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

Mealey's Insurance Fraud

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.
June 27, 2024
Magistrate Denies Protective Order For Deposition In Fire Coverage Dispute

SCRANTON, Pa. — A Pennsylvania federal magistrate judge on June 26 denied an insurer’s motion for protective order regarding a proposed deposition in an insurance coverage dispute over fire damage, finding that the disputed deposition is relevant because it addresses whether the insurer knew of the alleged improper use of the covered space when previously investigating a water damage claim.
June 27, 2024
Suit Against Former Underwriter Gets Quick Toss Over Jurisdictional Issues

MIAMI — Outlining “two deficiencies” in the jurisdictional allegations, a Florida federal judge dismissed without prejudice a suit that two affiliated companies filed against a former underwriter over conduct they allege included greatly exceeding his authority by executing a facultative retrocession agreement to cover a risk of more than $44 million.
June 24, 2024
High Court Again Extends Response Deadline In Review Of 9th Circuit FCA Reversal

WASHINGTON, D.C. — The U.S. Supreme Court on June 21 granted a district court qui tam plaintiff’s second request for additional time to respond to pharmaceutical companies’ petition that seeks review of the Ninth Circuit U.S. Court of Appeals’ ruling reversing the district court’s dismissal of a suit accusing the companies of violating the False Claims Act (FCA) by artificially inflating drug prices.
June 24, 2024
Former Underwriter Is Sued Over Facultative Retrocession Deal, Other Allegations

MIAMI — Asserting claims for breach of contract and unjust enrichment, two affiliated companies sued a former underwriter in Florida federal court over conduct they allege included greatly exceeding his authority by executing a facultative retrocession agreement to cover a risk of more than $44 million.
June 21, 2024
Judge Deems $200,000 Life Policy Void For Insured’s Health Misrepresentations

TAKOMA, Wash. — A Washington federal judge on June 20 granted a life insurer’s motion for default judgment and declared a $200,000 life insurance policy void ab initio, finding that the insured’s misrepresentations in his insurance application weigh in favor of default judgment and that the insurer is entitled to rescind the policy due to the insured’s false statements about his health status.
June 21, 2024
Revised $195,000 Class Deal Gets Initial OK In Suit Alleging Fraudulent Policies

SANTA ANA, Calif. — Ruling various revisions sufficient, a California federal judge granted preliminary approval to a $195,000 settlement in a suit over alleged fraud involving captive reinsurance, also modifying the preliminarily certified settlement class.
June 20, 2024
Judgment Denied For Insurer Over $3.8M Settlement Owed To Murdaugh Housekeeper Heirs

CHARLESTON, S.C. — A South Carolina federal judge denied summary judgment to an insurer seeking a declaratory judgment that it is entitled to recover the $3.8 million settlement paid to settle a claim brought by the estate of Alex Murdaugh’s former housekeeper, which the estate never received due to the purported fraud of Murdaugh and his alleged conspirators, finding that the federal court lacks jurisdiction to invalidate a state court-approved settlement.
June 19, 2024
Insurers Appeal To 5th Circuit Dismissal Of $14M RICO, PIP Fraud Suit

HOUSTON — A Texas federal court clerk issued a notice that insurers have filed an appeal, seeking Fifth Circuit U.S. Court of Appeals review of a district court’s dismissal of their suit seeking to recover more than $14 million from chiropractors and their affiliated practices for their purported participation in a fraudulent scheme regarding Racketeer Influenced and Corrupt Organizations Act (RICO) violations in billing the insurers for unnecessary or never performed procedures for personal injury protection (PIP) and uninsured motorist (UM) claims.
June 18, 2024
Firms Accused Of Participation In $1B RICO Insurance Fraud Scheme Seek Dismissal

RALEIGH, N.C. —Malta-based investment firms Standard Advisory Services Ltd. and Standard Financial Ltd. moved in North Carolina federal court to join other defendants’ motion for partial dismissal of the complaint related to the defendants’ alleged participation in a $1 billion Racketeer Influenced and Corrupt Organizations Act (RICO) scheme to defraud now-insolvent insurers and their policyholders by using policyholder money to purchase noninsurance companies and to divert policyholder money.
June 17, 2024
Life Insurer Seeks To Void $212K Policy For Alleged Fraud Over Cannabis Dependence

KANSAS CITY, Mo. — A life insurer on June 14 sued its insured, seeking a declaratory judgment to rescind and void a $212,000 life insurance policy for the insured’s alleged fraud regarding his misrepresentation in the policy application about not using marijuana in the last 24 months, which purportedly contradicts his medical records indicating a diagnosis of cannabis dependence.
June 14, 2024
Relator Seeks High Court Review Of Ruling Affirming Dismissal Of FCA Claims

WASHINGTON, D.C. — A qui tam relator filed a petition for writ of certiorari in the U.S. Supreme Court, seeking review of the Second Circuit U.S. Court of Appeals ruling affirming a district court’s dismissal of his claim filed against a pharmaceutical and medical supplier pursuant to the federal False Claims Act (FCA) for violations of the Anti-Kickback Statute (AKS), asserting that review is needed to resolve the split between circuit courts regarding whether knowledge that a party’s conduct violates the law is required to show willfulness pursuant to the AKS.
June 13, 2024
Insurers’ Motion For Summary Judgment Denied In Row Over Jet Insurance Coverage

SAN DIEGO — A California federal judge denied summary judgment to insurers in their suit seeking rescission of a policy covering a private jet but granted in part the jet owners’ motion for partial summary judgment regarding their reliance “on a misrepresentation theory,” finding that the insurers failed to show that the insureds made misrepresentations about the identity of the jet’s pilots.
June 11, 2024
Michigan Panel Agrees With Lower Court That Policy Rescission Is Not Equitable

DETROIT — A split Michigan appellate court affirmed a lower court’s grant of summary disposition in favor of Allstate Insurance Co. in its suit against another auto insurer, seeking reimbursement for $521,872.82 in personal injury protection (PIP) benefits Allstate paid on behalf of a man fatally injured in a moped accident, finding that the other insurer failed “to show that the equities weighed in favor of enforcing rescission against him.”
June 10, 2024
Seniors Sue Wells Fargo For Fraud In $300M Ponzi Scheme Involving Insurers

MIAMI — Two seniors filed a putative class action against Wells Fargo in a Florida federal court for its role in allegedly aiding and abetting fraud in a “massive” Ponzi scheme purportedly orchestrated by owners of insurers, some of whom are now in receivership, resulting in elderly investor victims losing more than $300 million after scheme operators sold them promissory notes secured by collateral in stranger-oriented life insurance policies (STOLIs).
June 07, 2024
Dismissal Denied As To 1 Relator In FCA Medicare Fraud Suit Against Walgreens

MIAMI — A Florida federal judge denied in part Walgreens’ motion to dismiss a qui tam action filed against it by relators alleging False Claims Act (FCA) violations related to Medicare fraud, finding that the case should be dismissed under the public disclosure bar as to a relator later added to the case, but there is “no reason to dismiss” regarding the original relator.