24 New Yorkers Charged in Fraudulent Billing Scam

Two dozen New Yorkers are in serious trouble with the law, stemming from 3 separate indictments for health care fraud. Twenty-two of those defendants are charged with participating in fraudulent billing scams that forced no-fault insurance carriers to dole out millions of dollars in reimbursements for medical treatments that were never provided or that were completely unnecessary.

According to this October 20^th press release from the Southern District of New York U.S. Attorney’s office, among the charged individuals are doctors, clinic employees, “runners,” and patients. The doctors for faking ownership of the medical clinics –located in Brooklyn and Queens– so they could conceal that the clinics’ true owners and operators were non-medical professionals; the clinic employees, who were involved with the submission of fraudulent bills to insurance companies for the treatments that were unnecessary, not provided at all, and/or that were billed incorrectly; the “runners,” who got paid for recruiting patients to the clinics; and the patients, who faked and exaggerated their automobile accident injuries, and received coaching from the clinics’ employees about their supposed injuries.

The third indictment charges two medical supply company operators with orchestrating a billing scam that targeted Medicare and Medicaid. The defendants allegedly forged prescriptions and doctors’ signatures to support the fraudulent bills for millions of dollars in durable medical equipment—such as motorized wheelchairs—that was never supplied to the patients.

Twenty-two of the 24 charged defendants were taken into custody on the morning of the 20^th and arraigned in Manhattan federal court. Six search warrants were executed and 10 accounts were frozen in connection with the arrests.

For one of the defendants, Rubin Kaykov, this is not his first arrest, as he was previously charged as the result of a complaint. And one other defendant, Ilya Slepak, remains at large.

Manhattan United States Attorney Preet Bharara said: “As alleged, these defendants engaged in a massive fraud that pervaded every aspect of the no-fault insurance industry—faking injuries, bills, and even accidents—that defrauded private insurers, Medicare, Medicaid, and ultimately taxpayers, out of millions of dollars. The breadth and brazenness of their alleged scheme is virtually unparalleled, and illustrates the perniciousness of the health care fraud problem. Today’s arrests should send a clear message that we are working in lockstep with our law enforcement partners to eradicate this problem and to punish those responsible.”

Janice Fedarcyk, the FBI Assistant Director in Charge stated, “The charges alleged in today’s indictments describe a growing epidemic that exploits private and public insurers and the people they insure. Health care fraud is often mistaken for a victimless crime, but it victimizes insurers directly and the insured and others indirectly. Those who employ these schemes will most certainly be brought to justice.”

Raymond Kelly, the NYPD Commissioner noted, “The individuals arrested today used elaborate schemes to bilk the health care system of millions of dollars through Medicare claims for procedures that in some cases were never performed. I commend the members of the Task Force including the NYPD detectives, federal agents, and prosecutors from the United States Attorney’s Office for getting to the bottom of this deceitful practice.”

The Special Agent in Charge of the New York Office of the Inspector General, Department of Health and Human Services Special Agent in Charge Thomas O’Donnell said: “Forging prescriptions and billing health programs for medical services never provided are crimes taxpayers cannot tolerate.

Superintendent of Financial Services Benjamin Lawsky stated, “No-fault fraud is an epidemic in our state driving up the cost of insurance for honest New Yorkers and requiring us to find new, innovative ways to stamp it out. The Department of Financial Services was pleased to work closely with our partners on the Health Care Task Force on this case and will continue to make this a priority. I would like to thank United States Attorney Preet Bharara and his team, the FBI, and our other law enforcement partners for their excellent work on this case.”

As for No-Fault insurance, vehicles that are registered in New York State are required to have it. It enables the driver and passengers of the vehicle to obtain benefits up to $50,000 per person for the injuries sustained from a car accident, regardless of fault.

Injured vehicle occupants can assign their right to reimbursement from an insurance company to medical clinics that provide treatment for their injuries, thus allowing the medical clinics to bill the insurance company directly for services rendered.

At all relevant times, New York State law requires medical clinics to be owned and operated by licensed medical professionals, and forbids medical professionals from sharing the fees for medical services with a non-medical business or professional.

As part of those schemes, the “runners” received cash payments in return for recruiting patients to the clinics. The runners found those patients by using radio scanners to locate accidents, paying corrupt hospital employees to disclose personal identifying information of occupants of vehicles that had been involved in collisions, paying tow truck operators to refer occupants of vehicles that had been involved in collisions, or by staging their own accidents.

The “patients” of the clinics, who typically had suffered either little or no injury from auto accidents, were directed to undergo weeks or months of medically unnecessary treatments, such as acupuncture, MRI, physical therapy, aquatic therapy, biofeedback training, and chiropractic adjustments.

Patients were urged to report to the clinics for a certain number of treatments, and were coached on how to describe their supposed injuries if they happened to be questioned by insurance companies. The patients allegedly participated in the scam in return for cash payments or in return for the prospect of substantial monetary settlements based on their bogus legal claims. For example, one patient was told s/he could make up to $25,000 by reporting for medical treatment several times a week for several months at the Rosedale, Queens clinic.

If patients would fail to show up for the treatments, clinic employees would allegedly forge documents and patient signatures to make it appear that patients had received the treatments. In a few instances, the patients were not even in the country at the time of their “treatments.”

As alleged, the clinics were operated by non-medical professionals in violation of New York State law. To conceal this fact from the authorities, medical doctors were recruited to “front” as the owners of the clinics, when they were in fact merely salaried employees who took direction from the non-medical employees running the clinic. One such doctor, defendant David Lee Hsu, was allegedly recruited back in 2009 to be the physician-owner of the Lenox Clinic, in Brooklyn, after the prior physician-owner was suspended twice from practicing medicine. The defendants would also change the names or locations of the clinics, at various times, to avoid detection by insurance companies or law enforcement.

In another example, a patient of the Lenox Clinic turned to the managers for help after she was summoned to give sworn testimony about her injuries. That “patient,” Irene Todd, was so unsure of the nature and extent of her injuries that she needed to be coached on what they were, who her doctors at the clinic were, and how often she went to them for treatment. When Todd asked, “Do I still come three times a week or is it just two,” she was allegedly instructed: “You come three times a week because your back really hurts.” Likewise, when she asked “what should I say got better” as a result of the treatments that were billed, Todd was told to reply that her neck was a little better.

The Twelve 12 defendants associated with the Lenox Clinic in Brooklyn include two managers, Alla Smirnov and Marina Bluvstein, one employee, Seritta Klass, two medical practitioners, David Lee Hsu and Danette Stefanelli, three “runners,” Steven Parchment, Rodney Terry, and Rusty Moore, and four patients, Patricia Murray, Karen Murray, Paula Phillip, and Irene Todd.

The 10 defendants associated with the other medical clinics include four managers, Leonid Kaplan, Ilya Slepak, Borgis Gasilo, and Abraham Pinkhasov, two employees, Tatyana Usyk and Jasoda Ramoutar, three medical practitioners, Leslie Dantes Theodore, Vadim Miloradovich, and Khalika Ayesha Rowe, and one runner, Larry Cantrell.

The third indictment charges Kaykov and Bortnik with defrauding Medicare and Medicaid of millions of dollars through a billing scheme that was operated through their medical supply company, “Triangle ‘R’ Inc.”

All 24 defendants are charged with conspiracy to commit health care fraud and mail fraud, which carries a maximum sentence of 20 years in prison.

Kaykov and Bortnik are also charged with health care fraud, which carries a maximum sentence of 10 years in prison and aggravated identity theft which carries a mandatory two-year sentence that would run consecutive to any other sentence that was given. The government is also seeking the forfeiture of everything that was gained by the defendants during the charged schemes.

The charges contained in the indictments are merely accusations and the defendants are presumed innocent unless and until proven guilty.