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Settlement of fraud cases does not allow Doc to sue insurers



Nine insurance companies sued Ajay Mohabeer for fraudulently billing them for medical treatment that was never provided or was provided in the amounts charged. The insurers sued, lost a partial summary judgment, and instead of proceeding to trial on other causes of fraud, the lawsuit was settled with Dr. Mohabeer. Dissatisfied with the settlement, Dr. Mohabeer Insurance Companies and Their Lawyers for Misuse of Civil Procedure and Damages (Called Malicious Prosecution in Other Jurisdictions) in Ajay Mohabeer v. Farmers Insurance Exchange, a company; et al , 318 Or.App. 313, A172057, Court of Appeals of Oregon (March 16, 2022) in which he sued nine insurance company defendants (including Farmers) and Farmers’ attorneys, for improper use of civil proceedings, alleging that the defendant filed insurance fraud claims against the plaintiff in federal court. was finally decided. Mohabeer claimed that the insurance companies sued him with intent and without probable cause.

THE COURTS OF JUSTICE

Insurers and attorneys filed a special motion to strike out claims under Oregon’s anti-strategic lawsuits against the Public Participation (Anti-SLAP) Charter, arguing that plaintiff’s claims require damages for conduct protected under ORS 31.150 (2), and that plaintiff could not provide substantial evidence that he would win on his claim. The defendants appealed the limited judgment of the district court by rejecting the claim. The special motion to strike is the Oregon Statute, ORS 31.150 (1) requires four categories of claims that are the subject of a special motion to strike:

  1. Any oral statement made, or written statement or other document filed, in a legislative, executive or legal proceeding or other proceeding permitted by law;
  2. Any oral statement made, or written statement or other document submitted, in connection with a matter under consideration or scrutiny by a legislative, executive or judicial body or other procedure permitted by law;
  3. Any oral statement, or written statement or other document presented, in a place open to the public or in a public forum in connection with a matter of public interest; or
  4. Other actions to promote the exercise of the constitutional right of representation or the constitutional right to freedom of expression in connection with a public issue or an issue of general interest.

FACTS

A defendant who makes a particular strike request has the initial burden of making one prima facie which shows that the plaintiffs’ claim is of the kind described in the charter. 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, Plaintiff 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. ” The plaintiff and the other named defendants sought a brief judgment in the underlying action, and the federal district court granted the claim for certain claims but denied it in part in respect of several of the claims, finding that there was evidence of the plaintiff and the other named’s conduct. Farmers and the plaintiff then settled Farmer’s remaining claims against the plaintiff in the underlying action and provided that the plaintiff be considered the winning party.

The plaintiff then brought this action for misuse of civil proceedings, alleging that Farmers appointed the plaintiff as defendant in the underlying action without any basis in fact so that Farmers could make extortion claims, for which Farmers would be entitled to triple damages and attorneys’ fees. The plaintiff claimed that he was appointed as a defendant without probable cause and with intent. Defendants filed their special strike requests under ORS 31,150 and, after a hearing, the court found that the plaintiff had provided substantial evidence to support a prima facie case of his claim. The court thus rejected the claims by a limited judgment.

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 an appeal concerns whether the plaintiff has fulfilled his burden of presenting prima facie evidence of each part of his allegation of misuse of civil proceedings.

ANALYSIS

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 initiator of the underlying action “reasonably believes” that there is a good chance of winning, namely., the person “has the subjective conviction and that belief is objectively reasonable.” The plaintiff argued that a probable cause is premature, since existence of prima facie Evidence of lack of probable cause is a matter for the fact finder that requires further discovery. Within the framework of the special strike motion, however, is existence of prima facie Evidence of the parts of the claim that are questioned by the motion is something that the court determines in law, based on the submissions and supporting and opposing statements that state the facts that form the basis of the liability or defense.

Defendants argued that the summary judgment of the federal district court in the underlying action ultimately established that Farmers had probable cause to bring the underlying action. By dismissing the plaintiffs ‘and other named defendants’ claims for summary judgment against the claims in the underlying action, the federal district court concluded that Farmers had shown genuine questions about the essential facts as to whether the plaintiff:

  • made material erroneous representations, either knowingly or recklessly, by writing on forged map entries;
  • engaged in a pattern of extortion by committing criminal acts through electronic and letter fraud;
  • engaged in a conspiracy to commit extortion; and
  • was unfairly enriched by fraudulent claims made to farmers through forged charts.

The Court agreed with the defendants’ argument that this is evidence that the claims raised by the defendants in the underlying action were objectively reasonable and based on probable cause. Notwithstanding the summary judgment of the Federal District Court in the underlying action, there is ample evidence in the minutes that the defendants had probable cause to name the plaintiffs as defendants 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 disputes this evidence but has not rebutted it with evidence to support his position.

The Oregon Court of Appeals ruled that the trial court erred in rejecting the special strike request and therefore set aside the limited judgment and remanded the case to the court for a judgment dismissing the plaintiff’s claim because the plaintiff failed to meet his burden. to present prima facie evidence for lack of probable cause, and that the district court was guilty of incorrect application of law by rejecting the defendant’s special strike church.

Farmers and other insurance companies accordingly should be honored for proactively working to defeat a fraudulent claim. By failing to take the matter to court after losing a writ of summons for a partial summary judgment and prescribing that the case be resolved in favor of the plaintiff, they invited his action. The Oregon Court of Appeal looked at the evidence and found that the insurance companies had probable cause to sue Dr. Mohabeer and disliked the mood. The lesson that the insurers learned was that they should have asked Dr. Mohabeans to trial for the reasons they could have proved were fraudulent. Conciliation is not appropriate when there is evidence of fraud.


(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 management, non-insurance and insurance fraud almost equally for insurers and policyholders. He also acts as an arbitrator or mediator 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. He is available at http://www.zalma.com and zalma@zalma.com.

For the past 54 years, Barry Zalma has devoted his life to insurance, insurance claims and the need to defeat insurance fraud. He has created a library of books and other materials to enable insurers and their claims staff to become professionals in insurance claims.

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