New Jersey Criminal Defense Attorney Blog Covering New Jersey and Federal Criminal Law and Procedure

Articles Posted in Insurance Fraud

Dr. Salomon Melgen, a soon-to-be former ophthalmologist, who still faces criminal charges for bribing New Jersey Senator Robert Menendez, was recently found guilty of healthcare claims fraud following a seven-week jury trial.  His case is significant because it highlights some of the activities that typically cause medical service providers to becomes investigative targets and, ultimately, criminal defendants in serious healthcare claims fraud cases that can result in the loss of a professional license, an entire medical practice, and jail time.

Briefly, Melgen was charged in a 67-count federal indictment with fraud, falsifying medical records and submitting fictitious claims to Medicare.  Federal prosecutors alleged that between 2008 and 2013, he billed more than $190 million to Medicare, which paid him approximately $105 million.  According to the Government, the vast majority of his billings were based upon false and/or fictitious diagnoses, unjustified medical procedures, and repeated billings for unnecessary diagnostic tests.

The Government alleged that Melgen falsely diagnosed patients with a condition known as wet macular degeneration, which could cause blindness.   He then treated them with laser treatments that were both outdated and harmful, as well as injections of an expensive ocular drug, all with the goal of lining his pockets.  The Government’s medical experts characterized Melgen’s patient notes as “pure fantasy”, and testified that his basis for administering treatments was fabricated.  They stated that he treated patients whose maculae appeared normal, that his laser treatments were both inappropriate and harmful, and that there were other treatments available for this condition that posed less patient risk.  (One expert testified concerning Melgen’s use of a laser on a patient with only one functioning eye, calling it “unconscionable”.)  Other experts testified that Melgen’s Medicare billings were “in the next galaxy”. Continue reading

Robert Goodwin recently learned that New Jersey is serious about convicting defendants charged with insurance fraud.  He was found guilty at trial of second-degree insurance fraud and sentenced to a prison term of seven years on account of false statements made to an insurance carrier in connection with an insurance claim stemming from the arson of his girlfriend’s car.  The Appellate Division vacated his conviction, finding that the trial court erroneously instructed the jury, in essence, that the defendant could not be convicted of insurance fraud unless the carrier actually relied upon the defendant’s false statements and paid the claim.  The Supreme Court reversed, finding that the carrier did not have to actually suffer a loss by paying a claim in order for the defendant to be convicted of the crime.  The Court found that it was sufficient if the statement could simply influence the carrier’s decision to pay the claim – even if the claim was ultimately denied and not paid.

The trial court hearing Goodwin’s case instructed his jury that the defendant could be found guilty if the false statement could simply affect the carrier’s decision to pay or deny the claim.  Thus, the question for the trial court was whether it was reasonable for the carrier to include the false statement in the larger mix of information that was reviewed and considered in connection with a decision to pay or deny the claim.  If it was reasonable for the carrier to consider the false statement as part of the decision-making process, the defendant making that statement could be convicted.  The Appellate Division reversed, issuing a somewhat convoluted decision that, in brief, found that the carrier had to actually rely upon defendant’s false statements.  Accordingly, the Appellate Division believed that for the defendant  to be found guilty, the false statement had to factor prominently in, and actually motivate, the carrier’s decision to pay the claim.

The Supreme Court had to determine which of these standards was correct – was it sufficient for the false statement to reasonably affect the carrier’s decision (the relatively relaxed standard set by the trial court), or did the false statement have to actually motivate the carrier’s decision (the standard set by the Appellate Division, which placed a heavier burden on the State).  The Court approved of the trial court’s standard, reversed the Appellate Division, and remanded the case to the trial court to, among other things, reinstate defendant’s conviction and seven-year prison sentence. Continue reading

Six Passaic County residents were arrested recently and charged with staging automobile accidents.  The State is alleging that their actions defrauded two insurance companies out of approximately $78,000.00, in connection with accidents that occurred on or about April 29 2009.  According to the State, four of the six suspects were in a minivan that the driver purposely drove into another vehicle carrying the other two suspects.  The six have been charged with conspiracy, insurance fraud and theft by deception in a State Grand Jury indictment handed up on April 10, 2014.  The charges could lead to prison terms.

This is just one of many recent cases involving the New Jersey Office of the Insurance Fraud Prosecutor (“OIFP”), which was first established in 1998.  This is a special section in the New Jersey Attorney General’s Office devoted to cases involving insurance fraud.  This is not the only office dedicated to such matters.  Many – if not most or all – of the county prosecutor’s offices in the State have specialized sections devoted to insurance fraud.

A cursory review of recent insurance fraud prosecutions shows that New Jersey is serious about prosecuting insurance fraud in all of its forms: Continue reading