Lesser Law Group

San Rafael California Insurance Law Firm

Negligence or misrepresentation could be accounting malpractice

Individuals and businesses in California often rely on accountants to track financial activity and prepare financial statements and tax returns. Accounting mistakes have the potential to get clients in financial or even legal trouble. Professional malpractice may occur when mistakes arise from negligence, misrepresentation or deviation from professional standards and practices. Under these circumstances, a client could pursue damages from the responsible professional.

A formal agreement to provide services between the accountant and client generally specifies that the accountant will comply with professional standards. Intentional departures from recognized standards could represent a breach of contract. The breach by definition must cause direct harm to the client.

Fire-floods threaten businesses in California

California business owners are familiar with the devastating effects of wildfires. In 2018 alone, wildfires have destroyed over 1.2 million acres in the state and demolished around 8,500 buildings. Hundreds of people have lost their businesses and livelihoods due to the blazes that continue to ravage the state.

Unfortunately, these fires are bringing businesses another natural disaster: fire-floods. A fire-flood occurs when rain lands on burned soil and cannot absorb into the ground. The mixture of rain and loose soil then rolls down hillsides in a form similar to a mudslide or flash flood.

Malpractice complaint demands $100 million

A $100 million legal malpractice lawsuit has been filed claiming a conflict of interest as a law firm allegedly represented both the lenders and the borrower during a legal action related to promissory notes. The plaintiff company in the case claims the law firm engaged in deceptive practices and breached fiduciary duties. California readers might be interested in the specifics of the case.

According to court filings, a Texas company called Quantum retained the law firm in 2016 and that representation continued even though Quantum ceased giving the firm work after some time. Thereafter, in 2017, Quantum issued promissory notes to two other companies. As part of that transaction, a fourth company, Empire Stock Transfer Inc., was authorized to reserve shares of common stock sufficient to compensate the lenders in the event that the terms of the notes were not honored.

California doctor awaits sentencing for insurance fraud

A jury in Riverside County returned a guilty verdict on charges of insurance fraud and perjury against an 86-year-old doctor on Oct. 4. He could potentially receive 18 years in a state correctional facility. After paying $30,000 in bail, the doctor secured his release while awaiting his sentencing hearing.

According to evidence presented at his trial, he had committed fraud on workers' compensation cases by billing for medical-legal reports. Doctors prepare these reports for disputed work injury cases. He sent bills to multiple employers within the state for reports on disputes that did not exist. The district attorney's office reported that he had billed companies for $90,000 to write reports that no one requested.

Former CEO faces accounting fraud charges

Businesses and individuals in California and around the country rely on professionals such as attorneys, accountants and brokers to manage their affairs, and both professionals and their employers can face severe penalties when documents required by state or federal law are falsified or not submitted in a timely manner. One such case involves an accountant who served as the chief financial officer of a leading management consulting company between 2008 and 2016. Media accounts reveal that the man has been indicted in connection with a scheme that allegedly led to his employer underreporting approximately $12 million in workers' compensation expenses.

According to prosecutors, the man falsified his employer's periodic filings with the Securities and Exchange Commission by improperly reporting workers' compensation costs as fees and payroll taxes. The man is said to have taken advantage of the scheme by selling 35,300 shares that he had purchased using his stock options for $467,261. Court records reveal that the man received more than $2.4 million when he sold the shares.

NBA star sues accountant for enabling theft of $77 million

The salaries of professional basketball players naturally impress sports fans in California, but the federal lawsuit filed by Kevin Garnett illustrates the risks that wealthy individuals take when they entrust others with their millions. Garnett, now retired from a career with the Timberwolves and Celtics, alleges that his accountant knew that Garnett's wealth manager and business partner was stealing. According to court filings, the wealth manager took $77 million of the professional athlete's money.

The malpractice lawsuit named the accountant and his firm as defendants. Garnett claims that the accountant did nothing as the wealth manager shifted millions away from businesses that Garnett had invested in.

Dispute between art dealer, collector and gallery goes to court

Some art aficionados in California may have heard about a dispute between companies owned by two prominent art collectors involving a mixed-media work by Frank Stella that has resulted in a lawsuit against another gallery. The lawsuit was filed by Artemus in July in the New York Supreme Court against the Paul Kasmin Gallery. It alleges that the gallery falsified documents related to the Stella work.

According to the lawsuit, in 2016, there was a transaction between dealer Anatole Shagalov and his gallery, Nature Morte, and an art leasing company founded by collector Asher Edelman, Artemus. In all, there was a $3.4 million transaction between the two, and the Stella work was included along with a number of others. However, Artemus alleges that Kasmin still had a 40 percent share in the Stella painting and that this information was not disclosed.

California wildfires consume an estimated 1 million acres

Across the nation, people are keeping up with news about the infamous California wildfires. The losses caused by these natural disasters are nothing short of devastating. Wildfire insurance claims reach nearly $12 billion statewide, and continue to grow like the flames. Additionally, the U.S. Forest Service reports fires have torched over 1 million acres of California land this year.

Rescinded insurance policies betray people who expected coverage

You selected an insurance policy and paid premiums to obtain financial protection in the event of an accident, theft, fire or other problem. If a loss covered by the insurance contract occurs, you naturally expect to collect on a claim or at least appeal a denial of coverage. The rescission of an insurance policy, however, could not only surprise you but undermine your protection from loss. When a Florida insurance company rescinds your policy, it acts as if the contract never existed.

The insurer will base its decision on claims that you misled the company when you applied for the policy or filed a claim. The insurer essentially accuses you of fraud. In this situation, you might receive a refund of all premiums that you paid along with a declaration that the policy is void. Your refunded premiums, however, might not adequately compensate you for your losses, which could be substantial.

Insurer accused of denying valid claims for addiction treatment

Hundreds of complaints from addiction treatment providers have prompted the California Department of Insurance to serve HealthNet with an Order to Show Cause and Notice of Noncompliance. Court filings indicate that the insurance company failed to meet the terms of its contracts with providers. Accusations from providers detailed an outright denial of legitimate claims or substantial underpayment.

The problem began late in 2015 and carried over into 2016. An investigation by the CDI determined that the insurer started to attack providers with accusations of insurance fraud. The company sent their claims to its special investigations unit without apparently reviewing them. The investigations bogged down providers' claims while withholding payment. While going unpaid, providers had to meet demands for excessive amounts of information about claims for covered and preauthorized treatments.

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