For Immediate Release: April 03, 2013
WESTCHESTER COUNTY INSURANCE AGENT CHARGED WITH GRAND LARCENY IN CONNECTION WITH HEALTH INSURANCE SCHEME
Benjamin M. Lawsky, Superintendent of Financial Services, announced that a Westchester County insurance agent was arrested Tuesday on charges of grand larceny for taking $62,000 in commissions from the enrollment of more than 400 people in a phony category of insurance that did not exist.
Norman J. Michaels Jr., 61, was arrested by investigators with the New York State Department of Financial Services’ (DFS) Frauds Bureau following a DFS investigation. Michaels was arraigned in Town of Oneonta Court.
Superintendent Lawsky said: “This scheme put the health care of hundreds of people at risk. Our office will continue to work tirelessly to investigate and root out insurance fraud, which is a crime that needlessly drives up health care costs for all New Yorkers.”
Michaels is accused of stealing the commissions from MVP Health Care of Schenectady as the result of the improper enrollment of individuals into small group and sole proprietor health plans insured by MVP and offered through the Otsego County Chamber of Commerce. The insurance policies were sold to downstate residents who were purportedly enticed to buy them on the basis that the coverage was less expensive than health insurance in the New York City area. However, in most cases, individuals must reside or work in the geographical area where a health insurance plan is offered in order to be eligible. The insurance policies of all of the 400 people were cancelled after it was discovered they were ineligible to join the plan.
Superintendent Lawsky added: “If this scheme had been left uncovered, it could have led to higher premiums for people living in Otsego County. Their premiums could have begun to reflect the health care costs of people obtaining more costly services in New York City.”
Michaels is alleged to have conspired with Robert Robinson, a former president of the Chamber, who is accused of creating a phony Chamber membership category so the downstate residents could be enrolled in the organization’s small group plan.
Robinson was fired from his position with the Chamber after he was arrested in 2011. He is now awaiting court action on charges of insurance fraud, grand larceny, fraud and falsifying business records.
The fraudulent insurance scheme was discovered after MVP noticed an unusually high spike in new enrollments and saw that a large number of enrollees were from downstate. MVP paid nearly $1 million in health care costs associated with the improperly enrolled individuals.
The case is being prosecuted by Ostego County District Attorney John M. Muehl.