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Home / Insurance / Zalma’s Insurance Fraud Letter – February 1, 2023

Zalma’s Insurance Fraud Letter – February 1, 2023

See the full issue here.

Watch the full video at https://rumble.com/v27r4rk-zalmas-insurance-fraud-letter-february-1-2023.html and at https://youtu.be/2gDf1Se5wzw

The source of all insurance fraud

In this, the third issue of the 27th publication year ZIFL contains the following articles:

Soft deception

No less a fraud than so-called hard fraud

For reasons known only to government entities, some insist on categorizing fraud into both “hard” and “soft” fraud. By doing so, the government entities that so categorize fraud make one type of fraud less heinous and less criminal than the other. Fraud, whether categorized as ‘soft’ or ‘hard’, is criminal and if a person is tried and convicted of fraud both can be sent to prison for the same period.

The types of insurance fraud that some call “soft fraud” can be found in any type of claim made to an insurer.

Soft fraud, sometimes called opportunity fraud, occurs when a policyholder or claimant exaggerates a legitimate claim… According to the Insurance Research Council, soft fraud is “much more common than hard fraud … Because of the frequency of soft fraud, it adds more to the total damage cost than hard frauds do.” [Article by the Idaho Fraud Bureau at http://www.idfbins.com/tips-safe-living/soft-fraud; report of the Coalition Against Insurance Fraud at http://www.insurancefraud.org/learn_about_fraud.htm; article by Arkansas Department of Insurance at http://www.fightfraud.arkansas.gov/]

Soft fraud occurs when a policyholder exaggerates an otherwise legitimate claim or when an individual applies for insurance and lies about certain terms or circumstances in order to lower the insurance premium.

The reality is that Soft Fraud is a criminal offense and a breach of an essential term of the policy. It contributes to increased insurance costs. As a result of increased insurance costs, millions of Americans cannot afford adequate insurance coverage. One cannot commit an innocent or partial fraud any more than one can be partially dead. When fraud has been committed, the insurance contract is breached and voided and the crime has been committed.

See the full issue here.

How not to commit arson

Most people do not understand how difficult it is to set fire to a house that will destroy the entire residence and its contents. Most homes simply do not have enough combustible material in the right place to allow for a sustained fire. Many homes, especially the more modern ones, have fail-safe devices everywhere that make accidental fires a thing of the past.

An insured decided that the only possible way to escape his mortgage was to burn down his house. Being quite the imaginative fellow, he decided to make the fire look like an accident as well.

When he left his house in the afternoon, he opened the gas jets on the stove, blew out the pilot on his gas dryer and water heater, and set the thermostat on his electronically lit oven to 80 degrees Fahrenheit. It was a hot summer day, but he assumed it would eventually cool down a bit, the thermostat would turn on the furnace, and the electronic starter motor would cause a gas explosion that would destroy the entire house. What he didn’t count on was Southern California’s Santa Ana Winds bringing heat from the desert and keeping the outdoor temperature in the hundreds throughout the day and into the night. The insured was shocked that a curious neighbor with clear sinuses could smell the gas, turn it off at the meter and save the house.

When the insured returned home, he naturally had to hide his disappointment that the house was still there. Undaunted, however, he tried again the next week. This time he was taking no chances. He went to the hardware store and bought a box of Coleman cooking fuel and spread it throughout the house. Then he tore open a book of paper matches so that there was no cover, only matches. He lit a cigarette and placed it low between the matches and left the house convinced that when the cigarette burned down it would ignite the match heads and burn the house down. He was again very disappointed when he returned home to find the house still standing.

See the full issue here.

scammer not a customer

Theft by fraud, trick or device is not covered


The plaintiff, an IT services company, sued the defendant for breach of contract and bad faith denial of a claim under MCL 500.2006 after the defendant denied the plaintiff’s insurance claim for computer equipment fraudulently obtained by a fraudster.

In July 2020, Plaintiff received a request from an individual claiming to be from the Macomb County Purchasing Department. The individual stated that Macomb County was interested in purchasing new computer equipment and asked the plaintiff to facilitate the transaction. Plaintiff did so only to later discover that Macomb County never ordered the equipment. The plaintiff submitted a claim for the loss to the defendant for $165,195, which the defendant disputed.

See the full issue here.

Good news from The Coalition Against Insurance Fraud

A chiro lied about having a medical license while inflating patients’ medical conditions for his cut of more than $3.5 million in federal and private disability payments. Although he lacked a license, Thomas G. Hobbs purchased and dispensed prescription drugs, administered injections, and administered intravenous drugs to patients. The man from Arnold, Mo. also fraudulently helped patients receive disability benefits. He charged patients between $2K-$8.6K to prepare disability forms. He also coached them to lie that they could not perform basic activities such as lifting, standing, walking, sitting, remembering and taking care of personal needs. And Hobbs used a fake medical license number so that his medical opinions carried more weight than federal and private insurance medical experts. He even falsified medical reports to show he had a long history with the patients. Many of his purported services were phantom, unnecessary or provided by unqualified people to make it appear that patients were disabled. The procedures included MRIs, CT scans and heart tests. Hobbs also filed numerous office visit claims when he had not provided the necessary face-to-face patient evaluation and case management. Hobbs pleaded guilty to federal charges and will be sentenced on April 19.

Plus many more reports.

See the full issue here.

Convictions of health insurance fraud

Donald Booker in Charlotte, North Carolina, was convicted of conspiracy to commit health care fraud, multiple violations of the Anti-Kickback Statute, money laundering conspiracy, and money laundering.

Booker is owned United Diagnostics Laboratories (UDL), a urine toxicology testing laboratory, and United Youth Care Services (UYCS), a provider of mental health and substance abuse treatment services. Booker’s co-defendant, Delores Jordanpleaded guilty to health care fraud conspiracy and money laundering conspiracy in December and owned Legacy Housing, a housing provider.

From January 2016 to August 2019, Booker and his co-conspirators defrauded the North Carolina Medicaid program of more than $11 million. Jordan would recruit people who were Medicaid eligible for housing and other programs and services. They would require beneficiaries to submit urine samples when they enrolled in the program, and they provided the samples to Booker and UDL for tests that were not medically necessary. Booker paid illegal kickbacks to Jordan and others in exchange for these urine samples. Booker and Jordan also laundered the proceeds to hide and conceal the nature and source of the illegal kickback payments. Plus dozens more reports of convictions.

See the full issue here.

Eleventh Circuit allows reconsideration of Esformes

IN United States v. Philip Esformes, No. 19-13838, 19-14874, United States Court of Appeals, Eleventh Circuit (January 6, 2023) Philip Esformes challenged his convictions for health care fraud, kickbacks and money laundering and the related restitution and forfeiture order. After Esformes filed this appeal, President Trump commuted his prison sentence, making every challenge to it moot.

See the full issue here.

Other insurance fraud

Mark Bieglera commercial insurance broker based in Helena, Montana, has been sentenced to 90 days in jail, sentenced to 10 years of probation and ordered to pay $150,000 in restitution for insurance fraud.

Biegler pleaded guilty to six felony counts of insurance fraud and theft, according to the state Commissioner of Securities and Insurance, Office of the Montana State Auditor.

Mr. Biegler previously worked at Hub International Ltd., but he was terminated by Hub in 2017, a spokeswoman for the brokerage said in an email. The charges relate to Premier Insurance LLC, an agency he established, she said.

According to court documents filed in state court in 2020, between September 2018 and September 2020, Mr. Biegler, who held insurance and excess insurance licenses, for felony insurance fraud and theft of insurance premiums against five companies.

He was also charged with fraud for filing false written statements with State Farm Mutual Insurance Co. in May 2017.

The details of the fraud charges vary, but in one case he was accused of having a company pay a premium directly to him instead of an insurer and altering a return by falsely stating that the company had insurance coverage.

See the full issue here.

Motion re McClenny, Moseley & Associates

Attorney Matthew D. Monson of The Monson Law Firm, LLC filed the following motion, a full copy of which is available at https://www.claimsjournal.com/app/uploads/2023/01/Franatovich-Filing40.pdf, on behalf of Allied Trust Insurance Company. I have taken out of the motion to bring out its essence.

See the full issue here.

212 years in prison for fraud

Insurance fraud by killing children and attempted murder of wife confirmed

United States Of America v. Ali F. Elmezayen, AKA Ali F. Elmeza Yen, AKA Ali Fathelelah Elmezayen, AKA Ali Fathellah Elmezayen, AKA Ali Sayed, AKA Ali Fathelehah SayedNo. 21-50057, United States Court of Appeals, Ninth Circuit (January 19, 2023) Ali Elmezayen appealed the district court’s sentence following a jury verdict finding him guilty of four counts of mail fraud under 18 USC § 1341, four counts of wire fraud under 18 USC § 1343, aggravated identity theft under 18 USC § 1028A(a)(1) and four counts of money laundering under 18 USC § 1957.

See the full issue here.

(c) 2023 Barry Zalma & ClaimSchool, Inc.

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Barry Zalma, Esq., CFE, now limits his practice to serving as an insurance consultant specializing in insurance coverage, insurance claims management, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims attorney and more than 54 years in the insurance industry. He can be reached at http://www.zalma.com and zalma@zalma.com

Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published on https://zalma.substack.com. Go to the Zalma On Insurance podcast at https://anchor.fm/barry-zalma; Follow Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos on Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

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