Zalma’s Insurance Fraud Letter – November 15, 2021

Zalma’s Insurance Fraud Letter Volume 25, Issue 22

Nov 15, 2021

Zalma’s Insurance Fraud Letter

Volume 25, Issue 22

Insurance Criminal Appeals After Pleading Guilty

Ohio Court Allowed Insurance Criminal to Change Felony to Misdemeanor Only to Face an Appeal

Sandy Diane Pinney, appealed the March 2, 2021 judgment of the Ashtabula County Court of Common Pleas overruling her motion to dismiss due to pre-indictment delay, and the March 30, 2021, judgment sentencing her to twelve months community control on one count Insurance Fraud. In State of Ohio v. Sandy Diane Pinney, 2021-Ohio-3483, No. 2021-A-0013, Court of Appeals of Ohio, Eleventh District, Ashtabula (September 30, 2021) the Ohio Court of Appeal dealt with the claim.

FACTS

Ms. Pinney, a fairly incompetent insurance fraud perpetrator, in October 2018, staged a fall on a broken egg while shopping at Wal Mart. Much to her surprise, she was actually injured and suffered a broken ankle. Wal Mart denied her insurance claim and she received no monetary compensation. An investigation was submitted to the prosecutor’s office in 2019.

Meanwhile, in August 2021, Pinney was under indictment for an unrelated offense, to which she pleaded guilty and served a twelve-month prison term. In October 2020, after her release in the unrelated matter, the state charged her with one count Insurance fraud in violation of R.C. 2913.47(B)(1) &(C), a felony of the fifth degree, in relation to the Wal Mart fall.

Pinney filed a motion to dismiss due to a pre-indictment delay arguing prejudice in that she was deprived of the ability to argue for a concurrent sentence, or from seeking a negotiated plea that would have concluded the matter prior to her release from prison. Additionally, she argued that although the events occurred in 2018, the conviction appears on her record in 2021, after the completion of the 2019 prison sentence. The trial court overruled her motion, finding there was no evidence that the State was negligent or intentional in the delay, and that appellant failed to demonstrate prejudice in preparing her defense due to the delay.

In March 2021, Pinney, seeing a conviction on the way, withdrew her not guilty plea and entered a plea of no contest to an amended count one, Insurance Fraud, in violation of R.C. 2913.47(B)(1), a misdemeanor of the first degree. By so doing she avoided jail and the court sentenced her to a twelve-month period of community control.

Man Bites Dog Story – Aetna Sues Fraud Perpetrators to Recover Fruits of Fraud

New Jersey’s IFPA Helps Victims of Fraud Sue the Fraudsters

Aetna Health Inc. and Aetna Life Insurance Co. (collectively, “Aetna”) appeal from trial court orders dismissing for failure to state a claim their second amended complaint, and denying as untimely their motion for leave to file a third amended complaint, against father-daughter defendants Robert W. Kerekes (“Kerekes”) and Susan Nicoll (“Nicoll”). The two were minority owners of Biodiagnostic Laboratory Systems, LLC, (“BLS”) which submitted millions of dollars of fraudulent claims to Aetna. David Nicoll (“David”) – Nicoll’s husband and Kerekes’s son-in-law – was BLS’s majority owner and was convicted of various federal crimes related to the fraud, along with other Nicoll and Kerekes family members and numerous physicians who participated in the scheme.

In Aetna Health Inc. and Aetna Life Insurance Company v. Biodiagnostic Laboratory Services, L.L.C., et. al., No. A-3335-17, Superior Court of New Jersey, Appellate Division (October 7, 2021) the Appellate Division explained that the statutory provisions require less detailed pleadings than a common law fraud case.

Health Insurance Fraud Convictions

Two Sentenced for Embezzling Over $777,000 From Native American Addiction & Counseling Center

Fredericka DeCoteau, 63, Cloquet, Minnesota, and Edith Schmuck, 77, Rice Lake, Wisconsin, were sentenced October 29, 2021 in federal court in Madison, Wisconsin for theft of federal program funds.

U.S. District Judge William M. Conley sentenced DeCoteau to 2 years in prison, and Schmuck to 1 year and 1 day in prison. Judge Conley also ordered the defendants to jointly pay restitution of $777,283. Both defendants were ordered to report to the Bureau of Prisons on December 29, 2021 to begin their sentences.

DeCoteau and Schmuck pleaded guilty to one count of theft of federal funds on July 15 and June 24, 2021, respectively. They worked at Ain Dah Ing (ADI) which has operated as a non-profit halfway house in Spooner, Wisconsin since 1971. DeCoteau worked as the Executive Director at ADI from 2002 to 2017. Schmuck worked as the bookkeeper from 1990 to 2017. They were fired after the thefts were discovered.

ADI offered mental health and alcohol and substance abuse services to Native Americans from Michigan, Minnesota, and Wisconsin tribes. ADI’s services included a 90-day program at its 15-bed Community-Based Residential Facility in Spooner, Wisconsin. ADI’s funding came from a federal commercial contract with the U.S. Department of Health and Human Services, Public Health Service, Indian Health Services Division.

Both DeCoteau and Schmuck pleaded guilty to embezzling a total of $777,283 from ADI by paying themselves unauthorized bonuses via payroll checks that were signed using a rubber signature stamp of the ADI Treasurer. The embezzlement lasted from 2007 to 2017.

At today’s sentencing, Judge Conley noted that DeCoteau and Schmuck stole over 67% of the total funds intended for programming at ADI, and that they gambled away most of this money at local Indian casinos. Judge Conley explained that the defendants violated the trust of the ADI Board of Directors and took advantage of vulnerable people with addictions. In imposing sentence, Judge Conley made clear to both defendants that the gravity of the offense, coupled with the long-term nature of the embezzlement, mandated that they serve prison time despite their claims of being addicted to gambling.

Other Insurance Fraud Convictions

Life Sentence for Fort Worth Man Found Guilty of Gruesome Murder of Wife, Infant Son

Craig Vandewege, 40, was found guilty, Thursday, and given an automatic sentence of life without the possibility of parole.

Vanderwege, a Fort Worth man was charged with, and convicted by a jury, of the capital murder of his wife and infant son. He was found guilty, November 4, 2021 and automatically sentenced to life without the possibility of parole.

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.

Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome.

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 53 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.