Confluence of Corrupt Interests Can Lead to Massive No-Fault Frauds

September 3, 2021 | Evan H. Krinick | Michael A. Sirignano | Insurance Fraud

In March 2020, as the COVID-19 pandemic was first beginning to take hold, the New York State Department of Financial Services (DFS) issued a report on insurance fraud that highlighted the fact that suspected no-fault automobile insurance fraud accounted for 59 percent of the 25,985 insurance fraud reports that the DFS’s Insurance Frauds Bureau received in 2019 – a six percent increase over the prior year. Perhaps more ominously, suspected no-fault insurance fraud accounted for 89 percent of all healthcare fraud reports the Bureau received that year. See DFS, “Investigating and Combating Health Insurance Fraud” (the DFS Report), available at

The DFS Report also pointed out that the DFS had conducted a number of no-fault investigations in 2019 that involved “runners” who solicit victims of motor vehicle accidents at accident scenes to steer them to medical clinics and coach them to exaggerate and fabricate injuries; “runners” who stage accidents and refer phony accident victims to medical clinics and law firms in exchange for monetary payments; and individuals adding themselves to accident reports when they had not been involved in the accident that was the subject of the report.

A common feature in all of these categories is the crucial role that patients – real (though exaggerated) and fake – play in no-fault insurance fraud schemes. Indeed, as can be seen from the November 2019 indictment brought in the U.S. District Court for the Southern District of New York against 27 individuals in connection with an alleged years-long, multi-million dollar no-fault insurance fraud relating to New York and New Jersey no-fault automobile insurance policies, generating patients is the essential element necessary for an insurance fraud scheme to be able to fleece insurers and ultimately (through increased premiums) policyholders. United States v. Rose, S.D.N.Y., No. l:19-cr-00789-PGG.

In the Rose case, prosecutors alleged, in essence, that Anthony Rose, a/k/a “Todd Chambers,” was the ringleader of the fraud and that Rose and his co-conspirators bribed 911 operators, medical personnel, and police officers for the confidential information of tens of thousands of motor vehicle accident victims. Then, the government alleged, using this information, Rose and his co-conspirators contacted victims, lied to them, and steered them to clinics and lawyers who paid Rose kickbacks for these referrals, leading to millions of dollars in fraudulent payments and losses to insurance companies.

The Allegations in Rose

New York and New Jersey no-fault insurance laws require a driver’s automobile insurance company to pay automobile insurance claims automatically for certain types of motor vehicle accidents, provided the claim is legitimate and is below a particular injury or damages threshold. Pursuant to these requirements, insurance companies typically pay medical service providers directly for the treatment they provide to automobile accident victims, without the need to bill the victims themselves. This process resolves automobile claims without apportioning blame or fault for the accident, thereby avoiding protracted disputes and the costs associated with an extended investigation of the accident. According to prosecutors, Rose and his associates exploited these procedures by bribing individuals with access to confidential information about motor vehicle accident victims, using this information to contact victims under false pretenses, and steering these victims to seek treatment at medical clinics and legal representation from lawyers who were willing to pay kickbacks for the referrals.

According to the indictment, Rose enlisted the services of the following groups of co-conspirators: brokers who cultivated the lead sources and paid bribes; the workers of a multi-person call center who contacted the victims and steered them to the lawyers and medical providers participating in the scheme (the Call Center Defendants); the employees and contractors of federally funded hospitals who sold protected patient information to Rose and his co-conspirators for personal gain (the Hospital Defendants); and police officers and 911 operators employed by the New York Police Department (NYPD) who provided confidential information concerning motor vehicle accident victims to Rose and his co-conspirators (the NYPD Defendants).

In particular, the government asserted that since at least in or about 2014, Rose and his co-conspirators paid hundreds of thousands of dollars as bribes to as many as 50 “lead sources.” As alleged, Rose paid these lead sources as much as $4,000 per month, and continuously worked to identify new lead sources, largely through word of mouth and through the extensive corrupt network he established. The government said that lead sources were paid in cash and “off the books.” In return, according to prosecutors, these lead sources unlawfully disclosed protected, confidential information to Rose and his co-conspirators, including victims’ names, contact information, and medical information.

As alleged in the indictment, after receiving the confidential victim information from the lead sources, Rose and his associates provided the information to co-conspirators working at Rose’s call center, located in Brooklyn, New York. As alleged, the call center was staffed with employees who contacted the accident victims on a daily basis and steered them to seek medical treatment at clinics and law firms handpicked by Rose.

Prosecutors contended that the Call Center Defendants followed a pre-established script during these communications. Allegedly, among other things, the Call Center Defendants falsely told accident victims that they were calling from an organization affiliated with the New York Department of Transportation and that their organization had obtained the victims’ contact information through a so-called Personal Injury Hotline. Prosecutors said that the Call Center Defendants also lied by saying that they were calling to protect victims from people who obtain victims’ information illegally and misled victims into seeking treatment with certain providers.

According to the government, Rose instructed the Call Center Defendants to target victims from low-income neighborhoods because, in his view, these individuals could be more easily brought into the scheme. The indictment quotes Rose as saying, “The hood. The hoods is number one. Meaning, they pull those joints up based on neighborhoods. Tell her all that Manhattan shit, those people got attorneys. We need all the hood cases. Bronx hood, they – – it’s poor – – those cases those insurance policies go by demographics. We want all the bad neighborhoods            . The top-tier shit is all the hood. I don’t care what neighborhood it is.”

The indictment states that from at least in or about 2014 to November 2019, Rose and his co-conspirators illegally steered more than 6,000 motor vehicle accident victims to participating clinics and lawyers, who paid kickbacks in return for the referrals. According to the charges, Rose and co-conspirators earned, on average, approximately $3,000 per successful referral, resulting in millions of dollars in illegal profits.

It is important to note that, according to prosecutors, the Call Center Defendants successfully induced approximately one in 10 accident victims to seek treatment or representation from participating clinics and lawyers. Thus, prosecutors contended, the fraud resulted in the improper disclosure of the confidential information of at least 60,000 motor vehicle accident victims.

According to the indictment, Rose and his co-conspirators went to elaborate lengths to conceal the alleged fraud. Among other things, prosecutors asserted that the co-conspirators generally referred to one another only by aliases; used “burner” phones with temporary and unidentifiable phone numbers; switched their phone every 60 days; set up numerous fictitious companies; corresponded through encrypted mobile applications; and used concealed spreadsheets that tracked bribe payments to lead sources, in secret email accounts that co-conspirators could access remotely. Prosecutors also said that the members of the conspiracy assigned unique code names to each lead source, such as “J1,” “P2,” and “G6,” and used these code names to refer to lead sources during communications rather than using their true names.

In summary, the indictment charged Rose and the Hospital Defendants with conspiracy to violate the Travel Act (for example, by using the mail to promote, manage, establish, carry on, and facilitate an unlawful activity), unlawful disclosure of protected health care information, and bribery. It charged other defendants, including members of Rose’s family and the Call Center Defendants, with conspiracy to violate the Travel Act. In addition, it charged the NYPD Defendants with conspiracy to violate the Travel Act and bribery.


The government’s multi-year investigation leading to the 54-page indictment has generated a docket sheet that as of this writing is about 90 pages long. Recently revealed wiretap information and affidavits suggest that the government’s case is quite strong. That undoubtedly has been a key incentive for many of the original 27 defendants to decide to plead guilty.

This case clearly has implications for all of the defendants and their friends and families, as well as for the carriers that the government alleges have been defrauded to the tune of millions of dollars.

Yet the indictment and the government’s allegations also may have a broader impact as the case may be seen to illustrate the confluence of interests that can lead to no-fault automobile insurance fraud, including medical clinics focused on profit and willing to pay for access to patients, despite laws prohibiting that conduct; personal injury lawyers who want to represent plaintiffs and are open to illegally kicking back fees to referral sources; and employees with access to patient data who are happy to accept bribes in exchange for that information. All of these factors together demonstrate how no-fault automobile insurance fraud continues to grow in sophistication and scope. The only remedy may be the continuing effort of prosecutors, and insurance companies themselves, intent on striking it down.

Reprinted with permission from the September 2, 2021, issue of the New York Law Journal©,  ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.

Share this article:

Related Publications

Get legal updates and news delivered to your inbox