New York Prosecutors Charge 11 in $6M Fake-Accident Insurance Scam

Eleven people, including three doctors, have been indicted on charges of running a medical mill that stole more than $6 million from insurance companies by staging fake car crashes and giving phony victims unneeded treatment.

The 11 people, all arrested Tuesday, also include two acupuncturists and a chiropractor. An 84-count indictment charges them variously with enterprise corruption, scheme to defraud and filing false records.

For five years beginning in 2002, prosecutors said, the enterprise stole more than $6.2 million from a dozen insurance companies, including Geico and Allstate, and from the Enterprise car rental company, which was self-insured.

Prosecutors said the defendants used so-called runners to stage bogus car crashes involving rented cars and to take purportedly injured people to a clinic in Manhattan.

Because the accidents were staged, there were no injuries to treat, but physicians and other health care professionals at the clinic were part of the scam and prescribed unneeded treatments, procedures and equipment, prosecutors said.

Those professionals also falsified medical records and other documents and submitted false claims to insurance companies, the prosecutors said.

In some cases, prosecutors said, the services for which the clinic billed were provided only in part or not provided at all. They said the group used the same fraudulent practices with people who visited with real injuries from real accidents and would bill the insurers for treatment or equipment that was unnecessary or not provided.

The fake patients were paid a couple of hundred dollars each for taking part in a phony accident, and runners would receive a couple of thousand, prosecutors said.

The defendants were arraigned late Tuesday in Manhattan’s state
Supreme Court. They pleaded not guilty and were told to return to court April 2.