$400M NY Fraud Scheme gets 5 more Guilty Pleas

Several New Yorkers have pleaded guilty for their roles in what is being called the single largest no-fault automobile insurance fraud scheme ever charged in New York.

According to the United States Attorney for the Southern District of New York, Preet Bharara, and the FBI, five defendants have pled guilty for their roles in the scheme that fraudulently took over $400 million from private insurance companies under New York’s no-fault automobile insurance law.

On February 15^th, Andrey Anikeyev, who owns and controls several acupuncture clinics, pled guilty before U.S. District Judge J. Paul Oetken to conspiracy to commit mail fraud and health care fraud. On the 14^th, Dmitry Slobodyansky, who owned and controlled chiropractic clinics, also pled guilty before Judge Oetken to conspiracy to commit mail fraud and health care fraud. Earlier in the month, medical doctor Sergey Gabinsky also pled guilty before Judge Oetken. Pavel Poznansky, an acupuncturist, and Constantine Voytenko, a chiropractor, pled guilty back in December. All five were arrested in February of 2012 along with 31 other defendants. Some of them were also charged with racketeering and money laundering. Among the 36 defendants are 10 doctors and three attorneys.

Manhattan U.S. Attorney Preet Bharara said, “These five defendants piled up fraud to the tune of $400 million in a scheme to exploit New York’s no-fault auto insurance laws. We remain committed to ensuring that all their alleged co-conspirators, including the corrupt medical and legal professionals charged with using their professional licenses and training to facilitate this brazen fraud, see justice.”

As far as the New York’s no-fault automobile insurance law goes, every vehicle registered in the state is required to have no-fault insurance. It entitles the driver and passengers of a registered and insured vehicle up to $50,000 per person for injuries sustained in a crash, regardless of fault. Under the No-Fault Law, patients can waive their right to reimbursement from an insurance company to other places –including medical clinics, which provide their treatment. Under the law, New YorkState also requires that all medical clinics in the state be incorporated, owned, operated, and/or controlled by a licensed medical practitioner in order to be eligible for reimbursement. Insurance companies will not honor treatment claims of they come from a clinic that is not actually owned, operated, and controlled by a licensed medical practitioner.

According to the indictment, prior informations, and other information about the case, some of the defendants misled New York authorities and private insurers about the true owners of these medical clinics. They paid licensed medical practitioners to use their practitioners’ licenses to incorporate the businesses through which the medical clinics billed the bogus treatments.

Gabinsky was one of those doctors who admitted in open court to prescribing unnecessary medical treatments and letting co-conspirators use his medical license. Poznansky and Voytenko were medical practitioners who billed for the unnecessary treatments.

The No-Fault Clinic Controllers also instructed the clinic doctors to prescribe excessive and unwarranted referrals for various “modality treatments” for nearly every patient they saw. The treatments included physical therapy, acupuncture, and chiropractic treatments—as much as five times per week for each—and treatments for psychology, neurology, orthopedics, and audiology. Clinic doctors also prescribed unnecessary MRIs, X-rays, orthopedics, and medical supplies. The No-Fault Clinic Controllers received thousands of dollars in kickbacks for patient referrals from the owners of the modality clinics (“modality controllers”). Anikeyev and Slobodyansky were two such Modality Controllers.

Anikeyev, 38; Slobodyansky, 42; Gabinsky, 55; Poznansky, 53; and Voytenko, 41, each face a maximum of five years in prison, a fine of up to $250,000, a maximum supervised release term of three years, and a mandatory special assessment of $100. Poznansky, Voytenko, Gabinsky, Anikeyev, and Slobodyansky are scheduled to be sentenced by Judge Oetken on April 23, 2013; April 24, 2013; June 12, 2013; June 28, 2013; and June 13, 2013, respectively.

The case is being prosecuted by the Office’s Organized Crime Unit. Prosecution is being handled by Assistant U.S. Attorneys Daniel S. Goldman, Nicholas L. McQuaid, Carolina A. Fornos, and Daniel Noble. Assistant U.S. Attorneys Jason L. Cowley and Martin Bell of the Office’s Asset Forfeiture Unit are responsible for the forfeiture of assets.