Podcasts Business Zalma on Insurance Man Bites Dog: GEICO Bites Fraudsters

Man Bites Dog: GEICO Bites Fraudsters

Published: Oct. 4, 2023, 4:09 p.m.

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Don\'t Ty to Defraud GEICO It Bites Back

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See the full video at\\xa0 https://rumble.com/v3mou6r-man-bites-dog-geico-bites-fraudsters.html\\xa0 and at https://youtu.be/KrGnHftnDaA

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GEICO (collectively, \\u201cGEICO\\u201d or \\u201cPlaintiffs\\u201d) sued Defendants ALP Supply, Inc. (\\u201cALP\\u201d), PV Supply, Inc. (\\u201cPV\\u201d), and Pal Vakula, alleging common law fraud and unjust enrichment claims.

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In Government Employees Insurance Company, GEICO Indemnity Company, Geico General Insurance Company, and GEICO Casualty Company v. ALP Supply, Inc.; PV Supply, Inc.; and Pal Vakula, No. 22-CV-79 (LDH)(MMH), United States District Court, E.D. New York (September 29, 2023) GEICO sought, and obtained, default judgments against health care fraud perpetrators.

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The GEICO Plaintiffs\' moved the USDC for default judgment pursuant to Federal Rule of Civil Procedure 55(b)(2). For the reasons set forth below, the Magistrate Judge\\xa0 recommended that Plaintiffs\' motion should be granted as to their common law fraud claims. The Court further recommended that Plaintiffs should be awarded damage.

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From July 2019, Vakula used ALP and PV to submit and cause to be submitted to GEICO thousands of fraudulent no-fault insurance claims for medically unnecessary, illusory, and otherwise non-reimbursable DME and OD.

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Defendants not only submitted claims to GEICO knowing that they included materially false information but also hired law firms to pursue collection of the fraudulent claims from GEICO, which resulted in expensive and time-consuming litigation against GEICO if the charges were not promptly paid in full.

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In the Second and Fourth Causes of Action in the Complaint, GEICO alleges that Defendants committed common law fraud. Under New York law, a plaintiff asserting a claim of common law fraud must plausibly allege:

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  1. a material misrepresentation or omission of fact
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  2. made by defendant with knowledge of its falsity
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  3. intent to defraud;
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  4. reasonable reliance on the part of the plaintiff; and
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  5. resulting damage to the plaintiff.
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Here, GEICO established that an actual controversy exists and that a declaratory judgment would afford specific and conclusive relief as to pending claims with respect to all Defendants. GEICO alleges that ALP and PV have pending bills submitted to GEICO that GEICO has no obligation to pay. Additionally, GEICO has submitted documentation of pending collections actions that ALP and PV are actively prosecuting against GEICO in New York state courts. GEICO has provided a list of the actions, including the amounts involved, the claim numbers, and the status of each action.

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In sum, Plaintiffs established liability on their common law fraud claims only. The Magistrate judge recommended:

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  1. a default judgment should be entered against Defendants for common law fraud;
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  2. Plaintiffs should be awarded compensatory damages in the amounts of
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  3. a declaratory judgment should be entered that Plaintiffs have no obligation to pay any pending claims submitted by ALP Supply, Inc. and PV Supply, Inc.
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ZALMA OPINION

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GEICO seems to have given up on Departments of Insurance and prosecutors to defeat insurance fraud by proactively suing fraudsters and taking the profit out of the crime of insurance fraud. Its success in this case and others should be emulated by the insurance industry who sits back and allows fraudsters to profit from claims.

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(c) 2023 Barry Zalma & ClaimSchool, Inc.

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