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Fraudsters cannot obtain cash under California law on unclaimed property



Golden State Pharmaceuticals LLC (Golden State), a disbanded corporation, filed a claim with the California State Controller for money held by the California Unclaimed Property Law (UPL). When the inspector failed to act on the claims, Golden State brought a civil action under the UPL to recover the money. The trial court granted Golden State a summary judgment order for $ 121,989.13. The inspector appealed. In G Olden State Pharmaceuticals LLC v. Betty T. Yee, California State Controller B308625, California Court of Appeals, Second District, Fifth Division (November 23, 2021), the trial court ordered the state to pay the Golden State and the inspector appealed.

BACKGROUND

Marisa Schermbeck Nelson worked as a personal assistant to Dr. Munir Uwaydah from 2000 to June 2010. Uwaydah owned and controlled several companies held in other people's names to conceal his ownership and control from creditors, insurance investigators and government agencies. . During Nelson's employment with Uwaydah, Uwaydah urged her to put her name as owner, official or manager of various companies or corporations, even though he owned and controlled the operation of those units alone.

Uwaydah owned Golden State but still led Nelson. to put her name as Golden States owner. Nelson was also named owner of a bank account associated with Golden State. On Uwaydah's instruction and until her employment with Uwaydah ended in June 2010, Nelson transferred money in and out of the Golden State bank account.

On March 16, 2017, the Los Angeles County District Attorney filed a complaint against Nelson and others for, among other crimes. , conspiracy to commit insurance fraud in violation of section 182 of the Penal Code (a) (1) and 550, part (a) (6) of the Penal Code. The complaint alleges that the insurance fraud was committed between November 15, 2004 and February 20, 2015 and was based in part on Golden State operations. On July 26, 2017, Nelson pleaded guilty to the charge set forth in a third amended gross complaint.

Nelson testified that Uwaydah, who "was the true owner of Golden State…, Created a list of prescription drugs and insisted that each patient seen on Frontline [a medical clinic also controlled by Uwaydah] would be prescribed all the medications on the list or at least a certain dollar amount … The invoicing reflected that each patient was essentially prescribed the same medication. ” She added that "[p] prescriptions would often be returned to the clinic or pharmacy and these medications would be re-labeled with different patient names and the insurance company would be re-billed for the same medication. Nelson also testified that Golden State operated under a fraudulent system from its inception until she left Uwaydah's employment in June 2010.

On January 17, 2019, a criminal jury in Riverside County prosecuted Uwaydah, Hunt, and others for, among other things. other offenses, conspiracy to knowingly make false or fraudulent claims for payment of health care benefits in violation of Penal Code 182, subdivisions (a) (1) and 550, subdivision (a) (6).

The Insurance Claims [19659011] Between May 2015 and June 2016, the controller received 37 notifications from insurance companies and other units of insurance claims, repayments of insurance claims and compensation to employees who identified Golden State as the owner of the filing.

On March 9, 2017, Hunt, on behalf of Golden State , submit a claim form to the data controller regarding the 37 submissions. From October 2017 to February 2018, Zachary Peccianti, Controller & # 39 ;s Bureau Chief, communicated with Hunt and Steven Gardner, Golden States Attorney, regarding documents necessary to "complete the claim."

On August 30, 2018, Golden State filed its complaint against the data controller to recover its requested money under the UPL. It requested a summary judgment.

DISCUSSION

UPL controls the state's management and disposition, generally through the controller, of property such as bank accounts and securities held by entities such as banks, brokerage firms and insurance companies, whose owners have not recognized or asserted their interest for several years , usually three. Such property disappears by law (becomes state property), non-permanently, and the holder must transfer it to the controller. UPL is not a permanent or "true" escheat charter. Instead, it gives the state custody and use of unused property until the owner claims it. Its dual purpose is to protect unknown owners by locating them and restoring their property to them, and to give the state rather than the owners of unused property the benefit of using it, from which experience shows that they will never be claimed.

The trial court implicitly ruled that Golden State did not file its complaint within the time limit set forth in section 1541, but expressly held that the limitation period was fair. The controller claimed that the court erred in applying reasonable tolls because Golden State failed to inform the controller of its intention to pursue litigation and failed to act reasonably and in good faith.

Golden State filed its complaint on August 30, 2018, over 270 days after March 9, 2017 and outside the statute of limitations. In order for Golden State to proceed with its statute of limitations, it had to comply with the elements of fair tolling.

to ensure basic practicality and fairness. Fair tolling has three components: prompt termination and lack of prejudice against the defendant, and reasonable conduct in good faith on the part of the plaintiff.

The controller demonstrated a tried and tested question of material facts regarding Golden State's ownership of the alleged Money

The controller acknowledges that the insurance companies and other entities that delivered the disputed money to the controller stated Golden State as the owner of this money.

probable question of material facts as to whether the Golden State was formed and functioned as part of a criminal conspiracy to commit insurance fraud. Nelson, who was for a time named Golden State's sole chief, pleaded guilty to conspiracy to commit insurance fraud in connection with the Golden States operation. Golden State operated under a fraudulent scheme from its inception until her resignation from Uwaydah in June 2010.

This evidence supported the conclusion that a criminal conspiracy generated the insurance payments to the inspector. It was a matter of material facts whether Golden State owned these check proceeds because the person who had a legal right to the property before its dismissal would not have had a legal right to money obtained criminally.

The verdict was overturned. The inspector was ordered to pay his costs on appeal.

UPL logically does not allow the state to pay money for a fraud controlled by the state. The fraud was obvious and established. If anyone was entitled to the funds, it was the insurance companies who were cheated and paid claims to which they were not liable. It should be an axiomatic that neither a government agency nor a court should do anything to allow a fraudster to take advantage of his crime.


© 2021 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to that position as an insurance consultant specializing in insurance coverage, handling insurance claims, bad faith and insurance fraud almost equally for insurers and policyholders.

He also acts as an arbitrator or media

for insurance-related disputes. He practiced law in California for more than 44 years as a lawyer for insurance coverage and claims management and more than 54 years in the insurance industry.

Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome.

He is available at http://www.zalma.com and zalma@zalma.com. Zalma is the first recipient of the first annual Claims Magazine / ACE Legend Award. For the past 53 years, Barry Zalma has devoted his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to enable insurers and their claimants to become professionals in insurance claims.

Go to the training available at https://claimschool.com; articles at https://zalma.substack.com, the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr Zalma on Twitter at https://twitter.com/bzalma ; Go to Barry Zalma videos at https://www.rumble.com/zalma; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ T the last two issues of ZIFL are available at https://zalma.com/zalmas-insurance-fraud- letter -2 / podcast now available at https://podcasts.apple.com/us/podcast/zalma-on-insurance/id1509583809?uo=4


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