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

Mealey's Insurance Fraud

August 01, 2024
Insurer Files Counterclaim Against Homeowners, Appraiser In Hurricane Coverage Row

NEW ORLEANS — After homeowners sued their insurer for breach of contract and bad faith related to the insurer’s alleged failure to cover their loss related to Hurricane Ida, the insurer filed a counterclaim against them and a third-party complaint against their appraiser, seeking damages for the homeowners’ and appraiser’s alleged scheme to defraud the insurer by inflating the damages estimate and improperly attributing costs to upgrade the property to hurricane damages.
July 31, 2024
Reconsideration Denied In Dispute Over Misrepresentation As To $2M Life Policies

MACON, Ga. — A Georgia federal judge on July 30 denied a life insurance beneficiary’s motion for reconsideration of a summary judgment ruling for the insurer regarding the beneficiary’s bad faith claim related to the insurer’s attempted rescission of two $1 million life insurance policies, finding that the insurer “had reasonable grounds to contest” the beneficiary’s claim given that the insured made misrepresentations in his insurance applications regarding his alcohol use.
July 31, 2024
9th Circuit Reverses Judgment In Insurance Row Over Application Misrepresentation

SAN FRANCISCO — The Ninth Circuit U.S. Court of Appeals reversed and remanded a district court’s grant of summary judgment to insurers in their insureds’ suit seeking coverage for expenses in defending another suit regarding fraud-based claims, finding that the district court erred in applying Nevada law, rather than Texas law, and that pursuant to Texas law, reversal is required because material facts remain in dispute regarding alleged material misrepresentations in the insureds’ application for policy renewal.
July 29, 2024
Michigan Panel Affirms Ruling Requiring GEICO To Reimburse Allstate In PIP Dispute

DETROIT— In an auto accident coverage dispute, a Michigan appellate court affirmed lower court orders granting an auto insurer’s motion for summary disposition and entering judgment requiring GEICO to reimburse Allstate for personal injury protection (PIP) benefits already paid and assuming liability for future PIP benefits, finding that the lower court correctly granted summary disposition to the insurer because its insured made material misrepresentations in the insurance application.
July 29, 2024
Judge Denies Underwriter’s Dismissal Bid In Yacht Damage Coverage Row With Insurer

KANSAS CITY, Kan. — A Kansas federal judge denied an insurance underwriter’s motion to dismiss a coverage dispute in which an insurer seeks a determination that a yacht that was damaged is excluded from coverage, finding that because the court previously decided that it had jurisdiction over the underwriter, the underwriter’s renewed request for dismissal is denied as an “attempt to take a second bite from the proverbial apple.”
July 26, 2024
Ex-Underwriter’s Dismissal Bid Skirts Main Claim In Breach Of Contract Row

MIAMI — Noting that he does not seek dismissal of a claim that he says the bulk of the allegations relate to, a former underwriter on July 25 moved in Florida federal court for dismissal of the other two claims in a suit over conduct that an insurer alleges included greatly exceeding his authority by executing a facultative retrocession agreement to cover a risk of more than $44 million.
July 25, 2024
Insurer Fails To Show Insured’s Concealment Of Commercial Fireworks Was Intentional

BISMARCK, N.D. — A federal judge in North Dakota on July 24 ruled in favor of an insured in a homeowners insurer’s declaratory judgment lawsuit disputing coverage for underlying property damage and personal injuries caused by a fireworks explosion, finding that the policy’s misrepresentation provision does not bar coverage because the insured did not willfully conceal or misrepresent any material facts regarding his use and storage of commercial fireworks at his Bismark property.
July 24, 2024
U.S. Supreme Court Distributes Cert Petition Over FCA Suit, Settlement Agreement

WASHINGTON, D.C. — The U.S. Supreme Court on July 24 distributed for conference a petition for writ of certiorari filed in the U.S. Supreme Court by the owner of medical clinics seeking review of the Sixth Circuit U.S. Court of Appeals’ ruling upholding a district court’s orders enforcing a settlement agreement and compelling the owner to seek U.S. government consent to dismiss claims for federal False Claims Act (FCA) violations in a separate qui tam suit.
July 23, 2024
Judge Issues Standing Order In Negligence Suit Against Purported Insurer’s Counsel

ATLANTA — A Georgia federal judge issued a standing order outlining case management in a negligence suit against legal counsel for a purported health insurer now in liquidation regarding the law firm’s role in aiding and abetting in an alleged scheme to entice people to purchase health plans that ultimately left “members without coverage and with devastating medical bills.”
July 19, 2024
Judgment Granted For Broker In Coverage, Fraud Dispute With Insurance Agent

TRENTON, N.J. — A New Jersey federal judge on July 18 granted in part judgment for an insurance broker in a dispute among a commercial general liability insurer, a broker and wholesale insurance agent, finding that material facts are not in dispute regarding negligent misrepresentation and common-law indemnity claims but that fact disputes remain as to a fraud in the inducement claim.
July 18, 2024
State Farm Waives Response To Cert Petition Over FCA Suit And Settlement Agreement

WASHINGTON, D.C — State Farm Mutual Automobile Insurance Co. waived its right to respond to a petition for writ of certiorari filed in the U.S. Supreme Court by the owner of medical clinics seeking review of the Sixth Circuit U.S. Court of Appeals’ ruling upholding a district court’s orders enforcing a settlement agreement and compelling the owner to seek U.S. government consent to dismiss claims for federal False Claims Act (FCA) violations in a separate qui tam suit.
July 17, 2024
8th Circuit Reverses Judgment For Nationwide In Row Over Public Auction Definition

ST. LOUIS — The Eighth Circuit U.S. Court of Appeals on July 16 reversed a district court ruling granting summary judgment to Nationwide Mutual Insurance Co. in its suit seeking to void its insured’s homeowners policy and a declaration that it is not liable for a fire loss at the insured’s property, finding that Nationwide failed to meet its burden to show that the homeowner’s alleged misrepresentation in the policy application “was false in fact.”
July 16, 2024
Judge Grants Dismissal In FCA Violations Suit Against Calif. Specialty Laboratory

LOS ANGELES — Without providing explanation, a California federal judge on July 15 granted parties’ joint stipulation of dismissal in a relator’s qui tam suit against a California special laboratory, alleging violations of the federal False Claims Act and similar California statutory provisions for the lab’s role in inducing physicians and offering remuneration to them to refer government-insured patients to the lab.
July 11, 2024
Insurer Seeks To Void Policy, Deny Fire Damage Coverage For Code Violation Fraud

LOS ANGELES — A commercial insurer sued its insured limited liability company in a California federal court, seeking rescission of the insured’s policy and a declaration that the insurer is not obligated to pay for fire damage to the property due to the insured’s material misrepresentations in the policy application regarding the absence of safety code violations and liens on the property when an investigation revealed otherwise.
July 10, 2024
Insurer Granted Default Judgment In Row Over Absent Motorist’s Misrepresentations

TRENTON, N.J. — A New Jersey federal judge on July 9 granted default judgment in an insurer’s suit seeking a declaration that the auto insurance policies issued to its insured are rescinded and that it has no duty to defend and indemnify regarding an auto accident involving the insured where another man died, finding that the complaint sufficiently alleges fraud and that the insurer will be prejudiced without default judgment against the insured, who failed to appear.
July 10, 2024
9th Circuit Affirms Judgment For Insurer In Dispute Over Misrepresentation

SAN FRANCISCO — A split Ninth Circuit U.S. Court of Appeals panel on July 9 affirmed a district court’s grant of partial summary judgment to an insurer seeking a determination that a medical professions liability policy issued to its insured behavioral health provider provides no coverage for an underlying Oregon state court suit, finding that summary judgment was proper because the insured “made a material misrepresentation in its renewal application.”
July 09, 2024
8th Circuit Affirms Ruling Finding Sleep Disorder Clinic Liable For FCA Violations

ST. LOUIS — The Eighth Circuit U.S. Court of Appeals affirmed in part a district court’s ruling entering judgment in favor of a former employee of a sleep disorder clinic regarding his claims for False Claims Act (FCA) violations and related state law provisions as to the clinic’s overbilling of federal insurers and retaliation by firing him, finding that the lower court correctly rejected the “public disclosure defense” and did not abuse its discretion in admitting testimony pursuant to Daubert v. Merrell Dow Pharmaceuticals Inc. but that it erred in applying a punitive sanction that was “excessive.”
July 08, 2024
Judge Rejects Insurer’s Misrepresentation Argument In Duty-To-Defend Action

MISSOULA, Mont. — A Montana federal judge granted summary judgment to an insured and related parties in an insurer’s suit seeking a declaration that it has no duty to defend and indemnify its insured in an underlying action related to injuries a man sustained when a 7,000-pound bundle of wood fell on him, finding that the insured did not “affirmatively” misrepresent “its business activities.”
July 03, 2024
Constructive Trust Claims Deadline Set In Liquidation Of Vesttoo And Affiliates

WILMINGTON, Del. — In the Chapter 11 liquidation of Vesttoo Ltd. and its dozens of affiliates, a Delaware federal bankruptcy judge set a July 22 deadline for asserting constructive trust claims and overruled the liquidating trustee’s objection regarding compensation for special counsel retained by the debtors.
July 02, 2024
Kentucky Panel Affirms Order Granting Allstate’s Bid For 2nd Examination Under Oath

FRANKFORT, Ky. — A split Kentucky appellate court affirmed a lower court’s orders requiring an individual purportedly injured in an auto accident while traveling in a vehicle insured by Allstate to undergo a second examination under oath (EUO), finding that the lower court did not abuse its discretion in its “good cause determination” to require the second EUO.
July 02, 2024
Insurer Amends Complaint Against Former Underwriter After Jurisdictional Toss

MIAMI — In an amended complaint dropping an initial plaintiff, an insurer sued a former underwriter in Florida federal court over conduct it alleges included greatly exceeding his authority by executing a facultative retrocession agreement to cover a risk of more than $44 million.
July 02, 2024
Appeal Over Confirmation Of Vesttoo’s Liquidation Is Voluntarily Dismissed

WILMINGTON, Del. — An appeal of the order confirming the Chapter 11 plan of liquidation for Vesttoo Ltd. and its dozens of affiliates has been voluntarily dismissed pursuant to a joint stipulation.
July 01, 2024
Magistrate Denies Motion To Quash Subpoena In Medicare Advantage Fraud Dispute

TAMPA, Fla. — One day after a Florida federal magistrate judge granted in part Medicare Advantage (MA) insurers’ motion to compel production of a litigation sharing agreement involving the relator in the instant case who alleged that medical providers and the insurers violated the False Claims Act (FCA), the magistrate judge on June 28 denied the insurers’ motion to quash a subpoena as untimely, finding that the delay in scheduling a deposition “will not prejudice” the insurers.
June 28, 2024
Jurisdictional Challenges Meet Mixed Fate In Suit Over Alleged Fraud Scheme

NEW YORK — Largely focusing on personal jurisdiction, a New York federal judge granted one refiled dismissal motion and partly granted another in an insurer’s suit over “an alleged massive and complex fraud that resulted in losses exceeding $135 million.”
June 28, 2024
Beneficiary’s Claims Fail Based On Proper Rescission Of Policy, Judge Says

SACRAMENTO, Calif. — A beneficiary’s breach of contract and bad faith claims cannot proceed against a life insurer because the beneficiary’s wife made a material misrepresentation on the policy application that justified the insurer’s rescission of the policy, a California federal judge said in granting the insurer’s motion for summary judgment.