'Tis the Season for Fraud

'Tis the Season for Fraud

From Zalma's Insurance Fraud Letter:

Fraud Fails In New York
In Nationwide Mutual Insurance Co. v. Posa, No. CA 08-00192 (N.Y.App.Div. 11/14/2008) Defendant Kathleen A. Baughman sued defendant Robert J. Posa seeking damages for injuries that she allegedly sustained on April 24, 2005 when the vehicle driven by her collided with a pickup truck owned and driven by Posa. It was proved that Posa left the scene of the accident without providing any identifying information to Baughman or the police, and that he submitted an insurance claim to plaintiff stating that he damaged his pickup truck by driving into it with his garden tractor.

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Posa's former girlfriend thereafter informed the police that Posa had been involved in the accident with Baughman's vehicle, whereupon Posa pleaded guilty to leaving the scene of an accident. When informed of Posa's admission, plaintiff disclaimed coverage based, inter alia, on the failure of Posa to cooperate with plaintiff and his fraudulent misrepresentations to plaintiff concerning the accident. Plaintiff then commenced this action seeking, inter alia, a declaration that it has no duty to defend or indemnify Posa in the underlying action.

The appellate court agreed with the insurer that the trial court in denying that part of its motion for summary judgment seeking a declaration that it has no duty to defend or indemnify Posa in the suit brought by Baughman. The insurer, the court found, met its burden of establishing Posa's lack of cooperation and misrepresentations. Posa's "failure to make fair and truthful disclosures in reporting the [accident] constitutes a breach of the cooperation clause [and the fraud and misrepresentation clause] of the insurance policy as a matter of law".

Fraud Causes Doctor To Lose License
On December 2, 2008, Texas Mutual Insurance Company reported that Ihsan Shanti, M.D. of Houston and Shanti Pain & Wellness Clinic pleaded guilty to felony workers' compensation fraud-related charges.

Between January 2003 and March 2006, Shanti and his clinic over-billed workers' compensation carriers for pain management services in excess of hours actually attended by patients, the workers' compensation insurer said.

A Travis County district court ordered Shanti to surrender his medical license for five years, pay a $10,000 fine, and repay $143,646 to Texas Mutual, $18,331 to the State Office of Risk Management, and a combined $182,500 to three other carriers.

The court also sentenced Shanti to eight years of deferred adjudication and ordered him to perform 400 hours of community service. In addition, Shanti Pain & Wellness Clinic was ordered to pay a $5,000 fine.

Sioux Falls Insurance Fraud – Probation

On December 9, 2008, Benjamin Meyer and Brandon Deweerd were sentenced for a conspiracy to burn a pickup in Sioux Falls to collect insurance money. Federal prosecutors proved the two planned to report his truck stolen after arranging to have it destroyed and Meyer paid to hire a third man to set fire to the vehicle.

Deweerd was sentenced to five years of probation with four months of home confinement and a $1,000 fine.
Meyer got four years of probation with four months of home confinement and 60 hours of community service.

12 Years in Jail
Brenda Buckaloo-Merchant was sentenced to serve twelve years in prison according to the Texas Department of Insurance.

Buckaloo-Merchant had previously pleaded guilty to a first degree felony – the theft of $1,208,316 while working as an adjuster for Unitrin Business Insurance Company of Dallas. A first degree felony carries a maximum sentence of 99 years in prison and a minimum sentence of 5 years imprisonment, and a fine of no more than $10,000.

The indictment and prosecution of Buckaloo-Merchant was the result of an investigation by the Dallas County District Attorney's Office and Texas Department of Insurance's (TDI) Fraud Unit.

Buckaloo-Merchant admitted in court that she used her position at Unitrin to steal over $1.2 million dollars from the insurance company. Buckaloo-Merchant said she wrote checks from Unitrin to a fictitious health care provider that was, in reality,. Buckaloo-Merchant. In addition to the twelve-year prison sentence, she has been ordered to pay restitution of $1,208,316 to Unitrin and a $3,000 fine.


Jennifer Fisher, 36, of Canyon County, Idaho pleaded guilty to insurance fraud and grand theft after submitting a false burglary claim under her renter's insurance policy to State Farm Insurance Company. She collected more than $7,900 under the claim.

Fisher is facing up to 15 years in prison for insurance fraud. Sentencing is scheduled for January.

Six Months for Fraud

Concetta Marie Prianti, a garbage collector for the St. Lucie, Florida West Services District was found guilty of workers’ compensation fraud and grand theft. She was sentenced to six months in jail and 10 years' probation. Prianti was ordered to repay more than $37,000 following a referral to the Division of Insurance Fraud by the Florida League of Cities’ Special Investigation Unit.

Kentucky Fraud – Probation

Robert O. Pratt, 49, of Hebron, Kentucky, already in prison on federal charges related to unlawful harboring and employment of illegal aliens, pleaded guilty to an insurance fraud charge after lying to his workers’ compensation carrier about the number of employees at his construction business.

The workers’ compensation case was investigated by the Kentucky Department of Insurance (DOI) Fraud Investigation Division. In the workers’ compensation fraud case investigated by DOI, Pratt paid premiums to Kentucky Employers’ Mutual Insurance (KEMI) during 2003-2004 for workers’ compensation coverage but underreported the number of employees at his Florence business, Pratt’s Quality Construction.

Pratt pleaded guilty in Boone Circuit Court to one felony count of insurance fraud and was ordered to pay restitution of $12,546.16 to KEMI and a fine of $2,155.16 to the DOI Fraud Division for investigative costs. The court also ordered Pratt to pay a fine of $1,000, a $30 monthly supervision fee, and $150 in court costs.

He was sentenced to five years on the insurance fraud charge and granted probation.