N.J. Businessman Sentenced for Forming Phony Business Group to Fraudulently Obtain Health Benefits for Non-Employees

March 31, 2004

New Jersey Attorney General Peter Harvey announced that a Bergen County man has been ordered to reimburse the states’ heath insurance provider thousands of dollars after pleading guilty to creating a phony business group to fraudulently purchase group health insurance coverage for individuals not employed by the company. The insurance fraud scheme resulted in non-eligible “employees” illegally obtaining more than $110,000 in group benefits and health insurance coverage.

According to Vaughn McKoy, director, Division of Criminal Justice and Insurance Fraud Prosecutor Greta Gooden-Brown, Barry W. Kallenberg, 51, of Fort Lee, Bergen County, was sentenced by Bergen County Superior Court Judge William Meehan to 180 days in the Bergen County Jail and ordered to pay $64,980 restitution to Horizon Blue Cross and Blue Shield of New Jersey. Kallenberg previously repaid $45,000 to Horizon Blue Cross Blue Shield.

Gooden Brown noted that on Dec. 19, 2003, Kallenberg pleaded guilty to a charge of theft by deception before Bergen County Superior Court Judge Sebastian Gaeta.

In pleading guilty, Kallenberg reportedly admitted that he created a fictitious real estate management business group in order to purchase group health insurance coverage. The Accusation charged that in February, 1999, Kallenberg applied to Horizon Blue Cross and Blue Shield of New Jersey for a small employer health benefits policy in order to provide health coverage at a lower premium employee group rate.

The investigation determined that five individuals were not entitled to the group coverage because they were not bona fide employees of a bona fide business. Between January, 1996 and January, 1999, $111,500 in health insurance claims were submitted to Horizon Blue Cross and Blue Shield on behalf of the purported employees.

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