Cuomo Announces Takedown Of Insurance Fraud Ring Which Infiltrated New York Hospitals
NEW YORK, NY (July 8, 2009) – Attorney General Andrew M. Cuomo today announced the indictment of 12 people and 9 corporations across New York City for their roles in a criminal enterprise that paid hospital employees for confidential patient information, lured patients into receiving unnecessary treatment, and then submitted over a million dollars in phony personal injury claims to insurance carriers. Attorney General Cuomo also announced separate criminal charges against two hospital employees for accepting bribes to provide confidential patient information to members of the criminal operation.
“The Levy Enterprise” was run by Daniel Levy, 32 of Rego Park, Queens, who owned and controlled two medical clinics: Bronx Sheridan Medical P.C., located at 1030 Sheridan Avenue, Bronx, New York and New Lite Bronx Medical, P.C., located at 1170 East Gun Hill Road. According to the 147-count indictment filed today in Bronx Supreme Court, Levy and the other defendants operated a scheme in which they paid hospital employees to figure out which patients had been in minor motor vehicle accidents. The enterprise then lured these patients to the two clinics, where they would provide unnecessary treatment. The Levy Enterprise would then submit fraudulent claims to insurance carriers, securing seven figure illegal profits.
One personal injury lawyer and numerous health care providers, including two medical doctors, three acupuncturists, and two chiropractors are among those charged in the indictment. The indicted defendants are charged with Enterprise Corruption, a class "B" felony that carries a maximum sentence of 8 1/3 to 25 years in prison. Other charges in the indictment include scheme to defraud, money laundering, grand larceny, insurance fraud, falsifying business records, and bribery. Two hospital employees are charged with bribe receiving and official misconduct in separate criminal complaints filed today in Bronx Criminal Court. They face a maximum sentence of 2 1/3 to 7 years in prison.
"This criminal enterprise allegedly reaped over a million dollars in profits by engaging in bribery, insurance fraud, and the filing of fraudulent lawsuits - a complex scheme that violated hospital patients' privacy and may have driven up the insurance rates of millions of New York automobile owners," said Attorney General Andrew Cuomo. "Today's 147-count indictment shows we will zealously pursue individuals allegedly involved in such blatant and far-reaching criminal activity."
Rose Gill Hearn, Commissioner of the New York City Department of Investigation, said: “Undercovers from DOI and the Attorney General's Office worked together to burrow into a corrupt network whose only business was to milk the system. Today's arrests send the message that law enforcement is working together to identify and stop fraud that injures New Yorkers. I thank Attorney General Cuomo and his staff for their hard work on this joint investigation and their continued commitment to ensure that those responsible are prosecuted.”
In New York State, a person injured in a motor vehicle accident is automatically covered by the Comprehensive Motor Vehicle Insurance Reparations Act, commonly referred to as the no-fault law. No-fault carriers provide reimbursement for a range of medical and health services, including initial medical evaluations, physical therapy, chiropractic care, acupuncture, and diagnostic testing, when such services are deemed medically necessary.
According to the indictment filed today by Cuomo’s Office, the Levy Enterprise was a web of medical providers, attorneys, and corporations that operated a complex criminal scheme which illegally abused no-fault insurance and bilked patients and insurance carriers out of over one million dollars
The structure of the Enterprise was as follows: defendant Daniel Levy, who had no medical or health provider training, paid an attorney, defendant Desmond Connell to supply his two clinics with patients. Connell would pay public and private hospital employees at Lincoln Hospital and other New York facilities in exchange for confidential patient information that disclosed who had been in minor vehicle accidents, and thus who would be eligible for no-fault auto insurance. Connell then gave that information to defendants Ronald Schwartz and Dan Madrid, who acted as “steerers,” convincing patients to receive treatment at Levy’s two clinics. Schwartz and Madrid would oftentimes direct patients to exaggerate or fabricate injuries, telling them that the more they were hurt and the more treatment they received, the more money they would make in a bodily-injury lawsuit settlement.
The steerers also directed the patients to be represented in their lawsuits by a select set of attorneys that defendant Connell had chosen. This group of attorneys would then pay Connell forty percent of the settlements they received from the lawsuits filed on behalf of these patients.
In another arm of the criminal operation, Daniel Levy’s brother, defendant Alex Levy worked as the manager of New Lite and enforced the clinic protocols that Daniel Levy established. Daniel Levy dictated to defendant doctors, defendant healthcare providers, defendant managers, and receptionists the frequency of treatment, the types of treatment and the testing that patients were to receive. Patients received months of unnecessary treatment for their alleged injuries, including acupuncture, physical therapy, chiropractic treatment, psychological counseling and neurological testing. The healthcare providers associated with the Levy Enterprise billed the insurance carriers for this treatment and received millions of dollars from the insurance carriers.
Providing patients with months of unnecessary treatment furthered the goals of the Levy Criminal Enterprise in two ways. First, it generated over one million dollars in illicit revenues paid by various insurance carriers. Second, it fraudulently strengthened the personal injury claims brought by the attorneys who received the cases from defendant Connell.
The following defendants are named in today’s indictment:
- Daniel Levy, a.k.a. Dima, 32, of Rego Park, Queens NY
- Dr. Hoi Yat Kam, 55, Fresh Meadows, Queens, a medical doctor
- Alex Levy, a.k.a. Sasha, 34. Flushing, Queens NY 11367
- Desmond Connell, 51, Bronx NY and Fort Lauderdale FL., an attorney
- Daniel G. Madrid, 48, Bronx, NY
- Ronald J. Schwartz, 54, Katonah, NY
- Dr. Salvatore Lentini, 58, Chester, NY, a chiropractor
- Yan Yan Yu, a.k.a. Angela, 53, Fresh Meadows, NY, an acupuncturist
- Dr. Haroutyoun Tiikranian, 46, Bridgeport CT, a chiropractor
- Lai Fan Xue, a.k.a. Lisa, 63, Flushing, NY, an acupuncturist,
- Cheng He, 63 Flushing, NY, an acupuncturist
- Dr. Aleksandra Gashinskaya, 57, Brooklyn, NY, a neurologist
The 147 counts of the indictment charge Enterprise Corruption, a "B" Felony; Money Laundering in the Second Degree, a "C" Felony; Grand Larceny in the Third Degree, a "D" Felony; Insurance Fraud in the Third Degree, a "D" Felony; Scheme to Defraud in the First Degree, an "E" Felony; Falsifying Business Records in the First Degree, an "E" Felony; Offering a False Instrument for Filing in the First Degree, an "E" Felony; and Money Laundering in the Fourth Degree, an "E" Felony.
The following individuals were charged today with bribe receiving and official misconduct in separate criminal complaints:
- Mary Jimenez, 33, New York, NY, a hospital employee
- Lloyd Modeste, 56, Ozone Park, NY, a hospital employee
The charges are merely accusations and all defendants are presumed innocent until proven guilty in a court of law.
Attorney General Cuomo also announced that his office has sent letters to every hospital in New York State, reminding the facilities that confidential patient information is protected by New York State and federal law and calling upon them to ensure that they are abiding by their obligations to protect such information. As part of Cuomo’s ongoing investigation, his letter also seeks information from the hospitals about the security systems and procedures in place to prevent such violations of patient privacy.
The case is a result of a multi-agency investigation, including the Office of the New York City Health and Hospitals Corporation Inspector General and the New York City Department of Investigation. Cuomo also thanked the National Insurance Crime Bureau, Allstate Insurance Company, A.I.G, American Transit Insurance, Liberty Mutual, and Metlife Auto and Home Insurance for their assistance in the investigation.
The case is being prosecuted by Assistant Attorneys General Joseph D’Arrigo, Peter Kolp, and Jeff Minett and Special Assistant Attorney General Lisa Lee of the Auto Insurance Fraud Unit, under the supervision of Senior Investigative Counsel Nina Sas, Bureau Chief Gail Heatherly and Deputy Bureau Chief Felice Sontupe.
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