New York State - Division of Criminal Justice Services

Investigation Squad, NICB, and insurance carriers resulted in the 2008 indictment andarrest of 13 defendants and 10 corporations for operating a “medical mill” that stolemore than $6 million from a dozen insurance companies. The investigation included aseries of undercover visits to the clinic – St. Nicholas Medical Care P.C. - and theexecution of extensive search warrants. The defendants include runners who stagedfraudulent car accidents and brought the supposedly injured “patients” to the clinic fortreatment; doctors and other health care professionals employed by the clinic whoprescribed unnecessary treatments and procedures, falsified records, and submittedfraudulent insurance claims; and the actual owner of the corrupt clinic who paid therunners to stage crashes and procure patients, directed the doctors and other staff intheir schemes, and concealed his ownership and control of the enterprise through aweb of corporations, management companies and related bank accounts. In addition totreating “staged accident” patients who had no actual injuries at all, the clinic prescribedsimilar fraudulent courses of treatment for patients who came in after being injured inreal accidents. In some instances, medical services billed for were provided only in partor not provided at all, and insurers were routinely billed for treatments and equipmentthat was medically unnecessary. An asset forfeiture action was also initiated. As thiscase continued to move toward trial in 2009, a related investigation led to an additionalarrest and indictment. Another long-term investigation and prosecution of a “medicalmill” enterprise that began in 2005 came to a close in 2009 with the sentencing of eightremaining defendants out of the original 16. Two ring leaders received prison sentencesof 2 to 6 years, another defendant was sentenced to 6 months in jail, and the othersreceived a variety of non-jail sentences. Asset forfeiture actions filed in the case havethus far resulted in the forfeiture of more than $4 million dollars, the majority of whichhas gone to make restitution to the various insurance companies victimized by thedefendants. The earlier trial conviction of a physician charged in this case was upheldon appeal. The Appellate Division specifically held that it was permissible for theprosecution’s expert witness to testify that the defendant, in the expert’s opinion, tookactions for which there was no reasonable medical explanation or justification, a rulingwhich may be useful for future prosecutions in this area.The Rackets Bureau has been conducting an investigation for several years intocrooked personal injury attorneys paying bribes to runners, hospital employees, andclinic owners to steer no-fault accident cases to them. Twelve individuals have beenconvicted as a result of this investigation, and in 2009, two attorneys pleaded guilty totax fraud, raising the number of convictions to 14. These two attorneys allowed apreviously convicted, disbarred attorney to continue the practice of law by setting up abranch office of their firm that was used as a front for his practice. The disbarredattorney gave them monthly cash payments for fronting his unlawful practice andallowed them to take some of his more lucrative cases for themselves. Thetwo attorneys used a shell corporation to share legal fees with their disbarred cohort.They pleaded guilty to failing to report the illegal cash income on their taxes.The C.E.O. of an industrial supply company was indicted and pleaded guilty thisyear to grand larceny and scheme to defraud for supplying numerous counterfeit partsto the Metropolitan Transit Authority (MTA) for installation on NYC buses and subways.He and his corporation are required to pay more than $125,000 in restitution and$10,000 in fines. A further condition of the plea and sentence is the dissolution of theNYS DIVISION OF CRIMINAL JUSTICE SERVICES MVTIFP BOARD / ANNUAL REPORT 2009 Page 27