Tuesday, September 25, 2007

Fraudulent Fraud

At the suggestion (almost a threat, really) of David M. Gottleib, Esq., I'm reposting a comment of mine from the previous entry. An anonymous insurance defense attorney asked: "Provider fraud should NEVER be waived. When did fraud stop being fraud?" I said:

The better question is actually: when did fraud start being fraud? Answer: when catchphrases got the better of good lawyering.

You won't find the word "fraud" anywhere in the majority or concurring opinions in Central General Hosp. v. Chubb, 90 N.Y.2d 195 (1997). You'll find a single variation of the word, namely "fraudulent" in Presbyterian Hosp. v. Maryland Cas. Co., 90 N.Y.2d 274 (1997), but only in the majority opinion, and not in the way carriers like: "The tradeoff of the no-fault reform still allows carriers to contest ill-founded, illegitimate and fraudulent claims, but within a strict, short-leashed contestable period and process designed to avoid prejudice and red-tape dilatory practices." New York's seminal no-fault cases don't create a solid foundation for anything that should be referred to as a "fraud defense."

Indeed, "fraud" isn't the word you want to use if you're a good insurance defense attorney. You want to say "lack of coverage." The Appellate Division, Second Department has reminded us a few times of this distinction, but it still goes basically unnoticed. Then again, "lack of coverage" isn't a catchphrase that instills fear in anyone's heart.

All of that said, I think there's a solid lack-of-coverage argument to be made in the carriers' favor in Fair Price. Nevertheless, the defense bar is getting itself wrapped up too much in the language of fraud, and to the detriment of their clients' interests.
As an addendum to those comments, I'd recommend that eager defense attorneys begin their research with App. Div. decisions such as Matter of Eagle Ins. Co. v. Davis, 22 A.D.3d 846 (2d Dep't, 2005). There, regarding an allegation, made as part of a petition to stay a UM arbitration, that an alleged collision was fraudulent in nature, the Court held: "When a petition raises an issue of fact as to whether the automobile collision giving rise to the underlying request for arbitration was deliberate or intentional, the issue of fraud is subsumed under the coverage issue. Evidence of such fraud should be considered in determining the broader coverage issue." Id. (internal citations omitted).


Anonymous said...

blah blah blah....

those who ignore the fraud are blind...any way you want to word it, facilities that are "fraudulent" are designed to put money in the hands of non doctors, and even some law firms are rumored to be run by the no fault illuminati...

Lets stop all the rhetoric and accept the fact if it wasnt for the piggish greedy spirit of mankind, none of us would have a job. Let the fraud (or whatever other term you care to use) flourish...

Anonymous said...

Actually, you are mistaken. There is quite a difference between lack of coverage relative to staged accidents, to which the term primarily applies, and fraud in the purest, common sense.
Although, I see the connection. Lack of coverage=injuries that do not arise out of the accident. Hence, there are no injuries in a "staged" accident. Likewise, provider fraud (e.g. billing for services never rendered)=injuries that never existed and thus, did not arise out of the accident.

Yep--we defense attorneys have tried this. We also tried to use "standing" to avoid using that awful word "fraud." Didn't work either.

The problem is, quite simply, that courts refuse to mention the word 'fraud.' Perhaps they do not want to address it--perhaps they are scared.

The thing is--they should. Fraud cannot be uncovered in thirty days. We all know that, come on. I suggest that you begin your research, as an eager plaintiff attorney, by researching the elements of common law fraud--you will see there are no time constraints.

And by the way--a qualification on what a 'good' defense attorney is--what you are really saying is t be creative, manipulate the words a bit. Eh--anyone can do that. A good attorney is a persistent attorney--one that doesn't shy from addressing the elephant in the room. That big elephant is FRAUD. That word should not be taboo.

What an interesting discussion. Thanks for keeping me entertained on these sleepless nights.

Anonymous said...

"Lets stop all the rhetoric and accept the fact if it wasnt for the piggish greedy spirit of mankind, none of us would have a job. Let the fraud (or whatever other term you care to use) flourish..."

By that reasoning: why try to stop crime? It's put our law enforcement out of jobs. So, then, shall we continue to let crime "flourish?"

Do not worry. Even without fraud, we will still be employed--we don't really need it.

Damin J. Toell, Esq. said...

To Anonymous #2:

Do you really want to have to prove the elements of common law fraud? Do you really want the pleading requirements of a common law fraud defense? Do you really want the burden of proof of a common law fraud defense?

These are some of the big reasons that I think the carriers and their attorneys are misguided in their use of "fraud" terminology. I'll take the task of showing that a car accident was likely staged and thus not covered any day over having to plead and prove, by clear and convincing evidence, the elements of common law fraud. That's why I cited to Eagle v. Davis heavily during my years as a defense attorney (once the decision came down, anyway).

So, in the end, I agree with you that there's a big difference between "fraud" and non-coverage due a loss not being accidental. And that difference can be used to the carriers' benefit when they're sharp enough to use it to their favor. Now that Travelers has been granted leave to appeal Fair Price to the Ct. of App., they have a tremendous opportunity to both avoid the misguided language of "fraud" (which has failed at two appellate levels thus far) and expand the scope of non-coverage defenses. The eventual Fair Price decision could become the next Zappone v Home Ins. Co.

Hell, at least it's going to be fun to see a Kings County Civil Court Part 41 decision make it all the way to Chief Judge Kaye's bench.

Damin J. Toell, Esq. said...

And a huge thanks for all of the insightful participation of late. It makes me want to actually make some posts here at a rate of quicker than once per decade.

David M. Gottlieb, Esq. said...

Let's not forget that my suggestion ("threat") was the catalyst for all this. :)

Anonymous said...

You guys are taking all the credit. If I, the Anonymous 1 and 2 (yes, one and the same), did not comment to your original post, Mr. Gottlieb, you'd not be the catalyst.

I'd love to reveal myself but can't just yet:)

Anonymous said...

After reading these comments it appears there may be hope in that some defense counsels will think outside the box and stop this business as usuaul nonsense. Sometimes it appears that no one wants to pursue the truth and that is disturbing when the facts of some case are so blatant. If you don't challenge the system you will never know the truth

Anonymous said...

There's fraud at every stage of No-Fault.

1) Staged accidents
2) Treatment that never occurred but was billed
3) Treatment by non-physicians but signed off by physicians.
4) Fraudulent incorporation allowing non-medical professionals to act as professionals.

And many more... it's almost impossible to determine if any or all of these occurred within 30 days. And even harder to prove them in court.

But just because it can't be proved doesn't mean it didn't happen. It just keeps us all employed, as anonymous #1 said.