Transamerica Wins Long-Term Care Benefits Appeal

Transamerica sent an investigator to conduct surveillance in February 2019 and March 2019, then again in April and May of 2019, a third time in August 2019 and a fourth time in September 2019.

During the first surveillance period, “Transamerica’s surveillance revealed that Mr. Pzdikyan never once came to Akop’s home,” according to the complaint Transamerica filed with the district court. “Nor did Akop ever meet with Mr. Pzdikyan at any other time or place during the period of surveillance. Akop and Mr. Pzdikyan never saw one another. No care was provided.”

The investigator also found that Akop Arutyunyan behaved “in a highly independent and functional manner, with no apparent limitations at all,” Transamerica reported. “He was seen walking his dog, reaching and bending, lifting objects with both hands, driving a car, shopping for groceries and other items, walking without a limp or any assistive device (such as the walker he claimed to need and use), and performing other movements and tasks he specifically represented to Transamerica he was unable to perform.”

Pzdikyan did not visit the Arutyunyan home during the second, third or fourth surveillance periods, either, according to Transamerica.

The litigation: Transamerica sued the Arutyunyans in May 2020 to recover the long-term care benefits it paid them.

The judge at the district court level asked the Arutyunyans for their social media passwords to see if Akop Arutyunyan was as impaired as the Arutyunyans said, and the judge asked for Anahit Arutyunyan’s tax returns, to see if she had a financial motive to commit fraud.

The Arutyunyans did not provide the requested documents.

The district court judge entered a default judgment in Transamerica’s favor in January 2022, and Transamerica filed an appeal in February 2022.

The Arutyunyans argued in their appeal that the district court’s order to produce the materials was an abuse of discretion. The Arutyunyans also objected to the district court’s decision to enter a default judgment.

The 9th Circuit ruling: The 9th Circuit panel found that the district court judge had the right to ask for the specified materials and that issuing the default judgment was not an abuse of the district court’s discretion.

“The district court applied a measured and gradational approach in responding to defendants’ non-compliance with the court’s orders and the local rules,” and the Arutyunyans’ lawyer “repeatedly minimized, if not misrepresented, his lack of compliance with the district court’s orders in this case,” Collins writes.

Even if the lawyer’s comments about his response to the district court’s orders “were not deliberate misstatements, it seems clear that they were at least made to this court with reckless disregard for their accuracy,” according to the opinion.

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