Mealey's Insurance Fraud : Mealey's : Legal News & Analysis

Mealey's Insurance Fraud

January 27, 2023
Resentencing Ordered By 6th Circuit In Unemployment Insurance Fraud Scheme

CINCINNATI — The Sixth Circuit U.S. Court of Appeals granted the government’s motion to remand for resentencing in a district court’s judgment revoking release and imposing additional prison time related for a man’s sentence in an unemployment insurance benefits fraud scheme, finding that remand is required to resolve the district court’s 27-month imprisonment term exceeding the statutory maximum.
January 27, 2023
Federal Judge Refuses To Toss Qui Tam Suit Alleging Allergy Testing Kickback Fraud

TAMPA, Fla. — A Florida federal judge denied allergy testing companies’ motion to dismiss a qui tam suit filed against them alleging violations of the False Claims Act (FCA) and multiple states’ insurance fraud statutes in a purported kickback scheme involving the companies’ allergy testing and treatment business models with medical providers, finding that the second amended complaint (SAC) asserts “plausible claims for relief that satisfy” Federal Rule of Civil Procedure 9(b)’s “heightened pleading standard.”
January 27, 2023
GEICO Awarded $637,688 In Damages After Default Ruling In Fraudulent Billing Suit

TAMPA, Fla. — GEICO was awarded $637,688.10 and $22,993.98 in prejudgment interest against two health providers in a fraudulent billing suit after filing a notice of dismissal with prejudice of the final claim remaining against one of the defendants; the notice was filed less than a week after a federal judge in Florida granted the insurer’s motion for final default judgment.
January 27, 2023
Mediator Reports Success After Judge Rules In Coverage Row Over Yacht Damaged By Reef

MIAMI — A mediator notified a federal court in Florida that a declaratory judgment suit to void an insurance policy issued to a yacht owner was successfully mediated and that the parties will file dismissal documents after completing their settlement documentation.
January 26, 2023
Michigan Panel Remands, Says Misrepresentation Not Shown But Insurer Can Amend

DETROIT — The Michigan Court of Appeals vacated a trial court’s order granting an auto insurer’s summary disposition motion in an insured’s suit against her insurer seeking no-fault benefits related to an auto accident, finding that while the insurer failed to plead with specificity the rescission defense related to the insured’s misrepresentation, the insurer may move to amend its defenses, which were not necessarily waived.
January 25, 2023
Michigan Panel Affirms Denial Of Disposition For Insurer In UIM, No-Fault Dispute

DETROIT — The Michigan Court of Appeals affirmed a lower court order denying summary disposition to an auto insurer in a suit filed against it by an insured auto accident victim seeking personal injury protection (PIP) and underinsured motorist (UIM) benefits, finding evidence lacking as to PIP to show that the insurer knew about alleged misrepresentations made by a co-insured person and that while the UIM contract permits rescission, the alleged misrepresentation was material only to another vehicle insured under the policy, not the one involved in the accident.
January 25, 2023
Mich. Panel Reverses, Agrees That ‘Equities Weigh In Favor’ Of Policy Rescission

DETROIT — The Michigan Court of Appeals reversed and remanded a lower court order granting summary disposition in favor of a personal injury protection (PIP) insurer in a suit it filed against a driver and her auto insurer related to an auto accident, finding that the lower court erred by denying the auto insurer’s motion for summary disposition and not granting its “request for the equitable relief of [rescission]” because without rescission of the auto insurance policy, the auto insurer would incur the burden of the driver’s alleged fraud.
January 24, 2023
Government Asks High Court To Uphold Fraud Sentence Under Identity Theft Statute

WASHINGTON, D.C. — The Fifth Circuit U.S. Court of Appeals properly upheld a trial court’s aggravated identity theft conviction of a psychologist under a federal identity theft statute, the U.S. government tells the U.S. Supreme Court in a Jan. 23 respondent brief, contending that although the petitioner did not steal anything, he nevertheless used a patient’s identity to commit health care fraud, which constituted a direct violation of the statute.
January 20, 2023
9th Circuit Affirms, Finds Materiality Absent In FCA Prior Authorization Suit

SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals affirmed a district court order dismissing a relator’s qui tam action alleging that pharmacies participated in fraudulent conduct that violated the False Claims Act (FCA) to obtain prior authorizations for prescriptions from government and private insurers, finding that the claims “fail to plead a government payor” and do not “adequately allege materiality.”
January 19, 2023
Judge Grants Default For Policy Misrepresentation In Dog Attack Coverage Case

GRAND RAPIDS, Mich. — A Michigan federal judge granted a homeowners insurer’s motion for default judgment in a coverage dispute over claims related to dogs purportedly harming dogs and residents of a neighboring property, finding that the insurer is “entitled to a declaration that, even if the homeowners insurance policy was not rescinded at the time of the dog incident,” due to the homeowner’s misrepresentations about residing there, coverage is not owed pursuant to the policy’s ‘“vicious dog’” exclusion.
January 12, 2023
Magistrate Recommends Partial Grant Of Default To GEICO In Fraudulent Billing Suit

TAMPA, Fla. — A federal magistrate judge in Florida recommended granting in part GEICO’s motion for final default judgment in a fraudulent billing suit involving Florida health care providers and employees, recommending that GEICO’s complaint suffices to show common-law fraud against two remaining defendants.
January 11, 2023
Lens Manufacturer, Calif. Insurance Department Settle Whistleblower Case For $23.8M

SACRAMENTO, Calif. — A company that manufactures and markets ophthalmic lenses and its subsidiaries have agreed to pay $23.8 million to resolve allegations that they violated the California Insurance Frauds Prevention Act (IFPA) by providing kickbacks and other unlawful incentives to eye care providers, driving consumers to more expensive services and submitting false claims to insurance companies, health care savings plans and vision benefit organizations.
January 11, 2023
California Panel Affirms Judgment For Defendants In Fraudulent Billing Action

LOS ANGELES — A state court did not err in finding that a relator and the California Department of Insurance (CDI) failed to present sufficient evidence that a hospital and others violated the Insurance Fraud Prevention Act (IFPA) by billing insurers for services performed at a medical detoxification center that was not properly licensed and using a referral agency to steer patients to the center, a California appellate panel has ruled.
January 11, 2023
3rd Circuit Denies Rehearing In Material Misrepresentation, Insurance Fraud Case

PHILADELPHIA — The Third Circuit U.S. Court of Appeals denied panel and en banc rehearing of its Nov. 18 ruling affirming summary judgment to a commercial insurer on its declaratory judgment and statutory fraud claims against its auto repair shop insured; the panel found that the insured waived its argument that it did not knowingly provide misleading or false information during the claims adjustment process when it submitted altered invoices and that the invoices were not misleading.
January 11, 2023
11th Circuit Hears Oral Arguments In GEICO’s Appeal Of Repair Act Ruling

ATLANTA — The 11th Circuit U.S. Court of Appeals has heard oral arguments on GEICO’s appeal of a district court’s grant of summary judgment in favor of a windshield repair shop and its owner, in an insurance fraud dispute alleging that the shop and its owners violated the Florida Motor Vehicle Repair Act by submitting insurance claims for repairs that were unnecessary or not performed.
January 11, 2023
5th Circuit: No Coverage For UM Claim Based On Material Misrepresentation

NEW ORLEANS — Although under Mississippi law, a claim for uninsured motorist (UM) coverage cannot be denied simply because the driver was not listed on the policy, the insurer may still void the policy — or deny coverage — because the insured made a material representation in the application by failing to name all those of driving age who lived in the household, the Fifth Circuit U.S. Court of Appeals ruled in affirming a federal district court’s grant of summary judgment to an auto insurer.
January 11, 2023
Federal Judge: Fact Issues Exist As To Whether Doctor Insured Had Intent To Deceive

LAFAYETTE, La. — A federal judge in Louisiana concluded that there are genuine issues of material fact regarding whether a doctor had an intent to deceive his insurer when he completed an application for professional liability insurance, denying dueling summary judgment motions in the insurer’s declaratory judgment lawsuit seeking rescission of the policy due to the insured’s alleged misrepresentations of his malpractice claims history.
January 10, 2023
11th Circuit Finds No Error In Allowing Expert Testimony In Insurance Fraud Case

ATLANTA — A district court did not err in admitting expert opinion testimony against a man convicted for his role in a $37 million health care fraud scheme that began in 1998 and involved bribing physicians to have patients entered into a network of assisted living facilities and skilled nursing facilities that he owned, the 11th Circuit U.S. Court of Appeals ruled, rejecting each of the man’s other arguments for reversal.
January 06, 2023
Federal Judge Grants Judgment For Insurers In Fraud Suits, Cites False Statements

CAMDEN, N.J. — A New Jersey federal judge granted summary judgment to commercial general liability insurers in consolidated declaratory judgment suits against their insureds seeking a declaration stating that they have no duty to defend the insureds in an underlying state court suit filed by people injured in a shooting, finding that because the insureds made omissions on their insurance application, the insurers are entitled to rescind the policies due to “equitable fraud.”
January 06, 2023
Summary Judgment Denied In Suit Over Policy Rescission For Misrepresentations

HOT SPRINGS, Ark. — On remand from the Eighth Circuit U.S. Court of Appeals, a federal judge in Arkansas denied multiple summary judgment motions in a suit over the rescission of an insurance policy, finding that “there may be a genuine dispute of material fact” about whether an insurer, through its agent, knew about information omitted from an insured’s application and whether the insurer would have declined to issue the policy if all those facts had been known.
January 04, 2023
10th Circuit Majority Partly Reverses Ruling Against Professional Liability Insurer

DENVER — A majority of the 10th Circuit U.S. Court of Appeals affirmed a lower federal court’s ruling that an insurer’s rescission of a professional liability insurance policy was untimely but found that the lower courted erred in making an Erie prediction that the New Mexico Supreme Court would not enforce the policy’s unambiguous exclusion for claims “arising out of any conversion, misappropriation, commingling [of] or defalcation of funds or property.”
January 03, 2023
Psychologist, Professor Urge High Court To Construe Identity Theft Law Narrowly

WASHINGTON, D.C. — Four days after a psychologist filed his petitioner merits brief in the U.S. Supreme Court championing a narrow construction of the federal aggravated identity theft statute under which he was convicted, a law professor filed an amicus curiae brief supporting the petitioner, encouraging the high court to avoid the vagueness that he says the Fifth Circuit U.S. Court of Appeals employed in its affirmance of the petitioner’s conviction.
December 22, 2022
Magistrate Rules On Dismissal Motion In Coverage Row Over Yacht Damaged By Reef

FORT LAUDERDALE, Fla. — A Florida federal magistrate judge issued a report recommending granting in part an insured’s dismissal motion in an insurer’s declaratory judgment suit to void a policy issued to a yachting company, finding that a breach of general condition claim should be dismissed because the policy’s requirements to complete the insurer’s recommendations do not apply when the insurer failed to request a survey.
December 22, 2022
Judge Denies Judgment For Insurer, Cites Failure To Disclose $11.5M Rescission

TAMPA, Fla. — A Florida federal judge denied a property insurer’s summary judgment motion but granted Certain Underwriters at Lloyd’s, London’s final summary judgment motion in a dispute over Lloyd’s duty to defend the insurer in underlying lawsuits, finding that the policy Lloyd’s issued to the insurer “is due to be rescinded” because the insurer failed to disclose its investors’ threats to rescind their $11.5 million investment.
December 22, 2022
Judge Grants $310,000 Default Judgment Against Clinic For Defrauding GEICO

MIAMI — Finding “no clear error” and agreeing “with the reasoning and recommendations,” a federal judge in Florida affirmed and adopted a magistrate judge’s report and recommendation and granted four insurers’ motion for default judgment against three defendants who failed to appear in a suit alleging that they schemed to defraud the insurers of $2.1 million by filing illusory or medically unnecessary claims for insureds who had recently been involved in automobile accidents.