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RICO Case Targets Insurance Fraud

In Brooklyn, N.Y., (search) it’s possible to make a living by doing nothing more than directing accident victims to the right medical clinics. That’s because certain clinics have abundant cash on hand to pay “runners” -- the people who steer accident victims to the medical clinics -- hundreds and sometimes thousands of dollars for every person brought in for treatment. 

Increasingly, the money to do this comes from billing insurance carriers for medical services that were never rendered. Although many observers have been aware of isolated groups of medical clinics who pay for new patients, it is only now, with the filing of a massive civil RICO (search) action in New York State Supreme Court by several insurance companies, that the public is becoming aware of the depth and intricacy of such insurance fraud schemes.   

The RICO action, filed by Nationwide, Allstate and Encompass insurance companies, alleges that Alex Buziashvili, Gary Grinberg, Yuri Grinberg, Lyubov Mirvis, Mark Mirvis, Edouard Rozenthal, Oleg Mirochnik, Yefim Gertopsky and others created a company called Parallel Management. Parallel Management, which police say has ties to Russian organized crime (search), functioned as a command center for layers of businesses below it, and at the bottom of the structure was a group of clinics nominally owned by 10 doctors. 

The complaint avers that those doctors, who are barred by two separate state laws from delegating their practices’ management responsibilities to non-doctors, did just that. In exchange for commission or a flat fee, the doctors agreed to limit their involvement to only their signatures and allow non-doctors to run the clinics, which included everything from rendering chiropractic treatment to the staging of accidents. 

But the owners of Parallel Management were not content to pay runners to steer genuine accident victims their way. In addition to the staged car accidents, there is evidence that bribes were paid to New York City Police administrative aids for wholly fictitious police accident reports. Insurance company claim representatives began to suspect a scheme when they noticed that some of the addresses of different accident victims were the same, that identical medical test results from different dates were forwarded for payment (suggesting that previous medical reports had been recycled), or that one individual would have several car accidents in a short span of time. 

They also noticed that the medical clinics the victims attended would run the same battery of tests, and administer the same treatment, even if differing injuries had been diagnosed. When the accident victims were examined under oath, many denied that they had received the treatment for which the insurance companies were billed.

Many of the scheme’s participants grew up in the states of the former Soviet Union (search). Michael Fella of the National Insurance Crime Bureau (search) said that Russian immigrants have used the auto insurance system to create a vast criminal enterprise. 

Lawyers, too, played an integral role in the day-to-day activities of the conspiracy. It’s alleged that two different lawyers and five law firms functioned, in essence, as “house counsel” to the clinics. When an insurance company denied a clinic’s patient’s medical bill, the lawyers would file suit against the company or file a demand for arbitration. When the patients had treated to the point that their injury was severe enough to translate to a big dollar settlement, they would file a lawsuit against those who had allegedly injured them. 

“Though insurance fraud is common, this is the first time we have seen such an elaborate structure of companies set up for the sole purpose, apparently, of committing insurance fraud,” says Vince Coyne, Director of the Special Investigations Unit at Nationwide Insurance, one of the plaintiffs in the civil RICO suit against Parallel Management and the others. “It’s clear to us that smart lawyers were instrumental to the ongoing scheme to defraud insurance companies out of millions of dollars.”

The RICO lawsuit shows that at the confluence of insurance money, new immigrants and lawyers, we can expect to find fraud. Much of our system of insurance depends on a relationship of trust. Insurance carriers are, after all, in the unenviable position of having to trust that the medical services for which they are billed were actually rendered. The system may have worked well at one time, but there is increasing evidence that in today’s America, it does not.  

 

Matt Hayes began practicing immigration law shortly after graduating from Pace University School of Law in 1994, representing new immigrants in civil and criminal matters. He is the author of The New Immigration Law and Practice, to be published in October.

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