Manhattan U.S. Attorney and FBI Impose Charges Against Largest No-Fault Automobile Insurance Fraud Ring to Date

On February 29, 2012, 36 individuals, including ten doctors, two acupuncture practitioners, two chiropractic practitioners and three lawyers, were charged with the largest single no-fault insurance fraud scheme in history. The defendants indicted were responsible for defrauding insurance companies of more than $279 million under New York’s no-fault automobile insurance law, whereby drivers and passengers can obtain as much as $50,000 in benefits for accident-related injuries, regardless of fault.

Charges in the indictment include conspiracies to commit racketeering, health-care fraud and money laundering. The ring, run by a group of mostly Russian-born United States residents, used at least 100 “medical clinics” to bill fraudulent charges to no-fault automobile insurers. Attorneys would then file fraudulent personal injury claims and suits to make additional money. The ring would recruit people who had been in accidents for the clinics, then billed insurers for unneeded treatments and procedures that were never performed. Doctors would prescribe physical therapy, acupuncture and other treatments to every patient no matter their condition for up to five days a week. According to Janice Fedarcyk, the FBI’s New York director, the accidents were real, but the injuries that were claimed were not.

Doctors that were indicted in this fraud ring, include: Sergey Gabinsky, Tatyana Gabinskaya, Joseph Vitoulis, Lauretta Grzegorczyk, Eva Gateva, Zuheir Said, David Thomas, Billy Geris, Mark Shapiro and Robert Della Badia. Acupuncture practitioners indicted include Michelle Glick and Pavel Poznansky. Chiropractic practitioners indicted include Chad Greenshner and Constantine Voytenko. Attorneys indicted include Matthew Conroy, Maria Diglio and Sol Naimark.

It is highly recommended that carriers and their SIU Departments investigate whether any of the above-named medical providers received any payments through your respective no-fault departments since 2007. If so, according to this indictment, the claimants either never received treatment that was billed for or they received treatment that was unnecessary.

We expect reforms to be made to the no-fault system as a result of this massive no-fault scheme. For example, Brooklyn District Attorney Charles Hynes and State Senator Martin Golden stated that they want to make it a felony to stage an accident and act as a “runner” by steering “patients” to no-fault medical clinics in exchange for payments. They would also like for there to be a ban on any medical provider convicted of no-fault fraud from receiving payments under the no-fault system, as well as fine them. They would also allow for more time for investigations of specific claims, require arbitration of disputed no-fault claims and require health-care providers to document medical necessity for services billed.

We will continue to keep you advised of developments if any additional details emerge concerning the no-fault ring, or legislation is enacted as a result of the no-fault ring.