Corporate Compliance

Massive insurance fraud scheme yields several indictments

Compliance Monitor, July 15, 2009

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On July 8, New York Attorney General Andrew Cuomo announced the takedown of an elaborate fraud scheme that allegedly generated more than $1 million in profits, according to a Department of Justice (DOJ) release. Cuomo indicted 12 people and nine corporations implicated in the scheme.
 
In the release, Cuomo describes the plot, dubbed “The Levy Enterprise” as “a complex scheme that violated hospital patients’ privacy and may have driven up the insurance rates of millions of New York automobile owners.”
 
The scheme got its name from the plan’s alleged mastermind Daniel Levy, 32, of Rego Park, Queens. Levy owned and controlled two medical clinics: Bronx Sheridan Medical P.C. and New Lite Bronx Medical, P.C. Levy and his co-conspirators allegedly took advantage of New York’s Comprehensive Motor Vehicle Insurance Reparations Act, commonly referred to as the no-fault law.
 
The no-fault law reimburses persons who are in injured in minor accidents for medically necessary medical and health services, including initial medical evaluations, physical therapy, chiropractic care, acupuncture, and diagnostic testing.
 
According to the DOJ, Levy allegedly paid Desmond Connell, an attorney, to drive business into Levy’s clinics. Connell increased business by paying hospital employees to provide him with the information for patients who had recently been in minor vehicle accidents. Connell then allegedly gave that information to “steerers” whose job it was to contact the patients and convince them to receive unnecessary medical treatment at one of Levy’s facilities.
 
Patients allegedly received months of unnecessary treatments, including acupuncture, physical therapy, chiropractic treatment, psychological counseling and neurological testing. The healthcare providers involved in the Levy Enterprise billed the insurance carriers for this treatment and received millions of dollars.  
 
The steerers allegedly told patients to make up false injuries in order to increase their chances of landing a big injury settlement. The DOJ also alleges that the steerers directed patients to Connell’s preferred attorneys to handle their cases. Connell preferred those attorneys because they allegedly paid him 40% of the settlement amount.
 
In addition to Levy and Connell, 10 others were included in the 147-count indictment.



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