N.J. AG, Insurance Fraud Prosecutor Obtain More than $3.5 Million in Civil Penalties from Practitioners

New Jersey Attorney General Peter Harvey announced that the Office of Insurance Fraud Prosecutor successfully argued two cases before the Superior Court which resulted in separate decisions that upheld the constitutionality of New Jersey’s Insurance Fraud Prevention Act and the awarding of more than $3.5 million in civil penalties as a result of complaints filed by the Office of Insurance Fraud Prosecutor. The cases represent the largest civil penalties to date in contested civil actions under the New Jersey Insurance Fraud Prevention Act.

“The significance of these decisions cannot be minimized,” Harvey said. “The cases challenged the very heart of New Jersey’s nationally recognized laws and efforts to attack insurance fraud and the Attorney General’s standing to bring actions under the statute. In both cases, Superior Court judges dismissed challenges to the Insurance Fraud Prevention Act, upholding the constitutionality of New Jersey’s statute. As a result of these cases, more than $3.5 million in civil penalties has been imposed upon corrupt medical service corporations, providers, and individual medical practitioners. These decisions serve to maintain the legitimacy of New Jersey’s recognized position as a national leader in attacking insurance fraud and related insurance crime.”

Division of Criminal Justice Director Vaughn McKoy and Insurance Fraud Prosecutor Greta Gooden Brown said that in the case of State v. HealthCare Integrated Services, et al (HIS), Morris County Superior Court Judge Charles Villanueva upheld the constitutionality of the Insurance Fraud Prevention Act and ordered HealthCare Integrated Services Inc. and four affiliated businesses to pay more than $2.57 million in civil fines as a result of committing 650 violations of the Act. In rejecting the contention that the Insurance Fraud Act violated the federal and state constitution, Judge Villanueva noted that HIS committed “intentional, coordinated and calculated acts to get around the system of regulatory safeguards.”

Brown noted that Judge Villanueva assessed $1,009,920 in civil penalties against HIS; $575,000 against Edgewater Diagnostic Imaging P.A.; $830,000 against Monmouth Diagnostic Imaging P.A.; $82,000 against Wayne MRI P.A.; and $75,000 against Meadowlands Diagnostic Imaging P.A. The combined award was $2,571,920.

The case was prosecuted and argued by Deputy Attorney’s General John Grady, Kathleen Waldron and Steven Smith of the Office of Insurance Fraud Prosecutor.

Brown said the second decision was issued by Passaic County Superior Court Judge Christine Miniman and awarded $935,610 in civil penalties in the case of State v. Daniel Fontanella, a former Passaic County chiropractor.

Fontanella pleaded guilty in March, 2001, to second degree theft by deception following the filing of criminal charges by the Passaic County Prosecutor. At the guilty plea hearing, Fontanella reportedly admitted that 45 percent of the billings submitted for reimbursement to insurance carriers during 1996 and 1997 were fraudulent.

The complaint charged that Fontanella submitted fraudulent bills for 441 patients representing 11,035 fraudulent medical treatments — an average of 25 fraudulent bills per patient. Insurance carriers were billed $2,123,344 for the visits. Judge Miniman estimated that Fontanella gained $955,055 as a result of his conduct. The judge also found that none of Fontanella’s ill-gotten gains has been recovered by the insurance carriers.

In imposing the financial penalty, Judge Miniman found that Fontanella engaged in fraudulent conduct with the specific intent to obtain insurance benefits to which he was not entitled and that he paid “runners” to bring purported accident victims to his practice for treatment.

Fontanella surrendered his New Jersey license to practice chiropractic in 1998. The license was revoked by the Board of Chiropractic Examiners in March, 2005.