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Never reconcile a proactive process against fraudsters



When nine insurance companies sued a doctor for implementing a system to deceive them, they collapsed after a partial summary judgment was handed down by a U.S. district court that made other allegations of fraud available. The insurer’s plaintiff then settled with Dr Ajay Mahabeer only to be sued for intentionally bringing an action against him. IN Ajay Mohabeer v. Farmers Insurance Exchange, et al, A172057, 318 Or.App. 313, Court of Appeals of Oregon (March 16, 2022), the Oregon Court of Appeals ruled on insurance companies’ Anti-SLAPP Motion.

BACKGROUND

The plaintiff brought this action against nine insurance company defendants (together Farmers) and Farmers’ attorneys, Cole, Wathen, Leid & Hall, PC and Ryan J. Hall, for misuse of civil proceedings, alleging that the defendants had filed insurance fraud claims against the plaintiff in federal court, which was finally decided, but which was brought with intent and without probable cause. Defendants filed a separate motion to strike out claims under ORS 31.150, Oregon’s Anti-Strategic Lawsuits Against Public Participation (anti-SLAPP) statute, arguing that plaintiff’s claim seeks damages for conduct protected under ORS 31.150 (2), and the the plaintiff. could not provide substantial evidence that he would win on his claim.

The defendants appealed.

RELEASE THE MOVEMENT

The special strike attempt, ORS 31.150 (1) contains:

A defendant may make a special claim to invoke a claim in a civil action described in subsection 2. in this paragraph. The court shall uphold the claim, unless the plaintiff in the manner prescribed in subsection 3. in this section states that it is likely that the plaintiff will win the claim. The special strike visit shall be treated as a dismissal application under ORCP 21 A but shall not be covered by ORCP 21 F. When the special strike visit is granted, the court shall render a dismissal judgment unconditional. If the court rejects a particular strike request, the court shall issue a limited judgment rejecting the request.

A defendant who makes a particular strike request has the initial burden of making one prima facie showing that the plaintiffs’ claims are of the type described in Oregon’s statutes. If the defendant manages this burden, the burden passes to the plaintiff in the action to establish that there is a probability that the plaintiff will benefit from the claim by presenting substantial evidence to support a prima facie case.

The plaintiff is a licensed physician who has practiced medicine in collaboration with First Choice Chiropractic Clinics. In 2013, defendants filed several claims in federal court naming defendants First Choice Chiropractic Clinics, Plaintiffs, and several other individuals, based on allegations that clinicians and individual defendants had committed insurance fraud by making false reports of alleged symptoms and exaggerated findings designed to obtain it appears that the patient either had or continued to have injuries / symptoms that did not actually exist.

Farmers and Plaintiff then settled Farmer’s remaining claims against Plaintiff in the underlying action and provided that Plaintiff should be considered the winning party.

On appeal, it is common ground that the plaintiffs’ claims fall within ORS 31.150 (2Xb). The allegations of plaintiffs’ claims are based solely on written statements and documents submitted to the federal court in connection with the underlying action. The only dispute in the appeal concerns whether the plaintiff has fulfilled his burden of providing prima facie evidence for each part of his allegation of misuse of civil proceedings.

DISCUSSION

Part of the allegation of improper use of civil proceedings is the lack of probable cause to prosecute the underlying action. “Probable cause” means that the person who initiates the underlying act “reasonably believes” that there is a good chance of winning, namely., the person “has the subjective conviction and that belief is objectively reasonable.” The defendants claim that the plaintiff has not borne its burden of presenting prima facie evidence that farmers lacked probable cause to bring the underlying action.

Oregon’s anti-SLAPP charter provides “an expedited procedure for rejecting certain non-meritorious civil cases without prejudice in the pleading stage.” [Neumann v. Liles, 358 Or. 706, 723, 369 P.3d 1117 (2016).]

When facts are in dispute, evidence of the absence of probable cause to establish a claim for misuse of civil proceedings is a mixed matter of law and facts. Within the framework of the special strike claim, however, the existence of prima facie evidence for the parts of the claim that are questioned by the claim is something that the court determines by law, based on the submissions and supporting and opposite statements. state the facts on which the responsibility or defense is based. It is therefore not too early for the court to rule on whether prima facie evidence for those parts of the claim has been presented before full discovery or for a party to raise the issue of rejection of a particular strike church on appeal.

Defendants argued that the summary judgment of the Federal District Court in the underlying action either definitively establishes that Farmers had probable cause to bring the underlying action or gives rise to a rebuttable presumption of probable cause.

The Federal District Court concluded that Farmers had shown genuine questions about material facts as to whether the plaintiff (1) made material misstatements, either knowingly or recklessly, by writing on forged cartoons; (2) engaged in a pattern of extortion by committing indictable acts by fraud with mail and mail; (3) engaged in a conspiracy to commit extortion; and (4) was unfairly enriched by fraudulent allegations made to peasants through forged cartoons.

The Court of Appeal adopted a categorical rule that the rejection of a claim for a summary judgment in the underlying dispute definitively established or created a rebuttable presumption for probable cause. Notwithstanding the summary judgment of the Federal District Court in the underlying action, there was ample evidence in the minutes that defendants had probable cause to name the plaintiff as the defendant in the underlying action, including certificates from former clinic staff, describing the plaintiff’s participation in a system to overtreat patients and overdraft insurance.

The plaintiff disputed this evidence but has not rebutted it with evidence to support his position.

The Court of Appeal therefore came to the conclusion that the plaintiff did not fulfill its burden of presenting prima facie evidence of lack of probable cause and that the district court erred in law by rejecting the defendant’s special strike claim.

Insurance companies that have proactively sued people they believe have committed fraud against them should be commended. However, the insurance companies that bring about such measures – whether direct or under qui tam laws – must have the courage in their conviction because insurance fraudsters have no morals. In this case, after reaching a settlement with the doctor, they were faced with a lawsuit from the doctor that could have been avoided if they had insisted on taking the federal fraud case to court. Since the USDC refused to grant the doctors’ request for a summary judgment, there were obviously probable grounds for bringing an action.


(c) 2022 Barry Zalma & ClaimSchool, Inc.

Barry Zalma, Esq., CFE, now limits his internship to the position of insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. 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. He is available at http://www.zalma.com and zalma@zalma.com.

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