CALIFORNIA : 20th Century Suit Accuses Quake Contractors of Fraud

Taking a novel approach to billing-fraud law, 20th Century Insurance Co. is using a California civil statute to sue a building contractor it alleges padded Northridge earthquake repair estimates and claims.

20th Century is suing John Kaldawi; Kaldawi’s company, Building Permit Consultants of Encino; and engineer Mesrop A. Mesrop of Burbank for $50 million, alleging that they prepared and submitted phony repair estimates and engineering reports.

Mesrop said he had not received a copy of the lawsuit and therefore could not comment on the allegations. Kaldawi did not return a call seeking comment.

The Woodland Hills-based insurance company, which was nearly bankrupted by the 1994 quake, is using a law previously employed by insurers fighting auto insurance fraud. The law allows a company to sue doctors and others it suspects of fraud after law enforcement authorities have been given two months to decide whether to pursue criminal prosecution. 20th Century’s suit is believed to be the first to use this statue to pursue a fraud case unrelated to auto claims.