NY Doctors Arrested in $279 Million Auto Insurance Fraud

The largest-ever auto insurance fraud involving New York’s no-fault insurance law resulted in the arrests of 36 doctors, lawyers and scam artists. The participants in this crime are accused of cheating insurance companies out of $279 million in bogus medical claims.

Auto Insurance Fraud Partners with Health Care Fraud

U.S. Attorney Preet Bharara explained in a news conference earlier this week those participating in the scam engaged in a number of crimes, including health care fraud, federal racketeering, mail fraud and money laundering.

Some of the money received from the false claims, which resulted in $113 million in actual losses for insurance companies, was spent on vacations in Mexico, shopping sprees at Saks Fifth Avenue and rides in limousines, Bharara said.

Of the 36 people arrested, 10 were physicians and three were lawyers.

No-Fault Insurance Law Exploited by Ring

The ring, which was in operation since 2007 across medical clinics in Brooklyn and the Bronx, systematically exploited the state’s no-fault insurance, investigators said. The no-fault law allows car accident victims to receive up to $50,000 in benefits per person, no matter who is at fault.

To best exploit the law, the participants incorporated what Bharara called a “colossal criminal trifecta” into their strategy by employing experts from the medical, legal and insurance systems. They relied on so-called ambulance chasers to convince victims of car accidents to seek unnecessary care at corrupt clinics in exchange for kickbacks of up to $3,000 per patient.

After the victims sought care, doctors would prescribe physical therapy, acupuncture and other treatments to every patient no matter their condition, sometimes for as many as five days each week. Then, the clinics referred people to lawyers who filed baseless personal injury lawsuits.

The defendants are also accused of laundering proceeds from fake billing through cash-checking outlets and shell companies. Investigators say many of the participants face up to 20 years in prison if they’re convicted of the highest offense.