CareFirst adds rabbis, faith groups to $66M racketeering suit

CareFirst of Maryland has named several Jewish leaders, institutions and property owners as defendants in its $66 million racketeering lawsuit against two brothers, expanding its allegations of a conspiracy the insurer described as one “of breathtaking scale and audacity.”

In an amended complaint filed Monday in federal court, the health insurance company added more than 30 parties to its claim against ex-insurance broker Avraham Rappaport and his brother, financial adviser Eliezer Rappaport.

The lawsuit accuses the Rappaports of falsifying residency records for Israeli and out-of-state clients to make them eligible for CareFirst benefits available only to Maryland residents. According to the amended complaint, the Baltimore-based insurer paid more than $66.7 million on 32,510 claims for 355 allegedly fraudulent subscribers.

The Rappaports, meanwhile, allegedly collected hundreds of thousands of dollars in commissions from those policies, the suit also alleges.

CareFirst attorneys wrote this week that the investigation remains active and the company is “continually uncovering more evidence.”

“The Rappaport conspiracy against CareFirst was successful,” the company’s attorneys wrote, noting the years it has taken to unravel the alleged scheme. “There can be no doubt about that.”

A CareFirst spokesperson declined to comment on the pending litigation. Attorneys for the Rappaport brothers, including the newly added and incarcerated lawyer Jacob Rappaport, did not respond to requests for comment.

The company’s initial complaint, filed in June, sought $50 million in damages against the Rappaports and 20 “John Doe” defendants. This week’s amended filing identified nearly 100 additional patients and about $15 million more in payouts allegedly tied to the conspiracy.

The lawsuit, filed under a racketeering law enacted to combat the Mafia and other organized crime groups, alleges that the Rappaports used a network of property owners, charities and overseas referrers to submit fraudulent claims and obtain insurance payouts.

Although this week’s amended complaint added dozens of defendants, CareFirst maintains that Avraham Rappaport, an Olney resident whose brokerage license was revoked, was the “chief architect” of the alleged scheme.

The lawsuit accuses the brothers of using their insurance brokerage, financial advising and legal services to initiate, support and protect fraudulent health insurance policies.

According to the complaint, the Rappaports also “relied extensively” on an “international network” of referrers, property owners, religious institutions and service providers to make clients appear to be Maryland residents and avoid scrutiny. The network allegedly helped secure medical coverage for people living in New York, New Jersey and Israel. The lawsuit also states that many, if not most, of the medical services were provided outside Maryland.

The company alleges the improper referrals primarily came from certain institutions and their leaders, with one exception: an Israeli resident whom the insurer described as an “intermediary” between the Rappaports and international clients.

For instance, CareFirst described Bikur Cholim of Baltimore, a volunteer service provider, as the “most involved” organization identified so far. The organization says on its website that it assists Jewish people who are ill or hospitalized by providing kosher meals, transportation, medical equipment and other resources.

But CareFirst described the nonprofit this week as a “major referrer” of clients to the Rappaports and alleged that its volunteers owned or had ties to many properties falsely listed as the homes of patients who did not live in Maryland.

The complaint also alleges that Rabbi Aaron Pinchos Rabinowitz, the nonprofit’s executive, helped conceal the alleged residency fraud by contacting CareFirst in 2022 “to vouch” for the clients.

Reached by phone Wednesday morning, Rabinowitz referred questions to an attorney but did not immediately provide the attorney’s contact information. As of Wednesday, federal court records did not list an attorney for Rabinowitz or Bikur Cholim.

Court records show that, at the peak of the alleged scheme, two Northwest Baltimore addresses were listed as the residences of 10 and 21 policyholders, respectively. A nearby complex of 10 adjoining duplexes was also listed as home to 75 subscribers linked to more than $15.8 million in paid claims.

Defendants tied to the properties include individual landowners, volunteers and rabbis. The lawsuit alleges that some institutions also referred clients to the Rappaports.

The complaint alleges that the Kahal Chassidim Kedushas Yisroel congregation owned more than 20 properties whose addresses were used on policies sold by the Rappaports. The congregation’s leader, attorney Michael “Mordechai” Snider, declined to comment Wednesday.

The complaint also alleges that Ner Israel Rabbinical College in Pikesville allowed the brothers to use its properties as addresses on health insurance policies. CareFirst says it has identified hundreds of claims tied to those addresses, resulting in millions of dollars in losses. The insurer is still “investigating the extent” of the college’s involvement, according to the complaint.

The Ner Israel Rabbinical College did not respond to a request for comment.

According to the complaint, the Rappaports’ “reach was broad,” extending through businesses, institutions and their own reputations. One New York resident whose 2022 policy was rescinded last year said a Florida addiction treatment provider referred her to Avraham Rappaport.

The brothers have not directly addressed the allegations in court. Instead, they contend that CareFirst filed the lawsuit after the statute of limitations expired, citing the company’s investigation dating to March 2022.

The law sets a four-year deadline for filing a racketeering lawsuit, beginning when the alleged injury occurred or was discovered. The Rappaports argue that CareFirst’s lawsuit, filed in mid-June, missed that deadline and should be dismissed.

“A complete, or even more fulsome, understanding of the facts underlying the alleged injury is not required to start the clock on the statute of limitations,” the brothers’ Aug. 28 motions state.

As of Wednesday, a federal judge had not issued an order on that motion.

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