Wednesday, June 19, 2019
By a MetNews Staff Writer
Insurance fraud was committed by a mother and daughter, neither a lawyer, who leased the names and bar numbers of members of the State Bar in putting forth multiple insurance claims through faux law firms, even though the claims, themselves, were not phony, the Court of Appeal for this district has decided, upholding civil penalties exceeding $6 million.
With attorney fees and costs added, and judgments against others, the plaintiffs proclaimed victory of $11.5 million.
Justice John Segal of Div. Seven wrote the opinion, filed Monday and not certified for publication. It affirms a Nov. 22, 2016 judgment by Los Angeles Superior Court Judge Michael L. Stern, based on a jury verdict.
Allstate Insurance Company and related companies brought the fraud action against Christine Suh and her mother, Christina Chang, pursuant to Insurance Code §1871.7 which proscribes the making of false or fraudulent insurance claims. The section provides:
“Any interested persons, including an insurer, may bring a civil action for a violation of this section for the person and for the State of California. The action shall be brought in the name of the state.”
Allstate did not contend that any of the 313 claims the defendant presented were fraudulent, but declared that it would not have made payment had it known that the claims arrived from fake law firms.
Code of Regulations §2695.2(c) restricts representation of insureds to attorneys, family members, adjusters, and certain other persons and, Allstate insisted, it refuses to deal with unauthorized representatives.
Suh had paid several lawyers $3,000 a month for permission to use their names and State Bar numbers, the opinion recites, though the scope of that license is not delineated. The opinion sets forth that the claims were “not authorized by” and were “without the knowledge of the individual attorneys.”
The defendants asserted that there was no insurance fraud because it was not even contended that the insureds were undeserving of payments, pointing out:
“There was no allegation of staged accidents, nor any claim that injuries were inflated or that treatment was not provided.”
Unpersuaded, Segal said:
“Suh and Chang perpetrated a deceitful insurance scheme designed to acquire insurance proceeds illegally for personal gain. Suh and Chang deceived Allstate into believing the attorneys whose names they were using actually and lawfully represented its insureds.”
“In their communications with Allstate, Suh and Chang misrepresented that attorneys represented the insureds. They concealed the fact they were masquerading as attorneys when they filed the insurance claims. And the misrepresentations were material: Allstate would not have released settlement proceeds to Suh or Chang or their sham law firms had Allstate known the truth.”
Denial of Stay
The defendants also argued that Stern abused his discretion in declining to stay the action, pursuant to an ex parte motion made shortly before trial was to commence, based on the recent institution of a criminal investigation of Suh and Chang.
By testifying at the civil trial, to protect their interests in that proceeding, Segal they explained in urging a stay, they would consequently be waiving their Fifth Amendment right not to be called to testify at any subsequent criminal proceeding.
“Suh made her request for a stay, not in a regularly noticed motion, but in an ex parte application. A court will not grant ex parte relief ‘in any but the plainest and most certain of cases.’ ”
He said that Suh “did not make a showing of irreparable harm, immediate danger, or any other basis for ex parte relief,” yet did have enough time to make a noticed motion.
As it turned out, Chang testified at trial while Suh stood on the Fifth Amendment.
The case is People v. Suh, B280293.
Suh and Chang
Riverside attorney Glenn A. Williams represented Suh and Chang. Thomas E. Fraysse and Maisie C. Sokolove of Knox Ricksen, a Walnut Creek firm, acted for Allstate.
A Dec. 21, 2016 press release by Allstate following its trial court victory say:
“The evidence…showed Chang and Suh used remote check-cashing facilities including liquor stores and small local markets to convert the settlement proceeds into untraceable cash from deposits into client-trust accounts. Allstate contended Chang and Suh knowingly concealed the fact that the law offices were owned, operated and controlled by unlicensed persons, all in violation of California’s Insurance Frauds Prevention Act.”
Knox Ricksen explained in a Jan. 3, 2017 posting on its website:
“Settlement payments from Allstate and other insurance companies were deposited in the “sham” law firm client-trust accounts (IOLTA accounts) opened by Chang and Suh, who then used remote check-cashing facilities, including a check-cashing facility owned by Suh, to convert the settlement proceeds to untraceable cash. Four lawyers whose names were used testified that they did not procure any clients for the law offices that they purportedly owned, did not create the law firms, did not authorize demand letters that were sent to insurance companies under their signature, were unaware that settlements had been negotiated and paid by insurance companies, and had no access to client files, firm records and firm bank accounts. One lawyer testified that when he first appeared to work at a law office bearing his name, he was told to go home and was not allowed to review client files.”
The statement notes:
“In post-trial motions, Judge Stern imposed further civil penalties and assessments against defendants Charles Rhyu, Robynnie Byon, Eunjin Chang and Wonguen “Steve” Chang in the amount of $1,734,948.26, and ordered the defendants to pay $3,401,229.38 in attorney’s fees, expenses and costs. The total monetary judgment is $11,544,037.03.”
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