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Preview: LexisNexis® Mealey's™ Insurance Fraud Legal News

LexisNexis® Mealey's™ Insurance Fraud Legal News

Headline Insurance Fraud Legal News from LexisNexis®


6th Circuit Finds Judge's Failure To Make Factual Findings Warrants Resentencing
CINCINNATI - A federal judge in Michigan's failure to make a factual finding as to whether the government properly calculated the amount of loss Medicare, Medicaid and other insurers incurred as part of a health care insurance fraud scheme violated Federal Rule of Criminal Procedure 32, a Sixth Circuit U.S. Court of Appeals panel ruled June 1 in vacating the sentence (United States of America v. Vinod Patel, No. 15-1666, 6th Cir., 2017 U.S. Dist. LEXIS 9851).

Appeals Court: Jury Was Properly Instructed In Insurance Fraud Case
FORT WORTH, Texas - An appeals panel in Texas on June 8 affirmed a man's convictions for insurance fraud and fraudulent use or possession of identifying information, finding that a trial court judge did not err when denying the defendant's requests for jury instructions that would have downplayed the amount of the fraudulent claim for allegedly stolen jewelry (Herman Florez Jr. v. State of Texas, No. 02-16-00195-CR, Texas App., 2nd Dist., 2017 Tex. App. LEXIS 5247).

Appeals Court Says Woman Found Guilty Of Arson, Fraud Needs New Sentence
DETROIT - A Michigan appeals panel on June 1 ordered a new judge to sentence a woman convicted of arson and insurance fraud after finding that a term of probation for five years was not strong enough (People v. Mona Fawaz, No. 329162, Mich. App., 2017 Mich. App. LEXIS 890).

Woman Loses Bid For Habeas Relief Based On Fire Expert's Arson Finding
DETROIT - A Michigan federal judge on May 25 upheld the conviction of a woman for setting fire to her house to collect insurance money after rejecting her challenge to an expert's opinion that the fire was caused by arson (Audrey Pruitt v. Anthony Stewart, No. 2:15-cv-10812, E.D. Mich., 2017 U.S. Dist. LEXIS 80162).

Appeals Court Reverses Arson, Insurance Fraud Verdict Over Prosecutor's Misconduct
ROCHESTER, N.Y. - A New York appellate panel on June 9 reversed a jury's verdict finding a woman guilty of arson, attempted insurance fraud and conspiracy after finding that the prosecutor's questioning of her husband about his criminal history and comments about the defendant's financial condition were prejudicial (People of the State of New York v. Shallamar L. Hayward-Crawford, No. 405 KA 14-01824, N.Y. Sup., App. Div., 4th Dept., 2017 N.Y. App. LEXIS 4506).

Insurer Can Pierce Corporate Veil To Obtain Attorney Fees, Judge Rules
CAPE GIRARDEAU, Mo. - An insurance company can ask the owner of a restaurant that was damaged as a result of a fire that was intentionally set to obtain insurance proceeds to pay $109,049.50 in attorney fees, a federal judge in Missouri ruled June 2 in granting the company's motion to pierce the corporate veil (Depositors Insurance Company v. Hall's Restaurant, Inc., No. 14CV34, E.D. Mo., 2017 U.S. Dist. LEXIS 84747).

Appeals Court Dismisses Nationwide's Challenge Of Ruling Denying Discovery Stay
CHILLICOTHE, Ohio - An Ohio appeals panel on May 31 dismissed an appeal from Nationwide Mutual Fire Insurance Co.'s over the denial of its motion to stay discovery in a suit accusing a couple of intentionally setting fire to their home to collect insurance proceeds, finding that the ruling does not require the insurer to produce privileged documents (Nationwide Mutual Fire Insurance Company v. Mark Jones, et al., No. 15CA3709, Ohio App., 4th Dist., 2017 Ohio App. LEXIS 2300).

4th Circuit Affirms Man's Sentence, Finds Fraudulent Scheme Resulted In Deaths
RICHMOND, Va. - A Fourth Circuit U.S. Court of Appeals panel on June 9 affirmed a man's convictions and 10-year sentence for health care fraud resulting in death, holding that a fraudulent health care scheme that involved untrained X-ray technicians reading radiology results caused the death of two patients (United States of America v. Rafael Chikvashvili, No. 16-4393, 4th Cir., 2017 U.S. App. LEXIS 10292).

Psychiatrist Found Guilty Of 5 Counts Of Health Care Fraud For $158M Scheme
HOUSTON - A psychiatrist in Texas was found guilty by a federal jury on May 23 of five counts of health care fraud and one count of conspiracy to commit health care fraud for his role in a $158 million fraud scheme that involved submitting fraudulent claims for partial hospitalization program (PHP) services (United States of America v. Riyaz Mazkouri, No. 16cr213, S.D. Texas).

Jury Convicts Woman For Psychotherapy Services That Were Not Provided
NEW HAVEN, Conn. - A federal jury in Connecticut on May 26 convicted a woman on 23 counts of health care fraud and one count of conspiracy to commit health care fraud for operating a social services business that billed Medicaid for psychotherapy services that were not provided by a licensed professional or not provided at all (United States of America v. Ronnette Brown, No. 16cr66, D. Conn.).

Appeals Court Says Evidentiary Hearing Needed In Insurance Fraud Suit
LOS ANGELES - An evidentiary hearing should have been held to determine whether a California Highway Patrol (CHP) officer had sufficient information in 2010 to begin an investigation into whether a man committed insurance fraud by further damaging a tow truck, a California appeals panel ruled June 12 (Mark Jeffrey Tornow v. Superior Court of Los Angeles County, et al., No. B271895, Calif. App., 2nd Dist., 7th Div., 2017 Cal. App. Unpub LEXIS 4020).

Judge Denies Doctor's Motion To Dismiss State Farm's Fraud Suit
DETROIT - A federal judge in Michigan on May 31 denied a doctor's motion to dismiss a lawsuit brought by State Farm Mutual Automobile Insurance Co. accusing a number of doctors and medical practices of submitting false bills under Michigan's No-Fault Automobile Insurance Act for services that were medically unnecessary or never provided, finding that a mobile magnetic resonance imaging (MRI) center was not an indispensable party (State Farm Mutual Automobile Insurance Company v. Elite Health Centers, Inc., et al., No. 16-13040, E.D. Mich., 2017 U.S. Dist. LEXIS 82736).

Judge: Contractor's Misrepresentations Warrant Voiding Policy
CENTRAL ISLIP, N.Y. - A federal judge in New York on May 24 entered summary judgment in favor of Scottsdale Insurance Co., finding that misrepresentations made by a carpentry contractor on its policy application were material (Scottsdale Insurance Company v. Pine Construction Corp., No. 15-cv-4764, E.D. N.Y., 2017 U.S. Dist. LEXIS 80475).

Insurer Was Not Entitled To Rescind Policy, California Panel Says In Reversal
SAN FRANCISCO - A California appeals panel on June 12 reversed a lower court's finding that an insurer was entitled to rescind an "Owners, Landlords & Tenants Liability Coverage" insurance policy, finding that the insurer failed to satisfy its burden of showing that the insured made material misrepresentations on the insurance application (Victor Duarte v. Pacific Specialty Insurance Co., No. A143828, Calif. App., 1st Dist., Div. 2).

Judge Adopts Recommendation To Accept Woman's Plea In Staged Accident Scheme
CLARKSBURG, W.Va. - A federal judge in West Virginia on June 6 adopted a magistrate judge's recommendation to accept a woman's plea of guilty to one count of mail fraud for her role in an insurance fraud scheme involving staged automobile accidents, finding that she was competent to enter a plea (United States of America v. Chastity Costilow, No. 17CR17-06, N.D. W. Va., 2017 U.S. Dist. LEXIS 86217).

DOJ: Michigan Doctor Sentenced To 19 Years For Fraud, Distributing Drugs
DETROIT - A federal judge in Michigan on May 18 sentenced a doctor to 19 years in prison after the doctor was found guilty of conspiracy to distribute prescription drugs and conspiracy to commit health care fraud, the U.S. Department of Justice announced (United States of America v. Damon Mason, et al., No. 11cr20551, E.D. Mich.).

4 Sentenced For Roles In Fraudulently Billing Medicare For Services Not Provided
CLEVELAND - Four individuals were sentenced by a federal judge in Ohio on May 19 for their roles in an $8 million Medicare fraud scheme that involved forging documents and billing the insurer for medical services that were not provided (United States of America v. Delores L. Knight, et al., No. 15-cr-222, N.D. Ohio).

School Counselor Pleads Guilty To Fraudulently Billing N.C. Medicaid
ASHEVILLE, N.C. - A school counselor pleaded guilty on June 7 to one felony count of health care fraud for submitting nearly $400,000 in false bills to North Carolina Medicare for psychotherapy services that were not provided (United States of America v. Joseph Frank Korzelius, No. 17cr70, W.D. N.C.).

New Jersey High Court Finds Attorney, Chiropractor Violated Fraud Prevention Act
TRENTON, N.J. - The New Jersey Supreme Court on May 4 unanimously affirmed a trial court's finding that a chiropractor and attorney who promoted a scheme that encouraged the creation of medical practices that were operated by doctors with a limited scope of practice violated the New Jersey Insurance Fraud Prevention Act (IFPA), overruling an appellate court's decision that there was not enough evidence to support such a finding (Allstate Insurance Company, et al. v. Northfield Medical Center, P.C., et al., No. A-27 September Term 2015, 076069, N.J. Sup., 2017 N.J. LEXIS 431).

Mass. Appeals Court Upholds Insurance Fraud Verdict, Reverses Larceny Conviction
BOSTON - An appeals panel in Massachusetts on May 9 found that a trial court judge did not err when admitting an insurance coverage sheet and accident report during the trial of man charged with motor vehicle insurance fraud, but ruled that the judge did not properly instruct the jury about the charge of larceny (Commonwealth v. Bryan Driscoll, No. 2015-P-1689, Mass. App., 2017 Mass. App. LEXIS 55).

State Sufficiently Proved Venue In Insurance Fraud Suit, Appeals Court Finds
LIMA, Ohio - An Ohio Court of Appeals panel on May 15 ruled that man was properly convicted of one count of insurance fraud, finding that the prosecution provided sufficient evidence regarding the location of the incident (State of Ohio v. Timothy Jon McVety, No. 8-16-19, Ohio App., 3rd Dist., Logan Co., 2017 Ohio App. LEXIS 1848).

Judge Refuses To Dismiss Fraud Claims Against Man Accused Of Concealing Coverage
OXFORD, Miss. - A federal judge in Mississippi on May 16 denied a man's motion for partial summary judgment on fraud claims brought by passengers who were injured in an accident while he was driving, ruling that a jury will decide whether he knew he had additional insurance coverage under his parents' umbrella policy (Allstate Insurance Company v. John Robert Scarborough, No. 15-cv-00114-MPM-RP, N.D. Miss., 2017 U.S. Dist. LEXIS 74301).

Judge Affirms Ruling Finding Conflict Between Fraud Defendant And Attorney
BUFFALO, N.Y. - A federal judge in New York on May 12 upheld a magistrate judge's decision finding that an attorney representing a man accused of health care fraud should be removed as his counsel due to a conflict of interest because the government intends to call him as a witness (United States of America v. Eugene Gosy, No. 16-cr-46-FPG, W.D. N.Y., 2017 U.S. Dist. LEXIS 72989).

GEICO's Amended Complaint Puts Clinic On Notice Of Allegedly Fraudulent Scheme
MIAMI - An amended complaint filed by the Government Employees Insurance Co. (GEICO) properly put a health care clinic and its owners of notice of claims that the defendants violated Florida law and submitted fraudulent claims for coverage, a federal judge in Florida ruled May 2 in denying the defendants' motion for a more definite statement (Government Employees Insurance Company, et al. v. Benefica Health Center, Corp., et al., No. 17-20161-CIV-MORENO, S.D. Fla., 2017 U.S. Dist. LEXIS 66542).

DOJ: Woman Sentenced To 21 Months, Ordered To Pay $1.6M For Billing Scheme
NEW HAVEN, Conn. - The U.S. Department of Justice announced April 27 that a woman was sentenced by a federal judge in Connecticut to 21 months in prison and ordered to pay $1.6 million in restitution for her role in a scheme that involved fraudulently billing Medicare for psychotherapy services that were never rendered (United States of America v. Patricia Lafayette, No. 16-cr-140, D. Conn.).

Texas Couple Sentenced For Fraudulently Inflating Mileage Billed To Medicare
TYLER, Texas - A federal judge in Texas on May 8 sentenced a couple who pleaded guilty to conspiracy to commit health care fraud for inflating mileage they incurred when providing laboratory services to nursing homes and ordered them to pay $161,695 (United States of America v. Gerard Dengler, et al., No. 16-cr-48, E.D. Texas).

Doctor Not Guilty On 2 Counts Of Conspiracy To Commit Health Care Fraud
DETROIT - A federal jury in Michigan on May 8 found that a doctor accused of participating in a $17.1 million Medicare fraud scheme was not guilty of two counts of conspiracy to commit health care fraud, but guilty of one count of health care fraud (United States of America v. Gerald Daneshvar, No. 15-cr-20362, E.D. Mich.).

Former Judge Pleads Guilty For Role in $550M Social Security Disability Scheme
LEXINGTON, Ky. - A former administrative law judge pleaded guilty in Kentucky federal court on May 12 to two counts of receiving illegal gratuities in connection with a $550 million scheme that involved acquiring disability benefits for Social Security recipients (United States of America v. David B. Daughtery, No. 17cr66, E.D. Ky.).

5th Circuit Upholds Ruling Finding Couple's Policy Void For Misrepresentation
NEW ORLEANS - A Fifth Circuit U.S. Court of Appeals panel on April 26 affirmed a federal judge in Mississippi's ruling that a homeowners policy issued by State Farm Fire & Casualty Co. was void, ruling that the judge did not err when finding that the couple's misrepresentation over ownership of the property was material (State Farm Fire & Casualty Company v. Cedric Flowers, et al, No. 16-60310, 5th Cir., 2017 U.S. App. LEXIS 7400).

11th Circuit Finds Group Could Have Investigated Life Expectancy Representations
ATLANTA - The 11th Circuit U.S. Court of Appeals on April 6 affirmed a district court's ruling that claims asserted by an entity, who alleged that agents made misrepresentations that fraudulently induced it into purchasing existing life insurance policies, were barred by a four-year statute of limitations under Florida law (The Bedtow Group II, LLC v. Martin B. Ungerleider, No. 16-10213, 11th Cir., 2017 U.S. App. LEXIS 5945).

4th Circuit Reinstates Retaliation Claim In Suit Over Overbilling Clinics
RICHMOND, Va. - A federal judge in Virginia erred in finding that a physical therapist assistant's retaliation claim against his employer should be dismissed, finding that they were not subject to the False Claims Act's (FCA) first-to-file rule, a Fourth Circuit Court of Appeals ruled March 16, but affirmed the dismissal of his qui tam claims under the statute (United States of America, ex rel. Patrick Gerard Carson v. Manor Care, Inc., a./k/a Manor Care, Inc., et al., No. 16-1035, 4th Cir., 2017 U.S. App. LEXIS 4617).

Judge Trims Some Claims Over Billing For Vein Procedures Due To Pleadings
CHICAGO - A federal judge in Illinois dismissed without prejudice claims from a man that his former employer falsely billed Medicare, Medicaid and other private insurers for endovascular laser therapy (EVLT) procedures that were not medically necessary or done with reused laser fibers, finding that the allegations were not made with the required level of specificity to support his False Claims Act (FCA) allegations (United States of America, ex rel. Constantine Zverev, et al. v. USA Vein Clinics of Chicago, LLC, et al., No. 12 CV 8004, N.D. Ill., 2017 U.S. Dist. LEXIS 43807).

Judge Refuses To Dismiss State Farm's Claims Over $3.8M Fraud Scheme
WEST PALM BEACH, Fla. - A federal judge in Florida on March 30 refused to dismiss a lawsuit brought by State Farm Mutual Automobile Insurance Co. against doctors and clinics accused of engaging in a scheme to submit bills under insureds' no-fault benefits for medically unnecessary treatments, ruling that it was premature to find that the insurer committed fraud on the court by omitting certain pages from documents it submitted as exhibits to its complaint (State Farm Mutual Automobile Insurance Company v. Gary Brown, et al., No. 16-80793, S.D. Fla., 2017 U.S. Dist. LEXIS 57019).

Judge Finds State Farm Has Evidence Of Scheme To Submit False Bills
ANN ARBOR, Mich. - A federal judge in Michigan on April 10 denied a motion for summary judgment filed by a doctor and his practice, finding that State Farm Mutual Automobile Insurance Co. has sufficient evidence to show that the defendants engaged in a scheme to submit false bills to obtain no-fault benefits State Farm Mutual Automobile Insurance Company v. Louis Radden, D.O., et al., No. 14-cv-13299, E.D. Mich., 2017 U.S. Dist. LEXIS 54093).

Appeals Court: Grand Jury Proceedings, Evidence Supported Arson Fraud Verdict
CLEVELAND - An Ohio appeals court on March 23 affirmed a man's conviction for three counts of aggravated arson and one count of insurance fraud after overruling the defendant's argument that he was prejudiced by grand jury proceedings that involved the use of a Bureau of Alcohol, Tobacco and Firearms (ATF) agent who later found that the cause of the fire was undetermined and that the evidence presented during trial sufficiently supported the jury's finding (State of Ohio v. Dale Rodano, No. 104176, Ohio App., 8th Dist., 2017 Ohio App. LEXIS 1009).

Judge: Insurers Have No Duty To Defend After Policy Holders Plead Guilty
KNOXVILLE, Tenn. - Two insurance companies were awarded summary judgment by a federal judge in Tennessee on March 15, after the judge found that policy holders' guilty pleas to charges of insurance fraud and conspiracy to commit insurance fraud removed any obligations the companies had to pay for claims stemming from an August 2013 fire (State Automobile Mutual Insurance Company v. Fireman Fire Protection Inc., et al., No. 14-cv-229-TAV-HGB, E.D. Tenn., 2017 U.S. Dist. LEXIS 36704).

California Appeals Panel Affirms Insurer's Restitution Award In Fraud Suit
SAN DIEGO - An insurer is entitled to $37,000 in restitution from a man who pleaded guilty to misrepresenting to the company that nurses he sent to work at skilled-nursing facilities were computer programmers to obtain a lower workers' compensation policy premium, a California appeals panel ruled March 22 in affirming the man's conviction (People v. John Paul Riddles, No. D069419, Calif. App., 4th Dist., 1st Div., 2017 Calif. App. LEXIS 259).

Appeals Court Finds Woman Waived Sufficiency- Of-Evidence Argument
HARRISBURG, Pa. - An appeals court panel in Pennsylvania on March 23 affirmed a woman's conviction and sentencing for insurance fraud, finding that she waived her argument challenging the sufficiency of the evidence that was presented during trial (Commonwealth of Pennsylvania v. Emma Comer, No. 1520 MDA 2016, Penn. Super., 2017 Pa. Super. Unpub. LEXIS 1100).

Appeals Court Affirms Judge's Decision To Convict Woman For Insurance Fraud
DALLAS - A Texas appeals panel on April 20 upheld a trial court judge's decision to revoke a woman's sentence for four years of community supervision and sentence her to 10 years in prison for insurance fraud, ruling that there was sufficient evidence showing that she committed a new offense of theft from an elderly person (Christine Zimmerman Shearer v. State of Texas, No. 05-16-00317-CR, Texas App., 5th Dist., 2017 Tex. App. LEXIS 3584).

Judge: Insurer Can Pursue Claims Over Scheme To Reduce Workers' Comp Premiums
NEWARK, N.J. - Liberty Mutual Insurance Corp. sufficiently alleged that a roofing company and its owner could be found liable for workers' compensation fraud and insurance fraud by submitting false information to obtain lower premiums, a federal judge in New Jersey ruled April 5 in denying the defendants' motion to dismiss (LN Insurance Corporation, et al. v. All-Ply Roofing Co., Inc., et al., No. 14-4723, D. N.J., 2017 U.S. Dist. LEXIS 53127).

Magistrate Judge: Insurers Should Receive $2.8M In Attorney Fees
WHITE PLAINS, N.Y. - A federal magistrate judge in New York on April 14 recommended that insurance companies that prevailed on claims that a former claims adjuster and a contractor violated the Connecticut Unfair Trade Practices Act (CUTPA) by engaging in a scheme to fraudulently inflate estimates to repair damages to properties insured by the plaintiff companies are entitled to $2.8 million in attorney fees and $656,684.36 in costs (Federal Insurance Company, et al. v. Paul H. Mertz Jr., et al., No. 12 Civ. 1597, S.D. N.Y., 2017 U.S. Dist. LEXIS 58458).

Insureds Not Indispensable Parties To GEICO's Windshield Fraud Suit, Judge Says
ORLANDO, Fla. - A federal judge in Florida on March 29 denied three motions to dismiss a lawsuit brought by Government Employees Insurance Co. (GEICO) accusing five windshield repair companies and their owners of engaging in a scheme to submit fraudulent claims for repairs, finding that the company's insureds are not indispensable parties to the action and that the insurer sufficiently stated claims under the Racketeer Influenced Corrupt Organizations Act, Florida Deceptive and Unfair Trade Practices Act (FDUTPA) and fraud (Government Employees Insurance Company v. Clear Vision Windshield Repair, LLC, et al., No. 16-cvc-2077-Orl-28TBS, M.D. Fla., 2017 U.S. Dist. LEXIS 47353).

Judge Enters Default Judgment Against Doctors, Clinics In Fraud Scheme
NEW YORK - A federal judge in New York on March 31 adopted a magistrate judge's recommendation to enter default judgment against doctors and health care clinics accused of submitting fraudulent bills to Government Employees Insurance Co. (GEICO), finding that the recommendation was "well-reasoned, thorough and carefully calculated" (Government Employee Insurance Company v. Roger Jacques, M.D., et al., No. 14 Civ. 5299, E.D. N.Y., 2017 U.S. Dist. LEXIS 50825).