NYSID Selects Top 10 ‘Rotten Apples’ in 2003 Fraud Review

March 9, 2004

New York’s Superintendent of Insurance Gregory V. Serio announced the his Department’s “Top 10” list of the worst insurance fraud cases in the state for 2003.

“This list of ‘Rotten Apples’ is a powerful reminder that insurance fraud is far from a victimless crime. Consumers may pay for this crime through higher insurance premiums, cost of goods and in some cases, injury and even death,” Serio stated. “Insurance fraud is a serious crime which we are aggressively fighting, evidenced by the record 811 fraud arrests made in 2003. As we win the fight on fraud, we can control costs and ensure that New Yorkers receive comprehensive and affordable insurance.”

Serio noted the support the NYSID has had from Governor Pataki and the success of undercover operations in cooperation with other law enforcement agencies.

Here are the Department’s selections, as set out in the NYSID’s bulletin:
MURDER — A Brooklyn man was accused of staging an accident that resulted in the death of a Queens grandmother. He was charged with murder in the 2nd degree, manslaughter in the 2nd degree, criminally negligent homicide and conspiracy to commit insurance fraud.
WORLD TRADE CENTER FRAUD — A Broome County man turned himself in on charges of defrauding Combined Life Insurance Company of $20,000. The defendant filed a death benefit claim stating that his daughter died in the attack on September 11. However, his ex-wife informed the Department that their daughter was alive and living outside New York State.
GOTCHA — In the first phase of an undercover investigation known as “Operation Gateway,” 51 people, including one doctor, were arrested for their role in a no-fault insurance fraud ring that defrauded insurers of tens of millions of dollars. In this scheme, individuals called ‘runners’ were paid to recruit people to pose as auto accident victims, who were then paid several hundred dollars to claim they were injured in an accident. The ‘victims’ were then steered to medical facilities that were part of the scheme where unscrupulous individuals billed insurance companies for unnecessary treatment and lawyers filed bogus lawsuits. The investigation was conducted by the Department’s Frauds Bureau, the New York Police Department, and the Brooklyn District Attorney’s Office.
23-COUNT INDICTMENT — A Long Island body shop, its owner and its manager were indicted on 23 counts of insurance fraud. According to the indictment, the defendants engaged in activity where they systematically enhanced the damages to vehicles or failed to do the repair work for which they were paid.
TARGETING NO-FAULT FRAUD — Nineteen members of two insurance fraud rings operating in Queens and Nassau Counties were arrested on various fraud charges. Those arrested included three personal injury attorneys, two former New York City police officers, two insurance brokers, several middlemen, and the operators of various medical clinics. The group ran a personal injury scheme that involved steering auto accident victims to corrupt medical facilities and billing for medical treatments that were unnecessary or never performed.
SWEEPING UP — Eighteen Suffolk County residents were arrested for defrauding the State’s workers’ compensation system of $550,000. Most of the defendants were gainfully employed while fraudulently collecting benefit checks. Among those arrested were two teachers, the owner/operator of a limousine service, and a chiropractor.
BUSTED — The ringleader and four participants in a Queens-based fraud scheme were arrested for their involvement in the theft of luxury vehicles. Some vehicles were stolen off the street or ‘given up’ by their owners to collect the insurance settlements. Cars involved included a Mercedes Benz, a BMW, a Montero and a Hummer.
A GOOD DAY’S WORK — A two-year joint investigation by the Frauds Bureau, the Bronx District Attorney’s Office and the New York City Police Department led to the arrest of 16 people, including one former and four active New York City Police Officers, charged with the theft of $750,000 from seven insurance companies. The scheme involved the submission of fraudulent auto accident reports in order to receive compensation from the insurers.
WHAT A TEAM — The Department’s Frauds Bureau teamed up with other state and local authorities in a roundup of nine individuals suspected of cheating the State’s workers’ compensation insurance system. The nine suspects were part of a larger sweep of 15 fraud arrests in cases representing more than $1.1 million. The sweep was conducted in the Albany area over a three-week period in November and was the culmination of a six-month undercover operation.
INDICTED — A 263-count indictment was filed against four psychotherapists for their involvement in a no-fault fraud ring. A licensed psychologist and three psychotherapists in his employ at medical clinics throughout New York City and Long Island were charged with fraudulently billing for counseling services they claimed were provided to hundreds of auto accident victims. According to the indictment, the defendants engaged in a conspiracy to submit falsified no-fault claims totaling approximately $88,000.

Editor’s Note:
The IJ congratulates Superintendent Serio and the NYSID for a job well done. Other jurisdictions could profit from New York’s example. We look forward to the 2004 ‘Top 10’ list.

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