TRENTON
- Attorney General Peter C. Harvey announced
that a Bergen County man has pleaded guilty
to stealing health insurance benefits
by creating a phony business group in
order to fraudulently purchase group health
insurance coverage for individuals not
employed by the company. The fraud resulted
in non-eligible "employees"
fraudulently obtaining more than $110,000
in ineligible group benefits and insurance
coverage.
According
to Vaughn L. McKoy, Director, Division
of Criminal Justice and Insurance Fraud
Prosecutor Greta Gooden Brown, Barry W.
Kallenberg, 51, North Avenue, Fort Lee,
Bergen County, pled guilty before Bergen
County Superior Court Judge William C.
Meehan to a criminal Accusation which
charged theft by deception (3rd degree).
A third degree crime carries a maximum
sentence of up to five years in state
prison and a fine of up to $15,000. Additionally,
Kallenberg may by ordered to pay restitution
and subject to civil insurance fraud fines
pursuant to the civil Insurance Fraud
Prevention Act. Kallenberg is scheduled
to appear before Judge Meehan on March
26, 2004 for sentencing.
In
the Dec. 19 guilty plea hearing before
Judge Meehan, Kallenberg admitted that
he created a fictitious real estate management
business group in order to purchase group
health insurance for five individuals
not entitled to group coverage because
they were not bona fide employees of a
bona fide business. The Accusation charges
that in February, 1999, Kallenberg applied
to Horizon Blue Cross and Blue Shield
of New Jersey for a small employer health
benefits policy in order to provide health
coverage at a lower premium employee group
rate. The investigation revealed that
between January, 1996 and January, 1999,
$111,500 in health insurance claims were
submitted to Horizon Blue Cross and Blue
Shield on behalf of the purported employees.
The
investigation was conducted by the Division
of Criminal Justice - Office of Insurance
Fraud Prosecutor. State Investigators
Robyn Greene and Thomas Ference, Civil
Investigator Errol English and Deputy
Attorney General Philip J. Mogavero were
assigned to the investigation. DAG Mogavero
represented the Division of Criminal Justice
- Office of Insurance Fraud Prosecutor
at the guilty plea hearing. The case was
referred by Horizon Blue Cross and Blue
Shield of New Jersey to the Office of
the Insurance Fraud Prosecutor.
"This prosecution was based on a
false and fictitious application for health
insurance for a group of employees who
were allegedly employed by a small business.
The business was not bona fide and the
application was submitted so that health
insurance monies could be stolen from
the insurance carrier on behalf of persons
ineligible for the coverage. It is a serious
crime for small business owners to falsely
represent that friends or family are employed
by the business so that health insurance
can be obtained at a lower rate,"
said Insurance Fraud Prosecutor Gooden
Brown.
Insurance
Fraud Prosecutor Gooden Brown noted that
the Office of Insurance Fraud Prosecutor
realized a 143 percent increase in indictments;
a 91 percent increase in defendants charged;
a 79 percent increase in convictions (trial
convictions and guilty pleas); and a 80
percent increase in civil sanctions in
2002. The Office of Insurance Fraud Prosecutor
charged 225 defendants in 2002, versus
118 defendants in 2001. Additionally,
the Office of Insurance Fraud Prosecutor
imposed sanctions in 3,723 civil fraud
cases in 2002, compared to 2,063 civil
sanctions obtained in 2001. The Office
of Insurance Fraud Prosecutor collected
$20.6 million in penalties in 2002, up
from $15.8 million in 2001.
Noting
that some important cases have begun with
anonymous tips from the public, Insurance
Fraud Prosecutor Gooden Brown encouraged
anyone with information about insurance
fraud to contact the Division of Criminal
Justice - Office of Insurance Fraud Prosecutor's
toll-free hotline at 1-877-55-FRAUD,
or to visit the insurance fraud web site
at www.NJInsurancefraud.org
.
Housed
in the Department of Law and Public Safety's
Division of Criminal Justice and reporting
to the Attorney General, the Office of
the Insurance Fraud Prosecutor was established
by the Automobile Insurance Cost Reduction
Act of 1998 (AICRA). The Office is the
centralized state agency that investigates
and prosecutes civil and criminal insurance
fraud, as well as Medicaid fraud. Criminal
convictions for insurance fraud can result
in fines and imprisonment. Civil penalties
can include substantial fines and referral
for revocation or suspension of professional
licenses.
