Tuesday, March 4, 2003
Court Upholds Order Freezing Assets in Alleged Medical Insurance Fraud
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals yesterday upheld a preliminary injunction freezing the assets of Haya Zilka, a woman allegedly involved in a wide-ranging medical insurance fraud scheme.
Although Zilka is now divorced from the doctor whom the plaintiffs say performed cosmetic surgery but disguised the bills as being for medically necessary procedures, the court said there was sufficient evidence that she recruited patients for the scheme and participated in a plan to hide and transfer assets.
Judge Michael Hawkins rejected Zilka’s assertion that the court must give “full faith and credit” to the divorce decree she and her former husband entered into during the lawsuit.
“This argument is not relevant to the issues before this court; there is no suggestion of how the divorce decree impacts the injunction, and plaintiffs are not in this proceeding attempting to reach those assets as community property,” Hawkins said.
The background of the case, the judge said, is “long and colorful.”
“The alleged scheme involved surgeons who would perform elective cosmetic surgeries and then submit fraudulent bills and medical records to plaintiffs, assigning bogus diagnoses and misrepresenting the surgeries performed,” Hawkins said. “For example, various facial cosmetic surgeries were documented and billed as procedures to correct deviated septums; breast implants were billed as biopsies; tummy tucks became hernia or gynecological surgeries. The fraud was aided by patient recruiters who sought patients, primarily Asian-American women, from all over the country and were paid a fee per patient.”
Zilka’s now ex-husband, Ezeckiel Zilka, was a surgeon at several of the clinics. The plaintiffs—Connecticut General Life Insurance Company, Equitable Life Assurance, Cigna Employee Benefits Services Inc., Aetna U.S. Healthcare, Inc., United Healthcare Corporation, Humana inc., and Aetna Life Insurance Company—obtained a $5 million judgment against him on two RICO claims.
The plaintiffs then attempted to determine his assets to enforce the judgment and served discovery on him, his wife and their son. The couple resisted and were found in contempt and jailed.
Meanwhile, the plaintiffs amended their complaint to add Haya Zilka and her company, DAS International, as defendants. They sought a temporary restraining order and preliminary injunction against Haya Zilka to freeze her assets and prevent her from making material asset transfers.
Zilka argued that the plaintiffs did not bear their burden of establishing the possibility of irreparable injury. But the district court found it was probable that she would engage in misconduct to conceal or dissipate assets.
“This finding was not clearly erroneous in light of the Zilka family’s history of fraudulent intra-family transfers, their refusal to disclose asset information in defiance of court order and their convenient divorce settlement,” Hawkins wrote.
The case is Connecticut General Life Insurance Company v. New Images of Beverly Hills, 02-55883.
Copyright 2003, Metropolitan News Company