Insurance Lawyer Blog

As San Francisco and Oakland insurance attorneys we pay attention to all insurance-related headlines. For example, almost decade ago there was a big news story about a massive, and twisted, insurance fraud scheme that crossed state borders. Four key players in that horrendous scheme are finally going to trial this week in a southern California courtroom to be held accountable for their crimes, which border on gruesome.

The New Times in Phoenix broke the story, and has continued to report on it. The story starts with fake totally healthy “patients” being recruited in Phoenix. They were hired for $800 to travel to Los Angeles and undergo completely unnecessary, and potentially dangerous, medical procedures. Many were not told about the side effects of these procedures, including one man who was struggling with the loss of strength in his hands, making it difficult for him to work. These included sweat-gland and sinus surgeries, colonoscopies, endoscopies, and gynecological and testicular procedures. The clinics that performed these operations would then bill the insurance companies at extremely high rates, and in this case the insurance companies asked few questions of the submitting doctors and organizations and paying out tens of millions of dollars in this massive fraud scheme. California officials estimate that 2,481 healthy “patients” went to California to undergo treatment from just one of the fake groups, Unity Outpatient, that was recruiting them.

The plan was that the patients would receive these huge reimbursement checks from the insurance companies and would turn them over, as they had already been paid their $800 fee. But some greedy “patients” saw the checks and cashed them instead of handing them over. One of Unity’s lawyers, himself deeply wrapped up in this scheme, actually sued the employees to get the fraudulently collected checks back! The whole mess unraveled from there. Roy Dickerson, that attorney, even claimed that they were being defamed at one point. Mr. Dickerson is no longer allowed to practice law and is one of the four main players about to go on trial in California.

The charges in this case of renting patients and harmful unnecessary surgeries include grand theft, conspiracy, insurance fraud (http://www.brodfirm.com/), filing false claims, and aggravated white-collar crime. Mr. Dickerson is additionally charged with money laundering, perjury, filing false tax returns, and failure to file tax returns. He also allegedly tried to transfer money around in a bid to hide their ill-gotten gains from federal investigators and prevent the victims from getting access to deserved restitution.

Some players have already been tried and convicted. Dr. William Hampton was sentenced to ten years in federal prison in 2008 and ordered to pay almost $2.5 million in restitution to patients on whom he performed unnecessary medical procedures. One of the original masterminds, Tam Vu Pham, is serving a 12 year sentence at the moment.

This kind of scheme is tragic and gruesome. However, it is a reminder that insurance fraud of various kinds happens all the time to many honest people. When it is one person against a huge company, the company often holds all the cards and tries to get away with wrongfully denying claims. If this has happened to you in our area, contact our Oakland or San Francisco insurance attorney to learn about your options.

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California Doctors Charged with Medicare Fraud in Nationwide Anti-Fraud Effort

MetLife Settles with States for Almost $500 Million

Our San Francisco insurance attorneys know that for our older citizens, Medicare is an absolutely crucial health care program. That is why when Medicare insurance fraud occurs all seniors (and all taxpayers) are affected.

This week, authorities charged two Orange County doctors and six others in the Los Angeles area for participating in a $14 million fraud scheme against Medicare, according to news reports. US Attorney General Eric Holder and Health and Human Services (HHS) Secretary Kathleen Sebelius said that these arrests were part of a larger investigation nationwide against an alleged $452 million in false claims made against Medicare. Across the country, 107 individuals were arrested in seven cities, including, Los Angeles, Baton Rouge, Houston, Detroit, and Tampa. Mr. Holder said, "We are determined to bring to justice those who violate our laws and defraud the Medicare program for personal gain.”

The two Orange County doctors are Dr. Augustus Ohemeng of Buena Park and Dr. George Tarryk of Seal Beach. The two of them are charged with racking up nearly $5.7 million in false claims to Medicare. They allegedly wrote fraudulent prescriptions and also received kickbacks for referring the prescriptions to a medical supplies company. Two others arrested, George Samuel Laing and Emmanuel Chidueme, were arresting with them in this scheme. The four were arrested Wednesday morning and were to appear in court that afternoon.

In another California case, Bolademi Adetola of Harbor City and Yuri Martin Lopez of Lawndale were also charged with getting fraudulent prescriptions for Adetola’s company, Latay Medical Services. Latay allegedly submitted more than $8 million in bogus claims for power wheelchairs, orthotics, and hospital beds, which were either not provided or not medically necessary.

Two more California medical professionals were scheduled to turn themselves in over charges that Greatcare Home Health, a home health agency. The allegations are that Greatcare received more than $4.5 million from Medicare for services that were either never performed or were performed by unlicensed caregivers. More allegations of kickbacks for referring patients to Greatcare were also included.

HHS also suspended or took administrative action against 52 providers following a data-driven analysis and credible allegations of fraud. More than 500 law enforcement agents, including from the FBI, were involved in this huge takedown. In addition to the arrests, 20 search warrants were also executed.

Mr. Holder and Ms. Sebelius did not say how much of these fraudulent claims were actually paid out. But a review of 34 complaints and indictments found that authorities were seeking at least $59.5 million in ill-gotten gains.

Insurance fraud on these arge scales are damaging. But insurance issues affect local residents as well. Often the problems occur when an insurance company wrongfully denies a claim. If you or a loved one has been the victim of insurance fraud or claim denial , please contact our San Francisco and Oakland insurance claim attorney to get help with any legal issues.

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MetLife Settles with States for Almost $500 Million

Blue Shield Settles Rescission Lawsuit

In another good news story, insurance giant MetLife, the largest life insurer in America, agreed to pay almost $500 million in a multi-state settlement deal after regulators reviewed whether companies were holding onto funds that should go to beneficiaries. This builds on a previous multi-state settlement with the US’s second biggest life insurer, Prudential, a few months ago (see blog post on that settlement here. Another settlement was reached with Toronto-based John Hancock.

With life insurance, the company is required to pay out the claim after receiving notification of the policyholder’s death and a valid death certificate. If there is no notification, then they are usually required to hold the funds until the policyholder would be 100 years old, plus an additional three to five years depending on the state, before turning the money over to the state as unclaimed property. The main allegation in these cases is that the insurance companies are not doing this, and are not taking the proper steps to track down beneficiaries, such as using Social Security databases to compare to their own records. MetLife maintains they pay more than 99 percent of life insurance claims and are working with regulators to ensure every claim gets paid.

An audit of MetLife launched in 2008 found that for two decades the company failed to pay benefits to beneficiaries or the state after a policyholder died. California Controller John Chiang said a joint investigative hearing with California Insurance Commissioner Dave Jones held last May revealed MetLife had information about the deaths of some of its life insurance policyholders but failed to pay what was owned. He went on to say, “These settlements make it clear that if the industry isn’t willing to make the payments legally required, we will take action, including lawsuits, to compel them to do right by their customers.”

As California insurance attorneys, we have been following these big investigations and multi-state settlements. States like California and Florida have led the way, with regulators scrutinizing these companies’ business practices. This most recent one with MetLife will likely see $40 million going to about 30,000 Californians, according to Mr. Chiang. The average cash value of each claim is about $1,200. Other states involved are Florida, Illinois, and Pennsylvania. MetLife also agreed to pay out about $188 million to beneficiaries across the country this year. Within the next 17 years is expected to pay as much as $438 million. Between the three companies that have settled, it is expected the combined payout will exceed $1 billion, although over several years.

Our San Francisco insurance attorneys know that these large multi-state settlements are a great step towards fairness for insurance consumers, especially by incentivizing these giant companies to behave correctly and follow fair, honest and transparent business practices. But these suits are not for individual policyholders who have been tricked or cheated by insurance companies. If a loved one has died, and you are unsure of whether there was a life insurance policy or what to do about it, contact an experienced insurance claim lawyer in San Francisco.

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Blue Shield Settles Rescission Lawsuit

Good news for California Life and Disability Insurance Consumers

As San Francisco insurance claim attorneys we know that even when you have insurance coverage, sometimes it is a struggle to get money from claims. Insurance companies are run for profit, and the more claims they can reject for whatever reason they can find, fair or unfair, the more money will go towards their profits. This blog has covered what can happen to property owners when insurance companies use their tricks over fires, wind, and floods. But Californians also have earthquakes to contend with, and like flood insurance, most general homeowner’s insurance policies do not cover earthquake damage. Although a serious earthquake has not occurred recently, a 7.4 earthquake last month in Mexico should have people thinking about protecting their property. News sources have been speculating for the past few years about when California is due for the next “Big One” and how much damage it could do.

A recent article in the Orange County Register stated that 88 percent of private homeowners and 90 percent of business owners in California do not have earthquake insurance. This saves between $400 and $1200 in premiums a year. Earthquake insurance has become more expensive in the last decades after the Loma Prieta earthquake in 1989 and the Northridge quake in 1994. The Northridge quake caused an estimated $19 billion to $29 billion in damages and caused premiums and deductibles to rise. Since the devastating Northridge earthquake 17 years ago, the average Orange County homeowner has saved about $8500 to $17000, but that money will pale in comparison to the costs of rebuilding if another serious earthquake strikes. At that point, your deductible is basically 100 percent if you have no insurance. Also, many people are not aware of the fact that mortgage holders are still responsible for paying their mortgage even if their house is completely destroyed.
Many Californians could be in the terrible position of paying to rebuild their house while still paying a full mortgage.

Some expect the government will bail them out from a future theoretical earthquake disaster. But emergency government assistance is meant to get people back on their feet and make sure they are safe, not to rebuild their home or replace their lost property. Another consideration is that after an earthquake, there could be peripheral damage as well that would be covered under your homeowners policy but perhaps not if the cause of the damage is an earthquake. An example of this is if an earthquake causes a pipe to burst, flooding your house. You may have insurance that covers burst water pipes, but if the cause of the burst pipe was an earthquake you may not be covered.

California law does require insurance companies that sell residential insurance policies to offer a supplemental earthquake insurance plan to policyholders under California Insurance Code section 10081. Insurance companies are required to offer such coverage even if your building or house does not conform to the current Building Codes—although the company can charge an additional premium or higher deductable. A great place for resources on earthquake insurance regulations and California’s detailed insurance laws regarding this is the Department of Insurance’s earthquake insurance page for consumers.

If you are concerned about investing so much money into yet more insurance in a time of economic hardship with the worry that when the “Big One” comes the insurance company will cheat you out of your claim money, there are experienced California insurance attorneys that will be available to help you with your insurance case. In light of how severe the physical and financial damage can be, it seems time for Californians to at least consider how prepared we are for a future earthquake.

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California Takes Action Against AIG Subsidiary for Mishandling of Fire Claims

Wind Damage: Understanding Your Policy

This week, a California insurance agent, Glenn Neasham, was sentenced to 90 days in jail after being convicted of felony-theft by a jury for selling an annuity to an 83 year old woman with signs of dementia. As San Francisco insurance attorneys, we are always especially concerned about the vulnerable being preyed up on by unscrupulous insurance companies and agents. (see another post about the elderly here)

Hopefully this case sends a clear message that California will not tolerated this. When the insurance agent was arrested in 2010, then Insurance Commissioner Steve Poizner said agents “who steal from vulnerable seniors will not get away with their shameful tricks." Mr. Neasham may be the first insurance agent ever put behind bars for selling an annuity. His bail was set at $20,000 and needs to be posted by April 18 to be allowed to remain free while his appeal is pending, but Mr. Neasham, once earning $500,000 a year, claims to be “financially ruined” from this case.

Mr. Neasham claims that the elderly woman, Fran Schuber, came to him in 2008 with her octogenarian boyfriend, Louis Jochim, who had bought a similar annuity from him years before. The annuity he sold Ms. Schuber was an “indexed” annuity, meaning that it pays interest based on the performance of stocks and bonds. The buyer is guaranteed not to lose the money they put into it—the principle—but they face very steep penalties for withdrawing the money early, sometimes being required to keep their money in the annuity for more than a decade. The annuity was to be through Allianz SE. Mr. Neasham denies that he noticed any signs of dementia in Ms. Schuber at the meeting.

The criminal case started when Ms. Schuber and Mr. Jochim went to her bank to withdraw $175,000 to pay into the annuity. Bank officials noticed she was confused and notified California’s elderly protection officials as required under California law.

The prosecutor in this case stated that there was evidence at trial that Ms. Schubert, who was too ill at the time of trial to testify, was not competent to make this decision and that Mr. Neasham knew it at the time. She claimed that the 8 percent commission he was earning, which amounted to $14,000, played into his criminal intent. The California Department of Insurance also investigated this incident and determined that it was illegal.

At a 2007 meeting of the National Academy of Elder Law Attorneys, these indexed annuities were discussed and an experienced elder and insurance lawyer asserted that they are completely inappropriate for anyone over the age of 75, and possibly for younger people as well, because they defer payouts for such lengthy periods of time.

The Wall Street Journal noted that the conviction of Mr. Neasham was “sending shivers down the spines” of insurance agents across the country. Our California insurance attorneys think that insurance agents thinking twice before selling an annuity, or any kind of financial or insurance product, to an elderly customer is only a good thing. As Baby Boomers continue to retire, the industry needs to be more vigilant than ever.

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The Attorney’s Role in Negotiating Claims with Your Insurance Company

Shameful Cheating of Seniors By Insurance Companies

Whether you are a small business owner or simply an individual in need of information about California insurance law issues, the Brod Firm hopes that this blog is informative and helpful. To start this new blog, our San Francisco insurance lawyers want to give an introduction to the basic topic of insurance fraud, a common type of occurrence that many community members think of when they consider insurance law.

A recent article in the San Francisco Chronicle called insurance fraud one of the oldest types of fraud recorded in history, citing an example of an ancient Greek ship sunk by its owner to collect insurance money. The article also reminded readers that insurance fraud continues to be pervasive and affects us all, whether as a policyholder or as a shareholder in an insurance company. There are two basic types of insurance fraud depending on the fraudulent party, either the buyer or the seller of the insurance. The buyer can try to manipulate the insurance process to his or her advantage to try to obtain something that he or she is not entitled to. The seller can also try to game the system unfairly to maximize profit. And insurance fraud affects everyone in the insurance system, including innocent parties, because insurance is built on a community of people pooling together to spread the risk. One instance of fraud can affect the costs and risks of everyone in the community.

In California, the Department of Insurance’s Investigation Division deals with customer complaints about unlawful activity by insurance companies. The Investigation Division can send cases documenting serious violations for either administrative or criminal prosecution. Administrative remedies include things like suspending or revoking insurance licenses, restitution to the injured party, and fines or penalties.

The Fraud Division deals with the criminal arm of insurance fraud, and is tasked with enforcing provisions of Chapter 12 of the California Insurance Code (also known as the Insurance Frauds Prevention Act), the California Penal Code sections 549-550, and the California Labor Code section 3700.5. The most common types of fraud that are criminally investigated are automobile property and personal injury, workers’ compensation, health insurance, and residential or commercial property claims.

The California Department of Insurance’s website is a fantastic resource for insurance information, including information about companies dealing with all different types of insurance. It also includes studies and reports, information on applying for licenses, and a special section for seniors and how to avoid scams aimed at California’s elderly. The California Insurance Code section 12921.1 requires that the state publish a Consumer Complaint Study, which can also be found on the website, to help consumers shop for insurance. This study is invaluable to the smart consumer, because it details information about insurance companies including the number of justified complaints in the past three years. The Department of Insurance then ranks the companies of different types of insurance (automobile insurance, homeowners insurance, etc) based on the ratio of justified complaints to number of policies the company holds. So the consumer can directly compare companies when shopping for a particular type of insurance. The Department’s website is very easy to use and navigate, and the Brod Firm’s San Francisco insurance attorneys encourage you to check it out for further information. We also hope that you bookmark this page and continue to stop by as we update this space with new and helpful information related to all areas of California, Oakland, Sacramento, and San Francisco insurance law.