In two separate cases in the state of Pennsylvania, chiropractors who either owned a club or were hired by club operators played a role in insurance fraud schemes that have landed the club owners in prison. A third case is Pennsylvania is still under investigation.

Insurance fraud occurs in many industries, and although it’s rare in the health club industry, insurance fraud was at the heart of three recent cases involving health club operators in the state of Pennsylvania.

Dr. Joseph Lerner, a chiropractor and owner of Horsham (PA) Fitness, was sentenced in January to 36 months in prison for defrauding eight insurance companies, including Independence Blue Cross, in a $3 million scheme. The office of U.S. Attorney Zane David Memeger for the Eastern District of Pennsylvania, Philadelphia, said that Lerner billed the insurance companies for chiropractic treatments that Lerner did not provide or supervise between 2007 and March 2010.

The owner of Horsham Fitness, Horsham, PA, is serving a 36-month prison sentence for insurance fraud. Photo by Robin Leven.

“Lerner lied to people who came to join his gym,” according to the sentencing memo, “telling them that they could obtain massages and personal training for the very low price of only a co-payment, usually $10, by having their health insurance company pay for those massages and personal training sessions, when he knew that such sessions were not reimbursable under the gym members’ health insurance policies.”

Memeger, along with Assistant U.S. Attorneys Mary Crawley and Laurie Magid, also submitted in the sentencing memo that Lerner, knowing that no treatments had been provided, prepared the fraudulent bills, including fictitious procedure codes and false representations of patient symptoms and clinical findings. The payments from the eight insurance companies totaled about $1.9 million. In his plea agreement, Lerner agreed to forfeit $432,834.12.

“Insurers saw that there were unusual patterns of billing by Dr. Lerner, so they brought it to our attention, and then we investigated further,” Magid says.

The Eastern District of Pennsylvania office also handled a case involving another chiropractor, Raymond Brozek, and Michael Karp and Mark Levin, owners of Hatfield (PA) Athletic Club and Rehab One, a chiropractic and rehabilitation facility located inside the club.

Levin and Karp hired Brozek to work from 2004 to 2006 and directed members to Brozek, who then created fraudulent bills that were submitted for treatments that Brozek did not perform or were not medically necessary.

In addition to Rehab One, which no longer is in operation at Hatfield Athletic Club, Brozek also saw patients in the basement of Levin’s home at a gym known as Rehab Two and at the homes of Levin’s friends, according to court documents. The fraudulent bills to Independence Blue Cross totaled $1.9 million, resulting in payments from the insurance company totaling almost $400,000.

Last year, Levin, Karp and Brozek each pleaded guilty to one count of health care fraud. Levin received a 12-month prison sentence, and Karp received a six-month prison sentence. Brozek avoided prison time and received a sentence that includes three years’ probation after a motion of leniency was filed based on “substantial” assistance from Brozek that led to charges against Levin and Karp.

“It didn’t do as well as I thought … and I guess I lost my mental control and tried to make up for it, and I did that by cheating,” Levin said at sentencing, according to Philadelphia newspapers. Levin added that he did not take the money for himself and instead put it back into the club.

The state of Pennsylvania was once again hit with an insurance fraud probe in late January. Investigators from the Northeast Pennsylvania Insurance Fraud Task Force raided the Giacalone Chiropractic and Fitness Center’s two locations in Pocono Summit, PA, and Canadensis, PA. A team of 20 officers in each location carried out computers, records and other items that could be used as evidence, according to local media outlets.

Myles Walsh, the task force’s director, said that the father-daughter business operated by Joseph and Maria Giacalone has been under investigation for the past five years, and the case could involve fraudulent insurance bills of more than several million dollars.

“This investigation began after an individual contacted us about inconsistencies in Giacalone’s insurance billing statements,” Walsh told media outlets in January. “We’ve found too many billing inconsistencies for all this to be accidental and not intentional. They’ve billed insurance companies 30, 36-hour days. Obviously, there’s only 24 hours in a day.”

A representative from the task force said last month that the case is still under active investigation. As of press time, no charges had been filed against the Giacalones, who did not respond to e-mailed requests for comments from Club Industry.

NEXT PAGE: INSURANCE FRAUD CASES RARE IN CLUB INDUSTRY

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