Insurance 101 – Chapter 15 – Volume 38 – More Fraud in the Legal Profession

More Fraud in the Legal Profession

In Fireman’s Fund Insurance Co. v. Stites, No. 99-56622 (9th Cir.,
08/03/2001),55 the court commented:

Stites’s scheme to “churn” litigation exploited California case law holding that insurance companies with a duty to defend their insureds must sometimes allow those insureds to select their own attorneys. See, e.g., San Diego Navy Fed. Credit Union v. Cumis Ins. Soc’y Inc., 208 Cal. Rptr.494 (Cal. Ct. App., 1984). Stites controlled a network of lawyers that was able to infiltrate both sides of several major lawsuits. Lawyers who were members of this so-called“Alliance” would ensure that plaintiffs would not settle until late in the litigation, thus enabling defense lawyers to accumulate substantial attorneys’ fees. Through this process, as well as through the use of kickbacks, Stites and other members of the Alliance extracted millions of dollars from the insurance companies who had to pay the defense bills and settlements.

The following video was adapted from my book, “Insurance Claims A Comprehensive Guide” Published by the National Underwriter Company and is available at the Zalma Insurance Claims Library

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