Insurers Seek $100 Million in Biggest N.Y. Fraud Suit
The Allstate Insurance Company, Encompass Insurance and Nationwide Mutual Insurance Company have filed a RICO (Racketeer Influenced and Corrupt Organizations Act) action in the Supreme Court of New York against 74 defendants, seeking to recover more than $100 million from a vast insurance fraud network.
The complaint follows recent arrests in Brooklyn in September of more than 50 people as part of the first phase of “Operation Gateway,” an investigation into an alleged criminal organization that is taking advantage of New York’s no-fault insurance law by falsifying auto accidents. The defendants allegedly made payments to “runners” to create staged accidents, paid bribes for fictitious police reports, laundered money, paid kickbacks for patient referrals, and billed for medical services and diagnostics tests that were never rendered.
The “principals” named in the complaint are: Alex Buziashvili, Gary Grinberg, Yuri Grinberg, Lyubov Mirvis, Mark Mirvis, Edouard Rozenthal, Oleg Mirochnick, Yefim Gertopsky, Losif Dubossarsky and Vladislav Fomenko. The fraudulent activity involves an expanding organization that systematically defrauded the insurers and their customers of millions of dollars per year.
It also identifies Brooklyn-based Parallel Management Group as the centerpiece around which the fraudulent activities revolved and as the center for laundering the proceeds from the illegal medical and management corporations. “A wave of fraud has been unleashed upon the State, insurers, consumers of medical services and the premium-paying public,” said Steve Englert, New York special investigations manager for Allstate. “Insurance fraud is not a victimless crime. It affects every insured driver in New York State. Until we tighten the no-fault laws in New York State, including stiffer criminal penalties, drivers in New York will continue to pay a premium to insurance cheats.”
“Fraud in New York’s medical no-fault system is a billion dollar business and evidence of fraud and abuse is irrefutable,” added Vince Coyne, special investigations director for Nationwide. “The scope of this problem points to a deliberate, well-organized and sophisticated enterprise that imposes what could be termed an auto insurance ‘surcharge’ on every honest driver in New York State.” The principals are alleged to have sought to deceive insurers into paying fraudulent medical claims that typically reached or exceeded $8,000 per patient.