Given the escalating costs of covering legitimate health care services, the last thing the health insurance industry needs is to be paying for services that were never rendered. Fortunately, state and federal laws provide harsh penalties for this sort of fraud. The onerous nature of those penalties will be brought home forcefully to a group of New Yorkers who allegedly sought a path to riches through pretending to undergo multiple brain surgeries.

According to an indictment filed in Manhattan federal court on June 1, Charles Pritchett, employee of a medical billing company, obtained insurance claim forms for two individuals who actually underwent brain surgery. Pritchett allegedly altered the patient names on the claim forms, and submitted them to Group Health Incorporated (“GHI”), along with similarly altered medical records. GHI thereafter mailed multiple reimbursement checks to the phony patients: Dorothy Smith, Stanley Cannella, and Michael Biscotti. If this had been the end of it, they might have actually escaped detection; however the defendants allegedly continued their scheme, submitting fictional bills for twenty separate brain surgeries, supposedly performed on Smith, Cannella, and their families. GHI's internal review picked up the supposed epidemic of brain damage, and referred the matter to federal authorities. Pritchett, Smith and Biscotti have been arrested, while Cannella remains at large. They are charged with an assortment of mail fraud and health care fraud counts. If convicted, the defendants each face a maximum sentence of 20 years’ imprisonment and a maximum fine of $250,000, or twice the pecuniary gain derived from the offense on each mail fraud count, and a maximum sentence of 10 years’ imprisonment and a maximum fine of $250,000 or twice the pecuniary gain derived from the offense on each health care fraud count.