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

Mealey's Insurance Fraud

September 19, 2023
Judge Reopens FCA Suit Alleging Walgreens Engaged In Medicare Fraud

MIAMI — A Florida federal judge granted a relator’s motion for reconsideration in his federal False Claims Act (FCA) suit filed on behalf of the U.S. government against Walgreens related to alleged Medicare fraud, finding that the case should be reopened, allowing the relator to file an amended complaint, because filing claims in a separate action will result in statute of limitations concerns and implicate the public disclosure bar.
September 18, 2023
Magistrate Recommends Granting Default Motion As To Fraud Claims In No-Fault Suit

BROOKLYN, N.Y. — A New York federal magistrate judge issued a report recommending granting GEICO’s motion for default judgment as to common-law fraud claims in its suit against retailers of durable medical equipment (DME) and orthotic devices (OD), alleging that the retailers submitted thousands of fraudulent no-fault insurance claims for medically unnecessary DME and OD, finding that GEICO “sufficiently alleged the elements for their common law fraud claims.”
September 15, 2023
Judgment For Insurer Reversed In PIP Suit Seeking Coverage For Brain Injury

DETROIT — A Michigan appellate court reversed and remanded a lower court’s grant of summary disposition to a personal injury protection (PIP) insurer for a passenger who incurred a purported brain injury in an auto accident, finding that questions of fact remain regarding the passenger’s application for benefits as to the veracity of his statements and whether he knowingly made misrepresentations that were material to his claim for benefits.
September 15, 2023
Unsecured Creditors In Vesttoo Chapter 11 Case Want To Conduct Discovery

WILMINGTON, Del. — Arguing that it “is the only independent fiduciary capable of conducting a thorough and conflict-free investigation,” the Committee of Unsecured Creditors in the jointly administered Chapter 11 case of Vesttoo Ltd. and 48 affiliated entities on Sept. 14 asked a Delaware federal bankruptcy court for leave to conduct discovery.
September 15, 2023
Professional Services Exclusion Does Not Bar Coverage, Delaware High Court Affirms

WILMINGTON, Del. — The Delaware Supreme Court on Sept. 14 affirmed a lower court’s $4,907,612.95 final judgment in favor of an insured in its lawsuit seeking coverage for approximately $18 million in losses arising from an underlying False Claims Act investigation, finding that the management liability insurance policy’s professional services exclusion did not bar coverage and that the insurer did not act in bad faith.
September 13, 2023
Judge Says Insurer Has No Duty To Defend In Wrongful Death Suit Against Architect

TAMPA, Fla. — A Florida federal judge granted an insurer’s request for declaratory judgment that it has no duty to defend or indemnify its insured architect in a wrongful death suit filed against the architect by the family of a man who died while working on a construction project, finding that the architect “made material misrepresentations on the policy application that voided the policy under the rescission doctrine.”
September 07, 2023
Judge Reevaluates Order, Grants Judgment For Insurer In Policy Rescission Suit

HOT SPRINGS, Ark. — An Arkansas federal judge vacated a prior order denying multiple summary judgment motions in a suit over the rescission of an insurance policy, finding that the policy’s concealment of fraud clause “precludes coverage for the fire loss” at the insured property due to the insured’s misrepresentations regarding foreclosure on another property.
September 06, 2023
Judge Denies Default Judgment In Insurer’s Suit Seeking Rescission Of CGL Policy

MOBILE, Ala. — An Alabama federal judge on Sept. 5 denied an insurer’s motion for default judgment and dismissed a suit seeking rescission of a commercial general liability policy and a declaration that the insurer does not have a duty to defend the insured in an underlying breach of contract suit, finding that the court lacks subject matter jurisdiction because the insurer failed to show that the amount in controversy exceeds the $75,000 jurisdictional threshold.
August 31, 2023
Panel Affirms Judgment For Insurer In Row Over Fraud In PIP Coverage Application

DETROIT — A Michigan appellate court affirmed a lower court order granting summary disposition to an insurer in a personal injury protection (PIP) suit filed by a bicyclist seeking coverage for injuries sustained when a car hit him, finding that judgment for the insurer was appropriate because the lower court correctly considered the bicyclist’s medical records as evidence due to fraudulent information he submitted in his application for no-fault benefits.
August 31, 2023
Judgment Granted For Insurer In Suit Seeking To Void Commercial Insurance Policy

NEW YORK — A New York federal judge granted an insurer’s summary judgment motion in its declaratory judgment suit against its insured and a claimant seeking to recover against the policy, finding that the commercial insurance policy is void ab initio because there is no dispute that the insured’s failure to disclose outstanding code violations on the insurance application constituted material misrepresentation.
August 31, 2023
Wrangling Over Automatic Bankruptcy Stay Continues In Letter Of Credit Fallout

WILMINGTON, Del. — Arguing that the filing of a Chapter 15 case violates a consent order, Chapter 11 debtor Vesttoo Ltd. and 48 affiliated entities on Aug. 30 asked a Delaware federal bankruptcy court to issue a contempt order and sanctions against Bermuda-based White Rock Insurance (SAC) Ltd. and “the putative joint provisional liquidators [JPLs] of segregated cells.”
August 29, 2023
Motion To Quash Subpoena Denied In $5.6M RICO Suit Against New Jersey Pain Clinic

NEWARK, N.J. — A New Jersey federal magistrate judge on Aug. 28 denied a motion to quash GEICO’s subpoena served upon the New Jersey Office of the Insurance Fraud Prosecutor (OIFP) in a $5.6 million Racketeer Influenced and Corrupt Organizations Act (RICO) and fraud suit filed against a pain clinic and its owner and multiple chiropractic practices, alleging that the pain clinic unlawfully obtained personal injury protection (PIP) benefits by paying kickbacks to chiropractors in exchange for referrals, finding that the subpoena “does not unnecessarily hinder the OIFP and that the records may be disclosed.”
August 28, 2023
3rd Circuit Reverses Judgment For Hospice Agency In Medicare Fraud Suit

PHILADELPHIA — The Third Circuit U.S. Court of Appeals on Aug. 25 reversed and remanded a district court’s grant of summary judgment to a hospice provider whose former employees alleged that the provider violated the federal False Claims Act (FCA) by fraudulently billing Medicare in admitting and recertifying patients who were not actually eligible for hospice, finding that while the government’s failure to act for a long period of time is evidence of a lack of the materiality required under the FCA, “it was erroneous to treat this factor as determinative of immateriality.”
August 28, 2023
Discovery Row Outlined In Insurer’s Suit Over Alleged Fraud Scheme

NEW YORK — An insurer that alleges it sustained losses exceeding $135 million due to “systematic breaches of fiduciary duty, fraud, and other misconduct” has asked a New York federal court for a discovery conference over disputes with four defendants, which argue in an Aug. 25 opposition that the request should be denied because “[g]ood cause exists to shift expenses of discovery.”
August 25, 2023
6th Circuit Affirms Finding That Insurer Couldn’t Void Policy In Fire Coverage Row

CINCINNATI — The Sixth Circuit U.S. Court of Appeals affirmed a district court’s determination that a homeowners insurer could not void a policy after a jury returned a verdict in favor of the Tennessee homeowner and their insurance agency in a fire coverage dispute, finding that the insurer failed to prove that the homeowners’ misrepresentation about not having automatic water sprinklers in their home increased the risk of loss needed to void an insurance policy pursuant to Tennessee law.
August 25, 2023
Partial Dismissal Granted In Insurer’s Fraud Suit Against Biohazard Remediation Company

BOSTON — A Massachusetts federal judge granted a biohazard remediation company and its employees’ partial motion to dismiss a fraud and Racketeer Influenced and Corrupt Organizations Act (RICO) suit alleging that the company defrauded an insurer by engaging in a scheme to create fraudulent charges for remediation, finding in part that the insurer failed “to allege two distinct entities” to establish a RICO claim.
August 24, 2023
Enforcement Of Automatic Bankruptcy Stay Sought For Foreign Proceedings

WILMINGTON, Del. — Citing reports of litigation in Bermuda and Israel, Chapter 11 debtor Vesttoo Ltd. and 48 affiliated debtors moved in Delaware federal bankruptcy court for enforcement of the automatic stay against Bermuda-based White Rock Insurance (SAC) Ltd. and “the putative joint provisional liquidators [JPLs] of segregated cells.”
August 23, 2023
Split 5th Circuit Says FCA Tolling Bars Some Claims Against Hospital

NEW ORLEANS — A split Fifth Circuit U.S. Court of Appeals affirmed in part a district court’s judgment in favor of the government but dismissed for lack of jurisdiction a separate judgment consolidated on appeal, finding that the materiality and scienter requirements of the federal False Claims Act (FCA) were satisfied but that the district court erred in applying the statute’s tolling provision in a suit alleging that a hospital and its owners and officers violated the FCA by submitting false reports for Medicare reimbursement.
August 23, 2023
Government Wins Partial Summary Judgment In False Claims Act Crop Case

YAKIMA, Wash. — Saying disputes raised are supported only by one defendant’s declaration and “do not address the material facts,” a Washington federal judge granted summary judgment for the government on two counts asserted under the False Claims Act (FCA) in a crop insurance case.
August 22, 2023
Dismissal Motions Granted As To Illegal Kickbacks In FCA Suit Against Medtronic

KANSAS CITY, Kan. — A Kansas federal judge granted in part dismissal motions filed by Medtronic and its related company and a hospital in a relator’s qui tam suit alleging that they violated the federal False Claims Act (FCA) by participating in a scheme to provide medically unnecessary treatment resulting in the submission of false claims for payment to federal health care programs, finding that the illegal kickbacks claim related to marketing services is barred under the public disclosure bar.
August 22, 2023
Judge Says Public Disclosure Bar Doesn’t Stop FCA Suit Claiming Medicare Fraud

PHILADELPHIA — A Pennsylvania federal judge granted in part motions filed by skilled nursing facilities (SNFs) and a rehabilitative services contract provider to dismiss a qui tam suit against them, alleging Medicare and Medicaid fraud related to billing for rehabilitative therapy that was purportedly not provided, finding that False Claims Act (FCA) claims against the SNFs should be dismissed for failure to show that they knew of the false billing but that the public disclosure bar precludes dismissal of the FCA claims against the contract provider.
August 22, 2023
Rescission Row Stayed Pending Resolution Of Underlying Suit Against Contractor

SAN FRANCISCO — A California federal judge granted a painting contractor’s motion for a stay in an insurer’s suit against the contractor seeking rescission of the contractor’s insurance policy and a declaratory judgment that it is not required to provide coverage to the contractor in an underlying breach of contract case, finding that a stay pending resolution of the underlying case is warranted in part due to the overlap between the cases such that issuing a stay “increases judicial efficiency.”
August 18, 2023
11th Circuit Affirms Health Care Fraud Convictions And Restitution Order

ATLANTA — The 11th Circuit U.S. Court of Appeals on Aug. 17 affirmed defendants’ health care and mail fraud convictions and restitution and forfeiture orders stemming from their involvement in a scheme to submit bills to insurance companies for medically unnecessary prescriptions for a compounding pharmacy’s drugs, but vacated and remanded one of the defendant’s aggravated identify theft convictions, finding that using another person’s identity information “was merely ancillary to the health care fraud.”
August 17, 2023
Insurers Query Medical Coding Expert’s Role In Lab Testing Compensation Case

BRIDGEPORT, Conn. — A medical coding expert’s testimony lacks relevance in a case that turns on the medical necessity of labs’ drug testing, and the expert is not qualified to opine about internal codes used to deny claims, insurers tell a federal judge in Connecticut in seeking to exclude the opinions.
August 17, 2023
Stay Granted In Marine Insurance Dispute Over Material Misrepresentations

SEATTLE — A Washington federal judge granted a trust’s motion to stay a marine insurer’s suit against it, seeking a declaratory judgment that the trust’s marine insurance policy on its sailboat is void due to alleged material misrepresentations, finding that factors weigh in favor of granting a stay pending resolution of Great Lakes Ins. SE v. Raiders Retreat Realty Co., LLC, a case scheduled for argument before the U.S. Supreme Court.