Friday, June 18, 2010

New York DME Health Care Fraud Case: 17 Individuals Charged and 12 DMEs Searched In Federal Criminal Case Involving "No Fault Insurance" Billing

On June 15, 2010, four indictments were unsealed in the Eastern District of New York charging 17 individuals for their participation in alleged health care fraud and money laundering schemes in the Eastern District of New York. In addition, 12 durable medical equipment (DME) retail companies located in South Brooklyn that were operated by the charged individuals were searched.

Four of the DME businesses in Brooklyn that were searched were Kristar, Inc., Promed Supply Co., Inc., Dorsi Medical Supply Inc.,
DB Supply Inc./Avgur. The government also seized assets from bank accounts maintained by the retail DME companies owned by the charged individuals.

It must be remembered that the charges announced by the U.S. Attorney's Office today are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

According to the indictments, the DME company owners and operators filed fraudulent claims with private insurance companies with no-fault insurance plans. Specifically, it is alleged that the DME companies   submitted false invoices for durable medical equipment to the insurance companies in two ways: (1) by charging prices well in excess of the price paid by the companies, and (2) by billing for equipment that was never obtained.

There is a money laundering allegation as well since the indictments allege that the charged individuals engaged in financial transactions to conceal the identity, source, and destination of the fraudulent proceeds by “laundering” them through checks they issued to the same wholesale companies. The checks were then negotiated at check cashing stores and the resulting cash was delivered back to the defendants.

The charged individuals are: Aleksandr Afanasev (age 44), Leksandr Afanasev (age 44), Eduard Budrunov (age 49), Grigory Branfenbrener (age 57), Gennadiy Bronshteyn (age 51), Lyubov Groysman (age 56), Vladimir Khmelnitski (age 45), Iliya Mugerman (age 46), Bela Rud (age 38), Viktor Semerik (age 44), Arkadi Shapiro (age 59), Denis Zagladko (age 29), Igor Shturman (age 48), Mariya Gomelskaya (age 27), Igor Vetukh (age 50), Andrei Kozlovski (age 42), Igor Ladanov (age 28) and Artem Yuryev (age 31).

Attorney Commentary

In New York, there is no fault accident insurance. Health care fraud prosecutions are now proceeding beyond Medicare and Medicaid and are targeting private insurance companies. What appears to be alleged in this case is that the DME companies alleged that the price to the wholesale companies was more than charged, that the DME companies issued false invoices, the insurance companies sent checks to the wholesale companies, and then the wholesale companies cashed the checks at check-cashing stores. At that point, it is alleged that the cash funds were delivered back to the individuals charged.

How does the government prove such a case? Usually through  subpoenaed bank records and a forensic accounting probe. This means that witnesses are not necessary and it becomes a paper case. In order to evaluate the liability or exposure on such a case, analysis of these records by defense counsel is necessary.

The mark-up allegations are aggressive and are usually charged as a means of showing how kickback or other fraudulent schemes exist.  Large mark-up is not in and of itself against the law but is a factor that is considered on whether there is health care fraud. In some occasions, the large mark-up is used to explain how the extra money made is used for kickbacks or referral fees. 

Posted by Tracy Green, Esq. Any questions or comments should be directed to Tracy Green, a very experienced California health care fraud attorney, DME fraud attorney, California insurance fraud attorney, and California white collar criminal defense attorney at

The firm focuses its practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers and in health care fraud related matters in California and throughout the country. Their website is:


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