Fraud affects us all, especially when done on a wide scale and involving multiple conspirators and victims. A recent indictment of thirteen individuals shows that anyone is capable of fraud.
In this case, the defendants include a law enforcement officer, healthcare employees, a paralegal, and even 911 operators who helped perpetrate a collective $100 million no-fault auto insurance fraud scheme in New York and New Jersey.
One of “The Largest in History”
According to U.S. Attorney Damian Williams, “The thirteen defendants charged in [these indictments] are alleged to have collectively perpetrated one of the largest no-fault insurance frauds in history.”
This included going so far as bribing individuals such as hospital employees and even 911 operators to get confidential accident victim information. While no-fault insurance was designed to make getting benefits easier and insurance more affordable, this kind of fraud is what the industry blames for the ever-increasing costs of insurance throughout the country.
Investigations Began in 2017
The investigations themselves have been years in the making. The U.S. Attorney’s Office for the Southern District of New York, the FBI, and the Westchester County District Attorney’s Office have collaborated on these investigations regarding multiple organizations involved in this ongoing fraud since 2017. These schemes earned the involved parties millions of dollars in illegal profits.
The Relative Ease of Defrauding No-Fault Claims
Part of the ability to perpetrate this kind of fraud seemed to lie in the relative ease of collecting no-fault benefits when benefits fall under a specific monetary threshold.
No-fault insurance laws in both New York and New Jersey, where the fraud was perpetrated, require that the no-fault auto insurance company automatically pay claims for some accidents, providing that the claims are legitimate. This means that insurance companies will often pay healthcare providers directly for their services without first going through the victim.
Two Separate Indictments
This investigation has led to two specific indictments. The Gulkarov Indictment has charged eight individuals with participating in fraud. The Pierre Indictment has separately charged five more individuals with participating in other fraudulent activity.
These co-conspirators owned and controlled multiple medical professional corporations, paying medical professionals to use their licenses to incorporate them, and bribed healthcare employees and 911 operators for information regarding victims.
These individuals defrauded the associated insurance companies by billing them for “unnecessary, harmful, and excessive medical treatments” and lying to their representatives. They further laundered that money through check-cashing companies, shell companies, phony loan arrangements, and law firms.
Co-conspirators face between 37 years to 5 years behind bars.
The Many Faces of Insurance Fraud
While most people think of individual victims defrauding insurance companies when they think of insurance fraud, it can be perpetrated by many types of individuals, from the victim, to the insurers themselves, to these types of complicated conspiracies involving the coordinated effort of multiple people.
Medicare alone has estimated an improper payment rate of approximately 6.27 percent, which equates to $25.74 billion in fraudulent payments.
In this case, the fraudulent activity was directed at the no-fault auto insurance industry. This type of fraud can fall into one of two categories. Soft fraud refers specifically to exaggerated damages claimed after a legitimate accident, which is what these specific cases fall into. The other, hard fraud, refers to staging an accident for the explicit purpose of filing an insurance claim.
No-Fault Laws Open the Door for Fraudulent Activity
New York has no-fault insurance laws that cover benefits for individuals who were involved in a motor vehicle accident up to a certain threshold. This is despite who was at fault for the accident. Unfortunately, these laws also open the possibility for those who want to defraud the industry. According to the Insurance Information Institute, these types of fraud may have driven up insurance costs here in New York by as much as $229 million.
On the flip side, however, because of the prevalence of insurance fraud in the state, many legitimate claims are highly questioned, and many innocent people are looked at suspiciously when trying to collect on valid claims. When the insurance company suspects fraud, they may turn it over to state or federal law enforcement agencies to investigate, leading to a criminal investigation.
If you have found yourself on the receiving end of an insurance company’s overzealous suspicions, it is time to get skilled legal advice. Contact the insurance fraud attorneys at Bukh Law Firm to understand your legal options.
