California Court Revives $22.9M Insurance Fraud Lawsuit Alleging Attorney Aided Deception of GEICO

A California appellate court has revived a $22.9 million insurance fraud lawsuit alleging that an attorney helped clients deceive GEICO Indemnity Company with fabricated injury claims and nonexistent business losses. The ruling reverses a trial court dismissal and sends the case back to Orange County Superior Court, allowing a private citizen’s fraud allegations to proceed under California law.

The case traces back to a 2009 auto accident involving policyholder Omar Dauod. While Farmers Insurance paid policy limits after arbitration, a subsequent underinsured motorist claim and bad faith lawsuit against GEICO resulted in a jury verdict awarding Dauod $22.9 million. According to the fraud complaint, that verdict relied on exaggerated physical injuries, falsified business ventures, and misleading testimony regarding lost income and foreclosed properties.

The lawsuit was filed by former neighbor Jerilyn Henggeler, who said her firsthand observations conflicted sharply with the trial testimony. She alleged Dauod remained physically active years after the accident and never operated the Colorado development businesses described to GEICO and the jury. The complaint also claims documents submitted to support the loss included forged signatures, nonexistent companies, and escrow letters addressed to a minor child.

For claims professionals, the appellate court’s interpretation of the Insurance Frauds Prevention Act is the key takeaway. The California Court of Appeal clarified that the public disclosure bar applies only when a lawsuit is based on previously disclosed allegations of fraud, not when a relator uses public records or trial transcripts as evidence. This distinction may influence how insurers, SIU units, and defense counsel evaluate post-verdict fraud referrals and whistleblower complaints.

The decision does not determine whether fraud occurred, but it reinforces that insurers and private relators may rely on public filings, testimony, and records to construct fraud cases without automatically running afoul of statutory limits.