Federal officials described it is the largest single no-fault auto-insurance fraud case to date. The indictment includes racketeering charges against eight owners of medical clinics who have alleged ties to what authorities described as a criminal organization whose members are of Russian descent, as well as 10 licensed doctors and three attorneys.
All the defendants were arrested Wednesday morning. Thirty-five were taken into custody in New York and New Jersey and will be arraigned in a Manhattan federal court. The last defendant was arrested in Duluth, Minn., and will be presented in that state on Thursday.
Under New York 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.
From at least 2007 through 2012, federal officials charge that those involved in the plan engaged in a massive and sophisticated scheme to defraud insurance companies of hundreds of millions of dollars by, among other things, creating and operating medical clinics that provided unnecessary and excessive medical treatments in order to take advantage of the no-fault law, authorities said.
The clinic controllers also referred patients to personal-injury lawyers, who filed bogus lawsuits on behalf of the patients and who coached them on what injuries to claim in order to get as many treatments as possible.
The case is being prosecuted by the U.S. Attorney’s Office for the Southern District of New York’s Organized Crime Unit.