Standard Insurance Against Fraud

CIGNA Obtains $14,371,384.95 Judgment Against Fraudulent Health Care Provider

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Since the police, prosecutors and government insurance fraud investigators often do not like to arrest or prosecute insurance fraudsters it is important for insurers to take action and prosecute those who attempt to defraud insurers or succeed.

In Connecticut General Life Insurance Company and CIGNA Health And Life Insurance Company v. Mike Ogbebor and Stafford Renal LLC, No. 3:21-cv-00954 (JAM), United States District Court, D. Connecticut (September 6, 2022) CIGNA sued for false claims and obtained a judgment awarding the defendant approximately $15 million in damages and damages. individually.

EVENTS

Stafford Renal LLC (Stafford) and its owner Mike Ogbebor, received insurance payments from the plaintiffs, Connecticut General Life Insurance Company and Cigna Health and Life Insurance Company (collectively, “Cigna”), for dialysis Stafford allegedly offered two Cigna plans . members. Cigna claimed that Stafford was not licensed to provide, and in fact, did not, provide dialysis services.

After Cigna filed its complaint Ogbebor filed an answer on behalf of all the defendants. The trial judge answered this question in reference to Stafford because Ogbebor as a non-lawyer could not represent in court a company with as little debt as Stafford. Cigna then moved to enter against Stafford, which was granted based on Stafford’s failure to appear or respond.

As for Ogbebor, he has failed to dispute or respond in any way to Cigna’s discovery requests. Ogbebor also failed to respond to a request to compel his discovery, despite the Court obtaining an order warning him that such failure could result in penalties including life imprisonment. Cigna is now seeking default judgment against Stafford and Ogbebor.

Because Stafford failed to respond and Ogbebor responded but intentionally failed to comply with the findings, the trial court found Cigna’s claims valid against both defendants. Under these circumstances, Stafford and Ogbebor are liable to Cigna for making false claims on behalf of unauthorized parties.

Ogbebor formed Stafford as a limited liability company incorporated under Texas law, and served as its owner, principal, and manager. Stafford was self-diagnosed as a treatment for end-stage renal disease (ESRD). But Stafford didn’t have a license for ESRD. In fact, Ogbebor was affiliated with a company called Stafford Dialysis Renal, Inc., which operated a licensed ESRD facility. The license, however, expired in November 2016.

In 2017, Ogbebor made a donation to Cigna for ESRD medications provided by Stafford. Cigna learned that Stafford was not licensed for ESRD. Stafford was therefore operating in violation of Texas law.

Although unlicensed, Stafford provided and received $4,790,461.65 from Cigna for ESRD claims for two Cigna members. When Cigna asked Stafford and Ogbebor to show proof of proper authorization, they failed to do so. Cigna then reduced or refused to pay for some of the claims Stafford submitted.

The plaintiffs allege that they fabricated many of the drugs they wanted and received kickbacks from Cigna. Further, although Stafford allegedly provided coverage to the plan member almost daily from April 2018 to June 2020, Cigna learned from the member and confirmed with Medicare that she did not begin receiving coverage until January 2019.

DISCUSS

When the defendant fails, he admits all the facts in the complaint. The trial court found that a sentence of acquittal is the appropriate sentence in this case and that any lesser sentence would be null and void because Ogbebor had willfully refused and refused to cooperate with the case since he was first served in February 2022 with the requests for identification contained in his books. which is necessary to resolve Cigna’s allegations against him.

DECLARATION JUDGMENT

Cigna sought an injunction against Stafford, arguing that it had no duty to honor Stafford’s offer of ESRD services. Because Stafford was not authorized to provide any of the products that ESRD allegedly provided to Cigna, it has no legal or contractual right to reimbursement, payment, or other consideration from Cigna.

MISCELLANEOUS THINGS

The complaint alleges that the defendants falsely represented to Cigna that Stafford was licensed to provide ESRD services when they filed complaints seeking reimbursement for those services. In filing these claims, the defendants knew that Stafford did not have the required license and that many of the claims were false. Since Cigna’s claims of fraudulent misrepresentation are alleged to support a default judgment the claims are granted.

NEGLIGENT MISREPRESENTATION

The trial court held that Cigna’s allegations were sufficient to support a default judgment for negligent misrepresentation.

CUTPA

The Connecticut Unfair Trade Practices Act prohibits any person from engaging in “unfair, unfair or deceptive practices in the conduct of any trade or commerce.” Conn. Gen. Stat § 42-110b. “Any person who loses money or property, real or personal, as a result of the use or use of methods, acts or practices prohibited by [CUTPA]they can bring something… to restore the damage. ”

Ogbebor appears to have admitted that he personally directed Stafford’s fraudulent behavior. Accordingly, the complaint sufficiently states that CUTPA enjoins all defendants from agreeing to a default judgment.

DEATH

The Connecticut Health Insurance Fraud Act punishes intentional fraud or deceit in connection with claiming benefits under health insurance. all that is destroyed. Cigna’s claims are sufficient to justify a default judgment.

A RELATIVE IS STOLENT

A hospital’s undisclosed failure to comply with licensure requirements constitutes fraud on the part of the insurance company. Plaintiffs falsely represented to Cigna that Stafford was licensed to provide ESRD services by submitting requests for such services, and induced Cigna to pay for those services. These claims were fraudulent because the defendants knew that Stafford did not have a license to perform the services they claimed to be reimbursing from Cigna, and often did not perform them at all. The trial court determined that Cigna’s alleged fraudulent misrepresentation was subject to a default judgment.

TO MAKE A DIFFERENT ACTION

Under Texas law, having an owner or manager of a corporation responsible for the conduct of the corporation is only valid (1) when the corporation is created and operated as a mere instrument or means of another’s business; and (2) there is such a relationship between the corporation and the individual that the distinction between the corporation is extinguished and holding the corporation alone liable would result in injustice. The trial court concluded that Ogbebor framed Stafford in furtherance of his insurance fraud scheme. Thus, the trial court allowed Cigna to pierce the corporate veil and hold Ogbebor liable for Stafford’s actions as well as his own.

EVERYTHING

Cigna’s calculated damages are based on the dialysis payments it claims were made to one plan member totaling $763,592.27, plus the same member’s prescription drug payments, totaling $4,017,025.89. Cigna is seeking an additional $9,843.49 in co-pays for ESRD treatments, both dialysis and medication, for the second plan member. The figures are confirmed by a detailed spreadsheet Cigna provided with its complaint, and total $4,790,461.65. The high court awarded that amount in actual damages. Moreover, because Cigna has sufficiently pleaded a claim of embezzlement under Conn. Gen. Stat. § 52-564, the court awarded triple damages in the amount of $14,371,384.95.

THE END

A judgment was entered against Mike Ogbebor and Stafford Renal LLC in the joint and several sums of $14,371,384.95, as well as a declaration that the plaintiffs are released from any liability for payment of past or future claims made by Stafford Renal LLC.

ZALMA’s opinion

Although Cigna will have a difficult time collecting on this decision, its actions, and those of the District Court, should act as a deterrent to others attempting fraud. If Ogbebor owns his fraudulently obtained money Cigna should make vigorous efforts to enforce his claim and recover whatever the fraudster still has. Other insurers should follow Cigna’s lead and work to capitalize on insurance fraud.

(c) 2022 Barry Zalma & ClaimSchool, Inc.

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Barry Zalma, Esq., CFE, now narrows his practice to an insurance consultant specializing in insurance coverage, insurance litigation, insurance bad faith and insurance fraud for both insurers and policyholders alike. . He has practiced law in California for over 44 years as an insurance and claims attorney and over 54 years in the insurance business. Available and receive subscription-only videos of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe.Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome.

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