Psychotherapists Plead Guilty In No-fault Billing Scam

Attorney General Spitzer and State Insurance Superintendent Howard Mills today announced that two psychotherapists pleaded guilty last week in Brooklyn to submitting fraudulent bills to insurance carriers.

The defendants, Gabriel Feldmar, of Bayside and Brian McCarthy, of Massapequa, provided medically unnecessary counseling to motor vehicle accident victims and then billed no-fault carriers for the unnecessary treatment and for counseling sessions which never took place or lasted no more than a few minutes.

Pursuant to a negotiated plea, Feldmar, a licensed psychologist, is expected to be sentenced later this year to one year in jail and a fine of $300,000. McCarthy, a psychotherapist employed by Feldmar, is expected to be sentenced later this year to five years probation and pay a fine to be determined.

Among the charges defendant Feldmar pleaded guilty to were conspiracy, insurance fraud, falsifying business records, grand larceny and attempted grand larceny. McCarthy pleaded guilty to attempted grand larceny. The pleas were entered March 10 before Brooklyn Supreme Court Justice John P. Walsh.

Feldmar supervised McCarthy and other psychotherapists at no-fault clinics throughout New York City and Long Island. At the clinics, motor vehicle accident victims were directed to meet with a psychotherapist employed by Feldmar, regardless of medical necessity. The psychotherapists met with patients for no more than 15 minutes and frequently for no longer than a few minutes. The defendants then submitted bills under no-fault claiming that the face-to-face counseling sessions lasted had 45 to 50 minutes. They also billed insurance carriers for treatment sessions which never took place at all and falsely claimed to have provided patients with a stress-reduction therapy known as "biofeedback."

Under New York's no-fault law, a person injured in a motor vehicle accident can receive up to $50,000 coverage for medical expenses incurred as a result of the accident. Most health providers, including psychotherapists, are reimbursed directly by the insurance carriers for services provided.

Spitzer thanked the National Insurance Crime Bureau, GEICO, American International Group Insurance Company, Met Life Auto and Home, and the Hartford Financial Services Group for their assistance in the investigation.

These represent the 216th and 217th convictions by the Auto Insurance Fraud Unit since its first arrests in 2002. In testimony submitted to the New York State Assembly Standing Committee on Insurance on December 20, 2005, Commissioner Mills stated: "The actions of the Auto Insurance Fraud Unit have had a definite impact on the marketplace. Since 2002, there has been a significant decline in losses for private passenger automobile insurance. As a result of the success of the Auto Insurance Fraud Unit, as well as other measures implemented by Governor Pataki, the Insurance Department called on automobile insurers to reduce their rates. To date the Insurance Department has approved a record number of auto rate reductions, saving policyholders almost $400 million."

The case was prosecuted by Assistant Attorney General William Jorgenson, under the Supervision of Auto Insurance Fraud Unit Chief Steve Nachman. Investigators Ronald Stripp, Daniel Pisculli, Dave Henry, Investigator-Auditor Patrick Lubin, and Analyst Brian Selfon conducted the investigation, under the supervision of Supervising Investigator Dominick Zarrella and Deputy Chief James Conway of the Investigations Division.

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