Catch of the Week: 13 Conspirators Busted in $100 Million No-Fault Insurance Fraud
The U.S. Attorney this week announced the arrest of doctors, businesspeople, an attorney, a New York police officer, and several others in one of the largest no-fault automobile insurance fraud takedowns in history.
The investigation leading to their arrest was conducted by the U.S. Attorney’s Office for the Southern District of New York, the FBI, and the Westchester County District Attorney’s Office. The charges were set forth in two separate indictments: United States v. Alexander Gulkarov and United States v. Bradley Pierre, et al.
Westchester County District Attorney Miriam E. Rocah said: “This case is a perfect example of federal, state and local law enforcement working in partnership to investigate and take down two criminal organizations that allegedly defrauded insurance companies and exploited vulnerable individuals by subjecting them to unnecessary, harmful, and sometimes painful, medical treatments for the sake of greed and profit.”
The Insurance Fraud Allegations
New York and New Jersey no-fault insurance laws require automatic payment of claims for certain types of accidents. Insurance companies pay medical service providers directly for the treatment they provide to accident victims, without the need to bill the victims themselves. This process resolves certain claims without apportioning blame, avoiding protracted disputes and the high cost of investigation. The flipside is that the ease of obtaining automatic payments is a siren call to fraudsters.
According to the allegations, the Gulkarov and Pierre conspirators engaged in the same schemes but with different players. In both cases, a group of conspirators fraudulently owned and controlled numerous medical professional corporations, including medical clinics, acupuncture and chiropractic practices, and an MRI center. The owners illegally paid licensed medical professionals to use their licenses to incorporate the professional corporations.
To make the schemes work, both groups of conspirators paid hundreds of thousands in bribes to obtain accident victim information and then pressured them to receive unnecessary medical treatment at the clinics fraudulently owned by the conspirators. The conspirators defrauded insurance companies by billing for these unnecessary, harmful, and excessive medical treatments.
The Gulkarov conspirators laundered the proceeds of the fraud scheme through law firms, check-cashing entities, and shell companies, and used the money to pay for luxury cars, watches, and vacations. When certain members of the conspiracy learned that they were under federal criminal investigation, they obstructed justice by fabricating documents, lying to law enforcement, and committing perjury before a federal grand jury.
The Pierre conspirators laundered the proceeds of the fraud scheme through phony loan arrangements and shell companies.
All told, the Gulkarov conspirators billed insurance companies for more than $30 million in fraudulent medical treatments, and the Pierre conspirators billed insurance companies for more than $70 million.
Whistleblowers are Key to Stopping Insurance Fraud
Whistleblowers are critical to stopping healthcare fraud in its place, but unfortunately, the New York False Claims Act does not yet contain a provision for blowing the whistle on private insurance fraud. This type of scheme may have been exposed and stopped years ago if the current whistleblower rewards regime included provisions for reporting private insurance fraud. California and Illinois both have provisions for private insurance whistleblowers, and each has been successful in ferreting out millions in private insurance fraud. It is time for New York to follow suit and vest insurance fraud whistleblowers with the authority and incentives to chart a similar course.
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