in December 2006 for $5.95 million.
In April 2009, Dharia formed another company that bought the hotel about a year later for $1.05 million.
Two days before the late May 2010 purchase, the company obtained a $13.64 million insurance policy for the
hotel.
At that time, Dharia arranged for Jariwala to oversee hotel renovations.
When the renovations became too costly, Jariwala hired Robert Rodriguez to set fire to the lodge building of the hotel so the company could
cash in on its insurance policy. Rodriguez in turn hired another man, identified in court documents as Marcus Trevino, to help set the fire.
They did so in the early morning hours of Sept. 15, 2010, by pouring gasoline in several places before setting the place ablaze.
Rodriguez reported to Jariwala when the deed had been done, and Jariwala called the insurance company. Freudenthal sentenced Rodriguez
in September 2013 to serve five years in prison, followed by three years of supervised release, for counts of conspiring to commit fraud and
aiding and abetting arson. He was not fined but ordered to pay $50,000 in restitution.
Trevino was sentenced in June 2013 to serve two years in prison, followed by three years of supervised release, for the same crimes. He also
was not fined but ordered to pay $2,000 in restitution.
Jariwala, Rodriguez and Trevino were ordered to share their obligation to pay restitution, meaning it’s up to them to sort out who owes what
portion.
In addition, federal court documents in New York show Dharia pleaded guilty in August 2014 to two counts of bank
fraud, making a false statement on a tax return and obstruction of justice. Documents filed at that time accuse Dharia
of minimizing his ownership in three Houlihan’s restaurants so he didn’t have to provide personal financial statements
in order to obtain bank loans.
In November 2008, Dharia reportedly submitted an income tax return for the calendar year of 2006 that claimed a total loss in income of just
over $1 million by submitting approximately $1.5 million in fraudulent deductions. While Dharia reported owing no taxes that year, he in fact
owed more than $77,000.
Only Three Years for 23 Counts of Insurance Fraud
William Emerson Scruggs, 54, pleaded guilty to 23 counts of insurance fraud.
The Bibb County, Georgia Superior Court sentenced Scruggs to three years confinement to be served with a separate federal
incarceration and seventeen years of probation following the confinement.
In addition, Scruggs must pay $12,240 in restitution and perform 170 hours of community service.
The sentencing stems from a July 2014 investigation that found Scruggs, who owned Diamond Auto Painting, aided former
insurance adjuster Patrick Dixon with a generation of false auto repair claims.
Dixon is awaiting trial.
Guilty of Fake Car Theft
Josh Salisbury, a North Platte, Nebraska, man accused of driving his car into a canal so he could collect on his insurance pleaded no contest
and was been convicted of insurance fraud. He is scheduled to be sentenced on Oct. 26 in Lincoln County District Court. Prosecutors dropped
forgery and other charges as part of the plea deal.
Police say Salisbury reported June 28, 2014, that the car was parked in front of his home when it was stolen. The car was pulled from the canal
in Lincoln County on Aug. 11, 2014. Police says investigators later learned that Salisbury drove the car into the canal and collected $27,500
in insurance.
12 Years in Prison for Failed Arson for Profit
Dana Owens, 39, a West Point , Georgia woman set fire to her eight-bedroom home two years ago expecting a $1.5 million insurance check
— just like the one she’d gotten in 2007 when her first home burned to the ground.
Instead, in September a judge gave Owens a dozen years in state prison after a jury convicted her on two counts of arson in the first degree; one
count each for the mortgage and insurance companies she tried to swindle.
Troup County Superior Court Judge Travis Sakrison admonished Owens as he sentenced her saying she not only lied
through the entire investigation and trial, but endangered the lives of firefighters who responded to the blaze she set in
her home’s pantry on Jan. 8, 2013. Unfortunately for Owens, she botched the fire and it failed to spread past the pantry.
An automatic fire alarm she may have thought was turned off even summoned the fire department to the home at 3016
Georgia Highway 18 in West Point.
All along, Owens, who testified at the trial, said she knew nothing of how the fire started. She told conflicted stories to
investigators and the jury about a mountain of keepsakes and personal mementos found in a barn behind her home after
the fire. At various stages of the investigation, she claimed she’d lugged her china, clothes, drapes and assorted other
items from the home as firefighters were still on scene — although no firefighter saw her doing it. At other times, she
told law enforcement agents she’d been cleaning out an office space before the fire and had stored bills and other important financial records
there while she re-organized. For jurors, her story just didn’t add up.
She filed for divorce not even a month after the fire. Filings for alimony showed that Owens estimated she’d need $17,500 per month to keep
up her costly way of life. Other filings showed she and her husband were taking in about $16,000 per month from their business. In the months
prior to the fire, the bank was sending late notices about their mortgage and their homeowners insurance company was threatening to cancel
their policy for nonpayment. A laundry list of overdraft and nonsufficient funds charges checkered their sometimes-overdrawn bank account.
First, Owens set about photographing the items and rooms in her home. A camera was found in their barn after the fire showing nearly every
room in the home with itemized photos on a memory card. As a former insurance agent, Owens may have known she’d need the photographs
to file a claim later. Then, she moved the precious items — the ones that her insurance company couldn’t replace — into the family’s barn.
Owens could have received a stiffer sentence than she did; each of the two arson counts carried with it a sentence of not less than one but no
more than 20 years. The judge also ordered Owens remain on probation after she leaves prison. She was ordered to serve a total of 40 years,
12 of which will be served in prison and the balance on probation.
She must also pay restitution to her insurance company to the tune of more than $130,000 once she is released.
Four Years in Prison for Arson for Profit
Edward L. Possing, 46, told the judge “I got involved with some of these people and” they set it up so he would be
arrested. Circuit Court Judge Allan “Pat” Torhorst, however, wasn’t convinced.
“What should a man with your life history suffer as a result of this crime? It could not have occurred but for your
involvement,” Torhorst said before sentencing him to four years in prison plus four years on extended supervision.
Possing was renting out the house at the time, but his tenants left on Nov. 5, 2010 — taking their two dogs, two children,
some electronics and Washington Redskins memorabilia, witnesses testified during Possing’s May trial.
Edward L. Possing
Jurors spent only two hours and five minutes deliberating before convicting Possing of being a party to the crime of arson with the intent to
defraud. Prosecutors said Possing masterminded a scheme to set the house on fire to collect the insurance money.
The fire created an “extremely, extremely dangerous situation” for neighbors, police and firefighters, Chiapete said.
Three others are charged in the arson scheme. They are: Victor L. Jackson, 34, of Milwaukee; Catherine E. Derosier, 37, of Mount Pleasant;
and former Racine resident David R. Williams Sr., 44, now of Hainesville, Illinois. Each testified for the prosecution in May and face charges
of being a party to the crime of arson with the intent to defraud.
Jackson’s plea hearing is Oct. 1; Williams’ sentencing is set for the same day; and Derosier is due back in court on Sept. 24 for another hearing.
Derosier, her two children and Williams were Possing’s tenants. Jackson — whom the lawyers have referred to as “the torch” — admitted on
the witness stand during Possing’s trial that he set the fires inside the home while Williams and Derosier were out of town. They bought renters’
insurance in late October 2010, just weeks before the fire.
Guilty of Workers’ Compensation Fraud – Probation Only
Brent Taylor, a Nelsonville (Athens County), Ohio man pleaded guilty to one misdemeanor count of workers’ compensation fraud. Taylor was
ordered by a judge in Franklin County to pay restitution of $30,000.
SID opened an investigation after receiving an allegation that Taylor was engaged in work activity while he was
receiving Temporary Total Disability benefits for a workplace injury. The investigation revealed Taylor knowingly
engaged in work activities while receiving this benefit that does not permit a return to work. Specifically, the
investigation confirmed he worked as a girls’ basketball coach and provided lawn care services while concealing his
activities from BWC.
Brent Taylor
On Sept. 14, Taylor was placed on five years of community control and ordered to pay $30,000 in restitution, with
$13,500 to be paid at the time of the plea, in addition to $1,750 in investigative costs. Taylor submitted $13,500 to
the Franklin County Clerk’s Office prior to his plea.
Zalma Insurance Consultants provides the following services to its clients:
1.
Acting as a consultant or expert witness on behalf of insurers and
insureds in litigation.
6.
Consultation with insurance claims personnel on methods to avoid
charges of bad faith.
2.
Acting as a consultant to the insured in the presentation of a first
party claim.
7.
Consultation with insurers and insureds on insurer compliance with
Fair Claims Practices laws and regulations.
3.
Analysis of claims file material to allow the party to present
evidence to establish and document bad faith or the existence of a
genuine dispute between the insurer and insured.
8.
Training on insurance and insurance law for all insurer
9.
Acting as a mediator to help resolve insurance claims short of
litigation.
4.
Review of policy wording and claims files to determine if there is
a basis for payment or denial of a claim.
10.
Analysis of insurance policy wording.
5.
Analysis of insurance litigation for the insurer and the insured.
11.
Litigation advice to defense or plaintiffs’ counsel.
Consultation from Zalma Insurance Consultants can save you or your client thousands of dollars in the defense or prosecution of an insurance dispute. Zalma
Insurance Consultants will find a solution to your insurance claims dispute that is fair, intelligent, beneficial and Economical.
If you only need an opinion letter I will review your entire claim file and policy wording and prepare a coverage opinion letter for the flat fee of $4,000.00.
Otherwise, my services are billed at $500.00 per hour, portal to portal.
Zalma Insurance Consultants provides expert advice to counsel for insurers and plaintiffs’ counsel. Advice from Zalma Insurance Consultants is indispensable
to the resolution of insurance disputes. Consultation from Zalma Insurance Consultants can save you, your counsel or client hundreds of hours of investigative
and legal work. Call Barry Zalma at 310-390-4455 or e-mail at zalma@zalma.com.
Zalma’s Insurance Fraud Letter
© 2015 by Barry Zalma & ClaimSchool, Inc.
4441 Sepulveda Blvd, CULVER CITY CA 90230-4847
http://www.zalma.com # zalma@zalma.com # http://zalma.com/blog
ZIFL is made available by the publisher for educational purposes only as well as to give you general information and a general understanding of the law, not
to provide specific legal advice. By using ZIFL you understand that there is no attorney client relationship between you and the publisher. ZIFL should not
be used as a substitute for competent legal advice from a licensed professional attorney in your state.
Books from the American Bar Association
The Insurance Fraud Deskbook
Barry Zalma, Esq., CFE, 2014 Paperback, 638 Pages, 7x10
The Insurance Fraud Deskbook is a valuable resource, peer reviewed by the American Bar Association, for those who are engaged in the
effort to reduce expensive and pervasive occurrences of insurance fraud. It explains the elements of the crime and the tort to claims
personnel, and it provides information for lawyers who represent insurers so they can adequately advise their clients. Prosecutors and their
investigators can use this book to determine what is required to prove the crime and win their case.
The full text of decisions from courts of appeal and supreme courts across the country are provided so the reader can understand what
happens after the investigation is completed and can apply that information to undertake their own thorough investigations. It allow claims
personnel and their lawyers to understand what errors would cause a defect or a not-guilty verdict.
The effort to reduce insurance fraud requires the assistance of both civil and criminal courts. The Insurance Fraud Deskbook can help the
prudent fraud investigator, insurance adjuster, insurance attorney, insurance Special Investigation Unit and insurance company management
to attain the information needed to deal with state investigators and prosecutor.
Available from the American Bar Association at:
http://shop.americanbar.org/eBus/Default.aspx?TabID=251&productId=214624; or orders@americanbar.org, or 800-285-2221.
Diminution in Value Damages
How to Determine the Proper Measure of Damage to Real and Personal Property
This book was written to provide sufficient information to those who became interested in the issue since the Georgia Supreme Court decided
State Farm Mutual Automobile Insurance Co. v. Mabry, 274 Ga. 498, 556 S.E.2d 114 (Ga. 11/28/2001) and includes cases dealing with the
use of diminution in value as a method of determining the amount of loss incurred by a plaintiff seeking indemnity for damage to real or
personal property.
Because confusion has reigned across the United States concerning the proper measure of damages for property damage to property that has
been repaired, Diminution In Value Damages assists the reader in answering the questions concerning the proper measure of damage in each
of the fifty United States and federal United States jurisdictions
This edition has been totally rewritten and expanded, providing the most extensive and detailed coverage of the issue and a thorough explanation of how to
apply diminution in value damages to losses to property.
ISBN: 978-1-63425-295-8, Product Code: 5190524, 2015, 235 pages, 7 x 10, Paperback
Available at http://shop.americanbar.org/eBus/Store/ProductDetails.aspx?productId=203226972
As readers of ZIFL are aware, Barry Zalma is an insurance coverage attorney, consultant and expert witness. As a California attorney, Mr.
Zalma limits his practice to transactional, rather than litigation, counsel concerning insurance coverage matters, mainly representing insurers and those
in the business of insurance. Mr. Zalma was licensed to practice law in 1972 and has operated his own firm since 1979. He is admitted to practice before
all California courts, California U.S. District Courts and the Ninth Circuit Court of Appeals. He has qualified as an expert in various state and federal
courts across the U.S. and the British Cayman Islands.
The comments made in each issue of ZIFL are for information only and are not intended as legal advice. If you need legal advice, contact a
local attorney. If you need an insurance claims handling, insurance coverage or insurance bad faith consultant and expert testimony contact Mr. Zalma
at Zalma Insurance Consultants, 310-390-4455 or e-mail to zalma@zalma.com.

Zalma`s Insurance Fraud Letter

Transcription

Similar documents

Presentation () - Association of International Education

digital evidence

ProBTP and Counter Fraud

Break-out B Fraud Management in Social Security

Social Security Fraud, Similar Fault, and Penalties

Forensic Accounting

2nd Global Summit Healthcare Fraud: Prevention is better than cure

Evaluating International Qualifications and Combating

DV Fraud Lab Report

September 2014 - Florida Department of Financial Services

INF CUS - EarthMover Credit Union