Zalma’s Insurance Fraud Letter September 15, 2021
Volume 25, Issue 18 – September 15, 2021
Insurance claims expert, consultant at Barry Zalma, Inc. and author/Publisher at ClaimSchool, Inc. 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
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Quote of the Issue
“You can only protect your liberties in this world by protecting the other man's freedom. You can only be free if I am free." - Clarence S. Darrow
Cease And Desist Orders Issued to Four Companies Allegedly Selling Home Warranties Without a License
The California Department of Insurance announced September 7, 2021 that it has issued Cease and Desist Orders, effective immediately, to four companies who allegedly engaged in selling home warranty contracts in California without proper authorization. Under the Orders, the companies must immediately stop selling the contracts. To protect consumers from fraud, any company marketing and selling home warranty contracts to California consumers must be licensed by the Department of Insurance.
“California consumers place their trust in home warranty companies to provide coverage when something breaks,” said Insurance Commissioner Ricardo Lara. “Our licensing process is intended to protect consumers and ensure ethical standards and practices. Our team works diligently to help companies understand and meet these standards, and when they do not, we take decisive action.”
The Cease and Desist Orders were issued to:
The Department launched an investigation after receiving a complaint from a consumer alleging that these unlicensed home warranty companies were marketing and selling their plans in California.
During the investigation, Department investigators, using aliases, visited each of the companies’ websites and obtained multiple coverage quotes for California addresses. After initially receiving the quotes by emails, the companies then sent multiple follow-up emails to the investigators in attempts to sell the warranty contracts.
Consumers are advised tocheck the license status of a company before purchasing a policy and contact the Department at 800-927-4357 if they suspect they may be a victim of fraud.
Wisdom
“Mind is a flexible mirror, adjust it, to see a better world.” – Amit Ray
“Courage is very important. Like a muscle, it is strengthened by use.” – Ruth Gordon
"A lie doesn't become truth, wrong doesn't become right and evil doesn't become good just because it's accepted by a majority. " —Booker T. Washington
“You can't make up anything anymore. The world itself is a satire. All you're doing is recording it.” — Art Buchwald
"I didn't realize I was a slave until I found out I couldn't do the things I wanted." Frederick Douglass
“There is no vice so mean, so pitiful, so contemptible; and he who permits himself to tell a lie once, finds it much easier to do it a second and a third time, till at length it becomes habitual.” —Thomas Jefferson
“And above all, remember that the meaning of life is to build a life as if it were a work of art.” – Rabbi Abraham Joshua Heschel
"The real rulers in Washington are invisible and exercise power from behind the scenes." — Justice Felix Frankfurter
“One of the sad signs of our times is that we have demonized those who produce, subsidized those who refuse to produce, and canonized those who complain.” – Thomas Sowell
“Inconsistencies of opinion, arising from changes of circumstances, are often justifiable.” – Daniel Webster
"The condition upon which God hath given liberty to man is eternal vigilance; which condition if he breaks, servitude is at once the consequence of his crime and the punishment of his guilt." —John Philpot Curran
"In the United States there is no phenomenon more threatening to popular government than the unwillingness of newspapers to give the facts to their readers." —Nelson Antrim Crawford
Prosecutor Improperly Relied on Insurer’s Fraud Investigator’s Inadequate Investigation to Indict Physician and Assistant
New Jersey State insurance law requires insurers to maintain a Special Investigative Unit (SIU) to investigate and report insurance fraud to the state. After the report is made the state must conduct its own investigation to determine if a prosecutable fraud occurred.
In State Of New Jersey v. Yvonne Jeannotte-Rodriguez, Marta I. Gal Van, Lisa Ferraro, Nos. A-4361-19, A-4371-19, A-4374-19, Superior Court of New Jersey, Appellate Division (August 25, 2021) The New Jersey Appellate Division was faced with three appeals, after the State contended the trial court wrongly dismissed (without prejudice) a six-count indictment against Lisa Ferraro, M.D., Yvonne Jeannotte-Rodriguez, and Marta Galvan. During the relevant time period, Rodriguez served as a medical assistant in Dr. Ferraro’s medical office, and Galvan was the office manager and worked on billing.
THE INDICTMENT
The State alleged Rodriguez practiced medicine without a license; Dr. Ferraro and Rodriguez fraudulently billed for Rodriguez’s services; and Galvan joined Rodriguez and Dr. Ferraro in conspiring to commit this fraud. The State asserts it presented sufficient evidence to survive dismissal and urges us to reinstate
The indictment is the second attempt to indict the doctor and her assistant. The trial court dismissed the indictment without prejudice, holding it was “palpably deficient in its failure to produce any testimony before the grand jury to support the dates set forth in the indictment.”
FACTS
Dr. Ferraro knew Rodriguez was not a licensed medical doctor in the United States. Still, when speaking with patients, Dr. Ferraro would refer to Rodriguez as “Dr. Rodriguez or Dr. Yvonne.” Although Dr. Ferraro said “most of the time” she would come into the room to go over Rodriguez’s impressions of the patient with the patient present, Dr. Ferraro acknowledged there were times when she did not do that, and instead submitted billing orders based solely on Rodriguez’s exam and impressions.
Rodriguez told the grand jury that her effort to secure a license was stymied by her failure to obtain a residency. Instead, she worked as a medical assistant, first at St. Joseph’s Hospital, and then for Ferraro.
Menendez, an insurer’s SIU investigator described how his “audit” of a random sample of 100 patients’ files led him to conclude that Dr. Ferraro’s office received over $150,000 in payments for services that Rodriguez performed, but which the office billed in Ferraro’s name. One patient told Menendez that Rodriguez treated her when Dr. Ferraro was not physically present in the office. By examining patient notes, Menendez claimed to be able to distinguish between Rodriguez’s and Ferraro’s handwriting.
In dismissing the indictment, the trial judge identified three flaws in the grand jury process.
The prosecutor improperly referred to evidence that was not presented to the grand jury by referring to “thousands of claims” of health care claims fraud.
The evidence the State did present was insufficient. The court noted that Menendez’s analysis was too speculative, because it consisted of “inferences drawn from unfounded inferences leading to a further inference.” There was no proof Rodriguez or Galvan obtained a financial benefit. And there was inadequate evidence regarding the scope of practice of a medical assistant.
The indictment lacked sufficient specificity regarding dates of treatment and the names of patients to provide defendants notice and a fair opportunity to defend.
ANALYSIS
The grand jury fulfills a dual role under the Constitution: to decide if there is probable cause that a crime was committed, and to protect the innocent against unfounded charges. Though the grand jury is an arm of the court, an appellate court will reluctantly and sparingly review the grand jury’s actions to protect its independence.
A court may also act if the indictment does not clearly and in sufficient detail apprise a defendant of that against which he must defend.
The most significant defect in the grand jury process was the prosecutor’s failure to adequately and accurately instruct the jury about what a medical assistant, as an unlicensed medical professional, may do, and what activities encroach upon the licensed practice of medicine.
A physician may not delegate tasks that require the exercise of medical judgment and assessment (although that may be easier to say than to implement) or that encroach on tasks specifically assigned to other licensed professionals. What specific tasks a physician may delegate should best be defined by the Legislature and the expert regulators of the profession.
The “fair warning” requirement is manifest. There are some things that are black or white. For example, the court logically assumed it “reasonably clear” that medical assistants may not prescribe medicine or diagnose illness (as opposed to other health care professionals who are licensed and specifically authorized to do so). However, the prosecutor did not instruct the grand jury to limit itself to such clear encroachments into the practice of medicine. Instead, the prosecutor relied upon the testimony of a witness, Horizon Blue Cross/Blue Shield’s fraud investigator.
The failure to clearly instruct the grand jury as to the appropriate scope of a medical assistant’s practice tainted the counts charging theft by deception, health care claims fraud, and conspiracy to commit health care claims fraud. The crux of the deception and the fraud was that Dr. Ferraro sought reimbursement for procedures and activities that Rodriguez performed, by falsely conveying Dr. Ferraro performed them instead. Menendez stated that only licensed health care professionals had identification numbers to bill insurers for services.
Menendez’s opinion lacked sufficient reliability to support the indictment. An indictment’s “primary purpose” is to enable a defendant to prepare a defense by adequately describing the offense charged. Under the circumstances, the State’s allegation that the crimes occurred “on or about January 2012 until on or about May 2017” failed to apprise defendants of the crimes alleged or to enable them to mount a defense.
The prosecutor failed to adequately and accurately instruct the grand jury about what a medical assistant may do without encroaching upon the licensed practice of medicine. And, because the law does not clearly draw a line around a medical assistant’s allowable activities, prosecuting someone for crossing the line may violate the right to fair warning.
The prosecutor also improperly referred to additional evidence that he did not present to the grand jury, and presented a questionable analysis of the amount of money involved in the charged offenses. And the indictment lacked sufficient detail to give defendants a fair opportunity to mount a defense.
ZIFL OPINION
SIU investigators are insurance people not police officers nor are the investigators working for prosecutors. They are required by statute to advise the state that fraud is suspected. The state is obligated, before seeking an indictment, to gather evidence that supports a criminal charge. The state of New Jersey relied upon Mr. Menendez, an insurance investigator, whose inferences indicated fraud but failed to provide the grand jury with actual evidence. Although it is often true that a grand jury will indict a ham sandwich no court will allow trial to go forward against the sandwich and that is why this indictment failed.
ClaimSchool, Inc. – Insurance Education
Insurance Education From Barry Zalma
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Mr. Zalma’s presentations are practical, thought-provoking, entertaining and will fit easily into any budget.
Enthusiastically committed to professionalism in insurance and insurance claims Mr. Zalma positively influences other insurance professionals through the spoken and written word.
Mr. Zalma specializes in clarifying the importance of insurance in a modern society and in making insurance understandable. He also provides everything needed by the insurance claims professional to complete the thorough investigation of a property, casualty or liability claim efficiently, equitably, empathetically and in good faith.
How Will You or Your Group or Organization Benefit from Working with Barry Zalma?
You can expect live or video presentations supplemented with texts that are:
Clear and understandable presentations that involve the both youngest and oldest member of your organization.
Presentations that entice the most experienced person in your organization who thinks he or she has nothing to learn.
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Methods to make claims operations more cost effective.
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Live Training Available
Barry Zalma Presents What Your Insurance Organization Needs.
He positively influences other insurance professionals through the spoken and written word. He specializes in clarifying the importance of insurance in a modern society and in making insurance understandable.
The Excellence in Claims Handling Program Will Cover:
How to Read and Understand an Insurance Policy;
The loss notice.
The first contact with the insured presenting a claim.
The first contact with a third party claimant presenting a claim against an insured.
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The recorded statement.
Locating and taking recorded statement of independent witnesses.
Locating and obtaining information from governmental entities.
Preparing an agreed scope of loss with an insured or the insured’s public insurance adjuster.
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Preparing a statement of loss.
Negotiating a first party claim with an insured.
Negotiating a third party claim with a claimant or lawyer.
Preparing a sworn proof of loss with an insured after agreement.
Requiring an insured to submit a sworn proof of loss if agreement cannot be reached.
Preparing a release of all claims after reaching settlement with a claimant or claimant’s counsel
Use of an Insurance Coverage and Claims Handling Expert in Insurance Litigation.
Insurance Fraud & Weapons to Fight Fraud;
The Examination Under Oath;
Presentation and Adjustment of Claims in a Catastrophe;
Appraisal, A Specialized and Narrow Type of Insurance Arbitration;
Rescission of Insurance Policies;
Catastrophes and Fraud;
Torts for the Claims Person — A Primer;
Avoiding the Tort of Bad Faith;
Arson and Arson for Profit;
Dealing with the Public Insurance Adjuster; or
Barry Zalma will customize a talk and speak on any insurance topic you require.
Good News From the Coalition Against Insurance Fraud
Clifton Eutsey tried to make money off of hate. The Buffalo, N.Y. teen spray-painted racist, anti-gay and anti-Semitic graffiti onto his 2004 BMW SUV. He tried to convince his auto insurer that the Beemer was vandalized.Among other things, he spray-painted “Trump 4 President” plus slurs next to the sprayed phrase “Blacks Matter.” The graffiti also included swastikas and a homophobic slur. Eutsey smashed his windshield and poured sugar into the gas tank as well. A sympathetic body shop even offered to repair the Beemer for free. Eutsey didn’t bother appearing for his court date, so his bail was revoked. Buffalo police stopped Eutsey about a week later. He was driving without a license and had two loaded, illegal guns in his car. He’ll spend up to 15 years in jail when sentenced Oct. 5
A Navy SEAL saves his buddies, earns the Silver Star and incurs life-changing combat wounds. Richard Meleski made up the whole story to steal $300K of federal disability claims for fake wounds and PTSD. The Philadelphia-area man never spent a day in the military. Yet Meleski said he served in Beirut as a SEAL more than 30 years ago. His insurance claim read: “18 hr hostile takeover. Became POW during this tour. Beaten, shot. head injury, tortured. Hospitalized in Germany for injuries sustained. Crushed hand. Shrapnel.” Meleski said he won the Silver Star for rescuing 3 combat teammates. He also suffered a traumatic brain injury when he escaped captivity in Beirut by leaping from a window with the body of his executed partner on his back. He injured his left knee in that incident, he lied. Meleski gained priority medical treatment. That earned him free healthcare with no copays or premiums — while real wounded vets waited in line for care. Meleski lived in New Jersey during his claimed Beirut heroics. He pled guilty to healthcare fraud, stolen valor and other federal offenses. Meleski received 40 months in federal prison this week. The sentence that should humble him the most, however, was election to the Insurance Fraud Hall of Shame last year.
Timothy Mark Harron and his wife Latisha falsely siphoned at least $17M from Medicaid — and most patients already were dead. The couple lived a jet-set lifestyle, spending stolen taxpayer money intended for the urgent healthcare needs of low-income residents in North Carolina. The Raleigh-area duo ran two home-healthcare firms. The Harrons stole their fake patients’ names from obits. They cross-checked the names with a Medicaid database, then back-billed for home-health services purportedly given while the patients were alive. The scam was easy money. Timothy’s Facebook page describes him as an “Entrepreneur, author, husband, traveler, jet setter, wine connoisseur and lover of fine food.” The couple galloped off to Australia, the South Pacific, Malibu, Napa, Italy and other vacation locales — often traveling in their private $900K jet. Tim routinely posted selfie videos at their resorts and penthouses. They also bought Tiffany jewelry and Brioni clothing; business properties; thousands in gym equipment — plus a Las Vegas penthouse and 2017 Aston Martin DB 11 sports car. Timothy received 144 months in federal prison this week, and must repay $4.3M to Medicaid. Latisha earlier received more than 14 years and must repay $13.4M.
A doc handed her office manager blank, pre-signed prescription forms to dole out fentanyl and other dangerous meds to patients whenever they wanted. Dr. Janet S. Arnold never met with patients or reviewed their records at her office in Richland, Wash. Her office manager Danielle Corine Mata filled in the patient’s name, drug, dose and quantity. Mata also was drug-addicted and scored drugs. The pain meds included fentanyl, oxycodone, methadone, hydromorphone, a meth and amphetamine mixture, plus other drugs. DEA investigators found about 487 scripts with Arnold’s signature issued over a 14-month period. They included 27K oxy pills, 6.6K methadone pills, 7.1K Carisoprodol pills and nearly 2K fentanyl patches. Refills on some addictive narcotics are prohibited. Arnold’s office evaded that by issuing multiple scripts authorizing patients to receive a maximum 90-day supply. Arnold pled guilty and will be federally sentenced Dec. 7. Mata and others earlier pleaded guilty and await sentencing this fall.
Former NFL running back Clinton Portis was tackled for a big loss. Portis pleaded federally guilty to bilking the NFL’s health plan for retired players. The two-time Pro Bowler played for the Denver Broncos and Washington Football Team, retiring in 2012. Portis then sought more than $99K of reimbursements for med equipment he didn’t need — $44.7K for an oxygen chamber and $54.3K for a cryosauna. He forged invoices, prescriptions and letters of medical necessity. The NFL’s health plan gives retired players and their families tax-free reimbursement for healthcare costs. Portis is one of at least 10 former NFL players charged. He and his suspected cohorts made nearly $4M of false med claims. Some former players even claimed therapy devices used on horses. Ring leaders recruited the former players, and got thousands of dollars in kickbacks from the reimbursement checks. The scam jeopardized the plan’s tax-exempt status — threatening the ability of honest former players and their families to receive tax-free repayments for legitimate medical expenses. The plan’s administrator, Cigna, spotted the irregular claims and alerted the feds. Portis could spend up to 10 years in federal prison when sentenced. Former NFLers Tamarick Vanover and Robert McCune also pled guilty this week. Former Baltimore Ravens linebacker Robert McCune allegedly masterminded the national scheme.
In a Coalition First the Journal of Insurance Fraud in America produced Competing Articles on Bad Faith and Fraud
The Coalition reported that its deeply experienced authors Barry Zalma, who is an insurance claims handling consultant and expert witness, and Florida Justice Association’s general counsel, William Cotterall, present two compelling arguments for and against bad faith claims. Cotterall believes that bad faith claims are an important consumer protection. Zalma argues that they are a vehicle for fraudulent litigation. This is the true essence of the Coalition! “We ask you to please take the time to read both articles and carefully consider their content. Do not simply pick the “side” you may agree with, but instead take the time … to delve into this important issue and consider all of the ramifications of the connections between fraud and bad faith in the world of insurance. If you do so, you will learn more about our great profession, become a better advocate by understanding all sides of this issue and help fulfill our Coalition’s mission.”
A patient overdosed and died after a chiro stole a doc’s prescription pad to hand out painkillers to addicted people for profit. Chiro Mark Steven Gardner heisted the pad from the office of a doc with whom he shared his office building in Portland, Ore. Gardner used the doc’s name to forge false oxycodone prescriptions. He ordered staff to fill the scripts when he knew the doc’s office — to which he had access — was closed. Gardner then entered the office, answered the doc’s office phone and posed as the doc to verify the scripts when pharmacies called. The persons filling the prescriptions typically gave Gardner half of the pills they received. At one point, Gardner called 911 to report he found a female friend unresponsive. Paramedics arrived and found her dead of an oxy overdose. Gardner forged a prescription of 90 30mg pills for her the day before she died. He faked 48 scripts for 25 people overall — including several he wrote after the woman died. Gardner falsely dispensed 2,352 oxy pills overall. He received 50 months in federal prison.
Brandi Browning contacted a Kansas City financial company, saying she wanted to sell a pending life insurance claim. A friend died in a car accident and as a passenger Browning was entitled to receive $250K under her friend’s life policy, she lied. The friend did have a policy with the company, but Browning was not the named beneficiary, and the friend did not die in a crash. Browning handed false documents and other bogus info to the financial company. She sold her right to the $250K claim for $217.5K. The firm wired the money to a bank account that belonged to Browning’s mother-in-law, who was unaware of her scam. Browning and her husband wrote same-day checks to buy two vehicles and a $128K manufactured home in Browning’s name. They spent all of the $217.5K within weeks. Browning pleaded guilty. She faces up to 20 years in prison when sentenced, and must repay the money plus a $250K fine. The Georgia Bureau of Investigation joined the feds in the investigation.
Prison exacted its own justice when a former prison guard was beaten to death after being jailed in a twisted plot to have his wife murdered for life insurance. Michael Rudkin was a guard at a federal prison in Danbury, Conn. He started having sex with a female inmate, then asked her for help in killing his wife. The inmate convinced Rudkin she knew someone on the outside who’d make the hit. Rudkin provided the inmate a floor plan of his house, and the hours his wife would be at work. He tried to time the murder so he’d have time to reinstate a life policy on his wife. Rudkin promised to pay $5K into the inmate’s prison commissary account. He went to prison in Florida for the murder plot and illegal inmate relationship. There, Rudkin recruited two inmates to kill his by-then ex-wife, her boyfriend, the inmate he recruited for the first murder plot, and the federal agent who investigated that case. Rudkin received 90 years in a high-security prison in Terre Haute, Ind., where he was killed.
Insurance Fraud Results in Murder
Insurance Fraud Is a Violent Crime
Willie Hall, appealed judgments of the Lucas County Court of Common Pleas which, following a jury trial convicting him of aggravated murder, aggravated burglary, and burglary sentenced him to life imprisonment. In State of Ohio v. Willie Lewis Hall, 2021-Ohio-2968, Nos. L-20-1089, L-20-1090, Court of Appeals of Ohio, Sixth District, Lucas (August 27, 2021) the Ohio Court of Appeal was asked to reverse Hall’s conviction.
The January 11, 2019 Burglary
On January 12, 2019, the victim, Ben Ward, called 911 to report that his home had been burgled. Police arrived at approximately noon and observed a cut screen in the main bedroom. Ward reported that the intruder stole a television, Xbox, Play Station 4, multiple games for each, a Rolex watch, various other jewelry items, approximately 15 pair of Nike Air Jordan athletic shoes, and $500 cash.
It is undisputed that Ward lied to police. The testimony showed that the break-in occurred on January 11, 2019, and the intruder stole $3,000 cash, a few jars of marijuana, and possibly one pair of Nike Air Jordan athletic shoes. Ward lied to police to conceal the fact that he sold marijuana and to potentially allow him to file a claim on this renter’s insurance.
Murder and Aggravated Burglary of February 3, 2019
Following the presentation of the state’s case, appellant moved for acquittal. The defense then rested. Following deliberations, the jury found appellant guilty of all the charges. On April 13, 2020, appellant was sentenced to life imprisonment without the possibility of parole; this appeal followed with appellant sought reversal based on multiple grounds.
Joinder of the indictments was permissible under Crim.R. 8(A). The two incidents were closely related in time, involved the same individuals, and were similarly executed. Appellant broke into Ward’s house on Broadstone and stole money and marijuana. He left a glove at the scene of the crime and the match was found at his residence. Following the burglary, he was photographed with a large sum of cash, he paid cash for multiple items, though unemployed, and jars of marijuana like the ones stolen were found in his mother’s bedroom. Appellant again broke into Ward’s home later.
Admission and Exclusion of Evidence at Trial
However, as correctly noted by the state, at trial appellant’s counsel stipulated to the admission of the bodycam video. Counsel further exploited the fact that Ward expressed a strong belief that his neighbor, Mike Lowe, had committed the burglary. Accordingly, appellant cannot now claim error that he invited by stipulating to the admission of the evidence.
Where testimony was admitted for the purpose of explaining how the image was produced it is not hearsay.
Weight and Sufficiency of the Evidence
Appellant’s claims on appeal center around his theory that the victim fabricated the January 11 burglary in order to conceal his illegal enterprise and to perpetrate insurance fraud and that the prosecution used this false crime to bolster the evidence relating to the murder charge.
An appellate court, reviewing the entire record, weighs the evidence and all reasonable inferences, considers the credibility of witnesses and determines whether in resolving conflicts in the evidence, the jury clearly lost its way and created such a manifest miscarriage of justice that the conviction must be reversed and a new trial ordered. As to appellant, the charge of aggravated murder required proof that appellant purposely caused the death of another while committing or attempting to commit, or fleeing after committing, aggravated burglary.
Reviewing the evidence presented to the jury the state provided sufficient evidence to support the convictions. A rational trier of fact could conclude that while Ward lied about various details of the burglary, he was honest about the fact that there was a burglary and finding the glove in the back bedroom. Appellant’s DNA found on the glove, as a major contributor, and the matching glove found at his home. Evidence was presented that as to each incident the intruder entered by force with the intent to commit a criminal act.
The jury’s verdicts relative to the February 3, 2019 aggravated burglary and aggravated murder were supported by the weight of the evidence. Appellant’s convictions were supported by sufficient evidence and were not against the manifest weight of the evidence. Judgment affirmed.
ZIFL OPINION
The murder victim accused the burglar who later entered the victim’s house a second time after the victim tried to profit from the burglary, was murdered by the burglar on his second effort. Insurance fraud had nothing to do with the crime of murder but did give the murderer an excuse to claim the crime had nothing to do with the burglary. It was not even a good try. Insurance fraud is a dangerous crime and resulted in the death of the fraudster who made the mistake of accusing the person who perpetrated the crime and who later killed him and will now spend the rest of his life in prison.
Health Insurance Fraud Convictions
Washington State Medical Doctor Pleads Guilty to Conspiracy to Distribute Controlled Substances
Dr. Janet Sue Arnold, age 63, of Benton City, Washington pleaded guilty to conspiracy to distribute and possess with intent to distribute opioid pain medications (specifically, fentanyl, oxycodone, methadone, hydromorphone, methylphenidate, and amphetamine mixture) and other controlled substances (carisoprodol and alprazolam), without a legitimate medical purpose and outside the usual course of professional practice. Dr. Arnold faces a maximum term of imprisonment of twenty years. United States District Judge Edward F. Shea accepted Dr. Arnold’s guilty plea and scheduled a sentencing hearing for December 7, 2021, at 1:15 p.m. in Richland, Washington. Dr. Arnold is the final defendant to plead guilty in the case. Four other defendants, Danielle Corine Mata, age 44, of Richland, Washington, David Barnes Nay, age 43, of Kennewick, Washington, Lisa Marie Cooper, age 55, of Prosser, Washington, and Jennifer Cheri Prichard, age 46, of Prosser, Washington, previously pleaded guilty to conspiracy to distribute and possess with intent to distribute opioid pain medications and other controlled substances, and are scheduled to be sentenced on October 19, 2021, November 2, 2021, and November 9, 2021, in Richland, Washington.
According to court documents and information disclosed during court proceedings, Dr. Arnold owned and operated Desert Wind Family Practice, at 431 Wellsian Way in Richland, Washington. Beginning in approximately March 2016, and continuing until May 3, 2017, Dr. Arnold pre-signed hundreds of blank prescription forms and provided them to Mata, Prichard, and Cooper, who were drug addicts. These individuals then provided the illegal prescriptions to individuals seeking opioids and other controlled substances or used the prescriptions to get their drugs of choice. Dr. Arnold allowed Mata, who also acted as Desert Wind Family Practice’s office manager, to fill in all the required prescription information (patient name, drug type, dosage, and quantity) on the pre-signed blank prescriptions. Dr. Arnold’s practice of pre-signing blank prescription forms enabled the conspirators, including Nay, a drug dealer and addict, to distribute significant quantities of opioid medications and other controlled substances.
United States Obtains $140 Million In False Claims Act Judgments Against South Carolina Pain Management Clinics, Drug Testing Laboratories and A Substance Abuse Counseling Center
Oaktree Medical Centre P.C. (Oaktree), FirstChoice Healthcare P.C. (FirstChoice), Labsource LLC (Labsource), Pain Management Associates of the Carolinas LLC (PMA of the Carolinas) and Pain Management Associates of North Carolina P.C. (PMA of North Carolina were found by the U.S. District Court for the District of South Carolina to be subject to the entry of default judgments for the United States totaling $136,025,077 against them. This is the second time the court has entered a default judgment in this matter. On July 20, 2020, the court entered a default judgment in the amount of $4,269,084.78 against ProLab LLC (ProLab) and ProCare Counseling Center LLC (ProCare). The court entered these judgments after these defendants failed to defend against the United States’ allegations.
In its complaint, filed on May 31, 2019, the United States alleged that Oaktree, FirstChoice, Labsource, PMA of the Carolinas and PMA of North Carolina — all of which were owned or operated by chiropractor Daniel McCollum — provided illegal financial incentives to providers to induce their referrals of urine drug tests in violation of the Stark Law and the Anti-Kickback Statute. The United States also alleged that ProCare, a substance abuse counseling clinic, and ProLab, a urine drug testing laboratory partially owned by McCollum, billed federal health care programs for unnecessary urine drug tests. McCollum answered the United States’ complaint and remains a party to the ongoing litigation.
Congress passed the Stark Law and the Anti-Kickback Statute to prevent financial incentives from improperly influencing medical decision-making, which can lead to excessive and unnecessary tests and services. Among other things, the Stark Law prohibits billing Medicare for laboratory testing services referred by a physician who has a financial relationship with the laboratory. The Anti‑Kickback Statute prohibits offering or paying anything of value to induce the referral of items or services covered by federal health care programs, including laboratory testing services.
The judgment includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Donna Rauch, Muriel Calhoun, Brandy Knight, Karen Mathewson and Tracy Hawkins, former employees of pain management clinics owned or operated by McCollum. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery.
Whether the government can collect on the judgments is questionable. If the defendants are charged criminally, they might pay under an order of restitution rather than spend time in jail.
Ex-President of Long Beach Substance Abuse Treatment Provider Sentenced To 7 Years in Prison
Richard Mark Ciampa, 67, of Commerce, was sentenced by United States District Judge Philip S. Gutierrez, who also ordered him to pay $17,640,325 in restitution. Ciampa pleaded guilty on January 6 to one count of health care fraud. Ciampa, the former president and chief executive officer of a Long Beach substance abuse treatment provider was sentenced September 2, 2021 to 84 months in federal prison for participating in a scheme in which more than $18.5 million in fraudulent claims were submitted to California’s Drug Medi-Cal program for alcohol and drug treatment services for high school and middle school students.
Ciampa founded the non-profit Atlantic Recovery Services (ARS), later called Atlantic Health Services, in 1996 and served as its president and CEO until its closure in April 2013 following a suspension in payments. ARS provided substance use disorder treatment services to students at local high schools and middle schools through Medi-Cal and its Drug Medi-Cal program.
From March 2009 to April 2013, Ciampa participated in a scheme to defraud Medi-Cal in which ARS billed the Drug Medi-Cal program for services to students who did not medically need alcohol or drug treatment. ARS also billed Drug Medi-Cal for group and individual counseling sessions that were not provided or did not meet the requirements for reimbursement as to size, length or setting. ARS employees falsified documents to support the false claims.
In March 2009, Drug Medi-Cal ordered ARS to repay an overpayment assessed to the organization, which caused a significant amount of financial pressure on Ciampa. Ciampa, in turn, passed along this financial pressure to his employees and threatened the employees that they would lose their jobs with ARS or have their hours reduced to part-time if they did not generate significant billings.
Ciampa was aware or willfully blind to the fact that, in response to his threats, ARS employees were generating false and fraudulent claims for submission to Drug Medi-Cal. He also encouraged ARS employees to engage in fraud, telling them they should “find a way” to enroll more students in ARS’ program despite Drug Medi-Cal’s medical necessity requirement.
The scheme was executed in several ways, including ARS counselors and managers maintaining student caseloads by enrolling students in the ARS substance abuse counseling program even if they had used drugs or alcohol only occasionally or even just once.
For example, in December 2011, ARS fraudulently submitted a claim for Medi-Cal reimbursement for an individual counseling session for a student on November 23, 2011 – a school holiday and the day before Thanksgiving – when the student was absent and the counselor listed on the claim did not provide any counseling.
In total, $18,530,927 in fraudulent claims were submitted because of the scheme, resulting in an actual loss to Medi-Cal of $17,640,325.
Prosecutors have obtained a total of 19 guilty pleas in this case and related cases, including former ARS Program Manager Lori Renee Miller, 60, of Lakewood, multiple former ARS managers and counselors, and Dr. Leland Whitson, 81, of Redondo Beach, the former Medical/Clinical Director of ARS who previously pleaded guilty to making a false statement affecting a health care program.
Gregory Hearns, 65, of Long Beach, the billing supervisor for ARS who compiled the monthly billing and arranged for its submission to Medi-Cal, LaLonnie Egans, 63, of Long Beach, a former manager, and Tina Lynn St. Julian, 57, of Inglewood, a former counselor, are expected to go on trial on January 6. They are charged with multiple counts of health care fraud.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Eleven More Individuals Plead Guilty to Oxycodone Distribution Offenses
Over the past several weeks before the September 2, 2021, announcement eleven individuals have appeared in federal court and pleaded guilty to charges of conspiring to unlawfully possess oxycodone with intent to distribute and for illegally distributing the prescription drug. Information about the defendants and the dates on which they pleaded guilty are as follows:
July 16, 2021- Joseph Anthony Coleman, 37, of Montgomery, Alabama.
August 3, 2021- Kambria Symone Robinson, 29, of Atlanta, Georgia.
August 4, 2021- Rubin Sanders, 30, of Atlanta, Georgia.
August 5, 2021- Towanna Lorrell Chapman, 36, of Montgomery, Alabama.
August 5, 2021- Jamal Anthony Thomas, 37, of Montgomery, Alabama.
August 24, 2021- Maurice Daughtry, 38, of Marietta, Georgia.
August 26, 2021- Melodie Donne Armer Cheatham, 38, of Savannah, Georgia.
August 30, 2021- Carlos D’Angelo Jones, 34, of Memphis, Tennessee.
August 30, 2021- Garren Charles Rogers, 35, of Houston, Texas.
September 1, 2021- Geniece Chadell Maxon, 33, of Lynwood, Illinois.
September 1, 2021- Robert Lee Thompson, 32, of Madison, Alabama.
According to court documents, these defendants agreed among themselves and with others to obtain illegitimate and unlawful prescriptions for oxycodone, a Schedule II controlled substance, signed by a Montgomery, Alabama physician, Dr. D’Livro Lemat Beauchamp. In many cases, this was facilitated through a third-party without actually going to the physician’s office. The defendants would then fill those prescriptions at pharmacies located in and around Montgomery, give the oxycodone tablets to organizers of the conspiracy, and collect payment. Additionally, the organizers of the conspiracy and Beauchamp agreed that Beauchamp would receive $350.00 per unlawful prescription he signed. Statements made at the various plea hearings, indicated that defendants Daughtry and Rogers were among the organizers of the conspiracy. The scheme operated from 2012 until April of 2020. However, each defendant did not necessarily participate for all or even most of that period.
In total, these eleven defendants unlawfully obtained, possessed with the intent to distribute, and, in most cases, did distribute, approximately 38,780 30-milligram oxycodone tablets, which is equal to 1,163,400 milligrams of the drug.
For his part in the scheme, on October 20, 2020, Dr. Beauchamp pleaded guilty to the same offense. Likewise, on March 30, 2021, another one of the organizers, Deandre Varnel Gross, entered a guilty plea. Finally, two other defendants in the case, Shayla Denise Moorer and Naaman Rashad Jackson, pleaded guilty earlier this summer. As noted in their press release, Moorer and Jackson each unlawfully received payments for filling oxycodone prescriptions and transferring oxycodone tablets.
In the coming months, United States District Judge Myron H. Thompson will conduct a sentencing hearing for each of the defendants discussed above. At his or her sentencing hearing, each defendant will face a maximum sentence of 20 years of imprisonment, a maximum fine of $1,000,000.00, and other monetary penalties.
Cases against other co-conspirators named in the indictment are still pending. Those defendants are presumed innocent until found guilty beyond a reasonable doubt in a court of law.
NFL Players Health Care Fraud
Former NFL players Clinton Portis, Tamarick Vanover and Robert McCune pleaded guilty September 6, 2021 for their roles in a nationwide health care fraud scheme and could face years in prison.
Portis, Vanover and McCune admitted to defrauding an NFL program set up to reimburse medical expenses not covered by insurance for retired players and their families, the Justice Department said.
McCune could be facing life in prison after pleading guilty to conspiracy to commit wire fraud and health care fraud, 13 counts of health care fraud, 11 counts of wire fraud and three counts of aggravated identity theft. He is scheduled to be sentenced Nov. 19.
The DOJ said McCune orchestrated the scheme that resulted in approximately $2.9 million worth of false and fraudulent claims being filed and $2.5 million paid out between June 2017 and April 2018.
Portis and Vanover each pleaded guilty to conspiracy to commit health care fraud and could face up to 10 years in prison. According to court documents, Portis was responsible for just under $100,000 and Vanover just under $160,000 in benefits for expensive medical equipment that were not provided.
They agreed to pay back that money. Portis is scheduled for sentencing on Jan. 6 and Vanover on Jan. 22.
An NFL spokesman did not immediately respond to a request for comment.
The league established the Gene Upshaw NFL Player Health Reimbursement Account Plan after the 2006 collective bargaining agreement to provide tax-free reimbursement of medical expenses up to $350,000 per player.
Portis, Vanover and McCune were originally indicted in the Eastern District of Kentucky in December 2019. Twelve other retired players had previously been charged and pleaded guilty to conspiracy to commit health care fraud, including former Chiefs and Saints receiver Joe Horn and longtime defensive back Carlos Rogers.
McCune, 42, was a 2005 fifth-round draft pick who played eight NFL games at linebacker with Washington and Baltimore.
Vanover, 47, was taken in the third round of the 1995 draft by Kansas City and played 77 games at receiver for the Chiefs and Chargers.
Portis, 40, was a second-round pick of the Broncos in 2002 and won AP Offensive Rookie of the Year honors that year. The running back played 113 games with Denver and Washington from 2002-2010.
Videos on YouTube and Zalma on Insurance from Barry Zalma
Over 320 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 320 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.
Other Insurance Fraud Convictions
South Africa Pastor Convicted of Murder Took Out Life Insurance Policies on Church Members
Insurance Fraud Is a Violent Crime
Melisiswe Monqo, the 32-year-old pastor at God’s Work International Ministries, and his 26-year-old wife, Siphoshile Pamba, took out life insurance policies on behalf of church members and an ex-lover, and had planned their murders with the intent to benefit from the policies according to Western Cape National Prosecuting Authority spokesperson Eric Ntabazalila.
The pastor convicted of murdering Hlompo Koloi in order to benefit from life insurance policies they took out on her behalf – without her knowledge – was also convicted of the attempted murder of Nomfundiso Booi, which involved several attempts.
In Koloi’s case, they took out two life insurance policies – one worth R3 million and the other worth R200,000, as well as a funeral policy worth R50,000.
They also took out life insurance policies on behalf of Booi, Anelisa Xhotyeni and Bulelwa Sihawu. Aside from being unaware that such life policies were taken on their behalf, the quartet were not beneficiaries of such policies. In fact, they never called the insurance companies to make such arrangements – Pamba had made the calls pretending to be from an insurance company.
Several attempts were made on Booi’s life, including shooting her while she was with her mother and children at their Ezibeleni home in Queenstown, Eastern Cape.
Monqo also attacked her with a knife in broad daylight on June 22, 2017 while she was walking from work, but luckily survived. Xhotyeni and Sihawu also learnt during the investigation that they had insurance policies taken out on their behalf.
The Western Cape High Court convicted Monqo, Pamba and the hitman, Phumlani Qhusheka, on charges of kidnapping, robbery with aggravating circumstances and murder of Koloi. They were also convicted with defeating or obstruction of the course of justice.
The trio was also convicted on charges of housebreaking in order to commit murder and the attempted murder of Booi, illegal possession of a firearm and illegal possession of ammunition. They were also convicted of the conspiracy to murder Booi.
Monqo was convicted on a charge of assault with intent to cause grievous bodily harm following an attack on Booi, theft and contravention of a protection order. Monqo and his wife were separately convicted on 13 counts of fraud.
Pensacola Insurance Company Owner Pleads Guilty on Wire Fraud and Money Laundering Offenses
John Thomas, 51, of Pensacola pled guilty August 25, 2021 on wire fraud and money laundering charges related to selling fraudulent insurance policies to his clients in exchange for approximately $4.8 million in insurance premium payments.
Court documents reflect that between September 2013 and February 2021, Thomas operated an insurance business known as Thomas Insurance, LLC. and defrauded customers through a type of insurance fraud known as premium diversion. Thomas executed this scheme by collecting insurance premiums from customers and keeping the funds for personal use instead of producing insurance policies. To conceal his acts, Thomas gave the customers fraudulent documents referencing insurance policies that did not exist.
This case resulted from a joint investigation by the Federal Bureau of Investigations and the Florida Department of Financial Services, Division of Investigative & Forensic Services, Bureau of Insurance Fraud. Work is ongoing to ensure all alleged victims are identified. If you are a client of Thomas Insurance, LLC. and wish to speak to an investigating agent regarding your policy, please contact FBI Jacksonville at 904-248-7000 or email FLinsurancefraud@fbi.gov, and reference “Thomas Insurance.” An FBI representative will respond with additional instructions.
Thomas’ sentencing hearing is scheduled for November 29, 2021, at 2:00 pm, at the United States District Courthouse in Pensacola before the Honorable District Judge T.K. Wetherell. Thomas faces a maximum term of 20 years’ imprisonment for wire fraud, a maximum term of 10 years’ imprisonment for money laundering, and a maximum term of 20 years’ imprisonment for money laundering to conceal proceeds of specified unlawful activity.
Washington Man Who Faked Job Injury Pleads Guilty in Workers’ Comp Scam
Chuck Wayne Riccio, 40, of Yelm, Washington pleaded guilty August 24, 2021 to third-degree theft. Thurston County Superior Court Judge Sharonda Amamilo ordered Riccio to pay court costs and reimburse L&I for his medical care.
Riccio, reportedly tried to pass off a barroom brawl injury as a workplace accident pleaded guilty to stealing state workers’ compensation insurance benefits. The case resulted from a Washington State Department of Labor & Industries investigation.
Riccio filed an L&I claim in October 2018, stating he injured his right hand at his new job at a bathtub and shower manufacturer. But someone who knew Riccio reportedly told L&I he actually hurt his hand in a bar fight in Yelm in August 2018, according to charging papers.
The acquaintance provided investigators with a text Riccio sent when he was at a clinic around the same time he filed the L&I claim. He reportedly texted that his hand hurt from the fight, but that he told the clinic “I kinda said it happened at work.”
Later that day, he texted photos of an L&I form and himself holding up his bandaged hand and the words, “Now L&I will cover it.”
L&I investigators also interviewed several of Riccio’s co-workers, who disputed he was injured at work, and a man who said he was reportedly punched by Riccio in the Yelm bar fight. The Washington State Attorney General’s Office prosecuted the case based on L&I’s investigation. If Riccio is not convicted of any other crimes and follows other conditions of his sentence for one year, he can ask the court to allow him to change his plea and to dismiss the case.
L&I administers the state workers’ comp insurance system.
Mayor Sentenced - Another Pleads Guilty in Illinois Town’s Insurance Procurement Case
Tim Lowry, an insurance agent and the former mayor of Red Bud, Illinois, with falsely testifying in April 2019 to an FBI agent and an officer with the federal Southern Illinois Public Corruption Task Force that he did not pay Kevin Hutchinson, the former mayor of Columbia, Illinois, part of a commission Lowry received for facilitating an insurance contract with the city of Columbia for casualty loss and workers’ comp coverage.
On Aug. 13, Lowry, became the second area mayor to plead guilty to lying to federal agents investigating a case involving commission payments related to the placement of casualty loss and workers’ compensation insurance for an Illinois municipality.
Lowry, who owned the Ackermann Agency in Red Bud, according to the charges, directed payment through a third party to Hutchinson in the amount of $15,854 for placement of the insurance contract with the city of Columbia.
The nearly $16,000 Lowry paid Hutchison represented around 40% of Lowry’s 2016 through 2018 commission on the account from the Illinois Counties Risk Management Trust (ICRMT), an organization that provides insurance and risk management services to public entities in Illinois, according to the published stipulation of facts in the case.
Lowry’s plea came roughly a month and a half after Hutchison, Columbia’s former mayor, was sentenced for lying to federal investigators about receiving payments from Lowry in relation to his city’s purchase of the ICRMT coverage.
Hutchinson, 56, was indicted in February and pleaded guilty in March to the charge of lying to federal investigators. He was sentenced on June 29 to two years’ probation, a $500 fine, and 40 hours of community service, according to the U.S. Attorney’s Office for the Southern District of Illinois.
Hutchinson was also a licensed insurance agent and owned a closely held Illinois corporation called BMC Associates Inc. Neither the city council nor the city manager were aware of the payments by Lowry to Hutchinson and his company.
The Associated Press reported that before he resigned Hutchinson had been serving in his fourth term as mayor of Columbia, a community of about 11,000 located on the Mississippi River about 13 miles south of St. Louis. Under Illinois law, as elected public officials both Lowry and Hutchinson were prohibited from having any direct or indirect personal financial interest in contracts with the municipalities they governed.
Although Lowry could face up to five years in prison, prosecutors are recommending a sentence of one year probation, a $1,000 fine and 40 hours of community service. Lowry has resigned as mayor of Red Bud, a small community also near St. Louis. Lowry’s sentencing is scheduled for Nov. 22.
Free Insurance Videos
Barry Zalma, Esq., CFE has published five days a week videos on insurance claims, insurance claims law, insurance fraud and insurance coverage matters at
© 2021 – Barry Zalma
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 52 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 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.
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
New Books for the Insurance Claims Professionals
Zalma on Insurance Claims Part 105 Third Edition:
by Barry Zalma | Sep 2, 2021
Kindle$9.95 Available instantly
This is the fifth part of a Treatise on Insurance Claims consisting of a series of ten books, of which this is the latest addition to Barry Zalma’s insurance claims Treatise that will form the most thorough, up-to-date, expert-authored insurance claims guide available today.
Written by nationally-renowned insurance coverage expert Barry Zalma, a semi-retired insurance coverage attorney, consultant, expert witness and blogger, Zalma on Insurance Claims provides in-depth explanations, analysis, examples, and detailed discussion of Property insurance claims; Third-party liability claims; Casualty claims; and Insurance Fraud.
Thorough, yet practical, this fifth part of the ten-part treatise form the ideal guide for any professional who works in, or frequently interacts with, the insurance industry. Claims professionals, risk managers, producers, underwriters, attorneys (both plaintiff and defense), and business owners will benefit greatly from the ten volume Treatise. It is also the perfect resource for insurance educators, trainers, and students whose role requires an understanding of insurance law.
As you read through the various volumes of Zalma on Insurance Claims, you will find comprehensive—yet comprehensible—coverage of key topics, dealing with all property, casualty and liability insurance.
Table of Contents
Chapter 1 Investigation of Liability Claims.
Chapter 2 Errors & Omissions & the Claims Made & Reported Policies
Chapter 3 The Notice-Prejudice Rule.
Chapter 4 Types of Torts.
Chapter 5 The Liability Claim File.
Chapter 6 Duty to Defend.
Chapter 7 Tests for Determining Duty to Defend:
Chapter 8 Scope of The Duty to Defend.
Chapter 9 Grounds to Reject Coverage for Defense or Indemnity.
Appendix 1 Form Letter to Expert
Appendix 2 Form Letter to Independent Medical Examiner
Appendix 3 Non Waiver Agreements
Appendix 4 Form Letter: Rescinding Automobile Policy.
Appendix 5 Form Letter: Rescission and Denial Letter
Appendix 6 Form Letter: Advising of Right to Appraisal
Appendix 7 Form Letter: Reservation of Rights Letter to Insured.
Appendix 8 Form Letter: Reservation of Rights Letter B.
Appendix 9 Authorization Forms
Appendix 10 California Actual Cash Value Statute.
The Compact Book of Adjusting Property Insurance Claims – Third Edition
A Manual for the First Party Property Insurance Adjuster Newly Updated and Edited
The insurance adjuster is not mentioned in a policy of insurance. The obligation to investigate and prove a claim falls on the insured. Standard first party property insurance policies, based upon the New York Standard Fire Insurance policy, contain conditions that require the insured to, within sixty days of the loss, submit a sworn proof of loss to prove to the insurer the facts and amount of loss.
The policy allows the insurer to then, and only then, respond to the insured’s proof of loss. The insurer can then either accept or reject the proof submitted by the insured.
Technically, if the wording of the policy was followed literally the insurer could sit back, do nothing, and wait for the proof. If the insured was late in submitting the proof the insurer could reject the claim. If the insured submits a timely proof of loss the insurer could either accept or reject the proof of loss. If the insurer rejected the proof of loss the insured could either send a new one or give up and gain nothing from the claim. Suit on the policy would be difficult because the policy contract limited the right to sue to times when the proof of loss condition had been met.
Insureds and insurers were not happy with that system. It made it too difficult for a lay person to successfully present a claim. The system, as written into the standard fire policy seemed to run counter to the covenant of good faith and fair dealing that had been the basis of the insurance contract for centuries. Most insurers understood that their insureds were mostly incapable of complying with the strict enforcement of the policy conditions. To fulfill the covenant of good faith and fair dealing insurers created the insurance adjuster to fulfill its obligation to deal fairly and in good faith with the insured.
The Third edition adds new material from 2018, 2019, and 2020 is easier to use and more compact than the original.
Available as a Kindle book.Available as a paperback.
The Compact Book on Adjusting Liability Claims – Third Edition
A Manual for the Liability Claims Adjuster Newly Updated and Edited
This Compact Book of Adjusting Liability Claims is designed to provide the new adjuster with a basic grounding in what is needed to become a competent and effective insurance adjuster. It is also available as a refresher for the experienced adjuster.
The liability claims adjuster quickly learns that there is little difficulty with a claimant (the person alleging bodily injury or property damage against a person insured) if the claim is paid as demanded. The insured may be unhappy if the claimant’s claim is paid as presented since most do not believe they did anything wrong or fear an increase in premiums charged for subsequent policies.
The adjuster must be prepared to salve the insured’s emotions, explain why in the law and the policy it was appropriate to pay the claimant and that the settlement is in the best interest of both the insured and the insurer the adjuster represents.
The adjuster knows, and must be prepared to explain to an insured, that if a claim is resisted or denied the claimant will be unhappy, will probably file suit. If not promptly settled the claimant’s lawyers will rake the insured over the coals to prove that the insured is liable for the claimant’s injuries. The litigation will take time, effort, and money to establish the extent of the injuries and who is responsible for the injuries. Failure to settle promptly can cost the insured his or her reputation and will certainly cost the insurer much more than the claim could have been resolved for had it been resolved before the claimant retained a lawyer.
The Third edition adds new material from 2018, 2019, and 2020 is easier to use and more compact than the original.
Available as a Kindle bookAvailable as a paperback.
“It’s Time to Abolish The Tort of Bad Faith"
The concept of unintended consequences is one of the building blocks of economics. Adam Smith’s “invisible hand,” the most famous metaphor in social science, is an example of a positive unintended consequence.
INSURANCE AS A NECESSITY
Neither the courts nor the governmental agencies seem to be aware that in a modern, capitalistic society, insurance is a necessity. No prudent person would take the risk of starting a business, buying a home, or driving a car without insurance.
The risk of losing everything would be too great. By using insurance to spread the risk, taking the risk to start a business, buy a home, or drive a car becomes possible.
Insurance has existed since a group of Sumerian farmers, more than 5,000 years ago, scratched an agreement on a clay tablet that if one of their number lost his crop to storms, the others would pay part of their earnings to the one damaged. Over the eons, insurance has become more sophisticated, but the deal is essentially the same. An insurer, whether an individual or a corporate entity, takes contributions (premiums) from many and holds the money to pay those few who lose their property from some calamity, like fire. The agreement, a written contract to pay indemnity to another in case a certain problem, calamity, or damage that is fortuitous, that is that occurs by accident, is called insurance.
In a modern industrial society, almost everyone is involved in or with the business of insurance. They insure against the risk of becoming ill, losing a car in an accident, losing business due to fire, becoming disabled, losing their life, losing a home due to flood or earthquake, or being sued for accidentally causing injury to another. The insurers, insureds, or people damaged by those insured are dependent on one another. In a country where human interactions are governed solely by the terms of written contracts, insurance would be a simple means of spreading risk and providing indemnity based on the promises made by the contract of insurance. But, in this the real world, insurance contracts are controlled by statutes enacted to ostensibly protect the consumer of insurance, regulations imposing obligations on the conduct of insurers and the decisions of trial and appellate courts interpreting insurance contracts.
A simple insurance contract between two parties might say: “I insure you against the risk of loss of your engagement ring valued at $15,000 by all risks of direct physical loss except wear and tear for a premium paid by you of $15.00.” Anyone who could read would understand that contract. If something happens to damage, destroy or lose the ring the insurer will pay you $15,000.00. However, insurers cannot write such a simple contract because the state requires many terms and conditions that complicate the policy wording and confuse the common person. The states and courts that did so had nothing but good intentions to protect the consumer against the insurer and control the actions of the insurer.
The tort of bad faith was created because courts felt that insurers treated their insureds badly and defeated the purpose for which insurance is acquired. It has served its purpose. Fair Claims Settlement Practices laws and regulations are now available to control insurers who do not act in good faith. Insurance fraud statutes and Regulations provide assistance to insurers who have been deceived by those they insure or who are victims of attempted insurance fraud.
It is time that all contracts, including insurance contracts, are treated like any other contract, and insureds who believe the insurer breached the contract of insurance can sue to recover the benefits promised by the policy.
Available as a paperback here. Available as a Kindle book here.
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.
New and Now Available from the Zalma Insurance Claims Library
The Insurance Examination Under Oath Second Edition
A Tool Available to Insurers to Thoroughly Investigate Claims and Work to Defeat Fraud
The insurance Examination Under Oath (“EUO”) is a formal type of interview authorized by an insurance contract. It is taken under the authority provided by the agreement of the insurer, when he, she or it acquires a policy of insurance, to submit to a condition of the insurance contract that compels the insured to appear and give sworn testimony at the demand of the insurer. Failure to appear and testify is considered a breach of a material condition.
The EUO is conducted before a notary and a certified shorthand reporter who is present to give the oath to the person interviewed. The reporter will record the entire conversation and prepare a transcript to be read, reviewed, corrected and signed by the witness under penalty of perjury or by an oath taken before a notary or judge.
The EUO is a tool only sparingly used by insurers in the United States. A professional insurer will only require an insured to submit to an EUO when a thorough claims investigation raises questions: About the application of the coverage to the facts of the loss, the potentiality that a fraud is being attempted, or to assist the insured in the obligation to prove to the insurer the cause and amount of loss.
Although seldom used the EUO is an important tool needed by insurers when there is a question of coverage, destruction of evidence needed to prove a compensable loss or the amount of loss or evidence indicating the potential that a fraud is being attempted. The EUO and Legal Action provisions in an insurance policy are conditions precedent to an insured’s ability to file suit, and that since the insured failed to substantially comply with the terms of those provisions, the appropriate remedy is dismissal without prejudice. The insured’s failure to comply with these conditions does not bar his ability to bring suit to recover, but merely suspends his ability to bring suit until he has fully complied with those conditions.
Available as a paperback here or Available as a Kindle book here
Zalma on Insurance Blog Posting
The Fortuity Doctrine September 14, 2021
USDC in Oregon Finds Covid Shutdowns Resulted Only in Economic Losses September 14, 2021
Zalma on Insurance September 13, 2021
False Swearing & Insurance Fraud September 13, 2021
Convicted Insurance Fraud Perpetrator Could Not Understand Why He Was in Jail September 13, 2021
ClaimSchool, Inc. Presents Excellence in Claims Handling Programs September 11, 2021
Zalma on Insurance Claims Part 105 Third Edition: September 10, 2021
Comunale v. Traders & General Ins. Co September 10, 2021
Insurance Fraud Indictment Thrown Out Because of Inadequate Presentation to Grand Jury September 10, 2021
Rosina Crisci v. Security Ins. Co. September 9, 2021
Insurance Fraud Results in Murder September 9, 2021
Multiple Types of Insurance Fraud September 8, 2021
Covid Class Action Insurance Claim Fails in Florida September 8, 2021
Tests For Determining Duty To Defend September 7, 2021
Damage by Thief to Real Property Clearly Excluded September 7, 2021
The Adjuster & Good Faith Claims Handling September 3, 2021
Reporting Requirement of a Claims Made Policy is a Condition Precedent September 3, 2021
The Tort of Bad Faith & Investigation of Insurance Fraud September 2, 2021
Coverage Counsel Should Not Act Outside the Obligation to Advise the Insurer Client September 2, 2021
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.
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/
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