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The Fraud Report

NY Doctor Found Guilty in Massive No-Fault Fraud Scheme

by FraudReport 15. October 2014 07:00

On October 6th, the United States Attorney for the Southern District of New York, Preet Bharara, announced that Tatyana Gabinskaya was found guilty of various health care and mail fraud offenses. The jury in the two-week trial convicted Gabinskaya of charges arising out of her involvement in the largest single no-fault automobile insurance fraud scheme ever charged.

Gabinskaya, 60, is the 32nd defendant convicted in this case, stemming from arrests on February 29, 2012 as part of an indictment. The “Superseding Indictment” charged 36 defendants with conspiracy to commit mail fraud and health care fraud and charged others with racketeering and money laundering.

Under New York State Law, every vehicle registered in the State is required to have no-fault automobile insurance, which enables the driver and passengers of a registered and insured vehicle to obtain benefits of up to $50,000 per person for injuries sustained in an automobile accident, regardless of fault, (the “No-Fault Law”). The No-Fault Law requires prompt payment for medical treatment, thereby obviating the need for claimants to file personal injury lawsuits in order to be reimbursed. Under the No-Fault Law, patients can assign their right to reimbursement from an insurance company to others, including medical clinics that provide treatment for their injuries. New York State Law 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 under the No-Fault Law. Insurance companies will not honor claims for medical treatments from a medical clinic that is not actually owned, operated, and controlled by a licensed medical practitioner.

According to the Department of Justice press release, the Superseding Indictment and evidence admitted at trial: the true owners of those clinics paid licensed doctors to use their licenses to incorporate the businesses, which they then used to bill private insurers for millions of dollars. Gabinskaya was listed as the owner of a clinic that provided MRIs and other radiology tests, although it was actually owned by her co-defendants, Mikhail Zemlyansky and Michael Danilovich. Along with that clinic, Gabinskaya was also listed as the owner of six other medical facilities, including five that were incorporated in the span of about a year.

When she was interviewed under oath about her role at the clinic controlled by Zemlyansky and Danilovich, Gabinskaya repeatedly lied to insurers to get them to pay claims that were not eligible for reimbursement.

Gabinskaya was convicted on October 3rd of one count of conspiracy to commit health care fraud and one substantive count of health care fraud, plus one count of conspiracy to commit mail fraud and one substantive count of mail fraud. Each of the former charges carries a maximum sentence of 10 years in prison, while the latter two have a maximum 20 year sentence. Gabinskaya is scheduled to be sentenced on January 28th before U.S. District Judge J. Paul Oetken.

Gabinskaya’s first trial in the fall of 2013 ended in a mistrial after the jury failed to reach a unanimous verdict. Two of her co-defendants, Billy Geris and Joseph Vitoulis, were acquitted at their trials. The jury for Zemlyansky and Danilovich acquitted on some counts and hung on others; they are scheduled to be retried in January. Another co-defendant, Matthew Conroy, is set to stand trial on December 2nd. Co-defendant John Maurello does not have a scheduled trial date yet.

All in all, 31 other defendants –including three other doctors– have pled guilty to several things, including conspiracy to commit health care fraud. Charges were dismissed against three others, one defendant entered into a deferred prosecution agreement, and one defendant passed away while the case was still ongoing.

U.S. Attorney Bharara thanked the FBI and the New York City Police Department for their work, and the National Insurance Crime Bureau for its assistance; the case is being prosecuted by the Office’s Violent and Organized Crime Unit. The prosecution is being run by Assistant U.S. Attorneys Amanda Kramer, Janis Echenberg, Daniel S. Goldman, Edward Y. Kim, Peter M. Skinner, and Daniel S. Noble. Assistant U.S. Attorney Carolina Fornos is in charge of the forfeiture aspects of the case.

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Categories: Scandalous Schemes

LA County Probation Dept. Investigated for Questionable Claims

by FraudReport 7. October 2014 08:35

Probation Officers are tasked with watching, working with, and helping the people who have been placed on probation after committing a crime. Usually, one would assume that because of their jobs, they are law-abiding citizens; but a look into workers’ comp claims from employees with the L.A. County Probation Department is showing us that that is not always the case.  One example is an employee who has been with the office for 24 years. He filed claims stating that he hurt his hand restraining a minor; one that said he procured stress-related asthma, hurt his wrist after tripping on a curb, sustained a shoulder strain from putting up a bulletin board, and got a "contusion" from hitting his knee on a desk. And though we said he’s been with the probation department for 24 years, he’s actually only worked five of those years.

Another example is Cynthia Wesley, a probation officer who was recently arrested for allegedly filing a fraudulent insurance claim and for falsifying worker's comp documents. She was released the day after her arrest on $60,000 bail. Her disability claim was labeled as suspicious by county probation investigators back in May. Investigators say Wesley allegedly "manufactured" some of the claim forms she submitted to a supplemental disability insurance company to get benefits that she wasn't entitled to.

Yet more examples are of a man who received 165 days of leave after getting agitated with his boss, sitting down quickly, and "hitting buttocks," according to his disability claim; a woman who took 137 days off after fighting with her boss over her cubicle; and yet another woman who went on leave for 89 days when she experienced pain after pressing a button.

According to KPCC, they reviewed hundreds of Probation Department workers’ compensation files from 2010-2012, resulting in dozens of questionable cases being found, including ones where workers spent months away from the job after either getting spider bites, tripping in parking lots, or falling out of chairs.

L.A. County Probation Chief Jerry Powers says the vast majority of comp claims are legitimate, but he has taken several steps to crack down on them since he took office in 2011. In fact, he says the number of probation staff on disability has dropped by one third since then. He also mentions that questionable workers’ comp and disability claims were one of the first things the L.A. County Board of Supervisors asked him to tackle.

Powers says when he started the job, about 750 employees –or 15% of the workforce– was either out on workers’ comp or reassigned due to on-the-job injuries. Powers added, "That’s incredibly high. It makes me crazy. It makes my blood boil when I hear some of these things." He also says the number of 4850 cases --a law designed to counterbalance the risk of working in public safety with up to one year of full, tax-free salary while on workers’ compensation leave, has dropped by 2%.

Powers is adamant that the problem of fraudulent claims is an "epidemic" in the department. But officials there say they don’t have hard numbers on the percentage of claims believed to be illegitimate.

At one point, the problem was so bad involving mishaps with chairs, that "Risk management took the wheels off of the chairs at a lot of locations," says Cynthia Maluto, who oversees return to work efforts at probation.

"I’ve looked up cases where the employee will be off a whole year, come back for one day and then go off another year and come back, file another claim, [and] could be off for two years," says Maluto. "And in the 20 years of service they probably worked three months."

Once Powers took office, his supervisors ordered him to use an investigative model developed by the L.A. County Sheriff’s Department. He amped up the unit that investigates claims by telling the team to "start scrutinizing doctors’ notes, questioning restrictions and limitations and frankly, if necessary, videotaping staff doing things they say they can't.” 

He also added, "Before I got here, when employees were injured they could take cruises, they could come and go as they pleased. We put in a requirement they have to be home between 8 a.m. and 5 p.m." They also have a team whose job it is to follow up on claims it considers questionable by checking up on employees who are out on workers’ comp and disability claims. The team makes home visits, double checks case files, and interviews witnesses to make sure employees are where they should be. They also check on the workers’ doctors. The investigators out in the field, like John Perico and Jennifer Kaufman, serve in that "return to work" division.

But despite these frivolous claims, Sue Cline, a steward in the probation officers’ union, says the work of a probation officer can be stressful and highly physical –creating many legitimate workers’ compensation claims.

For example, when KPCC examined the department’s comp claims, they found many that appeared to be serious injuries sustained on the job: head and neck injuries from on-the-job car accidents, broken bones from intervening in fights between minors at juvenile camps, and emotional stress after witnessing deaths.

Cline says, "I think you have to look at the big picture instead of these isolated cases. But do I think every single person is legitimate? No. Just like every person who works at Yahoo and says they got a paper cut isn’t legitimate."

Alex Rossi of the L.A.CountyCEO’s office says they’re not quite sure how much fraudulent claims cost taxpayers, but a single claim - legitimate or not - can add up to tens of thousands of dollars. He said, "They can be incredibly expensive, things like pushing a button or a spider bite" transform into a "major injury" because the employee claimed to be experiencing "continuous trauma" or "psychiatric injuries."

According to Cline, Powers’ move to crack down on workers who are faking injuries is more about politics than fixing the department’s problem. Many workers stay out for long stretches because it takes them that long to get care within the slow-moving workers’ compensation system, Cline says. "I see those cases more than I see the others.”

As for employees cheating the system, Powers says one of his biggest problems is staff taking out separate private disability policies. He says, "Several times we’ve found employees who will falsify medical notes and send them to these insurance companies and tell them they are injured and off duty for months at a time.” The problem of course, is that they are not off duty. They are getting a regular paycheck and collecting a check from these insurance companies at the same time. “And some of these employees will have two, three, four separate policies." This can be lucrative, causing the worker to double or triple their salaries, says Powers.

To counteract that though, he says they “know everyone who has those policies and we are working with the insurance companies to cross check those policies.” So far, he says that cooperation has resulted in the arrests of two probation workers for allegedly collecting disability checks while they were still on the job.

"This isn’t just a probation problem," he asserts. "I would bet my house that if you were to go look at other city or county agencies…you will find others that are doing that."

Here is a sample of questionable claims from the 1,179 cases that KPCC reviewed from L.A. County Probation Department employees between 2010 and 2012.

“Stress” was claimed in 57 cases:

  • An employee took 137 days off work because he/she was "upset with supervisor" because "cubicle taken away.” 
  • An employee took 7 days off work because she said she "heard two men talk about her, [which] caused stress.”
  • An employee was supervised by a lower ranking employee, causing "mental stress" that resulted in 180 days off work.
  • An employee received 44 days off work after suffering "mental stress after performing CPR on dying minor." 
  • An employee involved in "witnessing death of a minor" took 6 days off.

There were 271 slips, trips, and falls (excluding those that occurred while restraining a minor in a juvenile detention camp):

  • An employee took 180 days off work after he/she "slipped on sand on asphalt, caused inflamed knee.”
  • An employee said "while lifting chair, it slipped and fell, hit employee," resulting in 161 days off work.
  • An employee took 20 days off work because air ducts had blown cold air on the employee’s shoulder.
  • An employee took 134 days off work after he/she "slipped on computer cables and fell on floor.” 

In the majority of the claims, 454, employees claims injuries involving handling minors:

  • An employee took 3 days off work because of "bruised elbow and hips breaking up fight between minors.”
  • Another employee took 3 days off after being "assaulted by minor and choked."
  • An employee was "kicked during physical fight" between 2 minors, resulting in 180 days off work.
  • An employee took 26 days off after a "minor struck her in face, [and] she fell down."

In their crackdown on false comp claims, the L.A. County Probation Department is not only focusing on employees with questionable claims, but on the doctors who may be helping them.

An example of that brings us back to Kaufman and Perico, who went to an office building to check the disability claim of a worker who’s been out some time based on a note from a doctor.

Perico says, "We want to just verify the validity of the note - that the doctor really exists and this note was generated by the doctor.

Dr. Cuthbert Pyne tells the pair that he did write the note for the probation employee who’s on disability leave, but because the patient had weight loss surgery back in December. "But that’s got nothing to do with her work status, correct?" Kauffman asks. "No," says Pyne. "Are you treating her for any sort of physical injuries at all?" asks Perico. "No," the doctor says.

He also tells the investigators that the patient has been given a note saying she can’t work because she requested one.

Perico adds, "I think some of the information the doctor provided us was a little alarming, to say the least." He seems surprised that Pyne admitted to giving his patient a work release just because she asked for it.

Pyne says he’s just trying to help, noting that many medical offices aren’t sympathetic to workers and their general health problems. Most of the patients he sees are dealing with depression; he says, "because of the pressures of work. Some drive 100 miles to work. They have families. They are getting divorced."

But Pyne has been in trouble before; in 2012 he pleaded no contest to filing false Medi-Cal claims, for which he was fined and placed on three years’ probation.

Powers wouldn’t comment on Pyne’s case, but said there is a problem with doctors who are all too willing to approve comp claims. He says, "There’s an informal grapevine out there" of doctors "who are more than willing to sign [probation workers] off duty so they can gain benefits.” However, he adds, he doesn’t know how large that grapevine is; there are hundreds of doctors who handle probation staffers’ workers’ compensation claims.

Though the Probation department says it has reached out to a number of doctors who work on their employees’ workers’ compensation or disability claims, they won’t say how many, or which ones.

Since Powers took over the department, no doctors have been prosecuted for helping probation workers fake injuries. But officials say the main goal is to work with the doctors to get more department staffers back on the job.

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Categories: Scandalous Schemes