Law & Order: SIU

One of the initial goals for this blog was to intersperse posts on recent news with a background primer on no-fault. Of course, this concept presumes that there exists a class of persons who are both a) reading this blog with sufficient interest to revisit periodically, and b) not very well-versed in no-fault. It is perhaps my own inherent self-deprecating nature that makes me inclined to believe that, to the extent that this blog is read at all (assuming that, say, Matthew Lerner, Esq. and Nicole L. Black, Esq. are real persons and not robots with high marks on their Turing tests), only those so masochistic as to already know no-fault rather well would be interested in visiting. This probably leads to postings here that assume too much with regard to the reader's knowledge. We are open to any commentary as to whether the blog is indeed too insular, what types of postings would be most useful (e.g., basic educational, statutory and case law reportage, issue-specific practice notes, etc.).

All of that being said, it has occurred to me that the previous posting assumed too much on the part of the reader's knowledge of the existence, structure, and entrenchment of no-fault fraud. To that end, an NYS OAG press release from July 31, 2006 concerning seventeen (17) grand jury indictments relative to a particular investigation may be of some value. The factual basis of the some of the charges is enlightening:

In the first indictment, three defendants, including a doctor and a medical clinic owner, are charged with Enterprise Corruption, a class "B" felony. The defendants allegedly earned millions of dollars through their operation and control of AR Medical Art, P.C. (AR Medical), a medical clinic in the Midwood section of Brooklyn that "treated" persons purportedly injured in car accidents. Other charges in the indictment include scheme to defraud, money laundering, grand larceny, insurance fraud, falsifying business records, and offering a false instrument for filing.
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In the two other indictments unsealed today, 14 people were charged with staging car accidents throughout New York City and attending clinics, including AR Medical, for treatment of their feigned injuries. These two staged accident ring indictments charged the defendants with scheme to defraud, insurance fraud, larceny, falsifying business records, and offering a false instrument for filing.
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The enterprise corruption indictment alleges that although the owner of record of AR Medical was Dr. Alexander Rozenberg, a physician specializing in physical rehabilitation, he did not control the operations or the financial affairs of the clinic. Instead, Inna Polack, who lacks a health provider license, secretly owned the clinic and decided what medical and health services were to be provided to patients. The defendants acquired patients through a network of "steerers," who were paid to refer patients to AR Medical. Steerers solicited patients by staging motor vehicle accidents and by offering the clinic’s "services" to real car accident victims.
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The indictment further alleges that, following referrals of patients to AR Medical, Rozenberg conducted cursory medical evaluations, fabricated patients’ symptoms, falsely diagnosed extensive soft tissue injuries, and referred patients for prolonged, unnecessary treatment and testing. This treatment included months of physical therapy, chiropractic care, acupuncture, and psychological counseling, as well as MRIs, x-rays, and nerve testing.

The AR Medical situation brings together many of the various defenses often described collectively as "fraud" or as relating to an "SIU" issue (SIU being an acronym for Special Investigations Unit, which carriers in New York are required by regulation to operate). For example, both of the following are complete defenses to a no-fault personal injury protection ("PIP") claim: a) the monies earned by a professional medical corporation are being directed to the true lay operators of the facility rather than the licensed person who is involved on paper only (see State Farm Mut. Auto Ins. Co. v Mallela, 4 N.Y.3d 313 (2005)), and b) the alleged motor vehicle loss was not accidental (see Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 N.Y.2d 195 (1997); Metro Medical Diagnostics, P.C. v. Eagle Insurance Company, 293 A.D.2d 751 (2d Dep't, 2002); State Farm v. Laguerre, 305 A.D.2d 490 (2d Dep't, 2002)). In practical litigation terms, these defenses lead to the submissions of the lengthiest motion and opposition papers, as well as the lengthiest jury trials.