TRENTON
- Attorney General Peter C. Harvey announced
that a Mercer County neurologist, his
former medical practice and four former
medical diagnostic and/or medical equipment
corporations, along with the former office
manager, have been charged with devising
a lucrative insurance fraud scheme which
resulted in nearly 50 insurance companies
processing more than one million dollars
in fraudulent reimbursement claims for
medical services that are alleged to have
been improperly performed and then billed
to the insurance companies.
"This
substantial and significant investigation
and prosecution targets a potentially
new generation of insurance fraud in that
the indictment alleges that the doctor
and his corporations engaged in an elaborate
scheme to defraud insurance companies
out of millions of dollars,” said
Attorney General Harvey. “This case
represents a collaborative effort between
numerous insurance companies and the Insurance
Fraud Prosecutor and is the first time
the Insurance Fraud Prosecutor investigated
allegations that a doctor improperly performed
and fraudulently billed for medical services.
I would like to credit New Jersey Manufacturers
Insurance Company, and the many other
insurance companies involved in this case,
for initiating civil proceedings and in
assisting in the criminal investigation.”
According to Vaughn L. McKoy, Director,
Division of Criminal Justice, and Insurance
Fraud Prosecutor Greta Gooden Brown, Dr.
Alan E. Ottenstein, 49, Mount Eyre Road,
Washington Crossing, PA, and his former
office administrator, Jean Woolman, 56,
Woodview Road, Morrisville, PA, were charged
in a seven-count State Grand Jury indictment
with multiple counts of racketeering,
conspiracy to commit racketeering, attempted
theft by deception, and Health Care Claims
Fraud.
The indictment also charged Ottenstein’s
former medical practices and/or corporations
with multiple criminal charges. The corporations
are identified as: Lawrenceville Neurology
Associates, PA, formerly located at 2997
Princeton Pike, Lawrenceville, Mercer
County; Hamilton MRI, LP (a/k/a Open MRI
at Hamilton, a/k/a Hamilton Super Open
MRI); Hamilton Neurodiagnostic Associates,
PA (a/k/a Hamilton Diagnostic Associates);
Neurology Pain Center, PA, all formerly
located at Whitehorse-Mercerville Road,
Hamilton, Mercer County; and N.R.E.C.,
Ltd. (a/k/a National Regulated Equipment
Company, Ltd.), formerly located at West
Sahara Drive, Las Vegas, NV.
The State Grand Jury indictment alleges
that from Oct. 1, 1990 through Aug. 31,
2003, Ottenstein, Woolman, and Ottenstein’s
medical practice and service corporations,
conspired to submit more than one million
dollars in fraudulent claims for medical
treatments and services to nearly 50 insurance
companies, including New Jersey Manufacturers,
Aetna, Allamerica, Allstate, AmeriHealth,
Guardian, HealthNet, Horizon Blue Cross/Blue
Shield, Liberty Mutual, MetLife, New Jersey
Cure, The Oxford Plan, Prudential, State
Farm, and Zurich.
The indictment alleges that Ottenstein
and Lawrenceville Neurology Associates,
Ottenstein’s primary medical practice,
submitted thousands of fraudulent claims
seeking insurance reimbursements for varying
medical procedures that were improperly
performed or not performed at all and
submitted unjustified bills seeking facility
fees and reimbursement(s) for non-existent
medical supplies. The indictment identifies
several types of alleged insurance fraud,
including improper billings seeking reimbursement
for epidural pain management injections;
improper billing for separate anaesthetic
and steroid injections as part of epidurals
(procedures that should not have been
billed separately); separate billing charging
the use of contrast agent(s) as part of
an epidural procedure when the procedure(s)
should not have been separately billed;
fraudulent billing for medical supplies
(sterile trays) when such supplies were
not used; fraudulent billing for “facility
fees” when such fees were not charged;
altering Magnetic Resonance Imaging (MRI)
reports so that patients (primarily patients
injured in automobile accidents) would
appear to have auto-related injuries when,
in fact, no such injury existed; and fraudulently
billing mechanical disk recovery system
treatment(s) as surgical procedures when
such procedures were not surgical-related.
The indictment charges that Ottenstein
submitted more than 2,400 claims totaling
$506,000 to health insurance carriers
for Disc Recovery System (DRS) procedures
purportedly performed on patients for
treatment of herniated and degenerative
discs. The investigation determined that
Ottenstein billed for surgical DRS, yet,
no surgery was done. It is charged that
Hamilton MRI (not a licensed MRI facility)
billed for MRI procedures after MRI reports
were allegedly altered by Ottenstein and
Woolman to reflect abnormal diagnoses
for otherwise normal scans. Hamilton MRI
and Ottenstein are also charged with generating
more than $225,000 in billings for contrast
injections, when such injections were
not done. The indictment alleges that
Ottenstein performed single epidural injections
containing an anesthetic (for pain) and
a steroid but billed as if injecting each
patient separately with each medication,
subsequently billing insurance companies
more than $600,000 for the procedures.
It is further charged that Ottenstein
billed insurance companies for “sterile
trays” and other sterile supplies
separately, rather than as items included
in the billings for the epidural injections.
These separate supply charges totaled
in excess of $125,000. N.R.E.C., a company
owned and run by Ottenstein and Woolman,
was the supplier of the sterile trays.
The Neurology Pain Center also lacked
a Certificate of Need nor is the facility
a licensed Medicare provider, yet the
Neurology Pain Center fraudulent charged
insurance companies $342,000 in fraudulent
facility fees.
New Jersey Manufacturers Insurance Company
and The Prudential Insurance Company,
two of the victim insurance carriers,
filed civil actions against Ottenstein
and his medical companies alleging allegations
of civil racketeering. Those matters are
pending.
Anthony G. Dickson, President and CEO
of New Jersey Manufacturers Insurance
Company said, "NJM applauds the dogged
efforts of the Insurance Fraud Prosecutor
to bring to justice those who not only
steal premium dollars from policyholders,
but also endanger lives through unnecessary
and sometimes dangerous medical procedures.
I also credit the hard work of NJM's Special
Investigations Unit, headed by a former
prosecuting attorney and staffed with
other former law enforcement officials
and insurance specialists. This case is
an example of how the Criminal Justice
system and insurance company fraud investigators
can work together to protect New Jersey
drivers. There is nothing like the sound
of a clanging jail cell door to make dishonest
practitioners understand that New Jersey
truly has zero tolerance for insurance
fraud."
Insurance Fraud Prosecutor Brown noted
that Ottenstein was arrested by State
Investigators on July 17, 2003, after
search warrants were executed at his (Ottenstein’s)
various offices. As a result of the arrest,
Ottenstein was released on $50,000 bail
set by Mercer County Superior Court Judge
Maryann Bielamowicz. Additionally, the
Division of Consumer Affairs, through
the State Board of Medical Examiners,
suspended Ottenstein’s license to
practice medicine.
The indictment was handed up to Mercer
County Superior Court Judge Linda R. Feinberg,
the Assignment Judge in charge of the
State Grand Jury, on Dec. 16. The case
will be assigned to the Mercer County
Superior Court for trial. The defendants
will be ordered to appear in Court for
arraignment and bail.
The investigation was coordinated by the
Division of Criminal Justice - Office
of Insurance Fraud Prosecutor which investigates
and prosecutes both civil and criminal
insurance fraud cases. State Investigators
Gregory Pringle, Allan Buecker, Max Henry,
and Scott Naismyth, Civil Investigators
Donna Augustyniak, Craig Leschner and
Analysts Terri Drumm and Terri Worthington,
and Deputy Attorney General Nicholas R.
Vasile were assigned to the investigation.
Additional investigative assistance was
provided by New Jersey Manufacturers Insurance
Company and Special Agent John Vella,
U.S. Department of Health and Human Services.
An indictment is merely an accusation.
The defendants are presumed innocent of
the charges unless and until proven guilty
beyond a reasonable doubt in a court of
law.
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