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BAD FAITH Insurer to pay $26.4M for premium overcharge Denver (AP)-Security Life of Denver Insurance Co. has agreed to pay $26.4 million to 191 policyholders in 34 states to settle claims the company inflated their premiums. If shared evenly, the awards would be about $138,000 per policyholder. The company, an affiliate of financial giant ING Groep N.V., also will pay $7.5 million in legal fees, pending approval by policyholders in the class action. CHILD ABUSE Jury orders $7.5M award over toddler’s slaying Phoenix (AP)-An Arizona supreme court jury has handed down a $7.5 million award in the death of a 20-month-old Phoenix girl and injuries to her older sister. The girls were assaulted by their mother’s boyfriend, who is facing sentencing by a criminal court jury. The decision calls for the state child protective services; the girls’ mother, Virginia Venegas; and her boyfriend, Juan Velazquez, each to pay one-third of the award. The jury awarded $2.5 million to the children’s father and $5 million for the surviving child, Isabella Sandoval. Authorities determined that Liana Sandoval was beaten to death, and her body thrown into the water, after which the couple called police and reported the child missing. The girl was killed just a few weeks after child protective services had investigated and dismissed allegations of abuse. FALSE CLAIMS Medicare fraud case ends with $8M fines Minneapolis (AP)-A Medicare fraud case against a Minnesota surgical products company has ended with fines of $8 million, after the defendants pleaded guilty to reduced charges of failing to reveal that Warm Up, a device for treating chronic deep wounds, might not qualify for Medicare reimbursement. Augustine Medical Inc. was fined $5.2 million and given five years’ probation. Company founder Scott Augustine was fined $2 million on a single misdemeanor charge and placed on three years’ probation. The company, a division of Arizant Inc., which was sold to Citigroup Venture Capital Equity Partners in August, had earlier paid the government $7.5 million to settle a civil lawsuit related to the criminal case. Augustine executives were indicted in early 2003 after undercover FBI agents posing as representatives of a medical supply company learned that the company was wrongly advising health care providers that they could seek Medicare reimbursement for Warm Up, a bandage with warm air that circulated over chronic deep wounds. SECURITIES FRAUD Bankers for EarthLink founder settle fraud suit Los Angeles (AP)-Former bankers for EarthLink Inc. co-founder Reed Slatkin have agreed to pay $26.5 million to settle a lawsuit alleging that they had helped him appear to be an investment advisor while he operated a multimillion-dollar Ponzi scheme. The defendants include Union Bank of California and Bank of Orange County. The documents didn’t disclose how much each of the defendants and their insurers was to provide toward the $26.5 million. The lawsuit accused the bankers of participating in fraud by providing Slatkin with credit and overdraft protection, allowing him to commingle personal and investor funds and lending their prestige to his operations. In 2003, Slatkin was sentenced to 14 years in prison and ordered to pay $240 million in restitution after he pleaded guilty to fraud, conspiracy and money laundering. SHAREHOLDER SUIT $50 million payout to settle fraud charges Newark, N.J. (AP)-Three companies have agreed to pay $50 million to settle charges that they defrauded investors in Pimco Funds by not disclosing a market-timing arrangement. In return, the Securities and Exchange Commission (SEC) agreed to drop a lawsuit it filed in May against the companies, PA Fund Management LLC, PEA Capital LLC and PA Distributors LLC. The settlement, consisting of a $40 million penalty and $10 million disgorgement of ill-gotten gains, is to be distributed to shareholders whose funds were affected by a market-timing arrangement, which the SEC deems illegal. The SEC suit followed a state regulators’ suit. Both maintained that investors were cheated when the companies allowed a major client to engage in market-timing trades of more than $4 billion. The state suit was settled for $18 million. WRONGFUL DEATH Nursing home company settles suits for $1.3M Little Rock, Ark. (AP)-A nursing home company accused of mistreatment and neglect has reached a $1.3 million settlement that resolves a series of lawsuits and investigations at 13 nursing homes run by Advocat Inc. The investigations involved 27 cases, all but one involving a death. The state attorney general said that mistreatment or neglect caused as many as 14 of the deaths. Under the settlement, $300,000 will go toward improvement of training and patient care, $400,000 toward the Arkansas Medicaid Program Trust Fund and $600,000 on installation of sprinkler systems in the nursing homes.

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