Sunday, November 29, 2009

No, Insurance Companies Don't Commit Fraud Do They?

When you throw around the word, fraud, you should be very careful.  Fraud or fraudulent at law is different than saying so-and-so is a fraud, or "that's fraudulent."  If you can easily see that something is fraud, by definition it isn't.  Admittedly, when we think about and talk about fraud we think and talk about precisely the same thing, something phony.

For something phony to be legal fraud there must be:  a material misrepresentation by words or conduct through active holding out or through concealment (of something that should have been revealed), which deceives and is intended to deceive another so that they reasonably rely and act upon the misrepresentation to their legal detriment.  My experience is that when clients have sought my assistance in redressing "fraud" the laying out of the elements has usually deterred further action.  The carnival midway is not a place where fraud is found, . . . fools, but not fraud.  Fraud in a generic sense covers all sorts of human sin where one takes advantage of another without rising to the level of "actionable fraud."  The defrauded in general are usually co-conspirators in their own injury, via the full panoply of psychic impulse including envy, denial, gluttony, pride, you get the picture.  Fraud is an alibi, an excuse when we get burned again.

My Cleveland friend, Patrick Perotti, has created a lucrative law practice out of bringing actions against insurance companies, title companies, banks, and businesses who engage in the real deal.  Real fraud happens all the time and it is often intended to surreptitiously scam nickels on top of legitimate profit margins or genuine cost.  Let me give you an example, Grange Mutual Insurance Company (yes, we name names when it suits us) charged a legitimate premium for a certain type of coverage under family auto insurance policies that they offered; but some bright executive at the company decided that the amount they collecting could be double, triple, and more than the law allowed. While the amounts involved were minuscule per family the net effect was millions and millions of dollars for Grange's bottom line without incurring any commensurate risk.  Patrick Perotti figured out how this scam worked and  brought a lawsuit.   After a two day trial a jury near Cleveland awarded $48 million in compensatory damages.  Punitive damages were pending submission to the same jury when Grange agreed to pay $51 million in settlement.

Mercury Insurance of Illinois just got hit by a demand for punitive damages for courthouse fraud.  According to the news account Steven Thomas Kirk was struck by a truck driven by  Mercury's "insured," Enver Hamiti. Kirk.  Hamiti fled the scene, even though " [Kirk's] leg was detached by the accident." Get this gothic detail, somebody walks by and steals a diamond stud earring from Kirk's earlobe as he lay inert at the scene. Kirk sued Hamiti in Madison County, seeking damages.  Apparently Kirk had been drinking, but Kirk's use of alcohol did not play a role in the accident, the jury found Mercury's insured Hamiti fully responsible for causing the accident awarding $1.37 million to Kirk.  


Attorney Chris Kolker is asking the Court to award an additional $500,000. directly against Mercury Insurance Company because he suspects the Mercury Insurance adjuster, claims people and although it doesn't say so, I suspect the defense attorney invented a eyewitness who at trial testified that Steven Kirk was driving his motorcycle erratically, weaving in and out of traffic.  This testimony was offered and intended by Mercury to be relied upon by the jury to the detriment of Steven Kirk.  The only problem with this eyewitness, she testified to seeing the accident happen from her apartment window--she didn't live in the apartment according to lease documents until six months after the accident.   Hmmmmmmm?  Sure sounds like fraud, or at least attempted fraud.  


Bear with me for a sec, reading between the lines it may be that the fraud claim is about "collecting."  Unless Mr. Hamiti was driving a commercial truck, it'improbable that Hamiti's Mercury Insurance policy carried million dollars worth of insurance.  In fact it's probable that the amount of insurance available to pay the jury verdict awarded to Mr. Kirk is in the tens-of-thousands so the only prayer Mr. Kirk has of collecting against Mercury is if the court imposes a direct sanction for fraud against the insurance company and it's claims people.  Other obstacles make it unlikely that Mr. Kirk and his counsel are going to succeed, including jurisdiction of the court to impose such a sanction.  I've talked about the concept of jurisdiction, before in the purest sense--jurisdiction refers to the power of a court, either geographically defined or over the subject matter of an action.  In the motorcycle-car crash the court's jurisdiction is over the parties, Mr. Stevens and Mr. Hamiti and any company Mr. Hamiti was working for at the time of the accident. It will be a matter of Missouri law whether Mr. Steven's fraud claim against Mercury can be heard as part of the underlying lawsuit.  Typically, Mr. Stevens has no claim against Mercury because he has no contract of insurance with them, his remedy is to sue Mr. Hamiti which he did.  Mercury's liability to Mr. Stevens is only for the amount of coverage purchased by Mr. Hamiti.  If Mercury only covered Mr. Hamiti to the tune of $12,500 which is not unheard of--that's all Stevens and his attorney will collect from Mercury.  The balance of the $1.37 million verdict comes out of Mr. Hamiti's pocket, if Mr. Hamiti is like most folks, Mr. Stevens is out of luck.  


Good luck on that fraud claim.  For more:


http://columbus.bizjournals.com/columbus/stories/2007/09/03/daily12.html


http://www.bnd.com/372/story/1028154.html

14 comments:

  1. This comment has been removed by the author.

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  2. THE HEARTFORD AUTO INSURANCE, WHEN I PURCHASED A BRAND NEW SUZUKI GRANDVITARA 2010 FROM THE DEALER IN BERGENFIELD NJ, THEY TRIED TO GET ME TO PAY $2400 DOLLARS EVERY 6 MONTHS WITH THE DEALERS BROKER IN AUTO INSURANCE, THAT INSURANCE WENT DOWN TO $800 DOLLARS, AFTER I HAD WRITTEN A LETTER TO INSURANCE CEO IMPLICATING BROKER AND DEALER FRAUD, SO HEARTFORD, LOWERED IT. GOT AN OLD USED CAR INSURED UNDER THE SAME POLICY FOR $300.DOLLAR A YEAR, ONLY LIABILITY AND THE SUZUKI FULL COMPREHENSIVE FOR $800.00 DOLLARS TOTALING $1200 FOR THE 2 CARS. THEN RECENTLY IN 2014 HEARTFORD RAISE MY INSURANCE TO $3000.00 DOLLARS, THATS $265.00 DOLLARS EVERY MONTH, WHEN I WAS ONLY PAYING $142.00 DOLLARS A MONTHS. i HAVE CALLED HEARTFORD REGADING THIS EXCESSIVE INCREASE AND DEBT CREATION, THEY OFFERED TO LOWER IT TO 1500. I ASKED WHY NOT LOWER TO THE 1200 CATAGORY WITH JUST A SMALL PERCENTAGE INCREASE, THE AGENT COULD NOT ANSWER ME MY QUESTION WHY DID WAS THIS INCREASED JUSTIFIED? PLEASE EMAIL ME THE INFORMATION YOU ARE COHERSING ME TO OFF THE ROAD BECAUSE YOUR YOUR INSURANCE RATES ARE TYRANICALLY HIGH IT SEEMS LIKE YOUR COMPANY IS COMMITING EXTORTION! SPOKE TO THE SUPERVISOR GARY GARRISON HE SAID THEY WOULD HAVE TO GET THE INFORMATION AND THAT THEY WOULD CALL ME BACK THEY NEVER DID. THEN EALIY JAN WENT TO TD BANK TO PAY OFF THE SUZUKI CAR LOAN, THE AGENT SAID THE BANK MADE OUT 4 DIFFERENT LOANNS AND DID NOT KNOW WHICH WAS WHICH SO I REQUESTED THE BANK TO MAIL THE LOAN APPLICATION, THE LOAN DEED I SIGNED OF THE CAR AT THE TIME AND AN EXPLANATION FOR WHY THE ORIGINAL PRICE OF THE CAR WAS INCREASED FROM $24,000 TO $34,000 DOLLARS. I NEVER RECEIVED ANY LETTERS FROM THE BANK SINCE JAN OF 2014. THEN I CHECKED THE YELLOW COPY I HAD SIGNED IT WAS A BLANK DOCUMENT WITH NO NUMBERS ENTERED SIGNIFING THE ORIGINAL COST OF THE CAR, IT IS ALL BLANKED OUT. I ALSO REMEMBERED ASKING THE GAL PRINTING THIS DOCUMENT ABOUT THE EMPTY NUMBERS ON THE AGREEMENT SHE SAID IT WAS THE PRINTERS FAULTY INK TONER. I WILL WRITE THE NUMBERS IN BY HAND LATER, SO I TRUSTED HER WORD. I THINK THE DEALEWR AND THE BANK LOAN AGENT BOTH COMMITTED FRAUD ON MY PURCHASE AND HAVE PLACED ME INTO PERPETUAL DEBT CRISIS HOPING I WOULD GIVE UP THE CAR SO THAT THEY COULD RE=SELL IT FOR MORE PROFITS HARMING MY CREDIT AND DRIVING UNDER THE THREAT OF THE REPO MAN TAKING AWAY MY PROPERTY ILLEGALY LEGAL. I STILL PAY A HIGHER INSURANCE AND THE BANK LOAN WITHOUT A CAP JUST TO KEEP THE WOLF AWAY UNTIL I CAN FIND A LAWYER TO SUE THEM FOR FRAUD. I NEED HELP?

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  7. Frauds are almost everywhere, it is rampant but is avoidable by being vigilant enough.

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  11. Insurance pay claims they know are fraudulent. In my opinion, by not standing up to fraud, some insurance companies are actually inviting it to continue. They should stand up against fraud or work to prevent it from happening again. I doubt fraud will ever be completely eliminated. It’s too profitable and often too easy.

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