Feds Dismantle NYC Auto Insurance Fraud Ring
By THE ASSOCIATED PRESS
Published: February 29, 2012 at 8:40 PM ET
NEW YORK (AP) — A cadre of corrupt doctors and scam artists sought to cheat auto insurance companies out of $279 million in bogus medical claims — the largest-ever fraud involving New York’s no-fault law, authorities said Wednesday.
The investigation resulted in federal racketeering, health care fraud, mail fraud and money laundering charges against 36 people, mainly of Russian descent. They include 10 physicians and three lawyers. One had the nickname “KGB.”
At a news conference, U.S. Attorney Preet Bharara said while the false claims totaled $279 million, the actual loss to private insurers was $113 million. Some of the ill-gotten gains were spent on vacations in Mexico, shopping sprees at Saks Fifth Avenue and rides in limousines, he said.
The charges “expose a colossal criminal trifecta, as the fraud’s tentacles simultaneously reached into the medical system, the legal system and the insurance system, pulling out cash to fund the defendants’ lavish lifestyles,” he said.
Since 2007, the ring operated a chain of medical clinics in Brooklyn and the Bronx that systematically exploited the state’s no-fault insurance law, authorities said. The law allows car accident victims to get up to $50,000 in benefits per person, no matter who was at fault.
The fraud relied on ambulance chasers — called “runners” — to convince real victims of car accidents to seek unnecessary care at the corrupt clinics in exchange for kickbacks of up to $3,000 per patient, authorities said.
Doctors would prescribe physical therapy, acupuncture and other treatments to every patient no matter what their condition, sometimes five times a week. Authorities allege the clinics also referred people to lawyers who filed baseless personal injury lawsuits.
“The accidents were real but the claims were not,” said Janice Fedarcyk, head of the FBI’s New York office.
The probe relied in part on two New York Police Department undercover investigators posing as accident victims. The clinics gave them neck and back braces even though it was clear they had no injuries, authorities said.
On visits to a chiropractor, all the officers were expected to do was “sign in, say hello and leave,” Police Commissioner Raymond Kelly said.
The defendants also are accused of laundering proceeds from the bogus billing through cash-checking outlets and shell companies. Many of them face up to 20 years in prison if convicted of the most serious charges.
Prosecutors declined to identify specific insurance companies.
Posted on March 1, 2012, in insurance, Private Investigations, Private Investigators and tagged insurance claims, insurance fraud, investigations, private investigator, surveillance, workers comp, workers compensation. Bookmark the permalink. Leave a comment.