Justia Insurance Law Opinion Summaries

Julian Omidi and his business, Surgery Center Management, LLC (SCM), were involved in a fraudulent scheme called "Get Thin," which promised weight loss through Lap-Band surgery and other medical procedures. Omidi and SCM defrauded insurance companies by submitting false claims for reimbursement, including fabricated patient data and misrepresented physician involvement. The scheme recruited patients through a call center, pushing them towards expensive medical tests and procedures regardless of medical necessity.A grand jury indicted Omidi and SCM for mail fraud, wire fraud, money laundering, and related charges. After extensive pretrial litigation and a lengthy jury trial, both were convicted on all charges. The district court sentenced Omidi to 84 months in prison and fined SCM over $22 million. The government sought forfeiture of nearly $100 million, arguing that all proceeds from the Get Thin scheme were derived from fraud. The district court agreed, finding that even proceeds from legitimate procedures were indirectly the result of the fraudulent scheme.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court affirmed the district court's forfeiture judgment, holding that under 18 U.S.C. § 981(a)(1)(C), all proceeds directly or indirectly derived from a health care fraud scheme must be forfeited. The court rejected the argument that only proceeds from fraudulent transactions should be forfeited, noting that the entire business was permeated with fraud. The court concluded that there is no "100% Fraud Rule" in forfeiture cases seeking proceeds of a fraud scheme, and all proceeds from the Get Thin scheme were subject to forfeiture. View "United States V. Surgery Center Management, LLC" on Justia Law

The Ninth Circuit certified the following questions of state law to the Arizona Supreme Court: 1. Whether Arizona equitable indemnity law incorporates Section 78 of the Restatement (First) of Restitution; and if so, 2. Whether equitable indemnity under Section 78 requires that the indemnity plaintiff's liability to the underlying plaintiff have been coextensive with the indemnity defendant's liability to the underlying plaintiff. View "KnightBrook Insurance v. Payless Car Rental System" on Justia Law

The Ninth Circuit reversed the dismissal of plaintiff's putative class action filed under California's Unfair Competition Law (UCL), Cal. Bus. & Prof. Code 17200–17210, and common law, alleging that AARP, through its arrangement with Medigap, transacts insurance without a license in violation of the California Insurance Code. The Ninth Circuit held that plaintiff stated a plausible claim at the motion to dismiss stage that AARP "solicits" insurance without a license, and consequently committed an unlawful act in violation of the UCL. Plaintiff also adequately alleged that AARP violated the UCL's "fraudulent" and "unfair" prongs where plaintiff plausibly alleged that members of the public are likely to be deceived into paying AARP's additional 4.95% fee because AARP collects and labels the the fee as a "royalty" rather than a "commission." View "Friedman v. AARP" on Justia Law

LMA filed suit against its excess insurance carrier, National Union, based on National Union's refusal to either contribute $3.75 million toward the settlement of claims brought by a third party or take over the defense. At issue was whether the district court erred in applying the rule in Diamond Heights Homeowners Association v. National American Insurance Co., instructing the jury, denying National Union's motion for judgment as a matter of law (JMOL), and awarding fees and costs. In Diamond Heights, a California appellate court ruled that an excess liability insurer has three options when presented with a proposed settlement of a covered claim that has met the approval of the insured and the primary insurer. The excess insurer must (1) approve the proposed settlement, (2) reject it and take over the defense, or (3) reject it, decline to take over the defense, and face a potential lawsuit by the insured seeking contribution toward the settlement. The court held that the district court did not err in applying the rule in Diamond Heights where National Union has not presented convincing evidence that the California Supreme Court would not follow Diamond Heights, and Diamond Heights is not distinguishable on its facts. The court also concluded that the district court did not commit prejudicial error in defining the standard of proof applicable to LMA's breach of contract claim; National Union's challenge to the bad faith claim failed because a jury could rationally conclude based on these facts that National Union acted unreasonably by refusing to take over the defense or approve the reasonable settlement, knowing full well of its obligations under California law; and the court affirmed the district court's award of fees and costs. Accordingly, the court affirmed the judgment and denied National Union's motion for certification. View "Teleflex Medical Inc. v. National Union Fire Insurance Co." on Justia Law

Plaintiffs, elderly Oregonians or their successors who purchased long-term healthcare insurance policies sold by Bankers, filed suit alleging that Bankers developed onerous procedures to delay and deny insurance claims. The court certified the following question to the Oregon Supreme Court, pursuant to Oregon Revised Statues 28.200: Does a plaintiff state a claim under Oregon Revised Statutes 124.110(1)(b) for wrongful withholding of money or property where it is alleged that an insurance company has in bad faith delayed the processing of claims and refused to pay benefits owed under an insurance contract? View "Bates v. Bankers Life & Casualty" on Justia Law

The court certified the following questions of state law to the California Supreme Court: 1. Is California’s common law notice-prejudice rule a fundamental public policy for the purpose of choice-of-law analysis? May common law rules other than unconscionability not enshrined in statute, regulation, or the constitution, be fundamental public policies for the purpose of choice-of-law analysis? 2. If the notice-prejudice rule is a fundamental public policy for the purpose of choice-of-law analysis, can a consent provision in a first-party claim insurance policy be interpreted as a notice provision such that the notice-prejudice rule applies? View "Pitzer College v. Indian Harbor Insurance Co." on Justia Law