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Federal and State Prosecutors Begin Cracking Down on No-Fault Fraud

By Ronald W. Chapman, II

In February 2012, then U.S. Attorney for the Southern District of New York unsealed an indictment against over thirty individuals including doctors and lawyers accused of defrauding New York’s “no-fault” auto insurance statute . The Federal Government estimated that over $113 million was lost in the scheme. Through this indictment, New York was one of the first states to indict health care providers for no-fault fraud. After a successful test case in New York, Federal prosecutors in other no-fault jurisdictions are taking note. A survey of litigation in nine no-fault states conducted by Chapman Law Group has shown a steady increase in no-fault fraud prosecutions.

In addition to Federal prosecutions, auto Insurance companies began filing civil RICO claims against providers and clinics who bill no-fault insurance companies alleging fraud. Recent suits by the auto insurance companies including Allstate and State Farm have alleged that clinics employ drivers and recruiters to phone auto accident victims, pick them up, and take them to appointments where their ailments are allegedly exaggerated and unnecessary services are performed. The insurance companies allege that claims for services were fraudulent, unnecessary, and the result of illegal kickbacks paid to the patients and “marketers”.

In order to be eligible to receive reimbursement from an insurance company under a no-fault insurance policy, a medical service must be reasonable medically necessary. Physicians who are employed in a practice that primarily bills no-fault insurance companies are sure to face increased scrutiny by insurance companies and now State and Federal prosecutors. While many believe that no-fault fraud is not related to a federal health care program and thus not within the reach of federal prosecutors, this is incorrect. In fact, no-fault fraud arguably implicates a host of federal and state statues for which a provider may face heavy fines and jail time including 18 U.S.C. 1347 (Health Care Fraud), 18 U.S.C. 1035 (Health Care False Statement), 18 U.S.C. 1962 (RICO), 18 U.S.C. 1037 (Wire Fraud).

If you have been named as a defendant in a civil suit, criminal indictment or you are concerned about the medical necessity of services rendered, it is imperative contact an experienced no-fault fraud attorney today. Chapman Law Group is a multi-state health care law firm that specializes in defending providers accused of health care fraud and abuse. Our team of trained attorneys, including federal prosecutors and health care fraud attorneys has the experience to defend every medical decision you make. Attorneys who do not regularly handle health care matters can be ill equipped to handle the complexity of a large scale health care case that could deal with thousands of claims and independent medical decisions. Our team of attorneys and experts will get to work protecting what you value most, your license, your freedom and your hard earned reputation.

  1. U.S. v. Zemlyansky et al, U.S. District Court, Southern District of New York, No. 12-cr-00171
  2. Michigan, Florida, New Jersey, Pennsylvania, Massachusetts, Minnesota, North Dakota, Utah and New York.