Proving Insurance Fraud

Proving INSURANCE FRAUD

Steven P. Del Mauro McElroy, Deutsch, Mulvaney & Carpenter, LLP Newark, New Jersey

Robert R. Pohls Pohls & Associates Los Angeles, California

International Claim Association – 2010 Annual Education Conference – Austin, Texas – October 4, 2010

Proving

INSURANCE FRAUD


QUESTIONS

1. Rescission Checklist 2. Real Case Study a. Claim Strategies b. Litigation Strategies c. Trial Strategies 3. Questions

CLAIM STRATEGIES

LITIGATION STRATEGIES

TRIAL STRATEGIES

AGENDA

RESCISSION CHECKLIST

2

Proving

INSURANCE FRAUD


QUESTIONS

Purpose Developed to train young associate lawyers as a guide and to assist in issue spotting.

Goals - To provide a thorough, complete and fair review of each claim.

- To eliminate or greatly reduce the company’s liability and exposure to extra-contractual liability/bad-faith.

- “Tee-up” the case – achieve rescission while substantially reducing attorney fees and costs.

NO SURPRISES!

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


3

Proving

INSURANCE FRAUD


QUESTIONS

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


4

Proving

INSURANCE FRAUD


QUESTIONS

1. Do I have the complete file?

- All coverage(s) with the company.

- Correct policy forms with all riders.

- All signed application forms, especially the delivery requirements.

- Conditional receipt form.

- Applicable underwriting guidelines.

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


5

Proving

INSURANCE FRAUD


QUESTIONS

1. Do I have the complete file?

- Recording of inspection report/telephone verification. - Premium/Billing information. - Outstanding or incomplete investigation. - Medical record requests (time period). - Inspect original application documents to assess the appearance of alteration – different handwriting or color ink.

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


6

Proving

INSURANCE FRAUD


QUESTIONS

2. Governing Law – contractual rights

- New Jersey vs. Arizona.

- ERISA – DOL claim guidelines?

- Within 2 years of issuance or beyond. - Review the language of the incontestable clause.

- except for fraudulent misstatements.

- tolling/accordion.

- strict two years.

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


7

Proving

INSURANCE FRAUD


QUESTIONS

2. Governing Law – contractual rights

- Legal Fraud.

- Equitable Fraud.

- Does jurisdiction require proof that misrepresented or concealed medical condition is cause of loss?

- If policy is not contestable, are you in a jurisdiction where you still have recourse?

- ex., New Jersey Insurance Fraud Prevention Act.

- ex., Waiver of premium rider/life insurance

- Alternate basis to adjudicate claim?

- ex., Pre-existing condition limitation provision.

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


8

Proving

INSURANCE FRAUD


QUESTIONS

3. Misrepresentation/Concealment

- Misrepresentation/concealment on the application(s). - Misrepresentation and concealment of a material change in health during underwriting. - Or both. - Any medical information we developed during the claim which reflects medical consultation, diagnosis and/or treatment during underwriting of the policy.

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


9

Proving

INSURANCE FRAUD


QUESTIONS


- Conditional Receipt

- When did we get the money?

- Generally two types providing different contractual rights:

1) Simply provides coverage if conditions are met, with a beginning and end date.

2) Fixes a date for determining insurability, if conditions are met. Changes in health occurring thereafter are ignored in determining insurability.

- Negligent delay in underwriting the policy.

- Length of time to underwrite in comparison to company standards.

- Cause of delay

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


10

Proving

INSURANCE FRAUD


QUESTIONS


- How was the policy delivered? - Mail

- In person

- No conditional receipt coupled with change in health – why?

- Was conditional receipt offered and refused?

- Negligence per se rules; Brill v. Guardian Life Insurance Company of America.

- Underwriting Opinion.

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


11

Proving

INSURANCE FRAUD


QUESTIONS


- Misrepresentation/Concealment on Application

- All questions answered on application, including related questions.

- Objective vs. subjective questions.

- ex.: “Have you ever received treatment for or been diagnosed as having or had any of the following?”

- ex.: “Within the past 5 years have you had a physical examination, medical consultation, X-ray or laboratory study, or been a patient in a hospital or other medical facility?”

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


12

Proving

INSURANCE FRAUD


QUESTIONS


- Misrepresentation/Concealment on Application

- Medical, financial, over-insurance, avocations.

- Incomplete answers – details.

- Half truths.

- Misrepresentation to broker, paramedical, or both? Was it affirmed during inspection report?

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


13

Proving

INSURANCE FRAUD


QUESTIONS

4. Underwriting - Company’s requirements for age and amount of

insurance applied for.

- Complied with or waived

- ex.: APS requirement; tax returns; financial statements.

- Sources of information available to underwriter. - ex.: MIB

- Any information developed during underwriting which is inconsistent with the representations made on the application which may give rise to the duty to inquire.

- ex.: APS

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


14

Proving

INSURANCE FRAUD


QUESTIONS

5. Underwriting Post-Loss

- Confirm the files reviewed by the underwriter.

- Were all grounds for rescission identified?

- Obtain and review underwriting guidelines that support underwriters conclusion.

- Misrepresented fact must be “material.”

- black/white vs. exercise of discretion

- Conference with underwriter.

- Referral to medical director where applicable.

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


15

Proving

INSURANCE FRAUD


QUESTIONS

6. Agent Misconduct

- Ascertain the producer’s relationship with the company and with insured.

- Obtain agent statement. - Obtain agent’s files.

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


16

Proving

INSURANCE FRAUD


QUESTIONS

7. Confront Insured

Did we provide the insured with an opportunity to explain the apparent inconsistency between the information represented on the insurance applications and that developed during the investigation of the claim?

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


17

Proving

INSURANCE FRAUD


QUESTIONS

8. Rescission of a Reinstated Policy

- Was there a valid lapse of the policy without value?

- Alternate basis for claim adjudication.

- ex.: The reinstated policy will only cover disabilities due to injury occurring after the date of reinstatement,

and due to sickness beginning more than 10 days after that date.

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


18

Proving

INSURANCE FRAUD


QUESTIONS

9. Estoppel/Waiver During Claim Handling

Inconsistent positions are to be avoided like the plague.

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


19

Proving

INSURANCE FRAUD


QUESTIONS

10. Claim Determination

- Appropriate tone.

- Correctly cites all applicable policy provisions.

- Factually accurate.

- All basis for decision, including alternate grounds.

- Tender premium refund.

- Reserves all rights.

- Supervisor approval.

- Compliance with internal company procedures

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


20

Proving

INSURANCE FRAUD


QUESTIONS

Real Case Study: Cynthia’s Kids v. Insurer and Agent

Proposed Insured: Stacey Applicant/Owner: Cynthia Proposed Beneficiaries: Cynthia’s 3 children (all minors)

Application:

· Completed in agent’s office (Los Angeles) · Dated: March 17, 2004 · Physical Description: 32 years old 5’1” and 120 lbs. · No Adverse Medical History · No History of Tobacco Use · Occupation: Unemployed

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


21

Proving

INSURANCE FRAUD


QUESTIONS


Face Amount Applied For: $50,000 Monthly Premium: Less than $20/month Cash With Application: First month’s premium

Signatures:

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


22

Cynthia (Applicant/Owner) Stacey (Proposed Insured)

Proving

INSURANCE FRAUD


QUESTIONS


· No paramedical examination · Oral specimen · Collected at time of application · Processed on March 24, 2004 · Negative results · reported to insurer on March 26, 2004 · received by underwriter on April 27, 2004 · Paper application received April 27, 2004 · Additional underwriting requirements satisfied on May 3, 2004 · Underwriter approved application: 4:48 p.m. on May 5, 2004

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


23

Proving

INSURANCE FRAUD


QUESTIONS


· Pronounced dead at 6:20 a.m. on May 6, 2004 · Reported to agent (and insurer) on May 8, 2004 · Agent indicated he was told Stacey died of a heart attack. · Agent informed Cynthia that insurer will conduct an investigation because Stacey’s death occurred in the contestable period. · Claim kit sent on May 10, 2004

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


24

Proving

INSURANCE FRAUD


QUESTIONS


Telephone Interview of Cynthia -- June 3, 2004

· Stacey had “never been ill and didn’t have a family physician.”

· Stacey had gone to Houston to visit their mom and became ill.

· Stacey was taken to “the largest trauma center in Houston,” which is where she died.

· Cause of death is not yet known.

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


25

Proving

INSURANCE FRAUD


QUESTIONS


Telephone Interview of Stacey’s Mom -- June 9, 2004

· Stacey died of a “massive heart attack.” · Stacey had been “physically healthy.” · Stacey was mentally ill. · Diagnosed with schizophrenia 10 years earlier · Many “mental doctors” and medications. · Stacey had been living in a nursing home in Southern CA. · Had “breathing problems” in March 2004. · Was moved to a Southern CA hospital for 4-5 days, then transferred to hospital in Houston “to be closer.”

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


26

Proving

INSURANCE FRAUD


QUESTIONS

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


27

My mama always said:

“IF YOU TELL ONE LIE, YOU’LL HAVE TO TELL ANOTHER.”

Proving

INSURANCE FRAUD


QUESTIONS

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


28

Claim Strategy Number 1:

Give ’em some rope.

Proving

INSURANCE FRAUD


QUESTIONS



· Stacey had been “in and out of mental type institutes.”

· Someone asked her if she had insurance “in case something happened to” Stacey.

· Picked Stacey up from a nursing home one day to go shopping with two friends, then to agent’s office to sign the application.

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


29

Proving

INSURANCE FRAUD


QUESTIONS



· Did not remember any application questions being read to her.

· Just “signed the application” where “she was told to.”

· Told the agent that “if something happened to her and her sister, she wanted her [Cynthia’s] kids to be the beneficiaries.”

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


30

Proving

INSURANCE FRAUD


QUESTIONS


Telephone Call from Cynthia -- June 9, 2004 · Reported that she has “only a 5th grade reading/writing level.” · Claimed she went to the agent because the insurer indicated its agents would “do everything” for her. · Trusted the agent “with everything.” · Told the agent that: · Stacey “was in a nursing home for mental problems.” · Cynthia was supposed to be the beneficiary, not her kids. · Friends and family told her to “get a lawyer.”

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


31

Proving

INSURANCE FRAUD


QUESTIONS


Telephone Call to Cynthia -- June 23, 2004

· No one asked any questions at the time of application.

· Claimed she called the agent’s office in January 2004 and left a message: · Stacey is mentally ill with schizophrenia. · Could she take out a policy on Stacey?

· Claimed she called again in February 2004 and was told to come to the office to get a policy on Stacey.

· Only one friend – Michele – went shopping with Cynthia and Stacey and was present at the time of the application.

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


32

Proving

INSURANCE FRAUD


QUESTIONS


Telephone Call from Cynthia -- July 22, 2004

· Claims agent came to her house 4 hours after learning of Stacey’s death and told her to not file a claim: · filled out some underwriting papers on his own. · was afraid to lose his job. · willing to pay money from own account if Cynthia would not file a claim

· Claims agent made similar offer to Cynthia’s mother; agent also called on Cynthia’s cell phone during Stacey’s funeral.

· Is “sure the agent is trying to trick her as she is sure the agent forged her signature on the policy.”

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


33

Proving

INSURANCE FRAUD


QUESTIONS


Telephone Call to Cynthia – August 22, 2004

· Told the agent in January 2004 that Stacey was mentally ill and living in a nursing home.

· One friend went with her and Stacey to the agent’s office to sign the application on March 17, 2004 .

· “no questions were asked.” · she and Stacey “both signed paperwork” where told.

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


34

Proving

INSURANCE FRAUD


QUESTIONS


Telephone Call to Cynthia – August 22, 2004

· Stacey left Los Angeles for Houston on April 22, 2004.

· Stacey “got away from” her mother, became delusional, and was admitted to hospital involuntarily.

· Stacey was discharged, then re-admitted after a week or two, just before she died.

· Stacey was 5’1” or 5’2” and weighed about 260 lbs.

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


35

Proving

INSURANCE FRAUD


QUESTIONS

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


36


Dig deep . . .

really deep.

Proving

INSURANCE FRAUD


QUESTIONS


Telephone Call to Agent -- June 9, 2004

· Only two people came to the office on the application date: Cynthia and Stacey.

· All application questions were read aloud while displayed on two computer monitors.

· Cynthia had no problem reading the questions.

· Cynthia had filled out forms for agent’s office before and reportedly “prepared income taxes for other people.”

· Stacey answered all the questions “No.”

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


37

Proving

INSURANCE FRAUD


QUESTIONS


Telephone Call to Agent -- June 9, 2004

· Cynthia specifically asked for her kids to be named as primary beneficiaries.

· Cynthia and Stacey signed the application.

· Agent would not have taken the application if knew Stacey was in a nursing home for mental problems.

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


38

Proving

INSURANCE FRAUD


QUESTIONS


Telephone Call to Agent – August 25, 2004

· Went to Cynthia’s house after learning of Stacey’s death

· Expressed condolences

· Explained claim process (contestable investigation)

· Denied offering any money to not make a claim

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


39

Proving

INSURANCE FRAUD


QUESTIONS


Telephone Call to Cynthia’s Mom – December 28, 2004

· Agent did call her after Stacey’s death

· Said did not think Cynthia could make a claim

· Offered money toward funeral expenses

· Agent also called Cynthia’s brother (Ernest)

· Said did not think Cynthia could make a claim

· Offered money toward funeral expenses

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


40

Proving

INSURANCE FRAUD


QUESTIONS


Telephone Call to Ernest – December 30, 2004

· Remembers agent calling after Stacey’s death

· Spoke only with Cynthia and Cynthia’s Mom

· Understood there might be a problem with policy

· Believes agent offered money toward funeral expenses

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


41

Proving

INSURANCE FRAUD


QUESTIONS


Medical Records

(California) Medical Center 6/17/2003 - 10/31/2003 (California) Care Center 10/31/2003 - 1/23/2004 (California) Hospital 1/23/2004 - 1/27/2004 (California) Nursing Home 1/27/2004 - 3/5/2004 (California) Hospital 3/5/2004 - 3/11/2004

(Texas) Hospital 3/14/2004 - 4/8/2004*

(Texas) Hospital E.R. 4/11/2004 - 4/12/2004 (Texas) Psych Ward 4/12/2004 - 5/6/2004

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


42

Proving

INSURANCE FRAUD


QUESTIONS


Autopsy Report

Death was the result of “[c]ardiomegaly associated with hypertensive cardiovascular disease,” secondary to obesity.

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


43

Proving

INSURANCE FRAUD


QUESTIONS


Medical Records

· hypertension, with non-compliance regarding treatment and abnormal EKG’s associated with the hypertension;

· asthma, COPD and pulmonary hypertension;

· obesity;

· congestive heart failure and cardiomegaly; and

· ten year history of mental/nervous disorders, including numerous medications and institutional stays.

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


44

Proving

INSURANCE FRAUD


QUESTIONS


Medical Records – (California) Hospital 3/5/2004 Admitted (SOB/aggressive behavior)

3/9/2004 “Cardiology assessment with COPD confirmed. . . Discussed patient’s predicament last night by phone with patient’s sister, Cynthia, and mother. On learning of CHF, they agreed to permit . . . development of appropriate Tx.”

3/11/2004 Discharged (to fly with Cynthia’s Mom to Texas)

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


45

Proving

INSURANCE FRAUD


QUESTIONS

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


46


Get them to commit.

Proving

INSURANCE FRAUD


QUESTIONS



· Came to office on date application was completed · Called just before coming · No prior calls, messages or discussions about Stacey

Letters from Agent and Agent’s Assistant

· Application completed on March 17, 2004

Telephone Call to Cynthia – December 20, 2004

· One friend – Michele – was with Cynthia and Stacey when the application was signed in the agent’s office. · Michele “moves around a lot” and cannot be contacted.

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


47

Proving

INSURANCE FRAUD


QUESTIONS



· Cynthia specifically said she did not want to be named the beneficiary.

· Cynthia gave no reason for not naming herself

Letters from Agent and Agent’s Assistant

· Cynthia asked that her three kids be named beneficiaries

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


48

Proving

INSURANCE FRAUD


QUESTIONS



· Cynthia signed the application when it was filled out

Claim Form – January 18, 2005 · Addendum:

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


49

Proving

INSURANCE FRAUD


QUESTIONS



· Stacey signed the HIV consent form on the date the application was completed

· Application was mailed to Cynthia’s home for Stacey to sign

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


50

HIV Consent Form Application

Proving

INSURANCE FRAUD


QUESTIONS


Comparison of Signatures

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


51


Proving

INSURANCE FRAUD


QUESTIONS


Comparison of Signatures

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


52


Proving

INSURANCE FRAUD


QUESTIONS


Denial Letter – January 10, 2005

Our investigation indicates Stacey was confined in (Texas) Hospital “in Houston, Texas from March 14, 2004 to April 8, 2004; therefore she could not have appeared in the agent’s office in California to complete this application, as confirmed by Cynthia in previous statements.”

In addition, “the application did not include information about the insured’s history of schizophrenia, hypertension with non- compliance regarding treatment, abnormal EKGs associated with the hypertension, congestive heart failure, cardiomegaly, and

pulmonary hypertension during her confinement.”

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


53

Proving

INSURANCE FRAUD


QUESTIONS


Attorney’s Response – February 27, 2005

· “On March 17, 2004, Stacey, Cynthia and a friend” (Michele) went to the agent’s office. · No one asked them questions. · Neither of them signed a document with medical questions. · Cynthia left the office with a Binding Receipt.

· As of March 17, 2004, Stacey “was residing in a nursing home in Pasadena California. To the extent any medical records show Stacey residing in Texas as of that date, they are in error.”

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


54

Proving

INSURANCE FRAUD


QUESTIONS

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


55

Litigation Strategy Number 1:

Don’t bite off more than you can chew!

Proving fraud requires evidence of:

• Representation of fact • Falsity • Knowledge of falsity • Intent to deceive • Actual reliance • Reasonable reliance • Damage

Proving

INSURANCE FRAUD


QUESTIONS

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


56

Basic Contract Principles

Every contract requires consenting parties. If there is mutual assent to the subject matter of the agreement, a contract results. However, it may be voidable when there is a harmful mistake as to some basic or material fact that induced the aggrieved party to enter it.

· If both parties are mistaken and neither is at fault (or both are equally to blame), the mistake may prevent formation of a contract.

· A contract formed when one party has made a unilateral mistake is not voidable unless the other party had reason to know of the mistake or his or her fault caused the mistake.

Proving

INSURANCE FRAUD


QUESTIONS

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


57

Insurance Laws

Ohio No answer to any interrogatory made by an applicant in his application for a policy shall bar the right to recover upon any policy issued thereon, or be used in evidence at any trial to recover upon such policy, unless it is clearly proved that such answer is willfully false, that it was fraudulently made, that it is material, and that it induced the company to issue the policy, that but for such answer the policy would not have been issued, and that the agent or company had no knowledge of the falsity or fraud of such answer.

Ohio Rev. Code §3911.06 See also, Ohio Rev. Code §3923.14

Proving

INSURANCE FRAUD


QUESTIONS

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


58

Insurance Laws

No. Carolina “All statements or descriptions in any application for a policy of insurance, or in the policy itself, shall be deemed representations and not warranties, and a representation, unless material or fraudulent, will not prevent a recovery on the policy.”

N.C. Gen. Stat. §58-3-10

Illinois “No such misrepresentation or false warranty shall defeat or avoid the policy unless it shall have been made with actual intent to deceive or materially affects either the acceptance of the risk or the hazard assumed by the company.” 215 ILCS 5/154

Proving

INSURANCE FRAUD


QUESTIONS

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


59

Insurance Laws

California “If a representation is false in a material point, whether affirmative or promissory, the injured party is entitled to rescind the contract from the time the representation becomes false.”

Cal. Ins. Code §359

Whether the representation was intentionally or unintentionally false does not alter the injured party's right to rescind the policy.

. Telford v. New York Life Ins. Co., 9 Cal.2d 103, 105 (1937)

Proving

INSURANCE FRAUD


QUESTIONS

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


60

Contract Language

Application Agreement:

“Coverage will be effective as of the policy date if the following conditions are met:

· the first premium is paid when the policy is delivered; · the Proposed Insureds are living on the delivery date; and · on the delivery date, the information given to the Company is true and complete without material changes.

Proving

INSURANCE FRAUD


QUESTIONS

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


61

Contract Language

Binding Receipt:

· “There is no coverage under this Receipt if the application contains any material misrepresentation.”

· “No death benefit is provided by this Receipt unless death results from an accident that occurs or an illness that first manifests itself after the Application Date.”

· “Coverage under this Receipt will end when the first of the following occurs: (a) The application is approved; (b) Notice of disapproval of the application is given; (c) 60 days have expired starting with the Application Date.”

Proving

INSURANCE FRAUD


QUESTIONS

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


62

Litigation Strategy Number 2:

Be ready to herd some cats.

Proving

INSURANCE FRAUD


QUESTIONS

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


63

Letter from Attorney

“I have reviewed the underwriting and claim files. . . It appears the initial meeting with the agent was probably in February 2004, at which time Cynthia was given a binding receipt post-dated to March 17, 2004 (the date Cynthia would have premium funds available).”

Cynthia: Went shopping before going to agent’s office because had just received a tax refund. Agent: No way to post-date binding receipt, and no reason to do so. Binding Receipt: No coverage if application date is more than 60 days before death.

Proving

INSURANCE FRAUD


QUESTIONS

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


64

Cynthia’s Testimony

“I applied for the policy because the nursing home told us that all patients have to have life insurance to be admitted. I needed it so Stacey could get the care she needed.”

· Nursing home has no such policy and denies any such discussion.

· Stacey was in a locked facility between January 27, 2004 and March 5, 2004 and only left on one date: a Saturday in February.

· Agent’s office is closed on Saturdays.

Proving

INSURANCE FRAUD


QUESTIONS

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


65


“I told the agent that Stacey was in a nursing home, had schizophrenia, was depressed and had hallucinations.”

· Agent would not have taken application if knew any of those facts.

· If the underwriter had known of those facts, no further inquiries would have been made: the application would have been denied.

· An applicant who communicates some (but not all) facts which are material to the risk he or she is trying to insure is not excused from his or her failure to communicate other facts which are material to that risk. Cal. Ins. Code §332.

Proving

INSURANCE FRAUD


QUESTIONS

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


66


“No one asked us any medical questions. The agent must have filled out the application.”

· Agent had never met, talked to, or talked with anyone about Stacey · Address · Date of Birth · Social Security Number · Agent had never met, talked to, or talked with anyone about Cynthia’s kids · all 3 are named in application · all 3 have a different last name than Cynthia

Proving

INSURANCE FRAUD


QUESTIONS

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


67


“Stacey never signed anything. The agent told me he signed Stacey’s name to the application.”

· Cynthia previously admitted she and Stacey “signed where told.”

· Agent clarified that application was mailed to Cynthia for Stacey to sign.

· No dispute that signature on application was not genuine.

· Cynthia claims agent forged it. · Agent though was genuine. · Insurer contends it was signed by an imposter.

Proving

INSURANCE FRAUD


QUESTIONS

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


68


“I never signed the application.”

· Cynthia previously admitted she and Stacey “signed where told.”

· Both handwriting experts agree that signature is genuine.

· Without a signature on the application, there is no application and neither a binding receipt nor a policy.

Proving

INSURANCE FRAUD


QUESTIONS

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


69

Trial Strategy Number 1:

Keep the stories

straight.

Proving

INSURANCE FRAUD


QUESTIONS

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


70

Underwriter’s Perspective · 32 year old non-smoker · 5’1” and 120 lbs. · No adverse medical/psychiatric history

Claim Handlers’ Perspective · 32 year old smoker · “about” 260 lbs. · Significant undisclosed medical/psychiatric history · Imposter at point of sale

Jury’s Perspective · 309 lbs. · Cynthia and her mother were told she was dying · Could not have been in agent’s office on either date

Proving

INSURANCE FRAUD


QUESTIONS

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


71


Let the facts speak for themselves.

If they are enough to prove fraud, jurors will see it.

Proving

INSURANCE FRAUD


QUESTIONS

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


72


Remember the “simple” truth.

Proving

INSURANCE FRAUD


QUESTIONS

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


73

Proving

INSURANCE FRAUD


QUESTIONS

QUESTIONS?

CLAIM STRATEGIES


TRIAL STRATEGIES

AGENDA


74

Steven P. Del Mauro McElroy, Deutsch, Mulvaney

& Carpenter, LLP Newark, New Jersey

Phone: 973.622.7711 Email: [email protected]

Robert R. Pohls Pohls & Associates

Los Angeles, California Phone: 310.694.3092

Email: [email protected]

Documents

Proving Insurance Fraud