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

Mealey's Insurance Fraud

February 14, 2023
Amendment And Dismissal Sought After Jurisdictional Discovery In Fraud Suit

WILMINGTON, Del. — Following a Delaware Chancery Court directive for a status update in a case concerning an alleged scheme to transfer funds from a reinsurance trust to affiliated entities and “highly volatile hedge funds,” the plaintiffs moved for leave to file a fourth amended complaint, and certain defendants moved to dismiss for failure to prosecute.
February 13, 2023
Dental Supplier Pays $100,000 To Settle False Claims Of Conflicted Sales Reps

BOSTON — Dental products seller OraPharma Inc. has agreed to pay $100,000 to settle false claims allegations that its sales account managers moonlighted as dental hygienists and pushed the use of an antibiotic, resulting in the filing of false claims to Medicare.
February 07, 2023
11th Circuit Tosses GEICO’s Appeal In Fraud Suit, Cites Lack Of Jurisdiction

ATLANTA — The 11th Circuit U.S. Court of Appeals on Feb. 6 dismissed GEICO’s appeal of a district court’s order granting summary judgment to a windshield repair shop and its owners, in a suit alleging that the shop and its owners committed fraud and violated the Florida Motor Vehicle Repair Act by submitting insurance claims for repairs that were unnecessary or not performed, finding that the 11th Circuit lacks jurisdiction because there is no final appealable decision.
February 02, 2023
2nd Circuit Issues Stipulation Order In Companies Appeal Of Insurers’ RICO Suit

NEW YORK — The Second Circuit U.S. Court of Appeals issued its fifth stipulation order pursuant to a local rule for dismissal without prejudice, withdrawing the case for stipulating parties to explore settlement through mediation in an appeal of a lower court order denying medical companies’ motion to dismiss no-fault insurers’ fraudulent billing suit against them.
February 02, 2023
Magistrate Denies Relator’s Motion For Protective Order In FCA Suit Over CMS Bids

LOUISVILLE, Ky. — A Kentucky federal magistrate judge denied a relator’s motion for a protective order regarding an expert’s supplemental deposition in a False Claims Act (FCA) suit alleging that Humana Inc. knowingly submitted false bids to the Centers for Medicare and Medicaid Services (CMS), resulting in overpayment to Humana, finding that the relator failed to show that “good cause exists for a protective order limiting the scope” of the deposition.
February 02, 2023
Judge Denies Dismissal In Insurance Rescission Suit, Cites Coverage Defenses

CHICAGO — An Illinois federal judge denied an indoor adventure park’s dismissal motion in a suit filed against the park by its insurer, seeking to rescind the policy issued to the park, regarding its duty to defend the park in a separate, underlying negligence suit, finding that regardless of whether the park’s representative signed the insurance application, the motion should be denied because the insurer’s second amended complaint (SAC) alleges sufficient reasons for policy rescission.
February 01, 2023
Insurer Granted Judgment In $650,000 Fraudulent Billing Suit For ‘Reckless’ Coding

DETROIT — A Michigan federal judge granted summary judgment to an insurer in a fraudulent billing suit against an ambulatory surgery center alleging that improper current procedural technology (CPT) coding resulted in the surgery center’s receiving an overpayment of $652,557, finding that the surgery center acted “reckless[ly]” by using surgical CPT codes for a nonsurgical procedure and that it was “unconscionable” for the surgery center to keep payment for services not provided.
February 01, 2023
Insurer’s Common-Law Fraud Claim Dismissed; New Jersey Statutory Fraud Claim Survives

CAMDEN, N.J. — Because an insured construction company’s duty to accurately report the number of vehicles it owns and to pay policy premiums stems from its insurance policies, the company’s alleged misrepresentations about the number of vehicles it owns “are embodied within specific contractual terms,” a federal judge in New Jersey ruled, granting the company’s motion to dismiss an insurer’s common-law fraud claim against it as barred by the economic loss doctrine.
January 31, 2023
New Trial Bid Denied, Farmers Sentenced In Crop Insurance Case

PIERRE, S.D. — Two farmers convicted of making false statements regarding crop insurance were sentenced Jan. 30 after a South Dakota federal judge denied their motion for a judgment of acquittal or a new trial, which included allegations that the verdict form was not consistent with the polling of the jury.
January 31, 2023
Judge Says Fact Disputes Remain About Tenants, ‘Fire Safeguards’ In Coverage Row

NEWARK, N.J. — A New Jersey federal judge denied summary judgment for an insurer that was sued by its insured after denying the insured’s claim for fire-related damages in a building with both commercial and residential tenants, finding that disputed facts remain regarding the existence of operating smoke detectors in the building and the veracity of the owner’s testimony as to whether the alleged misrepresentation was material to the insurer’s fire investigation.
January 31, 2023
Finding For Insurer Reversed For Remaining Issues Of ‘Material Misrepresentation’

DETROIT— The Michigan Court of Appeals reversed and remanded a summary disposition award for an auto insurer in a no-fault benefit coverage suit filed by its insured, seeking coverage for injuries incurred in an auto accident, finding “that there remains a genuine issue of material fact that forecloses an award of summary disposition”
January 31, 2023
Disposition Affirmed For Insurer In Pedestrian No-Fault ‘False Information’ Claim

DETROIT — The Michigan Court of Appeals affirmed a lower court’s summary disposition for an insurer in a personal injury protection (PIP) suit filed by a pedestrian injured after being hit by a motor vehicle, finding that the pedestrian “committed a fraudulent insurance act” by giving false medical history information when applying for no-fault insurance benefits.
January 30, 2023
Commercial Insurer Wins Judgment Finding Policy Void From Inception

BROOKLYN, N.Y. — Judgment was entered in favor of an insurer after a federal judge in New York adopted a magistrate judge’s finding that the insurer had established that a company made material misrepresentations in its application for a businessowners policy, with the court entering a declaratory judgment that the policy is void from its inception and that the insurer is not obligated to pay any claims the company submits.
January 27, 2023
Resentencing Ordered By 6th Circuit In Unemployment Insurance Fraud Scheme

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

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

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

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

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

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

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

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

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

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

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

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