The insurer brought claims under Pennsylvania’s Insurance Fraud Act, 18 Pa.C.S. § 4117, and common law fraud, among others, seeking to recover allegedly fraudulent payments to medical providers.
The medical providers argued on summary judgment that the statutory fraud claims were time barred. They made extensive arguments concerning a variety of fact patterns to support its claim that the insurer was on notice of the fraud prior to the statute of limitations running, and there should be no tolling. The court analyzed each set of facts closely, but concluded that even though the insurer had been investigating a potential fraud, there was an argument that it did not know there was an actual fraud, and thus tolling might be permitted.
Thus, the court found that “whether the two-year statute of limitations period for Plaintiffs’ statutory insurance fraud claim should be tolled is genuinely disputed. Here, a reasonable factfinder could find that despite Plaintiffs’ reasonable diligence in discovering their injury, they did not discover the alleged fraud until … after reviewing hundreds of Defendants’ records with the assistance of an expert medical reviewer and counsel.” Ordinarily, factual issues about notice and the plaintiff’s diligence are jury questions, and such genuine issues of material fact as to when the statute of limitations runs preclude summary judgment.
The court observed that tolling could be proper if the “Plaintiffs were unable to discover the alleged fraud as a result of the scheme’s complexity and Defendants’ efforts to conceal it.”
On the common law fraud claim, the defendants argued for similar reasons that the insurer could not have justifiably relied on the insureds’ misrepresentations because of its alleged knowledge of the insureds’ fraudulent representations. Again, this made for disputed issues of fact that could not be resolved on summary judgment.
Date of Decision: September 28, 2018
State Farm Mutual Automobile Insurance Co. v. Stavropolskiy, U. S. District Court Eastern District of Pennsylvania CIVIL ACTION NOS. 15-05929 and NO. 16-01374, 2018 U.S. Dist. LEXIS 167425, 2018 WL 4680241 (E.D. Pa. Sept. 28, 2018) (Joyner, J.)