A roundup of some of the more unusual items that crossed our desk recently.
Lawyer Pleads Guilty to Involvement in Massive No-Fault Automobile Insurance Fraud Scheme
Ten Defendants Have Now Pled Guilty
U.S. Attorney's OfficeMarch 15, 2013
Southern District of New York (212) 637-2600
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that Sol Naimark, an attorney, pled guilty to his role in two separate conspiracies to defraud private insurance companies under New York's no-fault automobile insurance law, including one charge related to the largest single no-fault automobile insurance fraud scheme ever charged. Naimark pled guilty yesterday before U.S. District Judge J. Paul Oetken. Recently, Alexander Sander, an owner and controller of several fraudulent no-fault clinics; Gregory Mikhalov, an owner and controller of medical clinics; Lynda Tadder, a manager at a no-fault clinic; and Chad Greenshner, a licensed chiropractor, also pled guilty to conspiracy to commit mail fraud and health care fraud in connection with the scheme before Judge Oetken. The five defendants were arrested in February 2012, along with 31 others, and charged with conspiracy to commit mail fraud and health care fraud in connection with a systemic scheme to defraud private insurance companies of more than $279 million under New York's no-fault automobile insurance law. Some of the defendants were also charged with racketeering and money laundering. A total of 10 defendants, including one licensed doctor, have now pled guilty. Naimark also pled guilty to a separate conspiracy to commit health care fraud.
Manhattan U.S. Attorney Preet Bharara said, "Sol Naimark actively solicited clients for whom he could churn out bogus lawsuits as part of a multi-million-dollar insurance fraud scheme. It is particularly egregious when an attorney uses his license to perpetrate a fraud."
According to the superseding information, other publicly filed information in the case, and the defendants' statements in open court:
Under New York State Law, every vehicle registered in New York State is required to have no-fault automobile insurance, which enables the driver and passengers of a registered and insured vehicle to obtain benefits of up to $50,000 per person for injuries sustained in an automobile accident, regardless of fault, (the "No-Fault Law"). The No-Fault Law requires prompt payment for medical treatment, thereby obviating the need for claimants to file personal injury lawsuits in order to be reimbursed. Under the No-Fault Law, patients can assign their rights to reimbursement from an insurance company to others, including medical clinics that provide treatment for their injuries. New York State Law also requires that all medical clinics in the state be incorporated, owned, operated, and/or controlled by a licensed medical practitioner in order to be eligible for reimbursement under the No-Fault Law. Insurance companies will not honor claims for medical treatments from a medical clinic that is not actually owned, operated, and controlled by a licensed medical practitioner.
In order to mislead New York authorities and private insurers, some of the defendants in this case who were the true owners of these medical clinics ("No-Fault clinic controllers") paid licensed medical practitioners, including doctors, to use their licenses to form the professional corporations through which the medical clinics would then bill the private insurers for the bogus medical treatments. Sandler owned, operated, and controlled at least four of these no-fault clinics, and Tadder was a manager at one of the clinics.
The No-Fault clinic controllers also instructed the clinic doctors to prescribe excessive and unwarranted referrals for various "modality treatments" for nearly every patient they saw. The treatments included physical therapy, acupuncture, and chiropractic treatments--as much as five times per week for each--and treatments for psychology, neurology, orthopedics, and range of motion, in addition to functional capacity tests. Clinic doctors also prescribed unnecessary MRI's, X-rays, orthopedics, and medical supplies. The No-Fault clinic controllers received thousands of dollars in kickbacks for patient referrals from the owners of the modality clinics ("modality controllers"). Mikhalov was a modality controller who admitted to owning modality clinics that purported to be owned by licensed doctors, as required by New York Law. Greenshner was a chiropractor who provided unnecessary medical treatments at one of the modality clinics.
Patients were also referred to personal injury lawyers to file lawsuits against the insurance companies arising out of their exaggerated injuries from automobile accidents. The success of these lawsuits hinged on how many medical treatments the patients received, providing the necessary incentive for the patients to receive multiple treatments at the no-fault and modality clinics. Naimark admitted to paying a No-Fault clinic controller to refer him patients that received unnecessary treatments so that he could file personal injury lawsuits on behalf of the patients. The second charge to which Naimark pled guilty relates to payments he made to a runner to bring him no-fault patients so that he could file personal injury lawsuits on their behalf.
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Naimark, 54, of Flushing, New York, pled guilty to two counts of conspiracy to commit health care fraud. He faces a maximum sentence of 20 years in prison. He is scheduled to be sentenced by Judge Oetken on July 22, 2013. Sandler and Mihalov each pled guilty to conspiracy to commit health care fraud and conspiracy to commit mail fraud, and each faces a maximum sentence of five years in prison. Tadder pled guilty to conspiracy to commit health care fraud and conspiracy to commit mail fraud and faces a maximum sentence of 30 years in prison. Greenshner pled guilty to conspiracy to commit health care fraud and faces a maximum sentence of 10 years in prison. Greenshner Mikhalov, Sandler, and Tadder are scheduled to be sentenced by Judge Oetken on July 1, July 8, July 9, and September 27, 2013, respectively.
U.S. Attorney Preet Bharara thanked the Federal Bureau of Investigation and the New York City Police Department for their continued outstanding work in this investigation.
The case is being prosecuted by the Office's Organized Crime Unit. Assistant U.S. Attorneys Daniel S. Goldman, Nicholas L. McQuaid, Carolina A. Fornos and Daniel S. Noble are in charge of the prosecution. Assistant U.S. Attorneys Jason L. Cowley and Martin Bell of the Office's Asset Forfeiture Unit are responsible for the forfeiture of assets.