Zalma's Insurance Fraud Letter - October 1, 2024

ZIFL - 10/1/2024 -Volume 28, Issue 19
October 1, 1979 - 2024, Another Anniversary
Post 4901

Forty five years ago today I left the world of the employed and became an entrepreneur by opening my own law firm. The law practice was incorporated shortly thereafter as Barry Zalma, Inc. When I opened for business on October 1, 1979, I had no clients and no certainty that I would have any in the future. I had borrowed money from the bank to carry me through the first six months and was concerned about my ability to pay the loan with my third child about to be born.

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Lie on an Application About Primary Residence is Ground for Rescission

Plaintiff Homesite Insurance Company's (Homesite) moved for Summary Judgment seeking a judicial declaration that it is entitled to rescission of Defendant Zhen Jiang's homeowners' insurance policy and enter summary judgment in its favor on Mr. Jiang's bad faith counterclaims. In Homesite Insurance Company v. Zhen Jiang, No. CV-21-00554-TUC-JGZ, United States District Court, D. Arizona (September 16, 2024) the USDC explained an insurer's right to rescission.

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More McClenny Moseley & Associates Issues

This is ZIFL’s thirty sixth installment of the saga of McClenny, Moseley & Associates and its problems with the federal courts in the State of Louisiana and what appears to be an effort to profit from what some Magistrate and District judges indicate may be criminal conduct to profit from insurance claims relating to hurricane damage to the public of the state of Louisiana.

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World Wide Insurance Fraud

In an article by Kenneth Araullo on Sep 16, 2024 in ReinsuranceBusiness Mr. Araullo reports on the fact that fraud remains a top concern for insurers worldwide, according to the findings from the Reinsurance Group of America (RGA) 2024 Global Claims Fraud Survey. He notes: “The report highlights the ongoing challenges insurers face in managing fraud, with 74% of survey respondents indicating that the number of fraud cases is either holding steady or increasing compared to previous years.” He also notes that Reinsurance Group of America (RGA) 2024 Global Claims Fraud Survey. “35% of respondents said claims fraud had increased, while 39% reported no change. In underwriting fraud, 85% of respondents noted either no change or an increase in fraudulent activities, with 17% seeing an uptick.”  You can read the full article here.

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Intentional Arson Even for Mental Health Assistance Requires Jail

Hunter Hipp pleaded guilty to first-degree arson after intentionally setting fires in the kitchen and living room of his apartment. He notified the district court in writing of his intent to move "for a dispositional and/or durational departure from the presumptive sentence," and at sentencing he argued exclusively that he was particularly amenable to probation.

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Insurance Fraud is a Serious Crime
Why Insurance Fraud is Not Taken Seriously by Police & Prosecutors

State insurance departments near the turn of the century recognized that insurance fraud is a serious crime taking multiple billions of dollars from the insurance industry. Local police and prosecutors were not concerned, even after insurance fraud was made a felony, because no one suffered physical injury or death. Insurance fraud just cost a lot of money to insurers who were perceived as extremely wealthy and more victimizers than victim.

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Health Insurance Fraud Convictions
Behavioral Healthcare Company Executive Pleads Guilty to Healthcare Fraud

Miguel Saravia, 42, of Hanson, pleaded guilty to six counts of health care fraud. U.S. District Court Judge Allison D. Burroughs scheduled sentencing for Jan. 2, 2025.

Saravia, the Chief Executive Officer of Dana Group Associates, who is also the former Chief Operating Officer of Prime Behavioral Health, pleaded guilty to a scheme to defraud health care benefit programs by directing false billing for patient visits.
From approximately 2017 to 2022, Saravia directed a group of individuals with no billing or medical training to enter Current Procedural Terminology codes (CPT) for therapy services that were not provided and to upcode CPT codes used for psychotherapy visits. Saravia submitted, or directed the submission of, false claims for treatment that was not provided or for more complex and expensive treatment than was provided.

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The Public Adjuster & Fraud

In Chubb & Son Inc. v. Consoli, 283 A.D. 2d 297, 726 N.Y.S. 2d 398 (N.Y. App. Div. 05/22/2001), a public adjuster was involved in a scheme with one of Chubb’s adjusters to intentionally inflate a claim and then pay Chubb’s adjuster to approve the claim. The insureds’ public adjuster was later convicted on charges of mail and tax fraud and Chubb’s representative was found guilty of defrauding Chubb.

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Convictions of Other Than Health Insurance Fraud
Ghost Broker Sentenced

Mohamed Choudhary, 33, who sold invalid insurance policies and tried to take out car insurance for himself by covering up his driving offences and using a fake no-claims discount certificate was sentenced to two years in prison, suspended for two years at Inner London Crown Court on 13 September 2024. He is subject to a six-month curfew, which runs daily from 9pm to 6am and is monitored by an electronic tag. He must also complete 150 hours of unpaid work and pay £1,630 in costs.

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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   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.  Read the full article and the full issue of ZIFL here