Maryland brothers argue CareFirst’s $50M fraud lawsuit is too late

Luke Parker, Baltimore SunBaltimore Sun

Two Maryland brothers accused of an international healthcare conspiracy argued Friday that CareFirst of Maryland’s racketeering lawsuit against them was filed after the statute of limitations had passed. As such, the company’s $50 million claim should be dismissed, they say.

Ex-insurance broker Avraham Rappaport and his brother, financial adviser Eliezer Rappaport, are accused of flying clients to Maryland from other states and Israel to receive specialized care under CareFirst’s domestic insurance policies.

According to the 30-page complaint, at least 259 patients were improperly reported as living in Maryland between 2018 and 2022. Together, they received unqualified benefits topping $51.1 million in CareFirst payouts, the insurer said, while the “Rappaport enterprise” netted hundreds of thousands of dollars in commissions.

In their lawsuit, attorneys for the Baltimore-based insurance company described the alleged scheme as intricate, unquestionably successful and “breathtaking” in scale.

On Friday, the Rappaports’ attorneys said they would “avoid unnecessarily belaboring” disagreements on the allegations to focus on the statute or limitations.

Referencing a company report, the brothers say CareFirst began investigating Avraham Rappaport’s “billing practices” in March 2022. Because the law allows injured parties to file a racketeering lawsuit within four years of their injury, or their discovery of the injury, the Rappaports say CareFirst’s lawsuit in mid-June should be tossed out.

“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,” Friday’s motion states. It did not address the allegations themselves,

A spokesperson for CareFirst declined to comment on the pending litigation.

Attorneys for both Rappaport brothers did not respond to media inquiries on Monday.

The June lawsuit was filed under the Racketeer Influenced and Corrupt Organizations Act (RICO), a bill established to combat the mafia and other organized crime syndicates.

It describes an interstate and international network of service providers, property owners, religious organizations and charities that helped establish and support fake identities and fraudulent claims.

In order to sell invalid policies, the Rappaports allegedly instructed their clients to apply for insurance using Baltimore-area addresses controlled by themselves or their associates. Other entities would then provide referrals, transportation, lodging and documentation to bolster the claims, even when CareFirst challenged them, according to the lawsuit.

Although criminal charges have not been filed against the Rappaport brothers, CareFirst accused them of federal wire fraud in civil court, saying they “had no reason to suspect” anything was wrong “until the volume and nature of the claims” spiked.

According to the complaint, one address, the lawsuit states, had 21 policy holders registered to it, amassing 473 claims in total. Another less than a mile away allegedly housed 10 subscribers who made 655 claims.

Similarly, between 2019 and 2022, Avraham Rappaport allegedly sold 58 policies to subscribers with addresses at a string of ten side-by-side duplexes in Baltimore. Those homes, which helped accrue $11.3 million in CareFirst payments, were also less than a mile away from the others.

Early in its complaint, the insurance company referenced the criminal case against attorney Jacob Rappaport, the defendants’ brother, who was sentenced to 15 months in prison for a bank fraud conspiracy earlier this year, barely a week after the healthcare lawsuit was filed.

“Indeed,” CareFirst’s lawyers wrote, “it seems that fraud has become something of a family tradition for the Rappaports.”

Have a news tip? Contact Luke Parker at [email protected], 410-725-6214, or on X @lparkernews.