Court ‘Wipes Slate Clean’ in Insurance Fraud Case

(CN) - The 1st Circuit decided to "wipe the slate clean" in a battle between insurers and a couple who allegedly defrauded them. The panel vacated two rulings on cross-motions for summary judgment, saying the lower court had improperly favored the insurers.

The ruling stems from a massive lawsuit in Puerto Rico federal court, accusing hundreds of people of swindling insurance companies through false automobile insurance claims.

In the appeal before the Boston-based appeals court, married couple Rafael Rivera-Vázquez and Isabel Hurtado challenged an order denying their motion for summary judgment.

Rivera had been accused of submitting several fraudulent claims, both as an attorney for claimants and as a claimant himself. Insurers said Hurtado also took part in the swindle.

A day apart, the insurers filed a motion for partial summary judgment and the couple sought dismissal of all their claims. Each party submitted a statement of uncontested facts, which the opposing party must then confirm, deny or qualify.

U.S. District Judge Salvador Casellas found Rivera and Hurtado's response to the facts inadequate and concluded that the couple had filed fraudulent insurance claims.

The Boston-based appeals court rejected Rivera and Hurtado's appeal of this decision. Their opposition, which contained 25 numbered paragraphs, "nowhere matche[d] up with" the insurers' 88 numbered paragraphs of facts, the court ruled.

Local rules requiring parties to address opponents' facts help judges avoid "endless rummaging through a plethoric record," the court explained. Circuit Judge Bruce Selya said it's not the district court's job to "do the party's homework."

On the couple's motion for judgment, the district court had been faced with a dilemma of its own making: The insurers never responded to the couple's statement of facts, which would ordinarily trigger admission of those facts, but some of them contradicted Casellas' earlier ruling for the insurers.

The federal judge tried to escape the conflict by admitting only the facts that were consistent with his previous ruling.

But the 1st Circuit said this attempted solution "undeniably" favored the insurers.

"[T]he inconsistency is patent - the court held opposing parties to materially different standards in the application and enforcement of a local rule," Judge Selya wrote.

"Because this differential treatment unfairly prejudiced the appellants, we hold that the district court abused its discretion," Selya added. "It follows that both orders ... must be vacated."

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