Justia White Collar Crime Opinion SummariesArticles Posted in Insurance Law
Williams v. Nat. W. Life Ins. Co.
National Western Life Insurance Company (NWL) appealed after it was held liable for negligence and elder abuse arising from an NWL annuity sold to Barney Williams by Victor Pantaleoni. In 2016, Williams contacted Pantaleoni to revise a living trust after the death of Williams’ wife, but Pantaleoni sold him a $100,000 NWL annuity. When Williams returned the annuity to NWL during a 30-day “free look” period, Pantaleoni wrote a letter over Williams’ signature for NWL to reissue a new annuity. In 2017, when Williams cancelled the second annuity, NWL charged a $14,949.91 surrender penalty. The jury awarded Williams damages against NWL, including punitive damages totaling almost $3 million. In the Court of Appeal's prior opinion reversing the judgment, the Court concluded Pantaleoni was an independent agent who sold annuities for multiple insurance companies and had no authority to bind NWL. The Court determined that Pantaleoni was an agent for Williams, not NWL. The California Supreme Court vacated that decision and remanded, asking the appeals court to reconsider its finding that Pantaleoni did not have an agency relationship with National Western Life Insurance Company in light of Insurance Code sections 32, 101, 1662, 1704 and 1704.5 and O’Riordan v. Federal Kemper Life Assurance Company, 36 Cal.4th 281, 288 (2005). Upon remand, the Court of Appeal affirmed the judgment finding NWL liable for negligence and financial elder abuse. However, punitive damages assessed against NWL were reversed. The Court found no abuse of discretion in the trial court’s calculation of the attorney fee award, but remanded the case for the court to reconsider the award in light of the reversal of punitive damages. View "Williams v. Nat. W. Life Ins. Co." on Justia Law
Banerjee v. Super. Ct.
Following a preliminary hearing, petitioner Dr. Sanjoy Banerjee was charged in an information with two counts of presenting a false or fraudulent health care claim to an insurer (a form of insurance fraud, counts 1-2), and three counts of perjury (counts 3-5). The superior court denied Banerjee’s motion to dismiss the information as unsupported by reasonable or probable cause. Banerjee petitioned for a writ of prohibition to direct the superior court to vacate its order denying his Penal Code section 995 motion and to issue an order setting aside the information. The Court of Appeal issued an order to show cause and an order staying further proceedings on the information, pending the Court's resolution of the merits of Banerjee’s petition. The State filed a return, and Banerjee filed a traverse. The State argued the evidence supported a strong suspicion that Banerjee committed two counts of insurance fraud and three counts of perjury, based on his violations of Labor Code section 139.3(a) between 2014 and 2016. During that period, Banerjee billed a workers’ compensation insurer for services he rendered to patients through his professional corporation and through two other legal entities he owned and controlled. The insurance fraud charges are based on Banerjee’s 2014-2016 billings to the insurer through the two other entities. The perjury charges were based on three instances in which Banerjee signed doctor’s reports, certifying under penalty of perjury that he had not violated “section 139.3.” Banerjee argued: (1) the evidence showed he did not violate the statute's referral prohibition; (2) even if he did not comply with section 139.3(e), the “physician’s office” exception to the referral prohibition applied to all of his referrals to his two other legal entities; and (3) the patient disclosure requirement of section 139.3(e), the referral prohibition of section 139.3(a), and the physician’s office exception to the referral prohibition were unconstitutionally vague. The Court of Appeal concluded: (1) Banerjee did not violate section 139.3(a) by referring his patients to his two other legal entities; and (2) the evidence supported a strong suspicion that Banerjee specifically intended to present false and fraudulent claims for health care benefits, in violation of Penal Code section 550(a)(6), by billing the workers’ compensation insurer substantially higher amounts through his two other legal entities than he previously and customarily billed the insurer for the same services he formerly rendered through his professional corporation and his former group practice. Thus, the Court granted the writ as to the perjury charges but denied it as to the insurance fraud charges. View "Banerjee v. Super. Ct." on Justia Law
People ex rel. Allstate Insurance Co. v. Suh
Allstate filed suit under Insurance Code section 1871.7 on behalf of the People against defendant, her mother, and others for insurance fraud in violation of Penal Code section 550, which makes it unlawful to submit false or fraudulent claims to an insurance company. The jury found in favor of Allstate.The Court of Appeal affirmed, holding that the trial court did not abuse its discretion in denying defendant's ex parte application for a stay. The court also held that unlawful conduct under section 550 does not require a misstatement of fact in the insurance claim. In this case, defendant and her mother committed insurance fraud in violation of section 550 where they perpetrated a deceitful insurance scheme designed to acquire insurance proceeds illegally for personal gain. View "People ex rel. Allstate Insurance Co. v. Suh" on Justia Law
Rainforest Chocolate, LLC v. Sentinel Insurance Company, Ltd.
Appellant Rainforest Chocolate, LLC appealed the grant of summary judgment motion in favor of appellee Sentinel Insurance Company, Ltd. Rainforest was insured under a business-owner policy offered by Sentinel. In May 2016, Rainforest’s employee received an email purporting to be from his manager. The email directed the employee to transfer $19,875 to a specified outside bank account through an electronic-funds transfer. Unbeknownst to the employee, an unknown individual had gained control of the manager’s email account and sent the email. The employee electronically transferred the money. Shortly thereafter when Rainforest learned that the manager had not sent the email, it contacted its bank, which froze its account and limited the loss to $10,261.36. Rainforest reported the loss to Sentinel. In a series of letters exchanged concerning coverage for the loss, Rainforest claimed the loss should be covered under provisions of the policy covering losses due to Forgery, for Forged or Altered Instruments, and for losses resulting from Computer Fraud. Sentinel denied coverage. In a continuing attempt to obtain coverage for the loss, Rainforest also claimed coverage under a provision of the policy for the loss of Money or Securities by theft. Sentinel again denied coverage, primarily relying on an exclusion for physical loss or physical damage caused by or resulting from False Pretense that concerned “voluntary parting” of the property—the False Pretense Exclusion. Finding certain terms in the policy at issue were ambiguous, the Vermont Supreme Court reversed summary judgment and remanded for the trial court to consider in the first instance whether other provisions in the policy could provide coverage for Rainforest's loss. View "Rainforest Chocolate, LLC v. Sentinel Insurance Company, Ltd." on Justia Law
United States v. Walters
In 2010, the defendants formed PremierTox, a urinalysis testing company: Doctors Peavler and Wood owned a substance abuse treatment company, SelfRefind; Doctor Bertram previously worked for SelfRefind. Bottom and Walters owned a drug testing service and laboratory. Physicians at clinics ordered urinalysis tests to check if their patients used illicit drugs and to monitor their medications. PremierTox was to receive those urine samples, perform the testing, and report back. In October 2010, SelfRefind began to send frozen urine samples to PremierTox for testing, but PremierTox did not have the correct equipment. In 2011, after PremierTox bought the necessary, expensive machines, they broke down. Urine samples from SelfRefind piled up. PremierTox started testing them between February and April 2011 and finished testing them in October. Over the same period, it tested and billed for fresh samples as they came in, aiming for a 48-hour turnaround. PremierTox billed insurers, saying nothing about the delays. The defendants were charged with 99 counts of health care fraud and with conspiracy. A jury acquitted them of conspiracy and 82 of the health care fraud charges and convicted them of 17 health care fraud charges. The trial judge imposed sentences of 13-21 months in prison. The Sixth Circuit affirmed the convictions. A reasonable jury could find that the defendants violated 18 U.S.C. 1347 by requesting reimbursement for tests that were not medically necessary. View "United States v. Walters" on Justia Law
California v. Riddles
Defendant-appellant John Riddles pled guilty to one count of workers' compensation insurance fraud. His conviction grew out of his application for workers' compensation insurance, which fraudulently represented that a number of nurses who had been placed in residential care and skilled-nursing facilities by Riddles' staffing agency were computer programmers. His misrepresentation of the nurses as computer programmers substantially reduced the premium his agency was charged by the workers' compensation insurer that accepted his company's application; accordingly, the trial court required that Riddles pay, as restitution to the insurer, $37,000 in premiums the insurer would have earned in the absence of his misrepresentation. Contrary to his argument on appeal, a workers' compensation insurer could recover, as restitution under Penal Code section 1202.4, the premiums it would have earned in the absence of misrepresentations by an insurance applicant. The fact Riddles may have been able to establish that the Labor Code did not require that he provide workers' compensation coverage for the nurses did not relieve him of responsibility for providing the insurer with a fraudulent application or alter the fact the nurses were covered by the policy he obtained. View "California v. Riddles" on Justia Law
Travelers Cas. & Sur. Co. v. Wash. Trust Bank
An employee of a nonprofit serving disabled adult clients used her position to embezzle more than half a million dollars held by the nonprofit for its clients. After the embezzlement was discovered, Travelers Casualty & Surety Company, the nonprofit's insurance company, made the nonprofit whole. Travelers then sought contribution from the bank in federal court. By submitting certified questions of Washington law, that court has asked the Washington Supreme Court to decide, among other things, whether a nonpayee's signature on the back of a check was an indorsement. Furthermore, the Court was also asked whether claims based on unauthorized indorsements that are not discovered and reported to a bank within one year of being made available to the customer are time barred. The Supreme Court answered yes to both questions. View "Travelers Cas. & Sur. Co. v. Wash. Trust Bank" on Justia Law
Witasick v. Minn. Mut. Life Ins, Co.
Witasick was covered by a disability policy and a business overhead expense policy. His claims against both policies were honored. A dispute arose concerning coverage of some claimed business expenses. After years of negotiation, the parties settled: the insurer agreed to pay more than $4 million and Witasick agreed to release known, unknown, and future claims. The settlement contained a covenant not to sue, based on “any conduct prior to the date the Parties sign this document, or which is related to, or arises out of” the policies. During negotiations, the U.S. Government notified Witasick that he was the target of a grand jury investigation related to fraud and business expense claims on his income tax returns. Witasick was indicted in 2007. To support its charge of mail fraud, the government relied on information and documents Witasick had submitted to the insurer. An employee of the insurer testified before the Grand Jury and at Witasick’s trial. Witasick was convicted on most counts, but acquitted of mail fraud, and was sentenced to 15 months’ imprisonment. In 2011, Witasick sued the insurer based on the policies and cooperation with the prosecution. The Third Circuit affirmed dismissal, finding the claims prohibited by the settlement agreement. View "Witasick v. Minn. Mut. Life Ins, Co." on Justia Law
United States v. Kielar
Kielar, a pharmacist, got many patients from Dr. Barros, whose office was in the same building, and began defrauding two insurance companies. Kielar forged prescriptions for Procrit under Barros’s name and submitted them for payment, knowing that Procrit had neither been prescribed, nor provided, to the individuals under whose policies he sought reimbursement. The insurers lost $1,678,549. Kielar was indicted for health care fraud, 18 U.S.C. 1347, with a forfeiture allegation, 18 U.S.C. 982(a)(7) that identified properties subject to forfeiture, including a Florida property. Kielar asserted that he needed the proceeds of its sale to pay legal fees. The court granted a motion to release lis pendens and ordered that the proceeds of the sale be placed in escrow with the U.S. Marshals Service. Kielar unsuccessfully requested that the court allow him to use the sale proceeds “for taxes, legal fees and other expenses.” He was convicted of six counts of health care fraud; three counts of aggravated identify theft, 18 U.S.C. 1028A(a)(1); and of using false records to impede a federal investigation, 18 U.S.C. 1519. The Seventh Circuit affirmed, rejecting arguments that the court erred in failing to hold a hearing on his request to release his escrowed funds, by limiting cross-examination of Barros, and by preventing Kielar from calling a former patient as a defense witness. View "United States v. Kielar" on Justia Law
PHL Variable Ins. Co. v. Midas Life Settlements LLC
Retired seamstress, Joseph, never had annual household income exceeding $40,000; her condominium, worth $169,990, was foreclosure. Joseph was born in Haiti. She did not speak English well. Jean referred Joseph to the Diverse insurance agency for a fee. In 2008, Diverse applied for a $10 million life-insurance policy on Joseph’s life to PHL. The application falsely stated Joseph’s net worth was $11,906,000 and her income was $497,000. The application listed a 2008 Irrevocable Trust as the proposed beneficiary and owner. Joseph signed an agreement establishing the Trust and appointed BNC as the trustee and Jean as the trust protector. Joseph did not know of the misrepresentations and likely signed blank documents. The Trust financed the premiums through a loan from PFG. In 2010, Jean directed BNC to surrender the Policy to PFG in satisfaction of the loan obligations. PHL sought to rescind the Policy for fraud. After Joseph died in 2011, the new policy owner claimed the proceeds. The district court granted rescission and held that PHL could keep the premium. The Eighth Circuit affirmed, rejecting arguments that PHL could not rescind the Policy because its own agent completed the application and that PHL was estopped from rescinding the Policy because it had reason to know of the misrepresentations. View "PHL Variable Ins. Co. v. Midas Life Settlements LLC" on Justia Law