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N.Y. Unveils Plan to Shut Down Fraud Docs, Medical Mills

By | March 14, 2012

Dishonest doctors and medical mills in New York better watch out!

Following highly publicized crackdowns of major auto insurance fraud rings in the state, Gov. Andrew Cuomo unveiled a statewide initiative this month to bring down fraudsters that plague New York’s no-fault insurance payment system.

N.Y. Gov. Andrew Cuomo unveiled during his March 8 cabinet meeting an initiative to crack down on deceptive doctors and medical mills.

Under the new initiative, the Department of Financial Services is issuing a new regulation that will allow regulators to search for and ban doctors who engage in dishonest practices in the no-fault insurance system. The regulation implements a 2005 law that gives the department the power to regulate doctor participation in the system.

The department says it has already identified 135 medical providers whose billing practices have “raised concerns” regarding possible no-fault fraud. The regulators are searching for fraudulent doctors through audits as well as with help from law enforcement and insurance companies.

The regulators said letters are being sent to all of these 135 medical providers demanding more information. Failure to answer the letters could automatically lead to the medical provider getting banned from the no-fault system, the department said.

“The state has no tolerance for medical providers or doctors ripping off the system,” said Gov. Cuomo. “This affects all New Yorkers because we all pay the consequences with higher insurance premiums, and that’s why I asked the Department of Financial Services to take this action.”

DFS Superintendent Benjamin Lawsky added, “Rather than caring for victims of auto accidents, these doctors and other health care providers engage in scams, bilking millions of dollars from insurance companies each year.” Some of these doctors may have “rented out” their tax ID numbers and names to fraudulent medical practices in exchange for money, authorities said.

Taking Down Auto Fraud Rings

Gov. Cuomo’s initiative follows recent high-profile crackdowns of two auto insurance fraud organizations in the state.

At the Feb. 29 news conference, U.S. Attorney for the Southern District of New York Preet Bharara announced the indictment of 36 people in connection with a massive auto insurance scam. (AP Photo/Seth Wenig)

On Feb. 29, authorities announced the takedown of what they described as the largest auto insurance fraud ring they have ever witnessed involving New York’s no-fault law.

The scheme involved a criminal gang based in New York City, 10 licensed doctors, three personal injury lawyers, thousands of patients, clinics in the Bronx, Brooklyn and Queens, and 105 legal corporate entities — all in an alleged attempt to bill $275 million in fraudulent charges to no-fault auto insurers.

All 36 defendants on connection to this case have been arrested and arraigned in federal courts. “We believe this is the single largest no-fault insurance fraud case in history,” said U.S. Attorney for the Southern District of New York Preet Bharara.

“As alleged, the scheme relied on a cadre of corrupt doctors who essentially peddled their medical licenses like a corner fraudster might sell fake IDs — except those medical licenses allowed unlawful entry, not to a club or a bar, but to a multi-billion dollar pool of insurance proceeds.”

Authorities said “runners” were paid to find passengers from real auto accidents and steer them to the clinics managed by the criminal gang.

Authorities said that, while purporting to be legitimate medical care clinics specializing in treating patients, the nofault clinics were, in fact, medical fraud mills that routinely billed auto insurance companies under the no-fault law for medical treatments that were either never provided and/or unnecessary.

In actuality, these clinics were not owned by medical professionals— instead medical professionals rented out their names and tax ID numbers to these clinics for money, officials alleged.

And on March 6, New York State Attorney General Eric Schneiderman announced the arrests of 16 individuals in Brooklyn for allegedly staging auto accidents to fraudulently receive insurance payouts.

He said the conspiracy involved the intentional crashing of cars into unsuspecting drivers as well as individuals agreeing to fake accidents with each other to fraudulently bill insurance carriers and collect illegal payouts. In all, the defendants submitted fraudulent insurance claims totaling $400,000, officials alleged.

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