DIVORCE HEALTH INSURANCE FRAUD
# post divorce health insurance fraud.
Yesterday I had a client and his wife execute DRL § 255 which pertains to a spouse’s right to obtain healthcare coverage under COBRA (Consolidated Omnibus Budget Reconciliation Act) post divorce, and the termination of their rights to healthcare coverage as a dependent spouse, post divorce. This is obviously normal procedure in an uncontested divorce in New York. It got me to thinking about this post idea, though. This issue of insurance and COBRA and fraud.
With health reform in the U.S. a likelihood, the topic must be on more than just a few people’s minds. Health, and health care are obviously very expensive privileges. Only the rich and very poor get a free ride. For those in the middle, it can be prohibitive. After a divorce, if you are the spouse who received coverage from your husband or wife, you are in for a very costly proposition of getting your own coverage, even with COBRA.
Sometimes, though, the courts could order your spouse to pay your insurance premiums either for a duration, or for the rest of your life depending on the situation – let’s say you were in a long term marriage and you have a terminal illness for example. Depending on the plan, that could also be expensive for your spouse. And sometimes, it has happened that a spouse does not inform his or her employer of a divorce, but continues to allow the former spouse to obtain health insurance through the job. It’s a great way to get out of paying premiums that can be prohibitively expensive as I said. But it is also FRAUD.
There was a case in New Mexico a few years back — 303 F.3d 765 TRUSTEES OF THE AFTRA HEALTH FUND, Plaintiff-Appellee,
v. Richard BIONDI, Third-Party Plaintiff-Defendant-Appellant,
v. Thomas C. O’Brien, Selma D’Souza, O’Brien & Barbahen, a partnership, et. al., Third-Party Defendants-Appellees. No. 00-3598. United States Court of Appeals, Seventh Circuit. Argued January 18, 2002. Decided September 6, 2002. Rehearing and Rehearing En Banc Denied October 7, 2002
In that case, a guy by the name of Frank Biondi and his wife Hazel got divorced after 30 years of marriage. He was ordered to pay her health care premiums for a few years post divorce. What does he do? Well, he simply elects not to tell his employer that he was divorced for five years. Plus, he remarries but he was smart enough not to put his new wife on his health insurance plan. And he was careful to fill in any forms that asked his marital status as still being married to Hazel. Fast forward 5 years. One of his lawyers who handled the divorce basically writes a letter to his employer informing them of the divorce and the settlement agreement which required him to pay coverage for Hazel under COBRA. Once the insurance hears this, they sue Frank for, among other things, common law fraud. What does Frank do? Well, he blames it on his lawyers of course and brings a third party action for malpractice.
The end result was that the court and the appellate division all find that Frank was a fraudster to the tune of over $100,000. And they basically said that even if his attorneys committed malpractice by not explaining the COBRA situation to him, he would not benefit from the fraud by collecting funds from his lawyers (who moved for summary judgment and won) by accusing them of malpractice when he clearly knew, from his conduct, that he had a duty to inform his employer he was divorced from his wife. So now, he has to pay back every dime the insurance company paid on behalf of his ex wife to the tune of about $122,000.
The moral of the story is that when you divorce, you are generally no longer entitled to health care coverage as a dependent spouse. At best, you can get coverage under COBRA. Forget about perpetrating a fraud on your employer and the insurance companies by pretending to be married so that you can get coverage. It may take a few years but your fraud will be uncovered and you will be made to pay all the money back, plus interest, and possibly attorneys fees for the insurance company as well.
more divorce health insurance posts
Read Frank’s appeal here: http://openjurist.org/303/f3d/765/trustees-of-the-aftra-health-fund-v-biondi
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