Mealey's Insurance Fraud : Mealey's : Legal News & Analysis

Mealey's Insurance Fraud

August 29, 2023
Motion To Quash Subpoena Denied In $5.6M RICO Suit Against New Jersey Pain Clinic

NEWARK, N.J. — A New Jersey federal magistrate judge on Aug. 28 denied a motion to quash GEICO’s subpoena served upon the New Jersey Office of the Insurance Fraud Prosecutor (OIFP) in a $5.6 million Racketeer Influenced and Corrupt Organizations Act (RICO) and fraud suit filed against a pain clinic and its owner and multiple chiropractic practices, alleging that the pain clinic unlawfully obtained personal injury protection (PIP) benefits by paying kickbacks to chiropractors in exchange for referrals, finding that the subpoena “does not unnecessarily hinder the OIFP and that the records may be disclosed.”
August 28, 2023
3rd Circuit Reverses Judgment For Hospice Agency In Medicare Fraud Suit

PHILADELPHIA — The Third Circuit U.S. Court of Appeals on Aug. 25 reversed and remanded a district court’s grant of summary judgment to a hospice provider whose former employees alleged that the provider violated the federal False Claims Act (FCA) by fraudulently billing Medicare in admitting and recertifying patients who were not actually eligible for hospice, finding that while the government’s failure to act for a long period of time is evidence of a lack of the materiality required under the FCA, “it was erroneous to treat this factor as determinative of immateriality.”
August 28, 2023
Discovery Row Outlined In Insurer’s Suit Over Alleged Fraud Scheme

NEW YORK — An insurer that alleges it sustained losses exceeding $135 million due to “systematic breaches of fiduciary duty, fraud, and other misconduct” has asked a New York federal court for a discovery conference over disputes with four defendants, which argue in an Aug. 25 opposition that the request should be denied because “[g]ood cause exists to shift expenses of discovery.”
August 25, 2023
6th Circuit Affirms Finding That Insurer Couldn’t Void Policy In Fire Coverage Row

CINCINNATI — The Sixth Circuit U.S. Court of Appeals affirmed a district court’s determination that a homeowners insurer could not void a policy after a jury returned a verdict in favor of the Tennessee homeowner and their insurance agency in a fire coverage dispute, finding that the insurer failed to prove that the homeowners’ misrepresentation about not having automatic water sprinklers in their home increased the risk of loss needed to void an insurance policy pursuant to Tennessee law.
August 25, 2023
Partial Dismissal Granted In Insurer’s Fraud Suit Against Biohazard Remediation Company

BOSTON — A Massachusetts federal judge granted a biohazard remediation company and its employees’ partial motion to dismiss a fraud and Racketeer Influenced and Corrupt Organizations Act (RICO) suit alleging that the company defrauded an insurer by engaging in a scheme to create fraudulent charges for remediation, finding in part that the insurer failed “to allege two distinct entities” to establish a RICO claim.
August 24, 2023
Enforcement Of Automatic Bankruptcy Stay Sought For Foreign Proceedings

WILMINGTON, Del. — Citing reports of litigation in Bermuda and Israel, Chapter 11 debtor Vesttoo Ltd. and 48 affiliated debtors moved in Delaware federal bankruptcy court for enforcement of the automatic stay against Bermuda-based White Rock Insurance (SAC) Ltd. and “the putative joint provisional liquidators [JPLs] of segregated cells.”
August 23, 2023
Split 5th Circuit Says FCA Tolling Bars Some Claims Against Hospital

NEW ORLEANS — A split Fifth Circuit U.S. Court of Appeals affirmed in part a district court’s judgment in favor of the government but dismissed for lack of jurisdiction a separate judgment consolidated on appeal, finding that the materiality and scienter requirements of the federal False Claims Act (FCA) were satisfied but that the district court erred in applying the statute’s tolling provision in a suit alleging that a hospital and its owners and officers violated the FCA by submitting false reports for Medicare reimbursement.
August 23, 2023
Government Wins Partial Summary Judgment In False Claims Act Crop Case

YAKIMA, Wash. — Saying disputes raised are supported only by one defendant’s declaration and “do not address the material facts,” a Washington federal judge granted summary judgment for the government on two counts asserted under the False Claims Act (FCA) in a crop insurance case.
August 22, 2023
Dismissal Motions Granted As To Illegal Kickbacks In FCA Suit Against Medtronic

KANSAS CITY, Kan. — A Kansas federal judge granted in part dismissal motions filed by Medtronic and its related company and a hospital in a relator’s qui tam suit alleging that they violated the federal False Claims Act (FCA) by participating in a scheme to provide medically unnecessary treatment resulting in the submission of false claims for payment to federal health care programs, finding that the illegal kickbacks claim related to marketing services is barred under the public disclosure bar.
August 22, 2023
Judge Says Public Disclosure Bar Doesn’t Stop FCA Suit Claiming Medicare Fraud

PHILADELPHIA — A Pennsylvania federal judge granted in part motions filed by skilled nursing facilities (SNFs) and a rehabilitative services contract provider to dismiss a qui tam suit against them, alleging Medicare and Medicaid fraud related to billing for rehabilitative therapy that was purportedly not provided, finding that False Claims Act (FCA) claims against the SNFs should be dismissed for failure to show that they knew of the false billing but that the public disclosure bar precludes dismissal of the FCA claims against the contract provider.
August 22, 2023
Rescission Row Stayed Pending Resolution Of Underlying Suit Against Contractor

SAN FRANCISCO — A California federal judge granted a painting contractor’s motion for a stay in an insurer’s suit against the contractor seeking rescission of the contractor’s insurance policy and a declaratory judgment that it is not required to provide coverage to the contractor in an underlying breach of contract case, finding that a stay pending resolution of the underlying case is warranted in part due to the overlap between the cases such that issuing a stay “increases judicial efficiency.”
August 18, 2023
11th Circuit Affirms Health Care Fraud Convictions And Restitution Order

ATLANTA — The 11th Circuit U.S. Court of Appeals on Aug. 17 affirmed defendants’ health care and mail fraud convictions and restitution and forfeiture orders stemming from their involvement in a scheme to submit bills to insurance companies for medically unnecessary prescriptions for a compounding pharmacy’s drugs, but vacated and remanded one of the defendant’s aggravated identify theft convictions, finding that using another person’s identity information “was merely ancillary to the health care fraud.”
August 17, 2023
Insurers Query Medical Coding Expert’s Role In Lab Testing Compensation Case

BRIDGEPORT, Conn. — A medical coding expert’s testimony lacks relevance in a case that turns on the medical necessity of labs’ drug testing, and the expert is not qualified to opine about internal codes used to deny claims, insurers tell a federal judge in Connecticut in seeking to exclude the opinions.
August 17, 2023
Stay Granted In Marine Insurance Dispute Over Material Misrepresentations

SEATTLE — A Washington federal judge granted a trust’s motion to stay a marine insurer’s suit against it, seeking a declaratory judgment that the trust’s marine insurance policy on its sailboat is void due to alleged material misrepresentations, finding that factors weigh in favor of granting a stay pending resolution of Great Lakes Ins. SE v. Raiders Retreat Realty Co., LLC, a case scheduled for argument before the U.S. Supreme Court.
August 16, 2023
4th Circuit Vacates District Court Dismissal Of FCA Suit Against Walgreens

RICHMOND, Va. — The Fourth Circuit U.S. Court of Appeals on Aug. 15 vacated and remanded a district court decision dismissing a suit filed by federal and state governments alleging violations of the False Claims Act (FCA) and Virginia law, saying the court erred in finding that the governments did not “plausibly allege facts that establish materiality” regarding Walgreens’ alleged misrepresentation that certain patients met Medicaid eligibility requirements for hepatitis C drugs.
August 16, 2023
Chapter 11 Filings Sideline Bid For Injunctive Relief In Aid Of Foreign Arbitration

NEW YORK — A suit seeking injunctive relief in aid of foreign arbitration in a dispute involving reinsurance has been placed on the suspense docket of a New York federal court, with a judge on Aug. 15 saying counsel for Vesttoo Ltd. and its subsidiaries “reported that all respondent entities have filed for bankruptcy.”
August 15, 2023
Doctor Asks 4th Circuit To Set Aside $5.5M Conditional Judgment In FCA Suit

RICHMOND, Va. — A physician and his wife urge the Fourth Circuit U.S. Court of Appeals to set aside a $5.5 million consent judgment entered by a district court against them after they entered into a settlement agreement with the federal government and state of North Carolina in a suit alleging violations of the federal False Claims Act (FCA) and North Carolina False Claims Act (NCFCA), arguing, in part, that the lower court erred by dismissing their motion to set aside the judgment without a hearing.
August 15, 2023
Insurer Says District Court’s Ruling On Misrepresentations Must Be Reversed

ATLANTA — A district court’s ruling that an insurer could not demonstrate reliance upon its insureds’ fraudulent misrepresentations regarding mold damage in an insured hotel must be reversed because the district court failed to view the evidence in the insurer’s favor as the nonmoving party, an insurer argues in a cross-appeal reply brief filed in the 11th Circuit U.S. Court of Appeals.
August 15, 2023
Texas Settles Whistleblower Drug Fraud Claims Against Drugmakers For $42M

AUSTIN, Texas — The Texas Attorney General’s Office said in a press release that its Civil Medicaid Fraud Division has settled whistleblower claims involving the prescription drug Vyvanse against drugmakers Shire PLC, Baxter International Inc., Baxalta Inc., Viropharma Inc., Takeda Pharmaceuticals USA Inc. and Takeda Pharmaceuticals America for more than $42 million.
August 11, 2023
Man Convicted Of Care Home Fraud Seeks High Court Review Of $38M Forfeiture Order

WASHINGTON, D.C. — A man convicted of fraud, bribery and money laundering and ordered to forfeit $38.7 million related to a health care scheme involving bribing physicians to have patients entered into assisted living and skilled nursing facilities that he owned filed a petition for a writ of certiorari with the U.S. Supreme Court, asking the court to review whether a court, rather than a jury, may conduct fact finding to determine the amount to be forfeited.
August 10, 2023
Judgment Granted For Insurance Agency In Fraud Suit Filed By Workers’ Comp Insurer

WILLIAMSPORT, Pa. — A Pennsylvania federal judge granted summary judgment to an insurance agency in a fraud suit filed by a workers’ compensation insurer against it related to coverage on behalf of the agency’s customer, finding that because the insurer failed to act on its knowledge that the agency knew, through its access to an insurance database, that false information was submitted on the customer’s insurance application, the insurer’s claims were untimely.
August 09, 2023
Judge Dismisses Claims In FCA Suit Against Walgreens Over Alleged ‘Coupon Scheme’

MIAMI — A Florida federal judge on Aug. 8 adopted in part a federal magistrate’s report recommending partial dismissal in a federal False Claims Act (FCA) suit filed on behalf of the U.S. government against Walgreens related to its alleged Medicare fraud, finding that while no party challenges the magistrate’s recommendation to dismiss claims related to a medication therapy management scheme, the coupon scheme should also be dismissed under the doctrine of the first-to-file bar.
August 08, 2023
New York Justice Affirms Medical Provider’s Arbitration Award In No-Fault Row

BROOKLYN, N.Y . — A New York justice in an opinion filed Aug. 7 affirmed an arbitration award issued to a medical provider acting as an assignee of no-fault insurance benefits while alleged to be member of a fraud ring, finding that though the master arbitrator’s “award was incomplete” for failing to address the insurer’s legal issue that was previously addressed by another arbitrator, the justice was “constrained to uphold his award because the ultimate determination affirming” the previous arbitration “was not irrational.”
August 08, 2023
Arizona High Court: Insurer Can’t Challenge Life Policy After 2-Year Period

PHOENIX — A unanimous Arizona Supreme Court answered in the negative a question certified to it from a federal court asking whether an insurer can challenge a life insurance policy’s validity based on the lack of an insurable interest after the two-year statutory contestability period expires, finding that under Arizona law, the only permitted challenges to a policy’s validity after the period expires are those for nonpayment of premiums.
August 08, 2023
Judge Dismisses Case After Parties Settle In Row Over Coverage For Fire Damage

NEWARK, N.J. — A New Jersey federal judge dismissed a suit filed by an insured against his insurer after the insurer denied his claim for fire-related damages in a building with both commercial and residential tenants, finding that dismissal is appropriate because the parties reported settling the case and have not filed documents to terminate the case within the 60-day period as ordered by the court.