Geico Files Three Medical Fraud-Related Lawsuits

Millions of dollars in alleged fraudulent billings for medical equipment and diagnostic tests are at the center of three federal lawsuits filed last week by Geico.

Geico said it had brought the separate legal actions against three different business operations that allegedly exploited New York State's no-fault automobile insurance law. The defendants include a medical equipment supplier and its attorneys, a Brooklyn radiology practice and a Queens medical facility.

Berkshire Hathaway Inc.'s direct writer of auto insurance is seeking more than $9 million in damages and wants to nullify another $8 million in pending medical claims.

In one of the lawsuits, a Geico attorney claims that individuals at a medical practice known as Clearview of Brooklyn Medical allegedly masterminded a scheme in which it billed the insurer $2.5 million during a 10-month period. Dr. Tatyana Gabinskaya allegedly was recruited and her medical license was "purchased" by other defendants in order to comply with state incorporation requirements in New York, according to a suit filed in the U.S. District Court for the Eastern District of New York.

"Dr. Gabinskaya has never been the true shareholder, director, or officer of Clearview, and has never had any true ownership interest in, or control over the professional corporation," the lawsuit states.

The lawsuit identifies Gabinskaya as a pediatrician who has been listed as the owner of five medical corporations in the past three years, including two practices that billed Geico for a combined $2.3 million in a 12-month period.

In July, Gabinskaya allegedly told members of Geico's special investigative unit that she visits Clearview a few hours a week, and had no actual input or involvement into the operation. She received a weekly salary of $1,500 from Clearview, according to the lawsuit. Mikhail Zemlyansky is identified in court records as the individual who allegedly secretly owned and controlled Clearview. He and several John Doe Corporations are also identified as defendants.

Geico's suit states Clearview was ineligible for reimbursement under the state's no-fault statute because it was unlawfully incorporated, was engaged in unlawful fee-splitting with non-physicians and was allegedly owned by a physician who did not practice medicine through the professional corporation.

During a phone call placed Sept. 27 to a Brooklyn medical practice, a woman who identified herself as Dr. Tatyana Gabinskaya declined to comment.

A second lawsuit involves six medical equipment supply companies and their Long Island-based attorneys. Those individuals allegedly exaggerated charges on submitted claims or in some cases did not provide them at all, according to Geico. That case seeks $750,000 in damages and a court order nullifying $5.8 million in claims.

The third case seeks $6.5 million damages from a Queens-based medical facility that was allegedly secretly owned and operated by non-physicians, which is in violation of state law. An order to nullify $1 million in claims has also been sought in that case. Geico identified that facility as Hollis Medical Care P.C. Three individuals were identified as nominal owner defendants: Dr. Prasad Chalasani, Dr. Elizabeth Goldstein, and Dr. David Hsu. The following individuals were also named as "management defendants:" Simon Davydov, Mikhail Davydov, Ruben Davydov, Emanuel David, Berta Nektalov, Sophia David, and 10 John Doe defendants.

Geico filed a similar case in June against a New York-based group, alleging that the group received hundreds of thousands of dollars in payment for fraudulent radiology claims (BestWire, June 14, 2010). Among the 10 defendants in that case were two physicians, two medical professional corporations, a non-physician, two attorneys and a Long island, N.Y. law firm.

Medical fraud has become the single biggest drain on New York State's property/casualty industry, according to Tom Lohmann, the Long Island, N.Y.-based director of National Insurance Crime Bureau's Area 7 (BestWire, Sept. 13, 2010). Lohmann said a rising level of criminal sophistication has prompted the NICB to continue forming medical fraud task forces.

Based in Chevy Chase, Md., Geico writes property/casualty business through four companies. The companies, collectively called the Government Employees Group, currently have a Best's Financial Strength Rating of A++ (Superior). The group is one of the top five personal auto writers in the United States, according to BestLink, which provides online access to A.M. Best's Global Insurance & Banking Database.

(By Al Slavin, senior associate editor, BestWeek)