Attorney Sentenced to 51 Months in Federal Prison for Role in Extensive Insurance Fraud Conspiracy
|U.S. Attorney’s Office July 10, 2014|
Deirdre M. Daly, United States Attorney for the District of Connecticut, and Patricia M. Ferrick, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation, announced that JOSEPH P. HADDAD, 65, of Orange, was sentenced today by U.S. District Judge Stefan R. Underhill in Bridgeport to 51 months of imprisonment, followed by three years of supervised release, for his role in an extensive insurance fraud scheme. He was also ordered to pay a fine of $25,000.
This matter stems from “Operation Running Man,” a 14-month undercover fraud investigation headed by the Federal Bureau of Investigation. The investigation included the use of recordings of an undercover special agent meeting with HADDAD, various doctors and chiropractors in relation to auto-accident personal injury litigation.
According to court documents, statements made in court and the admissions of his co-conspirators, HADDAD, a Bridgeport-based personal injury attorney, conspired with chiropractors and others to defraud several insurance companies by exaggerating the auto accident injuries of HADDAD’s clients, and the cost of their medical care, to justify larger monetary settlements with the insurance companies. As part of the scheme, the co-conspirators fabricated medical records, prescribed unnecessary pain medication, performed unnecessary chiropractic treatment, ordered and billed for diagnostic tests of questionable medical value, and overstated injuries or permanent partial disabilities that were allegedly caused by the accidents.
“Over the course of years and in hundreds of cases, this corrupt attorney used his law license as a license to steal from insurance carriers,” stated U.S. Attorney Daly. “Driven by greed, he illegally used runners to find highly questionable personal injury cases, convinced his clients to overstate treatment needs to inflate medical costs, pushed for doctors’ reports that falsely claimed permanent injury, all the while aware that his clients were improperly receiving prescriptions for narcotics to make them seem more injured than they actually were. Through this scheme, Haddad and he cohorts bilked insurance companies of over $1.7 million dollars. His crime both damages the reputation of all legal and medical professionals and inflates the cost of insurance for all of us. I commend the FBI for their excellent work during this undercover investigation.”
“For years, Attorney Haddad operated a well-oiled fraud machine designed to bilk millions of dollars from automobile insurance companies,” stated FBI Special Agent in Charge Ferrick. “Today, he learned that his long-running scheme has earned him 51 months in federal prison. Lawyers, doctors, chiropractors and other licensed health care professionals can earn substantial incomes without having to steal. Sadly, the criminal conduct of Haddad and the other defendants in Operation Running Man not only causes a loss of trust in lawyers and doctors, but also much higher insurance premiums for us all. As covert investigations like Operation Running Man suggest, the FBI and the U.S. Attorney’s Office are fully committed to investigating and prosecuting licensed professionals who commit similar frauds.”
Between December 2006 and February 2010, HADDAD conspired in the scheme with Francisco R. Carbone, who had been licensed to practice medicine until his license was revoked by the State of Connecticut in March 2005, and with Dr. Marc Kirshner, who owned and operated two chiropractor offices in Bridgeport and one in Stamford.
As part of the scheme, HADDAD paid “runners” to locate and deliver to him clients for his personal injury practice. Because state law barred attorneys from hiring runners in personal injury cases, HADDAD attempted to hide this practice by paying the runners in cash. Dr. Kirshner regularly met with HADDAD to provide him with thousands of dollars in cash and, in return, HADDAD reimbursed Kirshner with checks written from his business account. HADDAD often included on the checks false memo lines suggesting that the checks were for medical expenses incurred by his clients. During the course of the conspiracy, Kirshner gave HADDAD more than $100,000 in cash. HADDAD also paid runners with checks directly from his client trust account, often disguising these payments as “independent investigative services.”
HADDAD regularly instructed clients to see Carbone for purported medical treatment, even though HADDAD was aware that Carbone had lost his medical license. Carbone provided HADDAD’s clients with prescription pain medication, even if the medication was not needed and, in reports, fabricated the clients’ injuries, medical conditions and permanent partial disability ratings. In multiple instances, Carbone did no medical examination at all. Carbone billed the victim insurance carriers in his name or in the name of another physician for services he allegedly rendered, and provided prescriptions, bills, medical reports and final reports to HADDAD, who submitted the documents to the
victim carriers to support requests for settlement. HADDAD also referred clients to Dr. Kirshner’s Bridgeport chiropractor offices, which operated under the name Health First Medical, P.C. Kirshner often permitted HADDAD to influence the course of patients’ medical treatments by acquiescing to HADDAD’s instructions that a patient receive more treatment and diagnostic tests despite the questionable need for both. Kirshner and other chiropractors at Health First, including Jennifer Netter, established a protocol to treat patients in HADDAD’s cases for six months, regardless of medical need, and would not resolve treatment of patients unless instructed to do so by HADDAD. Netter and others at Health First often falsified medical records by indicating that they had examined the patients when they had not, and by misrepresenting that patients’ pain complaints and other symptoms continued. After the six-month period, each patient would receive a permanent partial disability rating, regardless of the permanence of the medical condition. If a patient had received a permanency rating for a prior accident, the protocol was to give a higher or different disability rating for the present accident. Kirshner also owned a diagnostic testing company, Midas Medical LLC, and instructed his employees to conduct Nerve Conduction Velocity (NCV) tests whenever a patient’s symptoms could potentially implicate testing, even though he knew the test results would not change the course of treatment. HADDAD and Kirshner arranged for Carbone to order the tests, believing that, if ordered by a doctor, the tests would be given greater weight by the victim insurance companies and increase the likelihood of higher settlement payments. HADDAD summoned at least one chiropractor to his office so that Kirshner could explain that the chiropractor would receive a kickback of several hundred dollars for each referral of HADDAD’s clients for NCV testing. Kirshner’s office would provide to HADDAD a bill of approximately $2,000 for each NCV test, and HADDAD would submit the bills to the victim carriers as part of settlement discussions.
More than 10 insurance carriers lost a total of more than $1.7 million as a result of this fraud scheme. Judge Underhill ordered HADDAD to pay restitution in the amount of $1,758,368. HADDAD was ordered to report to prison on September 24, 2014.
On January 3, 2014, HADDAD pleaded guilty to one count of conspiracy to commit mail fraud and one count of mail fraud. After his guilty plea, he resigned from the practice of law. Carbone, Kirshner, Netter, two other chiropractors and a licensed doctor of osteopathic medicine also pleaded guilty to charges stemming from this scheme. On July 9, 2014, Netter was sentenced to two years of probation and ordered to perform 100 hours of community service. Carbone and Kirshner await sentencing. This matter is being investigated by the Federal Bureau of Investigation, with the assistance of the National Insurance Crime Bureau, the Metropolitan Property and Casualty Insurance’s Special Investigation Unit and the Travelers Insurance Company.
The case is being prosecuted by Assistant U.S. Attorneys Christopher W. Schmeisser and David J. Sheldon.