TRENTON – Attorney General Gurbir S. Grewal and the Office of the Insurance Fraud Prosecutor announced that a former North Jersey chiropractor was sentenced to seven years in prison today for his role in a medical fraud ring that bilked nearly $4 million from numerous insurance carriers.
Philip Potacco, 65, of Kinnelon, also must pay $3.5 million in restitution to various insurance companies under the sentence handed down by Judge Thomas J. Critchley in Morris County Superior Court.
In November, Potacco pleaded guilty to money laundering and official misconduct in the second degree, and to third-degree practicing chiropractic without a license in connection with a criminal enterprise that centered around his South Orange Trauma and Rehab Center (“SOTC”) from 2010 to 2015.
Potacco, whose chiropractic license was revoked in 2002, admitted he hired a licensed chiropractor to act as a straw owner of SOTC while he ran it covertly. An OIFP investigation revealed that Potacco used illegal “runners” to recruit accident patients to the facility, including people who had staged their crashes. He then fraudulently submitted insurance claims for those patients, using the billing information of the licensed chiropractor he had hired, the investigation revealed.
“Patients must be able to trust their doctors and the information their doctors provide,” said Attorney General Grewal. “When a doctor lies about the status of his medical credentials, the ownership of his chiropractic practice, and the details of his insurance claims, he betrays that trust. The lengthy prison sentence this defendant received underscores our commitment to eradicating this kind of criminal conduct from New Jersey’s health care industry.”
Over a five-year period, Potacco funneled approximately $3,991,812 in claim money into SOTC’s account. He then laundered the lion’s share of that money through a shell company called Medical Consulting Group LLC, (“MCG”). Once he transferred the money into the MCG account, Potacco used the account for personal use, withdrew thousands of dollars in cash, and wrote checks to deposit in his own name and his wife's name.
The investigation further revealed that Potacco collected money for referring SOTC patients to a South Orange personal injury attorney who filed insurance claims on their behalf, the investigation revealed. Potacco, under the name of SOTC’s straw owner, provided falsified medical reports to support those claims.
“For years Phillip Potacco lied and cheated and broke the law to get what he wanted, but justice caught up with him today,” said Acting Insurance Fraud Prosecutor Tracy M. Thompson. “He learned the hard way that insurance fraud isn’t a path to easy money, it’s a path to prison.”
Five other defendants, including an attorney and a chiropractor, previously pleaded guilty in the criminal enterprise.
The chiropractor who acted as the front man for SOTC, John Langeraap, of Sparta, has pleaded guilty to second degree conspiracy to commit insurance fraud and is awaiting sentencing.
The attorney who paid for SOTC referrals, Mark Gertner, of Montclair, has pleaded guilty to third-degree criminal running and is awaiting sentencing.
Other defendants in the case who pleaded guilty to third-degree running are Anulet Josaphat of Union, and Wilguere Rezan, of Irvington, who were both sentenced to probation. Andre J. Richemond, of East Orange pleaded guilty to obstructing the administration of law, a disorderly persons offense, for his role in the scheme and was sentenced to probation.
Charges are pending against a sixth defendant, Jude M. DiManche of East Orange, who is charged with two counts of third-degree criminal running.
In 2006 Potacco was sentenced to serve three years’ probation and to pay more than $48,000 in restitution after pleading guilty to theft by deception. In pleading guilty, Potacco admitted he continued to see patients after the state Board of Chiropractic Examiners revoked his license for misconduct in 2002. He also admitted he submitted nearly $100,000 in billings to insurance companies for medical services and treatments provided to patients while his license was revoked.
Deputy Attorney General Colin J. Keiffer represented the State at sentencing. Detectives Wendy Berg and Grace Rocca coordinated the investigation with assistance from analysts Kelly Celenza and Terri Drumm.
Acting Insurance Fraud Prosecutor Thompson noted that some important cases have started with anonymous tips. People who are concerned about insurance cheating and have information about a fraud can report it anonymously by calling the toll-free hotline at 1-877-55-FRAUD, or visiting the Web site at www.njinsurancefraud.org. State regulations permit a reward to be paid to an eligible person who provides information that leads to an arrest, prosecution and conviction for insurance fraud.
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