New York Charges Doctors, Hospital Employees with No-Fault Fraud

July 9, 2009

New York Attorney General Andrew M. Cuomo announced the indictment of 12 people and 9 corporations across New York City for their roles in an alleged criminal enterprise that paid hospital employees for confidential patient information, lured patients into receiving unnecessary treatment, and then submitted more than $1 million in phony personal injury claims to insurance carriers.

Cuomo also announced separate criminal charges against two hospital employees for accepting bribes to provide confidential patient information to members of the criminal operation.

According to officials, “The Levy Enterprise” was run by Daniel Levy, of Queens, who owned and controlled two Bronx medical clinics. According to the 147-count indictment filed 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.

Those charged include a personal injury lawyer, two medical doctors, three acupuncturists, two chiropractors and other health care providers.

“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 Cuomo.

In New York State, a person injured in a motor vehicle accident is automatically covered under the no-fault auto insurance 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, the Levy Enterprise was a web of medical providers, attorneys, and corporations that operated a complex criminal scheme. The indictment describes the structure of the Enterprise as including defendant Daniel Levy, who had no medical or health provider training and who paid an attorney, defendant Desmond Connell, to supply his two clinics with patients. Officials allege that 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, according to officials, who maintain that 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 a medical clinic 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 more than $1 million 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, officials said.

The following defendants are named in the 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 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.

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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