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Feds allege $279 million auto insurance fraud scheme in New York

Federal agents and NYPD detectives have arrested dozens of suspects on federal charges of participating in a $279 million insurance fraud scheme.

The 36 people charged include 10 doctors and three attorneys who are alleged to have participated in the scheme, officials said. They face maximum jail sentences ranging from 30 to 70 years, if convicted.

Read NBCNewYork.com's original story on insurance fraud scheme

Suspects were charged with racketeering and money laundering, among other counts. Officials said the Brooklyn-based operation was the largest single no-fault auto insurance fraud scheme ever charged.

The scheme took advantage of a state law requiring every vehicle in New York state to have no-fault auto insurance, enabling the driver and passengers to get benefits of up to $50,000 per person for injuries suffered in an accident, regardless of fault.

Under the law, payments for medical treatments had to be made quickly, meaning those in the car would not have to file time-consuming personal injury lawsuits.

Some medical clinics have been created in New York entirely for the purpose of defrauding insurance companies under the no-fault law.

In some cases, clinic operators would also arrange for other allegedly fraudulent businesses to give unnecessary treatments, and would provide referrals from doctors. Those treatments were also billed to the auto insurance companies and included acupuncture, physical therapy, X-rays, and orthopedics.

In return, the clinic heads received cash kickbacks for the referrals.

The scheme also used recruiters to bring in patients, and paid them thousands per referral.

The operation had ties to Russian organized crime, officials said.

"The criminal enterprise, while it lasted, was obscenely profitable," FBI Assistant Director-in-Charge Janice K. Fedarcyk said in a statement.

Those charged will be arraigned in federal court in Manhattan.

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