Zalma's Insurance Fraud Letter - June 15, 2021

Everything Needed to Defeat Insurance Fraud

Jun 15, 2021

A ClaimSchool™ Publication © 2021, Barry Zalma & ClaimSchool, Inc., Go to my blog & Videos at: Zalma on Insurance And at https://zalma.com/blog Go to the Insurance Claims Library, Listen to the Podcast: Zalma on Insurance, Videos from Zalma on Insurance, Subscribe to Barry Zalma on Substack.com

Volume 25, Issue 12 – June 15, 2021

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Quote of the Issue

“Learn from yesterday, live for today, hope for tomorrow.” — Albert Einstein

What Is Insurance Fraud

When an insurer is asked to pay a fraudulent insurance claim it is the victim of a tort, a civil wrong and in most states, a crime.

Black’s Law Dictionary, 6th Edition, defines fraud as:

An intentional perversion of the truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or to surrender a legal right; a false representation of a matter of fact, whether by words or by conduct, by false or misleading allegations or by concealment of that which should have been disclosed, which deceives and is intended to deceive another so that he shall act upon it to his legal injury.

In simple language, fraud can be defined as a lie told for the purpose of obtaining money from another who believes the lie to be true. Civil insurance fraud exists if an insured:

· makes a representation to the insurer that the insured knows is false;

· conceals from the insurer a fact he or she knows is material to the insurer;

· makes a promise he or she does not intend to keep; and

· makes a misrepresentation on which the insurer relies in issuing the policy

· that results in the insurer incurring damage.

To protect insurers against fraud, most insurance policies contain, in clear and unambiguous language, a clause similar to the following from the New York Standard Fire Policy:

This entire policy shall be void if, whether before or after a loss, the insured has willfully concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interest of the insured therein. . .

Fraud may be committed at different stages in the insurance transaction by:

1. applicants for insurance,

2. policyholders,

3. third-party claimants and

4. professionals who provide services to claimants.

Those who commit insurance fraud range from:

1) organized criminals who steal large sums through fraudulent business activities;

2) insurance claim mills;

3) professionals and technicians who inflate the cost of services or charge for services not rendered;

4) people in need of cash who are recruited, for a fee, to be “victims” in an auto accident;

5) ordinary people who want to cover their deductible; or

6) ordinary people who view filing a claim as an opportunity to make a little money.

Health care, workers’ compensation and auto insurance are believed to be the sectors most affected by insurance fraud. However, insurance fraud comes in all shapes and sizes.

They include with regard to first party property insurance:

Health care, workers’ compensation and auto insurance are believed to be the sectors most affected by insurance fraud. However, insurance fraud comes in all shapes and sizes. They include with regard to first party property insurance:

1. Staged Auto Accidents.

2. Arson-for-profit.

3. Insurer Fraud.

4. Faked thefts.

5. Faked vandalism and malicious conduct.

6. Faked hail and windstorm damage.

7. Acquisition of insurance under false pretenses, by misrepresentation of material facts, by concealment of material facts, or fraud.

Specialists who know insurance and insurance fraud investigate it. It is, at least in California where I live and the other 49 states that have criminal insurance fraud statutes, a rather simple crime to prove. It should be the type of case a prosecutor would want to file and try to a jury.

Instead, as an ex-prosecutor said to me: “insurance fraud is a crime prosecutors run away from because the cases are usually heavy with documentary evidence and are complex to prove to a lay jury.”

Consider the public outcry if gangs of bank robbers took $300 billion a year from banks in the U. S. every year. Would the public stand for groups of criminal stockbrokers looting their 401k and other pension plans? What would happen if a motorcycle gang went across the country and stole $300 billion every year from convenience stores across the country? There would be a hue and cry for the heads of the police and prosecutors who failed to stop the crime spree. Yet, when the public is told that a group of criminals steals $300 billion every year from the insurance industry the response is either a yawn or a cheer for the criminals who make Bernie Madoff, the Ponzi Schemer, seem an amateur.

I have heard the following odd responses from prosecutors to whom insurance fraud cases were presented:

· “A confession on the record with five corroborating witnesses is not enough to support a fraud prosecution.”

· “An insurance company can’t be a victim of a crime.”

· “You have a good case but I don’t have time to prepare an indictment or take the case to a grand jury.”

· “Juries don’t like insurance companies.”

· “Are you bringing this case because you don’t want to pay a legitimate claim?”

· “I don’t understand what the claimant did wrong.”

· “I don’t see a crime.”

· “I didn’t know crimes existed in the Insurance Code.”

Regardless of the excuses posited by prosecutors it is the duty of an insurer who suspects a fraud is being attempted to report that suspicion to the state’s Department of Insurance and/or local prosecutors. It is not an insurer’s obligation to prosecute—only provide the authorities with evidence sufficient to allow the fraud investigators or prosecutors to make a decision to prosecute or to not prosecute. [This article was adapted from my book “Property Investigation Checklists Uncovering Insurance Fraud, 13th Edition” available as an e-book and paperback from ThomsonReuters at https://store.legal.thomsonreuters.com/law-products/Forms/Property-Investigation-Checklists-Uncovering-Insurance-Fraud-13th/p/106702361 and as a THOMSON REUTERS PROVIEW eBOOK EDITION https://store.legal.thomsonreuters.com/law-products/Forms/Property-Investigation-Checklists-Uncovering-Insurance-Fraud-13th/p/106702363

Wisdom

"The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary." —H. L. Mencken

"An important art of politicians is to find new names for institutions which under old names have become odious to the public." —Charles Maurice de Talleyrand-Périgord

"Born in other countries, yet believing you could be happy in this, our laws acknowledge, as they should do, your right to join us in society, conforming, as I doubt not you will do, to our established rules." —Thomas Jefferson

"The battle for the world is the battle for definitions." —Thomas Szasz

“Learn from yesterday, live for today, hope for tomorrow.” — Albert Einstein

"A man always has two reasons for what he does — a good one, and the real one." —J. P. Morgan

"Our obligations to our country never cease but with our lives." —John Adams

Go Directly to Jail – Arson for Profit Fails

Setting a Fire and Presenting a Claim for Items Not Burned is Insurance Fraud & Arson

Good News From the

Five more crashers pled guilty as the feds continue dismantling a large ring that set up dozens of big-rig trucks for collisions on highways around New Orleans. The latest convictions: Lois Russell, Tanya Givens and John Diggs teamed with passenger James “Curtis” Williams to stage a crash with a tractor-trailer. Roderick Hickman drove Russell’s car, intentionally struck the 18-wheeler and then fled the scene with Damien Labeaud. Russell lied to police that she drove the car. She made false injury claims, along with Givens and Diggs. The insurers paid out $272.5K. In a related setup, Henry Randle and Dakota Diggs maneuvered another tractor-trailer into a crash, lying the truck was at fault. Ring members next set up another truck for a crash. The collisions typically involve a vehicle maneuvering innocent truckers into fake sideswipes of cars driven by ring members on a local highway. Damien Labeaud, who earlier pled guilty, drove a crony’s Chevy Avalanche into a truck — claiming the trucker was at fault. A colluding plaintiff attorney paid Labeaud $7,500 the day of the crash. The attorney arranged bogus injury treatment for several Chevy “passengers.” Lucinda Thomas had unneeded neck surgery to increase her insurance take. The truck’s dashcam later tipped off investigators. Suspicious injury suits also are spreading. In a $1M action, motorists claim a semi struck their 2010 Chevy Impala on I-10. The trucker says the driver moved to the left lane, then suddenly backed to the center lane to cause a collision. Defense attorneys say they’ve flagged 100 cases for criminal investigation.

Postal Inspector Guilty of Insurance Fraud

After Pleading Guilty Defendant’s Petition Coram Nobis Fails to Reverse His Conviction

Jason Weber pled guilty to a charge of theft of government funds. At the time of the offense, Weber was serving as a postal inspector. The Court sentenced him to a two-year term of probation and ordered him to pay $65,634 in restitution. He has filed a petition for writ of coram nobis, alleging that “new evidence” suggests that his indictment may have been based on “malfeasance and mishandling of evidence” on the part of the government. In United States of America v. Jason Weber, Case No. 14 CR 241, USDC (June 2, 2021) the USDC considered Weber’s attempt to reverse his conviction.

Health Insurance Fraud Convictions

Keyana Lanice Jamill Carter Gets Suspended Sentenced for Medicaid Fraud

Keyana Lanice Jamill Carter, 29, of Las Vegas, was sentenced in a Medicaid fraud case involving the failure to maintain adequate records to substantiate claims submitted to Nevada Medicaid between July 2017 and June 2019.

Eighth Judicial District Court Judge Jerry A. Wiese sentenced Carter to 364 days in jail, suspended, and placed Carter on probation for one year. As a part of her sentence, Carter was ordered to pay $500,000 in restitution. Individuals or businesses convicted of Medicaid fraud may also be administratively excluded from future Medicaid and Medicare participation.

The investigation of this case began after the Medicaid Fraud Control Unit (MFCU) received information that Carter, through her company Gentle Touch Behavioral Health LLC, was billing Nevada Medicaid for services that were not provided. The MFCU also received information that the company’s employees were asked to create false records to document services that were never provided in an attempt to substantiate claims that were submitted to Medicaid for payment. The investigation revealed that Carter not only failed to maintain requisite documentation to support services allegedly provided to Medicaid recipients, but she also presented documentation that had signatures of healthcare providers on them who denied having provided the services.

Marketing From Dennis Richard

My friend, Dennis Richard, is back offering his over 30 Years of Strategic Business-to-Business Marketing Experience in the Insurance Industry gained from, among other tools like the Insurance Broadcast System and World Risk and Insurance News, that I was honored to appear in as an expert on insurance claims.

Dennis Richard’s goal is to strategically strengthen your new Product or Brand, with the use, when needed, of powerful video, social media, and unique marketing techniques, so that all aspects of your plan are cross-promoting one another on all forms of media, at all times.

For Further Information Contact Dennis at 310.569.0076 or Dennisrichard933@gmail.com

Videos on YouTube and Zalma on Insurance from Barry Zalma

Over 110 Videos describing important insurance issues described by Barry Zalma and available to anyone who views or subscribes to the YouTube account. Issues include insurance fraud, definition of insurance, insurance as a contract of personal indemnity, millions for defense and not a dime for tribute and the tort of bad faith. Please subscribe. There are 62 Videos are at https://www.youtube.com/channel/UCFg7qxC0tVgKcMUqoUfnwPw/videos but I have had some difficulty posting new videos to my YouTube channel. I have posted about 175 videos on insurance, insurance claims, insurance law, and insurance fraud to this YouTube Channel my Rumble channelhttps://rumble.com/c/c-262921 and my blog, https://zalma.com/blog

Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ Read posts from Barry Zalma at https://parler.com/profile/Zalma/posts; and the last two issues of ZIFL at https://zalma.com/zalmas-insurance-fraud-letter-2/ podcast now available at https://podcasts.apple.com/us/podcast/zalma-on-insurance/id1509583809?uo=4

Other Insurance Fraud Convictions

Department Orders Consumer Refunds from Illegal Sales of Extended Vehicle Warranties

Elite Integrity LLC of Garden Grove, California was found by a Department of Insurance investigation that found the company was illegally selling vehicle service contracts, or “extended warranties,” led to an Order requiring it refund consumers and dissolve its operations.

The Order requires Elite Integrity LLC to pay back a total of $3,146 to five consumers and to immediately stop selling new contracts, or face a fine of nearly $3.5 million. The Department urges consumers who may have purchased the illegal warranties to contact it to find out if they are eligible for a refund.

Legal Disclaimer

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. The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

Insurance Fraud Costs Everyone

Fictionalized True Crime Stories of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers.

The stories 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 book started as a collection of columns I wrote and published in the magazines “Insurance Journal,” “Insurance Week,” and “The John Cooke Insurance Fraud Report” insurance trade publications serving the insurance community in the United States. Since the last edition I have added more stories that were published in my twice monthly newsletter, Zalma’s Insurance Fraud Letter which is available free to anyone who clicks the links.

Available as a Kindle Book and Available as a Paperback from Amazon.com.

Barry Zalma, Esq., CFE

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. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 54 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Barry Zalma, Inc., 4441 Sepulveda Boulevard, CULVER CITY CA 90230-4847, 310-390-4455; zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ Read posts from Barry Zalma at https://parler.com/profile/Zalma/posts;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/