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Home / Insurance / Zalma’s Insurance Fraud Letter – February 15, 2023

Zalma’s Insurance Fraud Letter – February 15, 2023

Sorry for being late with the blog and newsletter

On 2/15/2023 I had a transcatheter aortic valve replacement (TAVR) procedure to replace my malfunctioning aortic valve. I tolerated the procedure well although the recovery process took a couple of days without moving to avoid bleeding. I’m back at work now.


The following are the types of articles you can read in Issue 4.

More problems for Tom Girardi

Tom Girardi83, the disgraced former Los Angeles celebrity attorney was indicted by federal grand juries in Los Angeles and Chicago on charges of stealing more than $18 million from clients, federal prosecutors announced. he faces a maximum 20-year federal prison sentence, according to the U.S. Department of Justice.

The plans included stealing money from a couple whose son was paralyzed in a car wreck, a widow whose husband died when a boat unexpectedly sped up to 120 miles per hour (193 kilometers per hour) and flipped, and family members of victims during a 2018 Lion Air crashes that killed 189 people, according to the indictment.

Read the full ZIFL, in Adobe .pdf format, here.

Fiction: I’m Going Into the Insurance Business

This is one of a series of fictionalized true crime stories about insurance fraud from an expert who explains why insurance fraud is a “Heads I Win, Tails You Lose” situation for insurance companies. The stories help understand how insurance fraud in America costs everyone who buys insurance thousands of dollars each year and why insurance fraud is safer and more profitable for the perpetrators than any other crime.

The creation of a fraudulent insurance company

Most insurance companies are formed by large companies with significant assets. They are capitalized with earnest money that the insurer needs to cover losses until profits are made. The company is staffed with insurance professionals who believe in the concept of risk spreading. The insurers, whether new or old, provide a definitive service to the public.

Betty Bruja wanted to start her own insurance company. She had been an insurance broker for ten years. During those ten years, she had educated herself with books and training from the Insurance Risk Management Institute, the Society of Certified Property and Casualty Underwriters, the Insurance Institute and the Insurance Claims Library. Through dedicated and long study, Betty earned the CPCU designation in the shortest time allowed by the Society of CPCU.

Read the full ZIFL, in Adobe .pdf format, here.

More problems for McClenny Moseley & Associates

Lawyers cannot file a lawsuit without being retained by the client

Attorneys for McClenny Moseley & Associates appeared in a New Orleans courtroom on Feb. 1, 2023, to explain why they claimed to represent a homeowner who says she did not hire the law firm but signed some papers given to her by a restoration contractor.

Magistrate Judge Michael North ordered both MMA founding partner Zach Moseley and Louisiana office manager William R. Huye III to appear before him in person after an insurance attorney accused the law firm of working with contractors to sign up new clients. North ordered the law firm to pay attorneys’ fees to lawyers forced to contend with a duplicate lawsuit it filed. It was the third time a federal judge in Louisiana sanctioned McClenny Moseley.

That case number refers to a lawsuit MMA filed Dec. 4 on behalf of “Trichia” Franatovich, even though another law firm had already filed a lawsuit on behalf of Tricia Franatovich (correct spelling) for the same hurricane damage. The U.S. District Court for Eastern Louisiana scheduled the hearing after Matthew Monson, a New Orleans defense attorney representing the insurer named in both lawsuits, filed a lengthy motion accusing MMA of soliciting customers by working with restoration contractors who went door-to-door door in damaged neighborhoods by Hurricane Ida.

Read the full ZIFL, in Adobe .pdf format, here.

Citizens sue Strems Law Firm and Scott Strems

The suit alleges that the defendants conspired, combined and agreed to create or fraudulently increase insurance claims to be submitted on behalf of the insureds by falsely inflating the value of the claims and falsely asserting claims for costs for services not actually performed, in order to induce citizens to settle the claims and that the non-attorney defendants, in connivance with attorney Strems and the Strems Law Firm, also created false and fictitious invoices for services purportedly performed and repairs purportedly required which were used to defraud the citizens. to assuming that the claims should be settled for the amounts negotiated, when in fact the damages represented were either grossly inflated or non-existent.

The defendants acted individually and in concert to defraud the citizens. The citizens have been directly harmed by the behavior of the defendants. Defendants’ scheme to defraud citizens began in or around 2014 and continues today.

Read the full ZIFL, in Adobe .pdf format, here.

Only probable cause is needed for arrest

An acquittal is not a finding of innocence

Probable cause is not a high bar

People who attempt insurance fraud are always upset when the scam fails. When that failure results in an arrest and trial, outrage grows. When the jury acquits the fraudster, thanks are never enough, there is no need to go to jail, the fraudster wants – to paraphrase Shakespeare – a pound of flesh from those who stopped the attempt.

IN Joseph Fehl v. Borough of Wallington; et al, No. 21-3019, United States Court of Appeals, Third Circuit (January 25, 2023) Joseph Fehl sued Borough of Wallington; Witold Baginski, the district’s former business administrator; and Sean Kudlacik, a captain in the borough’s police department, alleging civil rights violations. The district court found no material facts in dispute and granted the defendants’ motion for judgment.

Read the full ZIFL, in Adobe .pdf format, here.

Good news from the Coalition Against Insurance Fraud

An airport chef was electrocuted after lying, injured his back and then caught kayaking with his children in the UK. Ferenc Sumegi said he needed a cane or crutches after straining his back lifting a fish tray at Heathrow Airport, where he prepared airline meals. He claimed £2.2 million for a “significant and continuing disability.” Sumegi said he could not work as a cook or lift or make sudden movements. The injury kept him on his back 18 hours a day and prevented him from kneeling, squatting and taking his children to the park, he claimed. Sumegi also had to hold on to furniture to get around his Berkshire home, he told a disability doctor. Still, surveillance captured Sumegi kayaking with his two children, “forcefully throwing a stick to his dog” and kneeling in the sand while burying his daughter on the beach. Surveillance also found him in a river with a daughter on each shoulder and his arms in the air. And he was seen fishing and paddle boarding, walking, filling up his car and shopping without seeming difficulty. A court rejected Sumegi’s claim, refused him an appeal and ordered him to repay £75K.

Read the full ZIFL, in Adobe .pdf format, here.

Health insurance fraud convictions

17 years in prison for fraud

Frank Patino, in the Detroit area, was also ordered to pay $30 million in restitution to Medicare and other insurers, the report said.

Patino, a Michigan doctor was sentenced to nearly 17 years in prison for running a year-long, $250 million opioid scheme that made him and others wealthy and addicted patients, the Associated Press reports.

Patino pleaded not guilty in court on Monday. His new attorney, Martin Crandall, is seeking a new trial, arguing that Patino’s trial attorney failed his defense. Crandall also cites Patino’s philanthropic work as at odds with someone who would commit these crimes.

Read about this and dozens more convictions.

Read the full ZIFL, in Adobe .pdf format, here.

Other insurance fraud

Guilty of providing false insurance documents

Oscar Sancheza former Marshalltown, Iowa insurance producer was recently sentenced to a pair of five-year suspended prison terms after pleading guilty to multiple counts of insurance fraud in December following an investigation by the Iowa Insurance Division Fraud Bureau.

An investigation into the actions of Sanchez, who pleaded guilty on December 8, 2022, began in September 2020. According to a press release, the investigation concluded that Sanchez provided fictitious insurance documents to several individuals in Marshalltown and collected premium payments for policies that did not exist. Sanchez collected illegal cash deductibles from insureds, which he used for his own personal gain.

Read this and about many more convictions.

Read the full ZIFL, in Adobe .pdf format, 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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