TRENTON – Attorney General Christopher S. Porrino and the Office of the Insurance Fraud Prosecutor announced that a former North Jersey chiropractor who was stripped of his license to practice more than a decade ago pleaded guilty today in connection with a medical fraud ring that bilked nearly $4 million from numerous insurance carriers.
Philip Potacco, 65, of Kinnelon, pleaded guilty to money laundering and official misconduct in the second degree, and to third-degree practicing chiropractic without a license in a hearing before Judge Michael Critchley in Morris County Superior Court. The State agreed to recommend a prison sentence not to exceed 10 years when Potacco is sentenced on March 2, 2018. Potacco will also be required to pay $3.5 million in restitution to the various affected insurance companies.
Five others defendants, including an attorney and a chiropractor, previously pleaded guilty in the criminal enterprise that centered around Potacco’s South Orange Trauma and Rehab Center (“SOTC”) from 2010 to 2015.
“Despite being stripped of his chiropractic license, Philip Potacco ran a medical practice that served as a front to steal millions of dollars from numerous insurance companies,” said Attorney General Porrino. “The lengthy prison sentence he is now facing will serve as just punishment for his brazen disregard for the law in masterminding this elaborate criminal enterprise.”
“It is especially disturbing that professionals in good standing agreed to join the defendant in a conspiracy to corrupt and victimize the healthcare insurance system,” said Acting Insurance Fraud Prosecutor Christopher Iu. “As the participants in this criminal scheme have learned, we will hold everyone accountable for the part they play in facilitating insurance fraud.”
Potacco, whose chiropractic license was revoked in 2002, admitted he hired a licensed chiropractor to act as a straw owner of SOTC while he ran it covertly.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.
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.
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, who was sentenced to probation; and Wilguere Rezan, of Irvington, who is awaiting sentencing. 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 is awaiting sentencing.
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 Attorneys General Colin J. Keiffer represented the State at Potacco’s plea hearing. Detectives Wendy Berg and Grace Rocca coordinated the investigation with assistance from analysts Kelly Celenza and Terri Drumm.
Acting Insurance Fraud Prosecutor Iu 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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