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Manhattan U.S. Attorney And FBI Assistant Director-In-Charge Announce Arrests Of Two Licensed Psychologists In $4 Million, Multi-Year, No-Fault Automobile Insurance Fraud Scheme

FOR IMMEDIATE RELEASE
Tuesday, December 18, 2012

Preet Bharara, the United States Attorney for the Southern District of New York and George Venizelos, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment against MARGARET KINDER and JAY SEITZ for their alleged participation in a multi-year, no-fault automobile insurance fraud scheme. KINDER and SEITZ are licensed psychologists who each allegedly caused over $2 million of claims to be reimbursed by no-fault insurance carriers on behalf of patients who purportedly received psychological services from the defendants that they never received. KINDER and SEITZ were arrested this morning at their residences in connection with today’s charges and will be presented and arraigned before U.S. Magistrate Judge Sarah Netburn this afternoon.

Manhattan U.S. Attorney Preet Bharara said: “As alleged, Margaret Kinder and Jay Seitz made the no-fault insurance system into a no-service medical system, all to fatten their wallets, at the expense of all who pay into the no-fault insurance pool. They abused their medical licenses by rubberstamping treatment notes for services they never provided in return for getting hefty cuts of insurance company reimbursements that they should never have received, as the Indictment describes.”

FBI Assistant Director-in-Charge George Venizelos said: “The defendants allegedly falsified insurance reimbursement documents, breaking the law and violating the most basic ethical obligations of their profession. Insurance companies paid out over $4 million in fraudulent claims for treatment services never provided by the defendants. Insurance fraud is a crime that ultimately increases costs for all of us.”

The following allegations are based on the unsealed Indictment and other public documents filed today in Manhattan federal court:

Under New York State Law, the owner of every vehicle registered in New York State is required to have no-fault automobile insurance, which enables the driver and passengers to obtain benefits of up to $50,000 per person for injuries sustained in an automobile accident, regardless of fault (the “No-Fault Law”). The No-Fault Law requires payments for medical treatments to be made promptly, thereby obviating the need for vehicle occupants to file personal injury lawsuits in order to be reimbursed for medical treatment. Among the services required to be reimbursed by the No-Fault Law are psychological screening and counseling services for accident victims. The No-Fault Law requires that such services be provided either by a licensed physician or psychologist, or by a licensed social worker acting under the supervision of a licensed physician or psychologist, and it also provides for a set rate of reimbursement for psychological services, which varies according to the duration of the services performed and whether the services are performed by a licensed psychologist or by a licensed social worker.

In 2004, KINDER and SEITZ were recruited to participate in the no-fault insurance scheme by the principals of a company that provided claims administration services to doctors associated with no-fault clinics (the “Claims Administrator”). From 2004 until December 2008, KINDER and SEITZ purported to provide psychological services to patients at medical clinics located in the Bronx and Brooklyn, New York. KINDER and SEITZ signed treatment notes that described the diagnoses they purportedly made, and the services they purportedly provided, to patients treated at these clinics. The treatment notes were provided to the Claims Administrator, who used them to generate claims that were submitted to no-fault insurance companies for reimbursement. The claims were coded to reflect that the psychological services for which reimbursement was sought were provided by either KINDER or SEITZ, and the duration for which the services were provided. In fact, KINDER and SEITZ neither diagnosed nor treated the patients. Although the patients at the clinics sometimes received psychological screening and treatment, this treatment was provided by staff members they employed who were not licensed psychologists or social workers, and who did not act under their supervision. In addition, the treatment duration reflected on the claims forms often exceeded the actual duration of services provided by KINDER’s and SEITZ’s staff members.

As a result of the fraudulent claim submissions, no-fault insurance providers reimbursed over $2 million in claims submitted on behalf of a professional corporation associated with KINDER, and over $2 million in claims submitted on behalf of professional corporations associated with SEITZ, for patients they never treated. KINDER and SEITZ kept 20% of the amount reimbursed by no-fault insurance companies for these sham services.

KINDER, 68, and SEITZ, 60, both of New York, NY, are each charged with one count of mail fraud, one count of health care fraud, and one count of participating in a conspiracy to commit mail fraud and health care fraud. The mail fraud and conspiracy counts each carry a maximum sentence of 20 years in prison, and the health care fraud count carries a maximum sentence of 10 years in prison. In total, KINDER and SEITZ both face a maximum jail term of 50 years. The case is assigned to U.S. District Judge Stein.

Mr. Bharara praised the investigative work of the FBI in connection with this long-term investigation.

This case is being handled by the Office's Organized Crime Unit. Assistant U.S. Attorney Brian Blais is in charge of the prosecution.

The charges contained in the Indictment are merely accusations and the defendants are presumed innocent unless and until proven guilty.

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U.S. v. Kinder, Margaret and Seitz, Jay Indictment(PDF)

 

 

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