Fraud Doesn't Pay but Keeps Trying

Post 4849

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"Operation Back Cracker" (a joint state and federal criminal investigation) exposed a ring of Minnesota healthcare providers (mostly chiropractors) who were recruiting car accident victims and fraudulently billing auto insurers for their treatment. In related civil settlements, several providers agreed not to bill some of the insurance companies for any treatment provided to their insureds.

The chiropractors sued seeking to void the no-bill agreements used to reduce the insurers losses, by claiming the settlements violated the Minnesota No-Fault Automobile Insurance Act. The district court enjoined Illinois Farmers Insurance Company and others (together, Farmers) from entering into or enforcing the no bill agreements.

In Taqueria El Primo LLC, et al v. Illinois Farmers Insurance Company; et al Coalition Against Insurance Fraud Amicus, No. 23-3128, USCA, Eighth Circuit (July 31, 2024) in a question of first impression: whether no-bill agreements "ha[ve] the effect of providing[] managed care services" and the Eighth Circuit resolved the issue.

THE LITIGATION

Plaintiffs represent both an injunctive class and a damages class of people insured by Farmers.

The No-Fault Act requires insurers to provide "[b]asic economic loss benefits" when an insured is injured by the maintenance or use of a motor vehicle.

Some agreements go so far as to clarify that bills submitted by the provider are void and that the provider "may not collect the bills from Farmers and/or the insured/claimant who received the treatments."

ANALYSIS

The No-Fault Act does not create a private right of action.

An insurer does not violate the Act by enforcing a no-bill agreement against a provider. Because the injunction prohibits the latter, it cannot stand and the injunction was vacated.

ZALMA OPINION

The chiropractors entered into a settlement to avoid losses as a result of being caught defrauding insurers. By promising not to bill the insurers for the future the insurers recouped their losses and incurred no new fraudulent losses. Attempting to break away from the agreement and continue to defraud the insurers they sought an injunction against enforcing the deal. The USDC fell for the claim and the Eighth Circuit saw through the scheme and vacated the injunction proving to Farmers and the other insurers involved you can't trust fraudsters.

(c) 2024 Barry Zalma & ClaimSchool, Inc.

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