Attorney Charged with Participating in Extensive Insurance Fraud Conspiracy
| U.S. Attorney’s Office July 31, 2013 |
Deirdre M. Daly, Acting United States Attorney for the District of Connecticut, and Kimberly K. Mertz, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation, announced that a federal grand jury in New Haven has returned a nine-count indictment charging attorney JOSEPH P. HADDAD, 65, of Orange, with federal offenses related to his participation in an extensive insurance fraud scheme.
The indictment was returned on July 25, 2013 and was unsealed today. HADDAD appeared this afternoon before United States Magistrate Judge Holly B. Fitzsimmons in Bridgeport, entered a plea of not guilty and was released on a $150,000 bond.
This matter stems from Operation Running Man, a 14-month undercover fraud investigation headed by the Federal Bureau of Investigation. The investigation included the use of recordings of an undercover special agent meeting with HADDAD, various doctors, and chiropractors in relation to auto-accident personal injury litigation.
As alleged in the indictment, HADDAD, a Bridgeport-based personal injury attorney, conspired with chiropractors and others to defraud several insurance companies by exaggerating the auto accident injuries of HADDAD’s clients, and the cost of their medical care, to justify larger monetary settlements with the insurance companies. As part of the scheme, the co-conspirators fabricated medical records, prescribed unnecessary pain medication, performed unnecessary chiropractic treatment, ordered and billed for diagnostic tests of questionable medical value, and overstated injuries or permanent partial disabilities that were allegedly caused by the accidents.
“This kind of blatant fraud drives up the cost of insurance for all people,” stated Acting U.S. Attorney Daly. “With the help of the FBI, the U.S. Attorney’s Office is committed to uncovering these schemes and prosecuting those who are the most responsible, especially corrupt attorneys and doctors who drive these schemes and profit the most in direct violation of their professional oaths.”
“The level of detail and orchestration alleged in this conspiracy to defraud automobile insurance companies is wrought with unadulterated greed and avarice,” stated FBI Special Agent in Charge Mertz. “As an attorney, Mr. Haddad is an officer of the court and, therefore, privileged and entrusted with upholding its laws and ethical canons. Instead, because of his selfish actions, Mr. Haddad is now a defendant in federal court and faced with some very serious charges.”
The indictment alleges that, between December 2006 and February 2010, HADDAD conspired in the scheme with Francisco R. Carbone, who had been licensed to practice medicine until his license was revoked by the State of Connecticut in March 2005, and with Dr. Mark Kirshner, who owned and operated two chiropractor offices in Bridgeport and one in Stamford.
As part of the scheme, it is alleged that HADDAD would pay “runners” to locate and deliver to him clients for his personal injury practice. Because state law barred attorneys from hiring runners in personal injury cases, HADDAD attempted to hide this practice by paying the runners in cash. Dr. Kirshner regularly met with HADDAD to provide him with thousands of dollars in cash and, in return, HADDAD reimbursed Kirshner with checks written from his business account. HADDAD often included on the checks false memo lines suggesting that the checks were for medical expenses incurred by his clients. During the course of the conspiracy, it is alleged that Kirshner gave HADDAD more than $100,000 in cash. HADDAD also paid runners with checks directly from his client trust account, often disguising these payments as “independent investigative services.”
The indictment further alleges that HADDAD regularly instructed clients to see Carbone for purported medical treatment, even though HADDAD was aware that Carbone had lost his medical license. Carbone provided HADDAD’s clients with prescription pain medication, even if the medication was not needed and, in reports, fabricated the clients’ injuries, medical conditions and permanent partial disability ratings. In multiple instances, Carbone did no medical examination at all. Carbone billed the victim insurance carriers in his name or in the name of another physician for services he allegedly rendered, and provided prescriptions, bills, medical reports and final reports to HADDAD, who submitted the documents to the victim carriers to support requests for settlement.
It is further alleged that HADDAD referred clients to Dr. Kirshner’s Bridgeport chiropractor offices, which operated under the name Health First Medical, P.C., and that Kirshner often permitted HADDAD to influence the course of patients’ medical treatments by acquiescing to HADDAD’s instructions that a patient receive more treatment and diagnostic tests despite the questionable need for both. Kirshner and other chiropractors at Health First, including Jennifer Netter, established a protocol to treat patients in HADDAD’s cases for six months, regardless of medical need, and would not resolve treatment of patients unless instructed to do so by HADDAD. Netter and others at Health First often falsified medical records by indicating that they had examined the patients when they had not, and by misrepresenting that patients’ pain complaints and other symptoms continued. After the six-month period, each patient would receive a permanent partial disability rating, regardless of the permanence of the medical condition. If a patient had received a permanency rating for a prior accident, the protocol was to give a higher or different disability rating for the present accident.
Kirshner also owned a diagnostic testing company, Midas Medical LLC, and instructed his employees to conduct Nerve Conduction Velocity (NCV) tests whenever a patient’s symptoms could potentially implicate testing, even though he knew the test results would not change the course of treatment. It is alleged that HADDAD and Kirshner arranged for Carbone to order the tests, believing that, if ordered by a doctor, the tests would be given greater weight by the victim insurance companies and increase the likelihood of higher settlement payments. It is further alleged that HADDAD summoned at least one chiropractor to his office so that Kirshner could explain that the chiropractor would receive a kickback of several hundred dollars for each referral of HADDAD’s clients for NCV testing. Kirshner’s office would provide to HADDAD a bill of approximately $2,000 for each NCV test, and HADDAD would submit the bills to the victim carriers as part of settlement discussions.
As disclosed during today’s court proceeding, more than 10 insurance carriers lost a total of approximately $2.5 million as a result of this fraud scheme.
The indictment charges HADDAD with one count of conspiracy to commit mail fraud and eight counts of mail fraud. If convicted, HADDAD faces a maximum term of imprisonment of 20 years on each count.
Carbone, Kirshner, Netter, two other chiropractors and a licensed doctor of osteopathic medicine have pleaded guilty to charges stemming from this scheme. Each awaits sentencing.
As to HADDAD, Acting U.S. Attorney Daly stressed that an indictment is not evidence of guilt. Charges are only allegations, and each defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
This matter is being investigated by the Federal Bureau of Investigation, with the assistance of the National Insurance Crime Bureau, the Metropolitan Property and Casualty Insurance’s Special Investigation Unit and the Travelers Insurance Company.
The case is being prosecuted by Assistant United States Attorneys Christopher W. Schmeisser and Robert M. Spector.
The indictment was returned on July 25, 2013 and was unsealed today. HADDAD appeared this afternoon before United States Magistrate Judge Holly B. Fitzsimmons in Bridgeport, entered a plea of not guilty and was released on a $150,000 bond.
This matter stems from Operation Running Man, a 14-month undercover fraud investigation headed by the Federal Bureau of Investigation. The investigation included the use of recordings of an undercover special agent meeting with HADDAD, various doctors, and chiropractors in relation to auto-accident personal injury litigation.
As alleged in the indictment, HADDAD, a Bridgeport-based personal injury attorney, conspired with chiropractors and others to defraud several insurance companies by exaggerating the auto accident injuries of HADDAD’s clients, and the cost of their medical care, to justify larger monetary settlements with the insurance companies. As part of the scheme, the co-conspirators fabricated medical records, prescribed unnecessary pain medication, performed unnecessary chiropractic treatment, ordered and billed for diagnostic tests of questionable medical value, and overstated injuries or permanent partial disabilities that were allegedly caused by the accidents.
“This kind of blatant fraud drives up the cost of insurance for all people,” stated Acting U.S. Attorney Daly. “With the help of the FBI, the U.S. Attorney’s Office is committed to uncovering these schemes and prosecuting those who are the most responsible, especially corrupt attorneys and doctors who drive these schemes and profit the most in direct violation of their professional oaths.”
“The level of detail and orchestration alleged in this conspiracy to defraud automobile insurance companies is wrought with unadulterated greed and avarice,” stated FBI Special Agent in Charge Mertz. “As an attorney, Mr. Haddad is an officer of the court and, therefore, privileged and entrusted with upholding its laws and ethical canons. Instead, because of his selfish actions, Mr. Haddad is now a defendant in federal court and faced with some very serious charges.”
The indictment alleges that, between December 2006 and February 2010, HADDAD conspired in the scheme with Francisco R. Carbone, who had been licensed to practice medicine until his license was revoked by the State of Connecticut in March 2005, and with Dr. Mark Kirshner, who owned and operated two chiropractor offices in Bridgeport and one in Stamford.
As part of the scheme, it is alleged that HADDAD would pay “runners” to locate and deliver to him clients for his personal injury practice. Because state law barred attorneys from hiring runners in personal injury cases, HADDAD attempted to hide this practice by paying the runners in cash. Dr. Kirshner regularly met with HADDAD to provide him with thousands of dollars in cash and, in return, HADDAD reimbursed Kirshner with checks written from his business account. HADDAD often included on the checks false memo lines suggesting that the checks were for medical expenses incurred by his clients. During the course of the conspiracy, it is alleged that Kirshner gave HADDAD more than $100,000 in cash. HADDAD also paid runners with checks directly from his client trust account, often disguising these payments as “independent investigative services.”
The indictment further alleges that HADDAD regularly instructed clients to see Carbone for purported medical treatment, even though HADDAD was aware that Carbone had lost his medical license. Carbone provided HADDAD’s clients with prescription pain medication, even if the medication was not needed and, in reports, fabricated the clients’ injuries, medical conditions and permanent partial disability ratings. In multiple instances, Carbone did no medical examination at all. Carbone billed the victim insurance carriers in his name or in the name of another physician for services he allegedly rendered, and provided prescriptions, bills, medical reports and final reports to HADDAD, who submitted the documents to the victim carriers to support requests for settlement.
It is further alleged that HADDAD referred clients to Dr. Kirshner’s Bridgeport chiropractor offices, which operated under the name Health First Medical, P.C., and that Kirshner often permitted HADDAD to influence the course of patients’ medical treatments by acquiescing to HADDAD’s instructions that a patient receive more treatment and diagnostic tests despite the questionable need for both. Kirshner and other chiropractors at Health First, including Jennifer Netter, established a protocol to treat patients in HADDAD’s cases for six months, regardless of medical need, and would not resolve treatment of patients unless instructed to do so by HADDAD. Netter and others at Health First often falsified medical records by indicating that they had examined the patients when they had not, and by misrepresenting that patients’ pain complaints and other symptoms continued. After the six-month period, each patient would receive a permanent partial disability rating, regardless of the permanence of the medical condition. If a patient had received a permanency rating for a prior accident, the protocol was to give a higher or different disability rating for the present accident.
Kirshner also owned a diagnostic testing company, Midas Medical LLC, and instructed his employees to conduct Nerve Conduction Velocity (NCV) tests whenever a patient’s symptoms could potentially implicate testing, even though he knew the test results would not change the course of treatment. It is alleged that HADDAD and Kirshner arranged for Carbone to order the tests, believing that, if ordered by a doctor, the tests would be given greater weight by the victim insurance companies and increase the likelihood of higher settlement payments. It is further alleged that HADDAD summoned at least one chiropractor to his office so that Kirshner could explain that the chiropractor would receive a kickback of several hundred dollars for each referral of HADDAD’s clients for NCV testing. Kirshner’s office would provide to HADDAD a bill of approximately $2,000 for each NCV test, and HADDAD would submit the bills to the victim carriers as part of settlement discussions.
As disclosed during today’s court proceeding, more than 10 insurance carriers lost a total of approximately $2.5 million as a result of this fraud scheme.
The indictment charges HADDAD with one count of conspiracy to commit mail fraud and eight counts of mail fraud. If convicted, HADDAD faces a maximum term of imprisonment of 20 years on each count.
Carbone, Kirshner, Netter, two other chiropractors and a licensed doctor of osteopathic medicine have pleaded guilty to charges stemming from this scheme. Each awaits sentencing.
As to HADDAD, Acting U.S. Attorney Daly stressed that an indictment is not evidence of guilt. Charges are only allegations, and each defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
This matter is being investigated by the Federal Bureau of Investigation, with the assistance of the National Insurance Crime Bureau, the Metropolitan Property and Casualty Insurance’s Special Investigation Unit and the Travelers Insurance Company.
The case is being prosecuted by Assistant United States Attorneys Christopher W. Schmeisser and Robert M. Spector.
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