Zalma’s Insurance Fraud Letter – December 1, 2023

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ZIFL – Volume 27 Issue 23

The Resource for the Insurance Claims and Insurance Fraud Professionals

This, the 22nd issue of the 27th Year of ZIFL includes articles and reports relating to insurance fraud, including:

Some Red Flags of Insurance Fraud

Over the last two centuries insurers, insurance investigators, Special Investigative Unit Investigators, insurance lawyers, and insurance management have developed lists of indicators of potential insurance fraud. The indicators are known as the Red Flags of Fraud and are used to determine if it is necessary to begin a thorough investigation of an insurance claim to determine if a fraud is being attempted.

To be able to work to deter or defeat attempts at insurance fraud the insurance claims person and the SIU investigators must be conversant in the red flags or indicators of insurance fraud.

Read the full 21 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/11/ZIFL-12-01-2023-1.pdf

More McClenny Moseley & Associates Issues

This is ZIFL’s nineteenth installment of the saga of McClenny, Moseley & Associates and its problems with the federal courts in the State of Louisiana and what appears to be an effort to profit from what some Magistrate and District judges indicate may be criminal conduct to profit from insurance claims relating to hurricane damage to the public of the state of Louisiana.

Read the full 21 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/11/ZIFL-12-01-2023-1.pdf

Litigation Financing

Although this report from Texas lawyer Steven Badger deals with the litigation around the MMA debacles it is more important for fraud investigators to understand what is happening in litigation financing.

Mr. Badger notes that “litigation financing and other interlopers [are] moving into the first-party claims world trying to line their pockets with insurance claim proceeds.” He concludes, and I agree: “This is a very dangerous trend.”

Litigation from an entity called Equal Access Justice Fund, LP loaned to MMA $30,000,000 at 20% per year interest plus an additional 4% in advance, extension, and yearly service fees would require the law firm to pay the lenders more than $600,000.00 a year. Unlike the U.S. government law firms cannot print money. For a normal law firm working on hourly billing that interest rate plus service fees is a scary, if not impossible, obligation to meet. Most law firms will not produce enough net income to pay $600,000 a year interest and be able to even consider paying off the principal.

In In Re: MMA a pleading filed in the Western District of Louisiana, by Intervenor Equal Access Justice Fund LP (“EAJF”) sought to recover the interest and principal from MMA and its partners as a result of its multiple hurricane suits that have bee removed from MMA’s control by the courts.
Chutzpah! Guess Who’s Back, Back Again?

MMA’s website is back up and running. The team is a bit smaller though. https://www.mma-pllc.com/our-team/ The new website for the MMA law firm states: “We believe that striking a balance between professionalism and self-empowerment is key to fostering a harmonious company culture—one where we are encouraged to build authentic relationships and welcome new opportunities.”

Read the full 21 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/11/ZIFL-12-01-2023-1.pdf

‘I Am Guilty.’ Murdaugh Pleads to 22 State Financial Crimes for 27 Year Sentence

Alex Murdaugh pleaded guilty November 17, 2023, to stealing millions of dollars from vulnerable legal clients in schemes lasting over a decade under an agreement that all but ensures more prison time for the longtime lawyer who was convicted of killing his wife and younger son.

Murdaugh agreed to plead guilty to 22 total counts, including money laundering, breach of trust and financial fraud, in exchange for a 27-year sentence. Judge Clifton Newman said he intends to officially accept the plea deal during a sentencing hearing set for Nov. 28 so that victims or their families may attend.

“I agree that I wrongly took all of that money, your honor, and did all of those crimes,” Murdaugh told Newman. “I am guilty,” he added.

Read the full 21 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/11/ZIFL-12-01-2023-1.pdf

Health Insurance Fraud Convictions

Psychiatrist Convicted of Billing for Services Never Rendered

Gustavo Kinrys, 52, of Wellesley, was convicted of seven counts of wire fraud, six counts of false statements relating to health care matters and one count of obstructing a criminal health care investigation. U.S. District Court Judge Denise J. Casper scheduled sentencing for Jan. 31, 2023.  Kinrys was arrested and charged in December 2020. 

Read the full 21 pages of this issue and dozens more convictions at ZIFL at http://zalma.com/blog/wp-content/uploads/2023/11/ZIFL-12-01-2023-1.pdf

Man Bites Dog Story

Lawyer Sanction Upheld for Intimidating and Harassing an Insurer

In Nguyen v. Aventus Ins. Co., 14-19-00607-CV (Tex. App. Sep 30, 2021) an April 2, 2018, sanctions order, that found that the lawsuit filed by Eric B. Dick, And Dick Law Firm, PLLC…” where the court found that the suit had no basis in fact, that it was brought in bad faith for the improper purpose of intimidating and harassing Aventus Insurance Company and that appellants hindered the litigation process and failed to make reasonable inquiries to ensure that the claims and pleadings were not groundless.

Read the full 21 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/11/ZIFL-12-01-2023-1.pdf

Other Insurance Fraud Convictions

Former Bail Agent And Torrance Police Officer Sentenced To 27 Years In Prison

Rehan Nazir, 51, of Torrance, was sentenced November 29, 2023, to 27 years after an investigation by the Los Angeles County Sheriff Major Crimes Bureau and the California Department of Insurance found he had apprehended bail clients prior to their required court appearances and threatened to return them to jail if they did not pay him money or give him property. 

Read the full 21 pages of this issue of ZIFL and many more convictions at http://zalma.com/blog/wp-content/uploads/2023/11/ZIFL-12-01-2023-1.pdf
It is Expensive to Lie to Your Insurer

Fraud in Inception Allows Insurer to Rescind

Lamin Fatty appealed the trial court’s order granting summary disposition to Farm Bureau on the basis of finding Fatty’s fraud was grounds for contract rescission and reimbursement of benefits paid. In Lamin Fatty v. Farm Bureau Insurance Company of Michigan, No. 363888, Court of Appeals of Michigan (November 21, 2023).

Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. 

He is available at http://www.zalma.com and [email protected] and read the full 21 pages of this issue of ZIFL at http://zalma.com/blog/wp-content/uploads/2023/11/ZIFL-12-01-2023-1.pdf