Is Good Health A Defense To Insurance Coverage Fraud Charge?

We recently reported on a complaint filed by the Illinois Administrator alleging that an attorney had engaged in dishonesty and fraud in order to maintain health insurance.

From the complaint

Between January 2006 and December 2014, Respondent had no other medical or dental insurance coverage.

Respondent’s continued use of  [Illinois Education Association’s]  insurance coverage for his health insurance needs between January 2006 and December 2014, during which time he was no longer Masterson’s domestic partner, was dishonest and fraudulent because Respondent was no longer in a domestic partnership with Masterson and therefore no longer entitled to IEA’s insurance benefits.

Between January 2006 and December 2014, while Respondent continued to use IEA’s insurance coverage, Respondent knew that his use of IEA’s insurance coverage was dishonest and fraudulent because he knew he was no longer in a domestic partnership with Masterson, and therefore he was no longer entitled to IEA’s insurance benefits.

Between January 2006 and December 2014, IEA incurred for Respondent $112,514.76 more in medical insurance premiums than it would have incurred for a single plan for Masterson. During that same time period, IEA also incurred for Respondent $6,266.56 more in dental insurance premiums than it would have incurred for a single plan for Masterson.

In or about November 2014, IEA discovered that Respondent and Masterson were no longer in a domestic partner relationship. As a result, IEA notified Respondent that his insurance benefits were being terminated and that he could seek COBRA continuation coverage.

The attorney’s answer is linked here.

Points made in that answer

Respondent states that any duty he had to notify IEA of any change in circumstances concerning the domestic partnership was a contractual duty, and nothing more than a contractual duty

Blue Cross Blue Shield (“BC/BS”) and Delta Dental profited by insuring Respondent, who at all relevant times was in good health.

In addition to denials of many of the facts alleged in the complaint, the answer contends

Without admitting that a contract was materially breached, the alleged conduct of Respondent is, at worst, a breach of a contractual agreement, and not a fraud, and not relating to the legitimate regulation of the legal profession and is not properly the subject of a disciplinary proceeding under In re Karavidas.

Upon information and belief, IEA was informed by Masterson of the change in the domestic partner relationship by Masterson, and voluntarily and or negligently continued to provide benefits to Respondent notwithstanding its knowledge of the change in the domestic partner relationship by Masterson.

The Administrator’s allegation that Respondent engaged in criminal conduct absent a conviction of the alleged conduct is a violation of Respondent’s rights to due process guaranteed under the Illinois Constitution and the United States Constitution.

Respondent cannot be found to have engaged in a criminal act because he was not convicted of any crime, and because the Administrator cannot plead and prove beyond a reasonable doubt that Respondent committed the alleged crime.

The suggestion that a criminal conviction is a necessary predicate for a Rule 8.4(b) violation has no support in the text (which prohibits commission of “a criminal act”) or interpretations of that Rule.

The impact of the Illinois Supreme Court’s Karavidas opinion, which we link to above. has been significant in its narrowing of the range of sanctionable conduct in that jurisdiction.

The dissent in particular is worth a read.  (Mike Frisch)