Zalma’s Insurance Fraud Letter
See the full video summary at https://youtu.be/4I7d8iR8pNo and at https://rumble.com/v1k2b5h-zalmas-insurance-fraud-letter-september-15-2022.html
Read the full Adobe pdf version at http://zalma.com/blog/wp-content/uploads/2022/09/ZIFL-09-15-2022-1.pdf
Quote of the Issue
“Many Of Life’s Failures Are People Who Did Not Realize How Close They Were To Success When They Gave Up.” — Thomas Edison
Small Victory but Stay in Jail
The appellate court modified the judgment, as a matter of discretion in the interest of justice, by vacating the conviction of insurance fraud in the third degree under count 57 of the indictment and the sentence imposed thereon and dismissing that count of the indictment; as so modified, the judgment is affirmed.
The defendant waived his claim that one count of insurance fraud in the third degree with respect to a certain insurance policy issued by GMAC Insurance, of which he was convicted, was barred by the statute of limitations by not making a timely, written motion to dismiss on that ground.
In The People of the State of New York v. Jean M. Davilmar, also known as Jean Myrtho Davilmar, No. 2018-05468, Ind. No. 4334/16, 2022 NY Slip Op 04975, Supreme Court of New York, Second Department (August 17, 2022) the defendant Jean M. Davilmar appealed from a judgment of the trial court convicting him of larceny in the third degree (2 counts), scheme to defraud in the first degree, insurance fraud in the third degree (17 counts), criminal possession of a forged instrument in the second degree (5 counts), and offering a false instrument for filing in the first degree (4 counts), after a nonjury trial, and imposing sentence.
The defendant only partially preserved for appellate review his challenge to the legal sufficiency of the evidence supporting his convictions of grand larceny in the third degree (2 counts), insurance fraud in the third degree (16 counts), and scheme to defraud in the first degree (see CPL 470.05[2]. In any event, viewing the evidence in the light most favorable to the prosecution the appellate court found that it was legally sufficient to establish the defendant’s guilt of grand larceny in the third degree beyond a reasonable doubt (Penal Law §§ 155.05[1], [2][a], [b]; 155.35[1]. Likewise, the evidence was legally sufficient to establish the defendant’s guilt of insurance fraud in the third degree beyond a reasonable doubt (Penal Law § 176.20. Moreover, the evidence was legally sufficient to establish the defendant’s guilt of scheme to defraud in the first degree. Further, in fulfilling the court’s responsibility to conduct an independent review of the weight of the evidence it was satisfied that the verdict of guilt on each of those counts was not against the weight of the evidence.
The sentence imposed was not excessive. The defendant’s remaining contentions were found to be without merit.
“Age is not a particularly interesting subject. Anyone can get old. All you have to do is live long enough.” — Groucho Marx
“What do automobiles, guns, and home-schooling all have in common that makes the liberals hate them? All these things reduce individual dependence on the government and on the grandiose schemes for other people’s lives created by liberals and imposed by government.” —Thomas Sowell
“Better a good enemy than a bad friend.” — Jewish saying
“The transformation of charity into legal entitlement has produced donors without love and recipients without gratitude.” – Antonin Scalia
“I do not think that we should be over-anxious. We can make sense of the future if we understand the lessons of the past.”- Elizabeth II
“The art of living lies less in eliminating our troubles than in growing with them.” — Bernard M. Baruch
“The unions might be good for the people who are in the unions, but it doesn’t do a thing for the people who are unemployed. Because the union keeps down the number of jobs, it doesn’t do a thing for them.” — Milton Friedman
“Things turn out best for the people who make the best of the way things turn out.”— John Wooden
“Semicolons only prove that the author has been to college.” – E. B. White
“Sometimes in this life, under the stress of an exceptional emotion, people do say what they think.” – Marcel Proust
“If our country, when pressed with wrongs at the point of the bayonet, had been governed by its heads instead of its hearts, where should we have been now? Hanging on a gallows as high as Haman’s. —Thomas Jefferson
“Those who know do not speak. Those who speak do not know.” — Tao Te Ching
“Ultimately a genuine leader is not a searcher for consensus but a molder of consensus.” — Martin Luther King Jr.
“We must always take sides. Neutrality helps the oppressor, never the victim. Silence encourages the tormentor, never the tormented.” — Elie Wiesel
“Keep away from people who try to belittle your ambitions. Small people always do that, but the really great make you feel that you, too, can become great.” — Mark Twain
“Of those men who have overturned the liberties of republics, the greatest number have begun their career by paying an obsequious court to the people, commencing demagogues and ending tyrants.” —Alexander Hamilton
The Coalition Against Insurance Fraud’s Report Came up With the Following Conclusions:
Final Estimate Of The Cost Of Insurance Fraud In The United States:
All numbers are in billions and figures are as of 2022:
Property & Casualty $45BWorkers’ Compensation $34Premium Avoidance $35.1BHealthcare $36.3BMedicare and Medicaid Fraud $68.7BLife $74.7BDisability $7.4BAuto Theft $7.4B
The report, when dealing with property and casualty insurance reveals that in 220 the industry collected $728.69 billion dollar in premium. If only 10% of that premium was paid to fraudsters – a fairly reasonable estimate used by the Insurance Information Institute (III) – they would receive $72.87 billion. The numbers should change enormously if the calculation follows the Insurance Research Council estimate that casualty fraud accounted for between 15% and 17% of total claims payments for auto insurance. A 15% calculation could result in $109.30 Billion and 17% the fraudsters would take $123.88 Billion.
It’s good to see that the Coalition took into consideration inflation and the obvious growth of fraud since the institution of the tort of bad faith. In my opinion, however, they underestimated the true extent of fraud since the insurance industry has no admissible evidence about the true amount because most insurance fraud attempts succeed. As you read below about convictions for the crimes of insurance fraud, note how long the schemes went on before they were caught and recognize that those caught were amateurs who were so sloppy the seemed to beg the state and federal agencies to arrest them.
The report also includes auto theft in the analysis of the updated estimate of the cost of insurance fraud in the United States. At the current time, auto thefts in the United States are reported to be on the rise. These thefts directly impact insurers through increased claims, investigations of the theft, and policy payments where appropriate. Auto thefts also harm consumers. Obviously, those directly impacted are harmed but so too are all consumers who pay for auto theft crimes through higher premiums. Absent provable involvement of the insured in the theft, however, auto theft is not insurance fraud but an insurance crime for which virtually all automobile insurance policies extend coverage. The Coalition recognizes the extensive and excellent work being done by our partner, the National Insurance Crime Bureau, law enforcement agencies and others to fight back on the crime of automobile thefts. We include the information in this report, and the cost in our estimate of insurance fraud cost in the United States to assist those efforts and shed additional light on the problem of automobile thefts in our nation.
You can read the full report here.
You can also read about the extent of Workers’ Compensation Fraud here.
Barry Zalma, Esq., CFE has published five days a week videos on insurance claims, insurance claims law, insurance fraud and insurance coverage matters at https://www.rumble.com/zalma.https://rumble.com/c/c-262921.
He 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.
See the more than 500 videos at https://www.rumble.com/zalma
California Gov. Gavin Newsom signed bills in September creating an advisory committee to study the effects of extreme heat on workers and requiring agents and brokers to undergo training on how to identify insurance fraud.
S.B. 1242 requires mandatory training agents and brokers must complete to receive or renew a license. This includes at least one hour of study on insurance fraud. It also requires agents and brokers to report suspected fraudulent applications for coverage to the Department of Insurance and to report to the insurer suspected fraud on an active policy.
The effect, if any, of the law will take years to take determine. My guess is that that it will just ad an expense to the licensing process and make money for a few who will create the courses.
Lack of Insurable Interest Makes Life Policy Void from Inception
Policy Acquired as Part of a STOLI Fraud Never Existed as a Matter of Law
In Geronta Funding, a Delaware Statutory Trust v. Brighthouse Life Insurance Company, No. 380, 2021, Supreme Court of Delaware (August 25, 2022) the Supreme Court was asked to determine whether premiums paid on insurance policies declared void ab initio for lack of an insurable interest should be returned. The trial court agreed with Brighthouse and relied on the Restatement (Second) of Contracts (the “Restatement”) to determine whether Geronta was entitled to restitution. Specifically, the court held that Geronta may obtain restitution under Section 198 of the Restatement (“Section 198”) if it could prove excusable ignorance or that it was not equally at fault.
Applying this test, the court ruled that Geronta was only entitled to the return of the premiums it paid after alerting Brighthouse to the void nature of the policy at issue.
RELEVANT FACTS AND BACKGROUND
On July 11, 2007, the fictitious Mansour Seck Irrevocable Life Insurance Trust (the “Seck Trust”) applied to MetLife Investors USA Insurance Company (Brighthouse’s predecessor) for a $5 million universal life insurance policy insuring the life of a fictitious man identified as Mansour Seck (the “Policy”), with a birthday of January 1, 1933. Seck was identified as a French citizen residing at 170 Academy Street, Jersey City, New Jersey.
After confirming that its procedures and guidelines were met, MetLife issued the Policy on or around July 24, 2007.
Pape Seck’s Arrest and Prosecution
In 2010, Pape Seck was the subject of numerous press releases issued by the State of New Jersey and other insurance industry publications; they stated that Pape Michael Seck, a New York City insurance agent, had been arrested and prosecuted for fraudulent insurance schemes. Pape Seck pleaded guilty to two counts of insurance fraud concerning fraudulent applications for Mansour Seck. T
Litigation and the Superior Court Ruling
On April 4, 2018, Brighthouse filed suit, seeking a judicial declaration that the Policy was void ab initio for lack of an insurable interest and arguing that it is entitled to keep all the premiums paid on the Policy. Geronta filed an answer, agreeing that the Policy was void ab initio, and a counterclaim, alleging that it was entitled to reimbursement of all premiums paid, with the exception of the premiums paid by the original owner of the Policy.
In its opinion, the trial court declared the Policy void ab initio. The court denied Geronta’s request for rescission and disgorgement, holding that rescission is not available where a contract is void because there is no contract to “unmake.” After trial, the Superior Court ruled that Geronta was only entitled to restitution of the premiums it paid after it informed Brighthouse that the Policy was void for lack of an insurable interest.
ANALYSIS
Overview of Potential Remedies for an Insurance Policy That Is Void Ab Initio for Lack of an Insurable Interest
A contract of insurance upon a life in which the insured has no interest is a pure wager that gives the insured a sinister counter interest in having the life come to an end. A court may never enforce agreements void ab initio, no matter what the intentions of the parties. Thus, when an agreement is void ab initio as against public policy, the courts typically will not enforce a remedy to any extent against either party. In other words, the courts typically will leave the parties where they find them.
Was Rescission Available?
Rescission would result in the return of any premiums paid by applying equitable principles and putting both parties back in the position they were in before the contract was made. Stranger-originated life insurance (“STOLI”) policies, like the one for Monsour Seck, when rescinded would require return of the premiums from the insurer to the investor. However, since the policy was void rescission was not available.
Restitution
Restitution is a body of substantive law in which liability is based not on tort or contract but on the defendant’s unjust enrichment. Restitution has been awarded under two separate approaches: (1) a fault-based analysis grounded in considerations specific to insurance policies declared void ab initio for lack of an insurable interest and (2) the Restatement.
Restitution Under A Fault-Based Analysis Grounded In Considerations Specific To Insurance Policies Declared Void Ab Initio For Lack Of An Insurable Interest
Most courts considering this issue have adopted a fault-based analysis in determining whether to return premiums paid on an illegal or void insurance policy.
Generally, when an illegal contract is voided, the parties will be left where they have placed themselves with no recovery of the money paid for illegal services. But there is an exception for the case in which the party that made the payments is not to blame for the illegality. The Insurers were the clear victims of the STOLI scheme as was Geronta who bought the policy.
If the downstream investor was equally at fault with, or more at fault than, the insurer, the trial court should leave the parties where it found them, allowing the insurer to keep the premiums. If the downstream investor was innocent or the insurer was more at fault, the court should return the premiums.
The Restatement (Second) of Contracts
Restatement Section 198 lays out two exceptions to the general rule-when a party is (1) excusably ignorant and (2) not equally in the wrong with the party from whom he seeks restitution.
The Supreme Court adopted a fault-based analysis, framed under the Restatement, that considers questions specific to insurance policies declared void ab initio as against public policy for lack of an insurable interest as the correct test to determine whether premiums should be returned.
The Supreme Court noted that a fault-based analysis incentivizes insurers to speak up when the circumstances suggest that a policy is void for lack of an insurable interest because they will not be able to retain premiums if they stay silent after being put on inquiry notice, and they might also be responsible for interest payments.
Thus, when analyzing a viable legal theory that seeks as a remedy the return of premiums paid on insurance policies declared void ab initio for lack of an insurable interest, Delaware courts are now required to analyze the exceptions outlined in Sections 197, 198, and 199 of the Restatement and determine whether any of those exceptions permit the return of the premiums. A court needs to determine whether:
there would be a disproportionate forfeiture if the premiums are not returned;the claimant is excusably ignorant;the parties are not equally at fault;the party seeking restitution did not engage in serious misconduct and withdrew before the invalid nature of the policy becomes effective; orthe party seeking restitution did not engage in serious misconduct, and restitution would put an end to the situation that is contrary to the public interest.
The fault of the parties and public policy considerations will determine which party is entitled to the premiums paid on an insurance policy that is void ab initio for lack of an insurable interest.
The Superior Court Failed to Consider Whether Either Party Had Inquiry Notice of the Void Nature of the Policy
Here, prior to purchase
Geronta, in consultation with Leadenhall, made the deliberate decision to superficially look at the Seck Policy by solely focusing on whether it was active.Geronta purposefully ignored the possibility that some of the unexamined policies in the bulk purchase might have been unenforceable.• “Geronta’s due diligence as to the Seck Policy was extremely limited.”[226]
The Superior Court also concluded that Brighthouse was not at fault because Geronta failed to show that Brighthouse had actual knowledge of the void nature of the Policy. In other words, the Court found that Brighthouse did not have actual knowledge of the Policy’s illegality.
Section 198 and the in pari delicto cases from Section III.A.b.i focus on whether a party had either actual knowledge or inquiry notice of the invalidity of the policy. Since the trial Court failed to consider whether Bighthouse was on inquiry notice of the void nature of the Policy.
The Supreme Court remanded the case for the Superior Court to reconsider its factual findings in light of this Court’s articulated test and specifically direct the court to consider whether either party had inquiry notice of the void nature of the Policy and reversed the court’s holdings regarding entitlement to premiums and remanded the case for consideration consistent with its opinion.
ZIFL OPINON
By waiting two years after inception of the policy for the fake insured the fraudsters defeated the ability of the insurer to rescind. However, since Mansour Seck did not exist the policy was not real, it was a gamble, that the criminal invested a great deal of money, sold the risk to another and profited from the crime only to have the victim sell again until Geronta found itself paying premium on a void policy. To do justice the Delaware Supreme Court has provided a means to determine who is free of guile and who is not when deciding who gets the premium back, if anyone.
Handed nearly 12 years in federal prison for doling out addictive opioids, Dr. Kurt Moran is lucky he didn’t get twice that time. Two of the Scranton, Pa. doc’s patients OD’d and died on drugs he prescribed them. He prescribed the potent opioid Subsys to 13 patients overall. Subsys is a fentanyl-based drug used by cancer patients who have excruciating pain. Yet Moran’s patients didn’t even have cancer. A drug company paid Moran $140K of illegal kickbacks to prescribe Subsys, disguising the bribes as speaker fees. Moran also liberally prescribed oxycodone. Dozens of patients testified they grew addicted to pain meds Moran handed out. He could’ve received double the prison time under federal sentencing guidelines.
The owner of house-cleaning firms tried to clean out his workers comp insurers. Attorney Robert Fitz owned 12 cleaning firms in Ohio. The Westlake man bought state-required coverage for one company, RCF Licensing, in 1996. He stopped paying premiums in 2003. The Ohio Bureau of Workers’ Compensation examined Fitz’s lack of payment. The state agency advised him it was illegal to run a business without proper comp coverage. Fitz was trying to reinstate his coverage, he replied. Yet in 2013, BWC discovered that Fitz had several policies that had lapsed or were canceled. BWC consolidated the comp policies and presented him with a payment plan to catch up on premiums he owed. Fitz still didn’t bring his policies into compliance. Owing more than $950K in restitution, he earlier was handed 30 days in jail for workers’ comp insurance fraud. The state Supreme Court now has suspended Fitz’s law license for two years this week.
Lies flowed easily for Mark Schena’s $77M scam by his fake Silicon Valley allergy-testing firm Arrayit Corporation. Schena tested every patient for 120 different allergies (ranging from hornet stings to codfish) regardless of medical need. He paid illegal kickbacks to marketers and lied to consumers that his allergy test was highly accurate. In fact, it wasn’t even a diagnostic test. Yet Schena billed more per patient to Medicare than any blood allergy lab in the U.S. He billed some insurers over $10K per test. Schema’s firm then went downhill because the COVID-19 pandemic and stay-at-home orders reduced demand for allergy testing. So, he lied he’d developed a COVID-19 test based on Arrayit’s blood testing technology — before bothering to develop the test. He also lied that Dr. Anthony Fauci and other prominent government officials required testing for COVID-19 and allergies at the same time. Schena said his COVID-19 test was more accurate than a PCR test for diagnosing infections — while hiding that the FDA refused to grant him an emergency-use authorization because his test wasn’t accurate enough. Schena also lied to investors. He said he invented revolutionary technology that tests for virtually any disease using only a few drops of blood. He claimed he was the “father” of this testing category and was on the shortlist for the Nobel Prize. Schena was convicted and faces potentially dozens of years in federal prison when sentenced Jan. 30.
Delays and lengthy negotiations took a decade to resolve the theft by independent agent Shawn Chambers of $100K of premiums from 25 clients. Clients of the Wichita Falls, Kans. man began complaining their coverage was canceled or claims weren’t paid despite paying their premiums. Chambers deposited their premium money into his personal bank account instead of with SIG Insurance. When re-submitting some claims, Chambers tried to refile them under new dates. SIG made good on the claims and premiums after the scam was discovered. Clients still incurred losses because of higher premiums when they bought new insurance. The charges date to 2013; it took five years for Chambers and court to reach a plea to 10 years of probation. The case was finalized recently after a decade of motions and delays. Chambers agreed to repay $145K to the insurer and will receive early release from probation. Chambers also lost his agent license and is dealing with serious medical issues placing him on a transplant waiting list.
Hurling yourself onto moving cars for fun and insurance profit gives video gamers fresh thrills with the new release of the next-gen edition of Saints Row. Yes, the popular Saints Row franchise is back and kicking. Saints gamers try to build vast money-grubbing criminal empires. Insurance scamming by launching yourself like a ragdoll onto oncoming vehicles is one of the dollar-stealing empires. “The name of the game here is getting hit as much as possible, hopefully by several cars in succession,” writes one reviewer. “Since you don’t know what vehicles will be driving your way during the match, it’s best if you try to find a strategy that works for you. The best thing you can do is find the busiest intersection near you and jump in front of cars there, as they’ll be coming from multiple directions. This will make it easy to bounce from one car to the other and build a nice combo.” Saints Row is available on PlayStation 5, PlayStation 4, Xbox Series X/S, Xbox One and PC.
Ivan Kriger made a claim for damage to the City of Spokane, Wash. for a paved parking lot he owned. A contractor the city hired to remove another building parked in his parking lot caused nearly $280K of catastrophic damage, he claimed. The city made the claim to Alaska National Insurance. The insurer found the parking lot was in disrepair for years and had no new damage. Kriger also filed three claims with Zurich Insurance for a building he owned in Spokane that suffered fire damage. The fire occurred at 5:50 a.m., yet Kriger bought a policy with Zurich several hours after the fire happened. He later filed several claims worth $324K total, trying to get the fire damage covered. Zurich denied the claims. The insurance department’s Criminal Investigation Unit then built the case, leading Kriger’s conviction in both cases for insurance fraud.
Two Aldermen of St. Louis fell hard after selling their influence to breed insurance schemes, bribery and graft. The insurance plot: A crash on Jan. 21, 2021 damaged three vehicles at an unnamed used-car lot owned by “John Doe.” Alderman Jeffrey L. Boyd’s used-car company The Best Place Auto Sales owned one of the damaged vehicles, and Doe owned the others. Doe learned his insurance wouldn’t cover the damage to his vehicles. So, Boyd suggested lying that his own used-car firm owned them. On Jan. 17, Boyd falsified and backdated vehicle sales records and Missouri Department of Revenue documents claiming he paid $22K for the vehicles on Jan. 2. So, the pair made the claim under Boyd’s policy and split the insurance money. Boyd also falsely tried to claim a $200 daily storage fee for the damaged vehicles. His insurer rejected the claim, despite his trying to have his insurance agent intervene. Boyd also took cash bribes to help Doe illicitly buy commercial property and earn other perks. Boyd also trafficked in illicit perks with another Alderman Lewis Reed. The pled guilty and could face decades in federal prison when sentenced Dec. 6. No word on Doe’s fate.
David Evans was a well-liked Baptist pastor at Harmony Church in Ada, Okla. He also was secretly a swinger —arranging threesomes with his wife Kristie and other men. She started having an affair with one swinger, Kahlil Square. Kristie convinced Square to shoot David in the head while he slept in the couple’s home early one morning. She was driven in part by a $250K life policy; the couple had recently declared bankruptcy. Kristie also wanted to escape what she said was an abusive marriage. So, she gave David’s gun and a box of bullets to Square, then left the back door unlocked. David had just returned from a mission trip in Mexico. Kristie showed no remorse after her arrest — she wrote “pornographic” letters in jail to Square and another inmate. Evans first wrote to Square only 19 days after her arrest to see if he was ok, still her man and had everything he needed. Evans pled guilty and was given life in prison. Now 49, she’ll be eligible for parole in her mid-80s. Square still faces trial.
Laden with NBA star potential he never achieved; Terrence Williams starred in another way: He masterminded an attempted $5M swindle of the NBA’s health plan for retired players. Williams was drafted 11th in 2009 by the New Jersey Nets, retiring in 2015. He’s now a felon, pleading federally guilty. Williams recruited players to submit false invoices for phantom medical and dental work, receiving $300K of kickbacks. Williams even impersonated a health plan manager to frighten a player who hadn’t paid him a kickback. Former Boston Celtics players Tony Allen and Glen Davis allegedly forged invoices for crowns on the same six teeth on the same day. Davis also claimed crowns on eight teeth in Beverly Hills when he was in Nevada. Williams agreed to pay the NBA $2.5M and forfeit $653.6K to the U.S. He could face 12 years in prison when sentenced. Six of the at least 24 suspects have pled guilty. They include a dentist, doc and chiro.
Patients waited for more than three hours in a dirty, crowded waiting room for painkillers doled out by husband-wife docs with no expertise in opioids. About 85% of patients received opioid prescriptions at Care Complete Medical Clinic in Birmingham, Ala. Dr. Patrick Ifediba kept his clinic open until 10 p.m., illegally prescribing up to 90K kilograms of drugs in total. Ifediba also did costly allergy tests on almost all patients with insurance. And he prescribed expensive allergy treatments for many patients, even if they tested negative for allergies. The allergy tests cost more than $500 per patient and shots cost $2.6K. Blue Cross Blue Shield of Alabama flagged the high numbers of allergy treatments. When the insurer audited the clinic, staff members altered documents and test results to support treatment. Ifediba’s sister, nurse Ngozi Justina Ozuligbo, gave the false allergy tests. Nigerian cultural norms dictated she was required to obey her brother, she argued without success at trial. Ifediba was handed 30 years in federal prison, and Ozuligbo three years.
Johnson & Johnson Has Agreed To Pay $40.5 Million To Settle New Hampshire’s Claims re Opiods
The September 1, 2022 settlement resolves a lawsuit brought in 2018 accusing Johnson & Johnson and its Janssen Pharmaceuticals unit of aggressively marketing opioids to doctors and patients, misrepresenting that the drugs were rarely addictive when used to treat chronic pain, and targeting vulnerable groups like the elderly.
New Hampshire will apply $31.5 million toward opioid abatement, after paying legal fees, and Johnson & Johnson will be banned from selling or promoting opioids there.
A trial had been scheduled for September 7 in Merrimack County Superior Court.
The New Brunswick, New Jersey-based drugmaker also said it will defend against other pending opioid litigation. New Hampshire was one of a few states that did not join Johnson & Johnson’s portion of February’s $26 billion nationwide opioid settlement with the company and the three largest U.S. drug distributors, hoping to recover more by suing on its own.
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Become a Professional Claims Handler
In search of profit, insurers have decimated their professional claims staff. They laid off experienced personnel and replaced them with young, untrained, unprepared people. A virtual clerk replaced the old professional claims handler. Process and computers replaced hands-on human skill, empathy and judgment. Money was saved by paying lower salaries. Within three months of firing the experienced claims people gross profit increased.
The promises made by an insurance policy are kept by the professional claims person. Keeping a professional claims staff dedicated to excellence in claims handling is cost-effective over long periods of time. A professional and experienced adjuster will save the insurer millions by resolving disputes, paying claims owed promptly and fairly, and by so doing avoid litigation.
The professional claims person is an important part of the insurer’s defense against litigation by insureds against insurers for breach of contract and the tort of bad faith. Claims professionals resolve more claims for less money without the need for either party to involve counsel. A happy insured or claimant satisfied with the results of his or her claim will never sue the insurer.
Insurers who believe they can professionally, fairly, and in good faith with young, inexpensive, inexperienced and untrained claims handlers should be accosted by angry stockholders whose dividends have plummeted or will plummet as a result. When an insurer compromises on staff, profits, thin as they may have been previously, will move rapidly into negative territory. Tort and punitive damages will deplete reserves. Insurers will quickly question why they are writing insurance. Those who stay in the business of insurance will either adopt a program requiring excellence in claims handling from every member of their claims staff, or they will fail.
Insurance is a business that must change if it is to survive. Insurers must rethink the firing of experienced claims staff and reductions in training to save “expense.” Insurers should, if they wish to succeed, adopt a program to promote excellence in claims handling that can help insurers keep the promises made by the insurance policy and avoid charges of breach of contract and the tort bad faith in both first and third party claims.
In The People of the State of New York v. Jean M. Davilmar, also known as Jean Myrtho Davilmar, 2022 NY Slip Op 04975, No. 2018-05468, Ind. No. 4334/16, Supreme Court of New York, Second Department (August 17, 2022) Jean M. Davilmar, also known as Jean Myrtho Davilmar, appealed from a judgment of the Supreme Court, Kings County (Danny K. Chun, J.), rendered March 13, 2018, convicting him of larceny in the third degree (2 counts), scheme to defraud in the first degree, insurance fraud in the third degree (17 counts), criminal possession of a forged instrument in the second degree (5 counts), and offering a false instrument for filing in the first degree (4 counts), after a nonjury trial, and imposing sentence.
One Count Dismissed at Request of Prosecution
The judgment was modified, as a matter of discretion in the interest of justice, by vacating the conviction of insurance fraud in the third degree under count 57 of the indictment and the sentence imposed thereon and dismissing that count of the indictment; as so modified, the judgment is affirmed.
The prosecution conceded that the defendant’s conviction of insurance fraud in the third degree under count 57 of the indictment should be vacated and that count of the indictment dismissed in the exercise of our interest of justice jurisdiction.
The defendant only partially preserved for appellate review his challenge to the legal sufficiency of the evidence supporting his convictions of grand larceny in the third degree (2 counts), insurance fraud in the third degree (16 counts), and scheme to defraud in the first degree People v Heron, 180 A.D.2d 750, 751).
In any event, viewing the evidence in the light most favorable to the prosecution the court found that it was legally sufficient to establish the defendant’s guilt of grand larceny in the third degree beyond a reasonable doubt. Likewise, the evidence was legally sufficient to establish the defendant’s guilt of insurance fraud in the third degree beyond a reasonable doubt.
Moreover, the evidence was legally sufficient to establish the defendant’s guilt of scheme to defraud in the first degree (Penal Law § 190.65[1][b]). The appellate court fulfilled its responsibility to conduct an independent review of the weight of the evidence and was satisfied that the verdict of guilt on each of those counts was not against the weight of the evidence and that the sentence imposed was not excessive and found that the defendant’s remaining contentions were without merit.
ZIFL OPINION
People who are convicted of insurance fraud are so surprised that a prosecutor would take the time and effort to try and convict them will invariably appeal their conviction using the funds they took in their successful crimes before they were arrested and convicted. Mr. Davilmar exercised unmitigated “chutzpah” by filing this appeal and obtained a Pyrrhic victory by having one of 17 counts of insurance fraud dismissed and must still spend time in jail for the 16 others.
Idaho Provider Sentenced to Jail for Defrauding State Medicaid Program
Janna Lyn Miller, 58-year-old of Kuna, Idaho, pleaded guilty on May 12, 2022. She was sentenced on Thursday, August 25, 2022 for executing a scheme to defraud the Idaho Medicaid program.
Judge Samuel Hoagland sentenced Miller to a suspended sentence of five years with one year fixed. She was placed on probation for five years. The court ordered Miller to serve 180 days in the Ada County Jail and pay $82,607 in restitution, a fine of $2,000 and court costs. The Department of Health and Welfare’s Medicaid Program Integrity Unit recovered nearly $64,000 in restitution prior to sentencing.
In addition to the criminal restitution, Miller is also responsible for repaying another $169,465 in overpayments and $65,256 in related penalties.
Miller was the owner and operator of Inclusion, Inc., a company that provided home health, supervised employment, mental health counseling and social support services to Idaho Medicaid participants with developmental disabilities. In addition to its main office in Meridian, the company maintained satellite offices in Sandpoint, Coeur d’Alene and Twin Falls.
Investigators determined that from January 1, 2018 to March 21, 2021, Miller executed a scheme to wrongfully obtain Idaho Medicaid funds and property. She did so by either making false representations or directing billing personnel to make false representations regarding services provided to Medicaid participants.
Seven-Year Prison Sentence Against San Joaquin County Doctor for Medi-Cal Fraud Scheme California
Gary Wisner used both his patients and state resources to line his own pockets according to California Attorney General Rob Bonta. Wisner, a San Joaquin County orthopedic surgeon was convicted for repeatedly defrauding the Medi-Cal and Medicare programs.
From 2012 to 2016, Wisner defrauded the Medi-Cal and Medicare programs by administering excessive and medically unjustifiable X-rays to his patients. In June, Wisner was convicted of 10 felony counts of health care insurance fraud. On Friday, Wisner was sentenced by the Sacramento Superior Court to serve a seven-year prison sentence.
In November 2016, representatives from the California Department of Justice, Division of Medi-Cal Fraud and Elder Abuse (DMFEA) were notified by multiple government offices of suspected fraud by Wisner in overbilling the Medi-Cal and Medicare programs. Wisner operated a medical clinic in Lodi, California where he had 26,000 patients under his care.
In DMFEA’s investigation into Wisner’s alleged misconduct, investigators randomly selected the files of five Medi-Cal patients and five Medicare patients — these 10 files became the basis of the 10 felony charges Wisner was convicted of in June. DMFEA’s investigation revealed Wisner would administer X-rays even in routine office visits and would X-ray multiple parts of a patient’s body — regardless of whether it had any relation to a patient’s medical condition.
Over the course of an approximate four-year period, evidence collected showed Wisner subjected ten individual patients to hundreds of unnecessary X-rays at his clinic. On Friday, Wisner was sentenced to a seven-year prison sentence by the Sacramento Superior Court.
This investigation was made possible through collaboration with the United States Department of Health and Human Services (HHS), the San Joaquin County District Attorney’s Office, and the California Department of Insurance.
Gary Wisner is also the subject of an independent criminal complaint filed by the San Joaquin County District Attorney’s Office for workers’ compensation fraud. The case is still pending, and Gary Wisner is presumed innocent until proven guilty of those charges.
Boca Raton Chiropractor Sentenced To Four Years’ Imprisonment For $20 Million Fraud Scheme
Jonathan Michael Rouffe (49, Boca Raton) was sentenced to four years in federal prison for conspiracy to commit health care fraud. The court also ordered Rouffe to forfeit assets from several bank accounts, which are traceable to proceeds of the offense. As part of his sentence, the court also entered an order of forfeiture in the amount of $3,127,290, the proceeds of the charged criminal conduct, and a restitution order in the amount of $10,725,607.15. Rouffe pleaded guilty on June 30, 2020.
According to court documents, in 2018, Rouffe and his conspirators established a conglomerate of durable medical equipment (“DME”) supply companies. During the creation of the companies, they lied to Medicare to secure billing privileges, including placing the companies in the names of straw owners. By concealing their true ownership, the conspirators gained control of more companies, which Medicare generally prohibits, enabling them to submit high volumes of illegal DME claims. Through the conglomerate, during the course of one year, Rouffe and his conspirators submitted more than $20 million in illegal DME claims, resulting in over $10 million in payments from Medicare and the Civilian Health and Medical Program of the Department of Veterans Affairs (“CHAMPVA”).
To attain such high volumes of claims, Rouffe and his conspirators used illegal bribes and kickbacks. Specifically, they illegally purchased thousands of DME claims from so-called “marketers.” On invoices, the parties disguised the illegal kickback transactions as marketing services and the conspirators claimed that the DME prescriptions had been generated through “telemedicine.” No telemedicine had actually occurred. Instead, doctors were bribed in exchange for DME approvals. Rouffe and his conspirators paid millions to secure the illegal DME claims for submission to Medicare and CHAMPVA.
Medical Director Convicted in Health Care Fraud Scheme
Dr. Sekhar Rao, 51, of Austin, was the medical director of the ADAR Group LLC. Rao authorized toxicology and genetic testing, including cancer genetic testing, for TRICARE beneficiaries without seeing, speaking to, or otherwise treating patients, and without incorporating the test results into ongoing treatment. In some cases, the patients did not know what they were being tested for. TRICARE beneficiaries were enticed to provide urine or saliva specimens in exchange for $50 gift cards. Evidence at trial demonstrated that Rao was paid in exchange for signing off on medically unnecessary and repetitive toxicology and genetic tests.
A federal jury convicted Rao, a Texas physician of engaging in a scheme that fraudulently billed TRICARE, the health care program for uniformed service members, retirees, and their families, for toxicology and genetic tests that were not provided as represented and/or were medically unnecessary.
According to court documents and evidence presented at trial, Rao was convicted of two counts of health care fraud. He is scheduled to be sentenced on March 27, 2023 and faces a maximum penalty of 10 years in prison for each health care fraud count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
13 Novus Healthcare Fraud Defendants Sentenced to Combined 84 Years in Prison
CEO Bradley J. Harris eventually admitted to the fraud and testified against two physicians who elected to proceed to trial.
As a result, thirteen defendants involved in the $27 million Novus healthcare fraud were sentenced to a combined 84 years in federal.
According to plea papers and evidence presented to a jury, Novus Health Services, a Dallas-based hospice agency, defrauded Medicare by submitting materially false claims for hospice services, providing kickbacks for referrals, and violating HIPAA to recruit beneficiaries. Novus employees also dispensed Schedule II controlled substances to patients without the guidance of medical professionals and moved patients to a new hospice company to avoid a Medicare suspension.
He told the jury that instead of relying on the expertise of licensed medical professionals, he and Novus’ nurses determined which medications and dosages patients would receive, dispensing drugs like morphine and hydrocodone using pre-signed prescription pads. Novus medical directors, including Dr. Mark Gibbs and Dr. Laila Hirjee, were supposed to oversee the care of these patients and examine patients face-to-face to certify that they were terminally ill. Often, however, the medical directors signed off on patient care plans without properly reviewing patients files and falsely certified they had completed in-person examinations when they had not.
Director of Operations Melanie Murphey testified at trial, “I was the doctor.”
Mr. Harris and the nurses also determined which patients would be admitted to or discharged from hospice care without any physician involvement. Mr. Harris also admitted to paying Novus physicians kickbacks – disguised as medical director salaries – to induce them to refer patients to Novus facilities.
When Mr. Harris realized, he could avoid exceeding Medicare’s aggregate hospice cap by enrolling an influx of first-time hospice patients, he negotiated an agreement with a company called Express Medical that allowed him to access potential patients confidential medical information in return for using Express Medical for laboratory tests and home health visits. Novus staff attempted to recruit Express Medical patients for Novus services, regardless of their eligibility.
Those convicted in the scheme include:
Sam Anderson, Novus VP of Marketing, pleaded guilty to one count of conspiracy to commit healthcare fraud and was sentenced to 33 months in federal prisonPatricia Armstrong, Novus triage nurse, pleaded guilty to one count of conspiracy to commit healthcare fraud and was sentenced to 84 months in federal prisonSlade Brown, Novus Director of Marketing, pleaded guilty to one count of conspiracy to commit healthcare fraud and was sentenced to 48 months in federal prisonDr. Mark Gibbs, Novus Medical Director, was convicted at trial of one count of conspiracy to commit healthcare fraud, two counts of healthcare fraud, and one count conspiracy to obstruct justice and was sentenced to 156 months in federal prisonAmy Harris, Novus VP of Patient Services and wife of Bradley Harris, pleaded guilty to one count of conspiracy to obstruct justice and was sentenced to 38 months in federal prisonBradley Harris, Novus CEO, pleaded guilty to one count of conspiracy to commit healthcare fraud and one count of healthcare fraud and aiding and abetting and was sentenced to 159 months in federal prisonDr. Laila Hirjee, Novus Medical Director, was convicted at trial of one count of conspiracy to commit healthcare fraud, three counts of healthcare fraud and one count of unlawful distribution of a controlled substance and was sentenced to 120 months in federal prisonDr. Charles Leach, Novus Medical Director, pleaded guilty to one count of conspiracy to commit healthcare fraud and was sentenced to 57 months in federal prisonTammie Little, Novus Registered Nurse, was convicted at trial of one count of conspiracy to commit healthcare fraud and three counts of healthcare fraud and aiding and abetting and was sentenced to 33 months in federal prisonJessica Love, Novus Registered Nurse, pleaded guilty to one count of conspiracy to commit healthcare fraud and was sentenced to 102 months in federal prisonMelanie Murphey, Novus Director of Operations, pleaded guilty to one count of conspiracy to commit healthcare fraud and was sentenced to 66 months in federal prisonAli Rizvi, Express Medical owner, pleaded guilty to one count of wrongful use of individually identifiable heath information and was sentenced to 18 months in federal prisonTaryn Stuart, Novus Licensed Vocational Nurse, pleaded guilty to one count of conspiracy to commit healthcare fraud and was sentenced to 96 months in federal prison
California Man Sentenced to Federal Prison for Role in Health Care Kickback Conspiracy
Vincent Marchetti, Jr., 58, was found guilty by a jury on December 16, 2021, following a month-long trial. He was sentenced to 48 months in federal prison by U.S. District Judge Robert W. Schroeder, III, on August 30, 2022.
Marchetti, a Coronado, California, man was sentenced to federal prison for conspiring to commit health care kickbacks.
According to information presented in court, Marchetti conspired with others to pay and receive kickbacks in exchange for the referral of, arranging for, and recommending health care business, specifically pharmacogenetic (PGx) tests. Pharmacogenetic testing, also known as pharmacogenomic testing, is a type of genetic testing that identifies genetic variations that affect how an individual patient metabolizes certain drugs. The illegal arrangement concerned the referral of PGx tests to clinical laboratories in Fountain Valley, California; Irvine, California; and San Diego, California. More than $28 million in illegal kickback payments were exchanged by those involved in the conspiracy.
In December 2019, twelve individuals from three states were charged for their roles in the kickback conspiracy. A federal grand jury in the Eastern District of Texas returned an indictment against Philip Lamb, 47, of Scottsdale, Arizona; Nicolas Arroyo, 40, of Tempe, Arizona; Vincent Marchetti, Jr.; William Flowers, 57, of Houston; Steven Donofrio, 48, of Temecula, California; James J. Walker, Jr. a/k/a Jimmy Walker, 48, of Frisco; Timothy Armstrong, 65, of Frisco; Virginia Blake Herrin, 57, of Frisco; Patrick Ridgeway, 53, of Jackson, Mississippi; Chismere Mallard, 42, of McAllen; Dr. Ray W. Ng, 66, of Dallas; and Ashley Kretzschmar, 37, of Aledo; for conspiring to commit illegal remunerations in violation of the Anti-Kickback Statute.
Philip Lamb, Nicolas Arroyo, Jimmy Walker, Timothy Armstrong, Virginia Blake Herrin, Patrick Ridgeway, Chismere Mallard, and Ashley Kretzschmar have pleaded guilty. Kimberly Willette, 61, of Friendswood, and Edwin Chad Isbell, 48, of Atascocita, also pleaded guilty to related charges.
On April 25, 2022, Nicolas Arroyo was sentenced to 21 months in federal prison. On August 23, 2022, Kimberly Willette was sentenced to one year and one day in federal prison, and Patrick Ridgeway was sentenced to a three-year term of probation and ordered to pay a $100,000 fine.
Global Healthcare Company to Pay $6.3 Million to Resolve False Claims Act Allegations
Novo Nordisk Inc., a global healthcare company has agreed to pay $6.3 million to resolve allegations that it violated the False Claims Act by selling items to the United States that were manufactured in non-designated countries in violation of the Trade Agreements Act of 1979.
The settlement resolves allegations that Novo Nordisk Inc. violated the Trade Agreements Act, which restricts the procurement of goods under certain government contracts to purchases from specific designated countries, by submitting false claims for payment for medical devices that were manufactured in non-designated countries.
The settlement resolves claims that from July 2012 through November 2020, Novo Nordisk sold to United States government agencies its NovoFine 30G 8 mm needles, and that from May 2016 through November 2020, Novo Nordisk sold to United States government agencies its NovoFine 32G 6 mm needles, all of which were manufactured in non-designated countries.
Philips Subsidiary to Brought Down by a Qui Tam Suit to Pay Over $24 Million for Alleged False Claims
Philips RS North America LLC, formerly known as Respironics Inc., a manufacturer of durable medical equipment (DME) based in Pittsburgh, Pennsylvania, has agreed to pay over $24 million to resolve False Claims Act allegations that it misled federal health care programs by paying kickbacks to DME suppliers. The affected programs were Medicare, Medicaid and TRICARE, which is the health care program for active military and their families.
The settlement resolves allegations that Respironics caused DME suppliers to submit claims for ventilators, oxygen concentrators, CPAP and BiPAP machines, and other respiratory-related medical equipment that were false because Respironics provided illegal inducements to the DME suppliers. Respironics allegedly gave the DME suppliers physician prescribing data free of charge that could assist their marketing efforts to physicians.
The Anti-Kickback Statute prohibits the knowing and willful payment of any remuneration to induce the referral of services or items that are paid for by a federal health care program, such as Medicare, Medicaid or TRICARE. Claims submitted to these programs in violation of the Anti-Kickback Statute give rise to liability under the False Claims Act.
The settlement provides that Respironics will pay $22.62 million to the United States, and in addition, will pay $2.13 million to the various states as a result of the impact of Respironics’ conduct on their Medicaid programs, pursuant to the terms of separate settlement agreements that Respironics has, or will enter into, with those states.
In addition to the civil settlement, Respironics entered into a five-year Corporate Integrity Agreement (CIA) with HHS-OIG. The CIA requires Respironics to implement and maintain a robust compliance program that includes, among other things, review of arrangements with referral sources and monitoring of Respironics’ sales force. The CIA also requires Respironics to retain an independent monitor, selected by the OIG, to assess the effectiveness of Respironics’ compliance systems.
The settlement resolves a lawsuit originally brought by Jeremy Orling, a Respironics’ employee, under the qui tam or whistleblower provisions of the False Claims Act. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. As part of this resolution, Orling will receive approximately $4.3 million of the federal settlement amount.
This settlement was the result of a coordinated effort by the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the District of South Carolina with assistance from the HHS-OIG and HHS Office of Investigations; DCIS; the Defense Health Agency Office of General Counsel; and the National Association of Medicaid Fraud Control Units.
Fraud Lawsuit Against Non-Profit For Inflating Medicaid Reimbursements Settled
Quit Tam Suit Brings Down Maranatha Human Services Who Agreed to Cease Operations and Pay $850,000
Maranatha Human Services, Inc. (“MARANATHA”) entered a settlement with the United States for falsely claiming that millions of dollars expended to benefit for-profit ventures owned and controlled by MARANATHA and its founder Henry Alfonso Coley (“Coley”), as well as payments to cover Coley’s personal expenses and excessive payments to Coley’s family members, were reasonable and necessary costs in connection with MARANATHA’s provision of Medicaid-funded services to individuals with developmental disabilities. MARANATHA is a non-profit organization based in Poughkeepsie, New York; Coley founded MARANATHA in 1988 and served as its chief executive officer until last year.
Specifically, the Government’s complaint, which was filed in November 2021, alleges that MARANATHA, with its board’s approval, funded for-profit companies operated by Coley; paid excessive salaries and consulting fees to Coley’s family members, often in exchange for little to no work; and paid for tens of thousands of dollars of Coley’s personal expenses. The Government further alleges that, from 2010 to 2019, Coley and MARANATHA submitted to the State of New York cost reports that falsely claimed millions of dollars of these expenses as “allowable” costs, which fraudulently inflated MARANATHA’s Medicaid reimbursement rates and resulted in MARANATHA receiving millions of dollars in Medicaid funds to which it was not entitled.
Under the settlement approved September 1, 2022 by U.S. District Judge Kenneth M. Karas, MARANATHA agreed to cease operations after transitioning the operation of its programs to other providers under the supervision of the governing state regulatory agency. MARANATHA will also pay $340,000 to the United States and has admitted and accepted responsibility for conduct alleged by the Government in its complaint as further described below. In addition, MARANATHA agreed to pay $510,000 to the State of New York to resolve the State’s claims, for a total recovery of $850,000. The settlement amount is based on the Office’s assessment of MARANATHA’s ability to pay based on the financial information it provided and its commitment to cease operations. The United States previously resolved the claims against Coley through a settlement approved by Judge Karas on November 17, 2021. In addition to paying damages to the United States and the State of New York, COLEY was barred from working for any entity that bills federal healthcare programs; he also entered into a Voluntary Exclusion Agreement with HHS-OIG, which prohibits him from, among other things, billing Medicaid and other federal healthcare programs for 15 years.
According to the Government’s complaint, from 2010 through 2019:
MARANATHA was required to submit cost reports, called Consolidated Financial Reports (“CFRs”), to the State of New York each year, specifying the reasonable and necessary costs MARANATHA incurred in providing services for its Medicaid-funded programs. these costs were to be reported as “allowable” costs.MARANATHA was required separately to report its other, “non-allowable” costs; “non-allowable” costs include costs unrelated to its Medicaid-funded programs, as well as any unreasonable or unnecessary costs.With its board’s approval, MARANATHA funded for-profit companies operated by COLEY and owned by COLEY or MARANATHA, as well as various unincorporated pet projects started by COLEY. One of the chief purposes of these ventures was to serve as vehicles to funnel money to COLEY’s daughter, as well as others associated with COLEY, whom MARANATHA paid for work they purportedly did to support these ventures and projects.Over the course of a decade, not one of these ventures ever launched a product or service or earned a single dollar in revenue. Coley and MARANATHA hired Coley’s family members as employees and consultants, some in connection with these for-profit ventures, and others in connection with MARANATHA’s Medicaid-funded services. Coley and MARANATHA paid excessive salaries and consulting fees to Coley’s family members, often in return for little to no work. MARANATHA also paid for tens of thousands of dollars of coley’s personal expenses, including more than $34,000 for personal training sessions at a gym.Coley and MARANATHA knowingly submitted CFRs annually to the State of New York fraudulently reporting these expenses—totaling millions of dollars—as “allowable” costs.On each CFR, Coley falsely certified to the completeness and accuracy of the report. Coley and MARANATHA knew that the State of New York relied on providers’ CFRs when setting provider-specific reimbursement rates for certain Medicaid-funded programs, including MARANATHA’s largest Medicaid-funded program. As a result of COLEY’s and MARANATHA’s falsely inflated cost reports, the State of New York awarded MARANATHA a higher reimbursement rate and MARANATHA received millions of dollars in Medicaid funds to which it was not entitled.
As part of the settlement, MARANATHA admits, acknowledges, and accepts responsibility for the following conduct:
COLEY made a presentation to MARANATHA’s board of directors acknowledging that “[i]t was always the plan for Maranatha to use government funds as a launching pad to create private enterprise that would enable it to not be dependent on [the] government while at the same time fulfilling its function” consistent with its mission.MARANATHA knew of the requirement to distinguish “allowable costs” from “non-allowable costs” in its CFRs.MARANATHA knew that the allowable costs reported in its CFRs are used by the New York State Department of Health, in part, to determine MARANTHA’s reimbursement rates for the provision of Medicaid services.In each CFR that MARANATHA submitted from 2010 to 2019 (the “Covered Period”), MARANATHA’s CEO, COLEY, certified that (i) the “information furnished in this report… is in accordance with the instructions and is true and correct to the best of my knowledge”; and (ii) the statement attached to the CFR “fully and accurately represents all reportable income and expenditures made for services performed in accordance with the provision of the Mental Hygiene Law and approved budgets.”Throughout the Covered Period, MARANATHA submitted CFRs every year that reported as “allowable costs” amounts expended not for MARANTHA’s provision of Medicaid-funded services but instead to pursue certain for-profit business ventures.In particular, MARANATHA submitted CFRs reporting as “allowable costs” costs expended to benefit certain entities owned and/or operated by COLEY or MARANATHA that did not provide Medicaid-funded services (the “Non-Medicaid Ventures”).MARANATHA’s board, which approved MARANATHA funding these Non-Medicaid Ventures, was briefed on them by COLEY.MARANATHA paid COLEY’s family members to perform work related to the Non-Medicaid Ventures. For example, since 2010, MARANATHA paid COLEY’s daughter more than $300,000. Though much of her time was spent on work related to the Non-Medicaid Ventures, MARANATHA reported her full compensation as an “allowable cost” in the CFRs.Since 2010, MARANATHA paid COLEY more than $2 million in salary and benefits, and MARANTHA claimed the full amount of that compensation as “allowable costs” on its CFRs. However, COLEY devoted much of his time to working on the Non-Medicaid Ventures.MARANATHA also paid for certain of COLEY’s personal expenses, including more than $34,000 spent on personal training sessions, as well as holiday gifts and jewelry. MARANATHA reported these expenses as “allowable costs” in its CFRs.
This lawsuit originated as a whistleblower lawsuit filed under seal pursuant to the False Claims Act.
Medicaid Recipients Agree to Pay $130,000 to Resolve False Claims and Health Care Benefit Fraud
Manpreet Kamboj and Gurdev Kamboj (aka David Singh) agreed to pay $130,000 to resolve allegations that they knowingly falsified income to unlawfully create eligibility for Mississippi Medicaid health care benefits for their dependents.
Despite Medicaid’s low-income requirement, the United States contends that Manpreet and Gurdev Kamboj collectively owned and/or were associated with 48 convenience store/gas stations located in Mississippi and Louisiana. The Kambojs also own a five-bedroom 7,850 square foot home located in Madison, Mississippi, most recently valued at 1.3 million dollars.
According to the United States, the Kambojs falsely represented on various Mississippi Medicaid health care benefit applications and renewals that one of them was unemployed and that the household derived income from one convenience store/gas station. As such, the United States alleges that from August 29, 2011, to February 28, 2022, the Kambojs caused the MDOM to pay over $70,000 in health care coverage benefits to which they were not entitled.
Medical Technology Company President Convicted in $77 Million COVID-19 and Allergy Testing Scheme
Mark Schena, 59, of Los Altos, California, served as the president of Arrayit Corporation. According to court documents and evidence presented at trial, Schena engaged in a scheme to defraud Arrayit’s investors by claiming that he had invented revolutionary technology to test for virtually any disease using only a few drops of blood. In meetings with investors, Schena and his publicist claimed that Schena was the “father of microarray technology” and falsely stated that he was on the shortlist for the Nobel Prize. The evidence at trial showed that Schena also falsely represented to investors that Arrayit could be valued at $4.5 billion based on purported revenues of $80 million per year.
A federal jury convicted Schena, the president of a Silicon Valley-based medical technology company September 1, 2022 of participating in a scheme to mislead investors, commit health care fraud, and pay illegal kickbacks in connection with the submission of over $77 million in false and fraudulent claims for COVID-19 and allergy testing.
In furtherance of the scheme, the evidence at trial showed that Schena, among other things, failed to release Arrayit’s SEC-required financial disclosures and concealed that Arrayit was on the verge of bankruptcy. Schena lulled investors who were concerned that the company was a “scam” by inviting them to private meetings and issuing false press releases and tweets stating that Arrayit had entered into lucrative partnerships with companies, government agencies, and public institutions, including a children’s hospital and a major California health care provider. The tweets and press releases falsely claimed that such entities had agreed to use the Arrayit technology, when in fact no such agreements existed or were of minimal value.
Schena also orchestrated an illegal kickback and health care fraud scheme that involved submitting fraudulent claims to Medicare and private insurance for unnecessary allergy testing. Arrayit ran allergy screening tests on every patient for 120 different allergens (ranging from hornet stings to codfish) regardless of medical necessity. To obtain patient blood specimens, Schena paid kickbacks to marketers in violation of the Eliminating Kickbacks in Recovery Act and orchestrated a deceptive marketing plan that falsely claimed that the Arrayit test was highly accurate in diagnosing allergies, when it was not, in fact, a diagnostic test. Arrayit billed more per patient to Medicare for blood-based allergy testing than any other laboratory in the United States, the evidence at trial showed, and billed some commercial insurers over $10,000 per test.
In early 2020, Arrayit’s allergy testing business declined because the COVID-19 pandemic and stay-at-home orders reduced demand for allergy testing. Schena then falsely announced that Arrayit “had a test for COVID-19” based on Arrayit’s blood testing technology, before developing such a test. Seeking to capitalize on the nationwide shortage of COVID-19 testing, Schena orchestrated a deceptive marketing scheme that falsely claimed that Dr. Anthony Fauci and other prominent government officials had mandated testing for COVID-19 and allergies at the same time and required that patients receiving the Arrayit COVID-19 test also be tested for allergies. Schena also falsely claimed that the Arrayit COVID-19 test was more accurate than a PCR test for diagnosing COVID-19 infections, while concealing from investors and patients taking the test that the Food and Drug Administration had informed him that the Arrayit test was not accurate enough to receive an Emergency Use Authorization for use in the United States.
Schena was convicted of one count of conspiracy to commit health care fraud and conspiracy to commit wire fraud, two counts of health care fraud, one count of conspiracy to pay kickbacks, two counts of payment of kickbacks, and three counts of securities fraud. He is scheduled to be sentenced on Jan. 30, 2023 and faces a maximum penalty 20 years imprisonment for the conspiracy to commit health care fraud and conspiracy to commit wire fraud; 10 years of imprisonment for each count of health care fraud; five years imprisonment for conspiracy to pay kickbacks; 10 years imprisonment for each count of payment of kickbacks; and 20 years imprisonment for each count of securities fraud. U.S. District Judge Edward J. Davila will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
$907,074.64 Health Care Fraud Settlement
Dr. Craig M. Morgan and Eye Consultants of Huntington Inc. have paid $907,074.64 to resolve allegations that they submitted false claims to Medicare and Medicaid.
From January 13, 2013 through April 12, 2019, Morgan routinely administered vascular endothelial growth factor inhibitor injections into the eyes of patients to treat purported wet age-related macular degeneration (Wet-AMD) or other ophthalmological conditions for which treatment with such injections is indicated. These injections were not medically necessary because the patients in question did not have treatable Wet-AMD or any other condition that would have warranted the invasive treatment at the time it was administered.
Morgan was identified by HHS-OIG as one of the top outliers for billing the Medicare program across all medical specialists in West Virginia, far exceeding the average of Medicare claims submitted by his peers. The vast majority of payments Morgan received from Medicare were for injections for purported treatment of Wet-AMD.
Chiropractic Clinic Agrees to Settle Allegations of Improper Billing for Electro-Acupuncture Devices
Lifestyle Resumption Integrative Health (“Lifestyle Resumption”), a chiropractic clinic located in Fort Mitchell, Ky., and its owner, Klaude Kocan, D.C., have agreed to pay $200,000 to resolve allegations that they violated the False Claims Act, by improperly billing Medicare for services involving electro-acupuncture devices.
According to the Settlement Agreement, between July 2016 and March 2018, Lifestyle Resumption billed Medicare for the implantation of neurostimulator devices – a surgical procedure during which devices are implanted into the central nervous system or targeted peripheral nerves. The United States contends that these bills falsely represented the services provided, because Lifestyle Resumption did not actually perform surgical procedures. Instead, Lifestyle Resumption’s nurse practitioner applied electro-acupuncture devices to patients’ ears by inserting a limited number of needles and using an adhesive. Medicare does not pay for electro-acupuncture devices billed as implantable neurostimulators and did not reimburse for acupuncture at all during the relevant period.
Colorado Springs Company and Owner Pay $400,000 to Resolve Allegations That They Submitted False Claims For Aquatic Therapy
Dynamic Physical Therapy, LLC (“Dynamic”), a physical therapy company, and its owner, Emad Yassa, have agreed to pay the United States $400,000 to resolve allegations that they violated the False Claims Act by falsely billing federal health care programs for aquatic therapy services.
Dynamic is a physical therapy company that operates two clinics in Colorado Springs, Colorado. Dynamic is owned by Mr. Yassa, who also practices as a physical therapist at the Dynamic clinics. Dynamic submitted bills for physical and aquatic therapy services to Medicare and other federal health care programs.
In 2019, a former employee of Dynamic filed a sealed civil “whistleblower” lawsuit under the False Claims Act alleging that Dynamic, at the direction of Mr. Yassa, was billing Medicare for medically unnecessary physical therapy services and for services that had not actually been provided. The lawsuit was filed in federal district court in Colorado under the “qui tam,” or whistleblower, provisions of the False Claims Act. Those provisions permit private parties to sue on behalf of the United States to bring claims based on the submission of false claims to the government and allow the whistleblower to receive a share of any funds recovered through the lawsuit. The whistleblower provisions encourage people with knowledge of fraud against the federal government to come forward when they believe fraud is being committed.
After the whistleblower complaint was filed, Mr. Yassa signed a “Stipulation and Final Board Order” with the State of Colorado’s Physical Therapy Board In the stipulation, Mr. Yassa admitted that, from mid-2014 to mid-2017, he “routinely and improperly billed insurance companies, Medicare, and Medicaid for individual aquatic therapy sessions for his patients when they had actually participated in group aquatic therapy sessions,” and also “routinely failed to document in his patients’ records that they had participated in group aquatic therapy sessions.”
In an investigation, the United States uncovered evidence indicating that Dynamic had also submitted false claims to TRICARE, a health care program for uniformed service members, retirees, and their families. The evidence indicated that Dynamic had falsely represented to TRICARE that its physical therapy services had been provided by an authorized physical therapy provider, when, in fact, they had been provided by an unauthorized physical therapy assistant.
The resolution obtained in this matter was the result of a coordinated effort between the U.S. Attorney’s Office for the District of Colorado, the Department of Health and Human Services – Office of the Inspector General, the Defense Criminal Investigative Service, and the Federal Bureau of Investigation.
Iowa Plastic Surgeon Agrees to Pay $800,000 to Resolve Allegations of Inappropriate Billing
Dr. Ronald Bergman and his medical practice, Bergman Cosmetic Surgery, P.C., of Des Moines, Iowa, have agreed to pay $800,000 to the United States and the State of Iowa to resolve allegations that Bergman wrongfully billed Medicare and Medicaid for services rendered by others and billed Medicare for medically unnecessary and unreasonable applications of skin substitute products.
Specifically, the government alleged that from 2013 to 2020, Bergman submitted inappropriate claims for payment to government healthcare programs in three ways. First, the government alleged that Bergman submitted claims to Medicare and Medicaid in his own name when, in fact, the services were rendered by auxiliary personnel, and when there was insufficient physician involvement for the claims to be billed in Bergman’s name. Second, the government alleged that Bergman submitted claims to Medicare and Medicaid in his own name when, in fact, the services were rendered by medical fellows without Bergman, as the teaching physician, being physically present. Third, the government alleged that Bergman submitted claims to Medicare for medically unnecessary and unreasonable applications of skin substitute products.
This civil matter arose from an action brought under the whistleblower provisions of the False Claims Act. Pursuant to that Act and the settlement agreements, the whistleblower will share in the United States’ financial recovery.
Pill Mill Operator Convicted For Oxycodone Diversion
PURIFICACION CRISTOBAL, was found guilty by a federal jury verdict September 7, 2022 for her participation in a conspiracy to distribute oxycodone without a legitimate medical purpose acting outside the usual course of professional practice. CRISTOBAL was also convicted of two counts of oxycodone distribution pertaining to specific prescriptions. She was found not guilty of other counts of oxycodone distribution pertaining to other prescriptions. Cristobal will be sentenced by U.S. District Judge Katherine Polk Failla, who presided over the approximately two-week trial.
As proven at trial, Purificacion Cristobal, a licensed nurse practitioner purporting to specialize in psychiatry, operated a clinic on Westchester Avenue in the Bronx. Between approximately June 2019 and June 2020, Cristobal prescribed tens of thousands of doses of oxycodone without a legitimate medical purpose outside of the usual course of professional practice. Oxycodone is a highly potent and addictive opioid that commands high prices in the black market because of demand by drug abusers. Cristobal often prescribed oxycodone in combination with Xanax (alprazolam) and/or Adderall (amphetamine), controlled substances that are themselves frequently abused and resold illicitly.
Cristobal never performed physical examinations or medical tests, often asked patients to take their pick among different narcotics and was repeatedly warned by others that her patients were reselling or abusing the drugs she prescribed. She encouraged existing patients to recruit others, regularly accepted cash, and charged different cash “fees” depending on how many prescriptions she wrote for a particular patient. Cristobal also coordinated with a nearby pharmacist, to whom she referred many of her patients, to shield her unlawful prescribing practices from law enforcement scrutiny.
Cristobal, 75, of Lyndhurst, New Jersey, was convicted of one count of conspiring to distribute oxycodone and two counts of distributing oxycodone without a legitimate medical purpose acting outside the usual course of professional practice. Those counts carry, in the aggregate, a maximum potential sentence of 60 years in prison.
The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Former NBA Player, Alleged ‘Ringleader’ of $5 Million Insurance Scheme Pleads Guilty
The Defendants Allegedly Engaged In A Widespread Scheme To Defraud The NBA Players’ Health And Welfare Benefit Plan
By submitting fake reimbursement claims for medical and dental services they never had players led by Terrence Williams learned he pleaded guilty to conspiring to commit health care fraud and identity theft in connection with a multimillion-dollar scam against the basketball league’s health plan, authorities said. Williams, selected 11th overall in the 2009 NBA draft by then-New Jersey Nets, pleaded guilty to one count of conspiracy to commit health care and wire fraud and aggravated identity theft. The latter charge carries a mandatory minimum sentence of two years in prison. Sentencing before Judge Caproni is scheduled for January.
Williams was one of 18 former players named in an indictment. The plea agreement announced by prosecutors includes a $2.5 million restitution payment to the NBA health plan and more than $650,000 to the government.
A judge remanded Williams to jail in May after text messages allegedly sent from the 35-year-old to a witness violated his pretrial release. The witness was “talking way to[o] f[—]ing much,” and Williams told them to “shut the f[–]k up,” according to prosecutors. More than a dozen former NBA players were charged in the alleged multi-million dollar health insurance fraud scheme to rip off the league’s benefit plan, with a former Nets player as the ringleader.
According to the grand jury indictment, the defendants allegedly engaged in a widespread scheme from at least 2017 up to around 2020 to defraud the NBA Players’ Health and Welfare Benefit Plan by submitting fake reimbursement claims for medical and dental services that were never actually rendered.
In some cases, the players who submitted the alleged false claims weren’t even in the United States at the times they allegedly received the treatments. They allegedly filed fake invoices saying they had to pay for the phantom procedures out of pocket.
Those allegedly fraudulent claims totaled about $3.9 million, from which the defendants got about $2.5 million in fraudulent proceeds, the indictment alleges.
Williams allegedly orchestrated the years-long scheme and recruited other NBA health plan participants to assist by offering them fake invoices to support their claims. He allegedly received at least $230,000 in kickback payments from 10 other players in return for providing the alleged false documentation.
The 34-year-old Williams also allegedly helped three co-defendants – Davis, Charles Watson Jr. and Antoine Wright – obtain fake letters of medical necessity to justify some of the services on which the false invoices were based.
Among the false reimbursement claims described in the indictment was a $19,000 claim that Williams filed for chiropractic services he allegedly never had and for which he received $7,672.55 in reimbursement. Williams also allegedly obtained a template for a fake invoice designed to appear as if it had been issued by the office.
Fake chiropractic treatment invoices were allegedly also created for Davis, Watson Jr. and Wright and emailed to Williams. The template had the date, invoice number, services and a charge of $15,000 filled in but left the “bill to” box, where the name of the patient would ordinarily be found, blank, according to the indictment.
Williams is accused of emailing those fake invoices to the other defendants named in the indictment. He and defendant Alan Anderson, who briefly played for the Nets from 2013 to 2015, allegedly helped get fake letters of medical necessity for Davis, Watson Jr. and Wright in furtherance of the fraud scheme as well.
According to the court documents, several of the fake invoices and medical necessity forms stood out because, “they are not on letterhead, they contain unusual formatting, they have grammatical errors” and were sent on the same dates from different offices.
Authorities said Terrence Williams received at least $300,000 in kickbacks from the others for his efforts.
In situations where others involved balked, authorities said Williams pretended to be other people and threatened them to gain compliance.
The National Basketball Players Association said in a statement that they were “aware of the indictment of former NBA players announced earlier today” and that they will “continue to monitor the matter.”
New York A.G. Secures $850,000 from Disability Services Not-for-Profit That Defrauded Medicaid
Guilty to Insurance Fraud in Iowa
D’Alan Thurmond, age 41, of Waterloo, pled guilty on April 25, 2022, to one count of Presenting False Information, a class “D” Felony, following an investigation by the Iowa Insurance Division’s Fraud Bureau.
The investigation began in December 2019 after the Iowa Insurance Divison’s Fraud Bureau received information indicating Thurmond had provided false information to an insurer following an automobile accident in Black Hawk County.
The investigation determined Thurmond had made false representations regarding the nature of the loss in an effort to secure benefits of the policy. He claimed that his vehicle was stolen when, in fact, it was involved in a single-car accident while he was the driver.
“Insurance fraud is not a victimless crime. We all pay for insurance fraud in the form of higher insurance costs,” Iowa Insurance Commissioner Doug Ommen said. “I appreciate the hard work of our Fraud Bureau and the Blackhawk County Attorney’s Office in the prosecution of this case, so Mr. Thurmond was held accountable for his actions.”
Following his guilty plea, Thurmond received a five year prison sentence, which he is serving concurrently to an unrelated crime. Financial penalties were suspended.
Chiropractor Pleads Guilty to Insurance Fraud and Fraudulent Practices
Joshua David Blunt, age 41, of Bettendorf, recently pled guilty to one count of Insurance Fraud – Presenting False Information (Class D Felony) and one count of Fraudulent Practices 4th Degree (Serious Misdemeanor) following an investigation by the Iowa Insurance Division’s Fraud Bureau.
The investigation began in May 2019 after a complaint alleged Blunt, while employed as a chiropractor at New Life Chiropractic Clinic in Bettendorf, submitted multiple fraudulent claims to Wellmark, Inc.
The investigation revealed Blunt utilized fraudulent billing practices which had been previously identified and addressed by Wellmark on at least two previous occasions. After being provided with education on these practices, and repaying Wellmark for fraudulently obtained claim payments, Blunt continued to submit fictitious billing information for chiropractic care and treatment services which had never been provided. As a result, Blunt illegally obtained $20,778 in claim payments.
Additionally, the investigation revealed that after purchasing a 2008 Flagstaff Travel Trailer in October 2017 for $8,500, Blunt provided false information to the Scott County Treasurer’s Office by reporting the purchase price as $1.00. As a result, Blunt avoided paying $424.90 in new registration fees.
Blunt was arrested on May 20, 2021 by the Scott County Sheriff’s Office and released after posting bond.
Following his guilty plea, Blunt received a deferred judgment and was sentenced to two years of probation, ordered to pay a civil penalty of $1,455, restitution to Wellmark in the amount of $20,778 and to the State of Iowa in the amount of $425.
Nebraska Farmer Ordered To Pay $1 Million For Crop Insurance Fraud
Ross Nelson, a farmer of Newman Grove, Nebraska was ordered to pay $1 million in restitution for profiting off a fraudulent crop insurance claim.
The U.S. Attorney’s Office for the District of Nebraska said Nelson provided false losses of soybeans and corn when he filed a claim in 2015 to an authorized insurance provider. Court documents revealed that he received more than $700,000 in reimbursement for losses, and the USDA’s Risk Management agency launched an investigation because Nelson’s losses didn’t match neighboring farms in Holt County.
Nelson has also been sentenced to 4 years’ probation and 16 weekends of intermittent confinement and a $30,000 fine.
Guilty Because a Hitting a Tree is not a Deer
Jared Simmons, age 42, of Davenport, pled guilty on September 1, 2022, to one count Presenting False Information, a class “D” Felony, following an investigation by the Iowa Insurance Division’s Fraud Bureau.
The investigation began in January 2021 after the Iowa Insurance Division’s Fraud Bureau received information indicating Simmons had provided false information to an insurer following an automobile accident in Scott County.
The investigation determined Simmons had made false representations regarding the nature of the loss in an effort to secure benefits of the policy. Simmons claimed that his vehicle sustained damage after hitting a deer when, in fact, the damage was sustained when Simmons was involved in a single-car accident while he was intoxicated. Simmons was arrested on February 3, 2022.
Following his guilty plea, Simmons received a five year suspended prison sentence and placed on supervised probation for a period of two years. Simmons was also ordered to pay a fine of $1,025.
Disbarred After Forgeries, Misconduct When Insurance Defense Attorney Goes Bad
Erika Lynn Muller, until recently a partner with the Cole, Scott & Kissane firm, based in Fort Lauderdale, Florida, a former attorney with one of Florida’s top insurance defense firms has been disbarred after the Bar said she engaged in repeated acts of neglect, deception and forgery.
Muller can no longer practice in the state, the Florida Supreme Court said in an order last week. The court agreed with the Bar’s complaint and a referee’s recommendation that she be disbarred, following months of disciplinary proceedings.
The Bar’s complaint listed several bases for the disbarment:
lack of truthfulness,misconduct andlack of communication with regard to one case in particular that unfolded in 2020 and 2021.
In a slip-and-fall claim against Rooms To Go furniture company in Miami, Muller offered to settle the claim for $325,000, even though she was not authorized to do so. She then sent the plaintiff’s attorney a photocopy of a check that she had allegedly fabricated. The plaintiff’s lawyer filed motions to enforce the settlement, which resulted in a court judgment in March 2021 of $425,000.
Muller agreed to send $550,000 to stop the garnishments on the judgment. She allegedly sent a photocopy of another fabricated cashier’s check, then said she would hand-deliver the check. On the day of the planned transfer, she falsely said she was in an automobile accident.
Meanwhile, Muller told the furniture company and an adjuster for the insurance company that the case was still in mediation and on April 7, 2021, Muller informed Cole, Scott & Kissane attorneys that she was resigning. In an affidavit, Muller acknowledged that she made misrepresentations to multiple parties and presented altered documents to plaintiff’s counsel.
In her affidavit, Muller stated that she was suffering from a mental health crisis during the time of the misconduct. Muller failed to respond to any of the Bar’s inquiries into the matter. The Rooms To Go litigation, brought by an independent contractor who was injured at an RTG parking lot, was dismissed in June 2021.
A referee judge who reviewed the case against Muller agreed with the disbarment action.
The state Supreme Court, which in recent years has often disagreed with referees’ recommendations, accepted it in this case and said the disbarment will be effective September 25, 2022. Muller must also pay $1,315 to cover the Bar’s costs in investigating the case.
Muller is a graduate of the University of Miami School of Law and was a member of the Florida bar since 2008. The Cole, Scott & Kissane website notes that she focused on bad-faith litigation, personal injury defense, premises liability and insurance defense litigation.
The Equitable Remedy of Rescission of Insurance
An Effective Tool to detect, deter and defeat insurance Fraud Hardcover – June 17, 2022
The Equitable Remedy of Rescission
Rescission is an equitable remedy first created in the ecclesiastical courts of Elizabethan England.
When the United States was conceived in 1776 the founders were concerned with protecting their rights under British common law.
Common Law is a form of law developed by judges through tribunals and decisions of courts rather than executive branch action and legislative statutes.
Following the common law tradition, legal principles were referred to courts of equity to “mitigate the rigor” of the common law.
The new United States of America adopted British common law as the law once the U.S. Constitution was adopted in 1789. British common law was only modified by the limitations placed on the central government by the Constitution.
The viability and ability to enforce contracts was recognized as essential to commerce. Courts of law, following the British Common Law, were charged with enforcing legitimate contracts and rendering money judgments against the party who breached the contract.
It became clear, however, that some contract disputes cannot be resolved with a money judgment. Rather, it needed the assistance of the courts of equity whose judges, in the Elizabethan era were presided over by priests who were believed to be better able to render fair judgments.
The term “equity” is associated with notions of fairness, morality and justice. It is an ethical jurisdiction. On a more legalistic level, however, “equity” is the branch of law that was administered in the Court of Chancery prior to the Judicature Acts 1873 and 1875.
This was a jurisdiction evolved to achieve justice and to overcome the rigorous and deficiencies of the common-law. Although application of conscience pervades this aspect of the law, equity never bestowed an unfettered jurisdiction on the Court of Chancery to do what was fair in the settlement of a dispute. Embodying aspects of ecclesiastical law and Roman law, equity developed and gradually emerged as a distinct body of law.
It was not until 1875 that equity was practiced in the common law courts. The existence of a dual system entailed that, for example, when a defendant had an equitable defense to a common law action, he would have to go to the Court of Chancery to obtain an injunction to suspend the proceedings in common-law court. He would then begin a fresh action for relief in the Court of Chancery. Facing duality persisted until the Judicature Acts which created the Supreme Court of Judicature and allowed all courts to exercise both a common law and equitable jurisdiction.
The courts of equity were charged with, among other things, protecting contracting parties from mistake, fraud, misrepresentation and concealment where no damages were involved. It was the obligation of the courts of equity to reach a result that was fair to all of the parties to the contract. The founders of the United States, and the British common law, concluded that equity required that enforcing a contract based on mistake, fraud, misrepresentation or concealment would not be fair.
A court of equity is a court which can apply equitable remedies to disputes. These courts operate within the legal system, but rather than focusing on the application of law, they look at cases and determine outcomes based on fairness. They can be found in many regions of the world. In modern usage in the United States trial courts are empowered to handle both legal and equitable remedies.
A court of equity can hand down a judgment which includes an equitable remedy such as an injunction, as opposed to simple monetary damages.
The judge in a court of equity can weigh many different sides to a case and explore different perspectives to arrive at a judgment.
Available as: A Kindle book A Paperback or a hardcover .
Insurance Fraudsters Deserve No Quarter
Available as a paperback here. Available as a hardcover here. Available as a Kindle Book here.
New Book That Explains How to Defeat or Deter Insurance Fraud
The Examination Under Oath to Resolve Insurance Claims
The Most Effective Tool Available to Insurers to Defeat Attempts at Insurance Fraud & to Resolve Questionable Claims
Available as a Kindle book Available as a paperback. Available as a hardcover.
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.
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;
Subscribe to Zalma on Insurance at locals.com https://zalmaoninsurance.local.com/subscribe. Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; I publish daily articles at https://zalma.substack.com, 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
https://zalma.com/blog
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