Recent Guilty Pleas Highlight Illegal Control of Medical Practices, Kickbacks for Patient Referrals

On Jan. 16, 2024, in the U.S. District Court for the Southern District of New York, the final two defendants in United States v. Pierre, Dkt. No. 1:22-cr-00019 (S.D.N.Y.), Arthur Bogoraz and William Weiner, D.O., pled guilty to charges stemming from their involvement in a massive insurance fraud scheme, where the government alleged that the defendants combined to use five medical professional corporations to submit over $70 million in fraudulent billing to no-fault automobile insurance carriers.

Pending sentencing, the guilty pleas conclude a two-year prosecution that exposed a highly coordinated scheme by individuals in the healthcare, legal and financial sectors to hijack New York’s no-fault insurance system for personal profit.

‘Pierre’ Indictment

The Pierre prosecution began in January 2022, when the U.S. Attorney’s Office for the Southern District of New York charged Bradley Pierre (Pierre), Marvin Moy, M.D. (Dr. Moy), William Weiner, D.O. (Dr. Weiner), Andrew Prime (Prime) and Arthur Bogoraz (Bogoraz) for their participation in a fraudulent scheme in which Pierre fraudulently owned and controlled multiple medical professional corporations, including medical clinics and an MRI facility, that billed automobile insurance companies over $70 million for fraudulent medical treatments under New York’s no-fault law.

Over the course of multiple indictments, Pierre’s brother, Jean Pierre, and accountant, Albert Haft, were also named as defendants for their participation in the scheme. As previously discussed in this column, approximately 10 months after being charged, Dr. Moy mysteriously disappeared in a boating accident; to date, his body has not been located (see Ben Feurerherd, “Marvin Moy, NYC doctor charged by feds, vanishes after alleged LI boat accident”, New York Post, Oct. 30, 2022; Michael Wilson, “The Mysterious Case of the Doctor Who Disappeared at Sea,” New York Times, Dec. 22, 2022).

By way of background, a medical professional corporation must be owned, operated and controlled by a licensed medical practitioner to be eligible for reimbursement under New York’s no-fault law. The New York Court of Appeals enshrined this principle nearly 20 years ago in State Farm Mutual Automobile Insurance v. Mallela, 4 N.Y.3d 313 (2005), where the Court of Appeals held that no-fault insurers may withhold payment for medical services when a medical professional corporation fails to meet applicable New York state or local licensing requirements, such as being unlawfully owned and controlled by non-physicians, even if the professional corporation was established under the facially valid cover of physician-ownership recorded on the incorporation documents.

With that in mind, in Pierre, the indictments allege that Pierre, who is not a licensed medical professional, recruited medical practitioners to open medical professional corporations between 2008 and 2021. On paper, these were legitimate medical practices that were owned by licensed medical professionals, including Drs. Moy and Weiner.

In reality, as alleged, Pierre was the true owner of the medical professional corporations, who, among other things, received the majority of the medical practices’ proceeds, decided how much the nominal medical professional owners would receive in payment, controlled the medical practices’ bank accounts, hired and fired the medical practices’ staff, identified the locations the medical practices would operate from and chose the attorneys that would represent the medical practices in collection proceedings and sworn examinations before insurance companies. Pierre allegedly further controlled the medical practices by requiring them to refer patients to a network of pharmacies, attorneys and medical specialists, who paid millions of dollars to Pierre for the illegal referrals.

Moreover, many of the medical practices’ patients were allegedly steered to an MRI facility that was owned on paper by Dr. Weiner, but, in reality, was actually owned and controlled by Pierre in the same manner as the medical practices. Pierre and Dr. Weiner allegedly falsified clinical findings on the MRI reports, which allowed for referring physicians and attorneys to bill insurance companies for additional treatments and obtain larger legal settlements.

In order to operate the scheme, Pierre needed access to a steady stream of patients. Accordingly, Pierre partnered with Bogoraz, who was a paralegal and manager at a New York-based personal injury law firm. Bogoraz and Pierre allegedly agreed to a quid pro quo where Bogoraz would refer clients to the medical practices controlled by Pierre for medical treatment and Pierre would direct patients from the medical practices to the law firm where Bogoraz worked for legal representation.

Moreover, Pierre and Bogoraz allegedly paid hundreds of thousands of dollars to “runners”, including Prime, who would bribe, among others, 911 operators and hospital employees to obtain confidential motor vehicle accident information. The runners would subsequently use this information to contact automobile accident victims and steer them to receive medical treatment at the medical practices owned by Pierre and legal representation from the law firm where Bogoraz worked.

To secure the profits from the scheme, the indictments alleged that Pierre arranged for much of the insurance company proceeds paid to the medical practices controlled by Pierre to be paid to shell companies—JAP Multi Services Inc. and Tort Cash LLC—controlled by his brother, Jean Pierre. The medical practices allegedly described these payments as legitimate business expenses; however, in reality, they were nothing more than a means for Pierre to pay bribes to runners and secretly profit from the fraudulent scheme.

Finally, Albert Haft, an accountant for Pierre, Dr. Weiner and Jean Pierre, allegedly falsified multiple corporate tax returns in order to increase defendants’ ill-gotten gains by reducing their tax bill.

‘Pierre’ Guilty Pleas

On Dec. 18, 2023, Pierre pled guilty to conspiracy to commit bribery and conspiracy to defraud the United States and is currently scheduled to be sentenced in May 2024. Pierre agreed not to contest various facts related to the previously discussed medical practices. Specifically, from 2008 to 2021, he agreed to unlawfully own and operate medical clinics located in New York state, including Veda Medical, Sky Medical, Sun Medical, and Rutland Medical (the clinics).

Moreover, between 2008 and 2021, he took over $20 million from the clinics and used his control of the clinics to steer prescriptions to various pharmacies in exchange for over $1 million in kickbacks. He further used his control of the clinics to steer patients to seek MRIs at Nexray Medical Imaging (Nexray) and agreed with Dr. Weiner—the sole listed owner of Nexray—that: (1) Dr. Weiner would falsely report injuries in MRI reports, which allowed the clinics to bill insurance companies for additional unnecessary treatments; and (2) Dr. Weiner would lie under oath about Pierre’s involvement with Nexray to insurance companies.

Of note, on Jan. 16, 2024, the government filed a superseding information with respect to Dr. Weiner, in which he was charged with conspiracy to commit healthcare fraud and conspiracy to defraud the United States for, among other things, lying to insurance companies under oath about Pierre’s involvement with Nexray. Dr. Weiner pled guilty to this charge in January 2024.

Pierre further agreed to pay bribes through multiple channels to obtain patient referrals for the Clinics and Nexray. Specifically, from 2015 to 2021, he agreed to pay hundreds of thousands of dollars in bribes to hospital employees, 911 operators and others for the confidential names and numbers of motor vehicle accident victims.

For example, in 2017, Pierre recruited Prime and paid him over $800,000 as part of the bribery scheme. Prime pled guilty to conspiracy to commit bribery in 2023 and confirmed that, between 2017 and 2021, he paid money to 911 operators in exchange for confidential information regarding motor vehicle accident victims, and received over $800,000 from Pierre in connection with the bribery scheme.

After receiving the confidential information, various individuals would contact the motor vehicle accident victims to induce them to receive medical treatment at the clinics. Moreover, in addition to paying bribes in exchange for information regarding motor vehicle accident victims, Pierre also bribed medical offices, including Epione Medical Center and Modern Brooklyn Medical, to send patients to Nexray for MRIs. These bribes were facilitated through multiple intermediaries, who received more than $800,000 from Pierre.

Although details of his plea agreement are currently unknown, Bogoraz pled guilty to conspiracy to commit bribery and conspiracy to commit money laundering in January 2024. Bogoraz is currently scheduled to be sentenced in July 2024.

Finally, Pierre utilized two companies—Medical Reimbursement Consultants and Marketing 4 You—to engage in tax evasion. Specifically, Pierre hid income from the Internal Revenue Service by using a series of check cashers for checks made out to these companies by the clinics and paid personal expenses, including payments for Pierre’s wedding, home renovations, luxury clothing and travel, from these companies’ bank accounts but improperly reported the payments as business expenses.

Similarly, Jean Pierre pled guilty to making and subscribing false tax returns for the shell companies—JAP Multi Services Inc. and Tort Cash LLC—receiving payments from the medical practices controlled by Pierre. Pierre’s accountant—Albert Haft—also pled guilty to conspiracy to defraud the United States in October 2022, and admitted that he had conversations with Pierre, Jean Pierre, Dr. Moy and Dr. Weiner during which he agreed to prepare and file federal tax returns which misrepresented personal expenses as business expenses.

Conclusion

Over the course of two years, the multiple indictments and guilty pleas in Pierre laid bare a sophisticated scheme carried out by individuals in the healthcare, legal, and financial sectors to defraud no-fault automobile insurance carriers. The facts brought to light in Pierre highlight the need for insurers to remain vigilant against schemes by non-licensed individuals to coopt the no-fault insurance system for personal profit.

Reprinted with permission from the March 7, 2024, issue of the New York Law Journal^©, ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.