Five years ago, ex-Lawrence chiropractic clinic operator Alan Cohen drew just a $2,000 fine to go with his 90-day jail sentence and 1,000 hours of community service for the phony accident scams that helped make him a multi-millionaire.
But last month, a Suffolk Superior Court judge decided Cohen's fraudulent conduct should cost him part of the fortune he bilked from insurance companies.
Judge C. Cratsley cited Cohen's Aug. 10, 2006 guilty plea to conspiracy to commit auto insurance fraud in a final judgment ordering him, his brother Marc and their now-defunct clinics to pay $6.7 million to four insurance companies.
The judge noted "Cohen admitted under oath to conspiring with runners Carlos Pinales and Jose Ansiani in order to stage automobile accidents and have the accident victims referred as patients to Lawrence Back & Neck." The clinic would then file fraudulent medical claims based on unnecessary and excessive treatment.
Cohen made more than $3.2 million in 2003 alone at Lawrence Back & Neck — the highest billing clinic in the state and one of six Cohen clinics (three in Lawrence) named in the lawsuit. The two other clinics Cohen operated in the city are Primer Quiropractico and South Lawrence Chiropractic & Rehabilitation. Primer once ranked as the 11th top billing clinic in the state at $1.2 million, while South Lawrence billed for $987,000.
The suit also named Cohen's two Dorchester clinics — Champion Spine Center ($1.7 million) and First Injury Chiropractic ($1.5 million) — which ranked fourth and sixth in the state respectively. Combined with the sixth clinic — West Lynn Chiropractic Rehab ($767,000), the six Cohen clinics billed more than $9 million in 2003 — the year before Cohen lost his chiropractor's license, insurance industry data reviewed by The Eagle-Tribune shows.
The precedent-setting lawsuit judgement is just a fraction of what the industry estimates Cohen's empire made. Commerce Insurance Co., the state's largest automobile insurer, will receive $3.8 million — which includes triple damages for violations of the Federal Racketeer Influenced and Corrupt Organizations (RICO) Act and close to $600,000 in legal fees, according to court papers.
The judgement also includes payouts to Premier Ins. Co. ($1.3 million), Encompass Insurance Co. ($1.2 million) and The Norfolk & Dedham Group ($454,000).
Cratsley determined that the Cohens' widespread use of "runners" to stage bogus car crashes and a "pre-established treatment recipe" for accident victims who became patients of the Cohens' clinics, constituted fraud.
The judge also noted in his order that the insurers presented "uncontroverted evidence that Alan and Marc Cohen, and thus the Subject Cohen Clinics as well, managed a corrupt set of enterprises that were engaged in racketeering activity via their fraudulent use of the U.S. Mail."
"The Cohens committed fraudulent nondisclosure by submitting claims to the Insurers for patients who had been solicited by runners and had not been involved in genuine accidents. The essential conduct underlying these instances of Common Law fraud consists of the actual mailing of patient claims by the Cohens to the Insurers," the judge concluded.
Attorney David O. Brink, litigation manager of the Braintree law firm of Smith & Brink which represented the insurance companies in the case, hailed the judgment "a landmark victory" in the fight against auto insurance fraud.
"Hopefully, this will dissuade others from engaging in these types of schemes in the future," Brink said in a phone interview last week.
"This is potentially a very important decision, in that it's one of the first Massachusetts cases I know about where the court had occasion to examine the role of runner in connection with automobile claims in a civil context," said Brink, who has spent a quarter of a century specializing in how to combat insurance.
The case began when the Cohens and their Blue Hill Chiropractic Group, Inc. sued Commerce, Encompasse and Premier, alleging the insurers failed to pay personal injury protection (PIP) benefits on claims submitted on behalf of patients who had received chiropractic treatment. They also accused the insurers of breach of contract and price-fixing.
After the cases were consolidated and moved to Superior Court, the insurers countersued Blue Hill, claiming the Cohens and their clinics had engaged in a coordinated practice of unreasonable and fraudulent billing. They alleged violations of the federal RICO statute.
In October 2008, the court dismissed Blue Hill's claims, leaving the insurers' claims as the pending litigation. Soon after, the Cohen brothers and their secretary through their attorneys indicated their intent to maintain a Fifth Amendment privilege, and not testify at a trial.
In individual depositions taken for the lawsuit, runners Pinales and Ansiani both confirmed Cohen's 2006 admission that he hired them to stage phony accidents and refer the participants to Cohen clinics.
"The Cohens have submitted no evidence in response to this specific set of claims and as such the summary judgment record regarding these fraudulent transactions is entirely uncontroverted," the judge concluded.
"The Cohens' widespread use of a preestablished treatment recipe ('the Cohen Treatment Recipe') that was administered to patients by chiropractic assistants prior to chiropractic consultation, coupled with affirmative misrepresentations the Cohens submitted to the insurers stating that such treatment rendered was reasonable and necessary, also constituted fraud," the judge ruled.
Court documents revealed that while the clinics treated multiple claimants from the same insured vehicles, each claimant received substantially the same diagnosis and treatment. They also noted the same patients were often treated for multiple accidents and that the vehicles involved in the reported accidents received little or no damage even though thousands of dollars in chiropractic treatment was billed. Patients pursued few wage claims despite purportedly having extensive chiropractic treatment.
Cohen, his Essex Street clinic and other operations that generated $10 million a year statewide were featured in a five-part Eagle-Tribune investigative series, "At Fault: Inside the Culture of Auto Insurance Fraud."
Gov. Mitt Romney later credited the June 2004 series with helping to pass an "anti-runner law" that made it a criminal offense for lawyers and health-care professionals to pay "runners" to bring them clients.
The Eagle-Tribune series described Cohen as an entrepreneur who built an empire of storefront chiropractic clinics earning him millions of dollars, along with the unwelcome attention of investigators. Within weeks of the series' publication, the Massachusetts Board of Registration of Chiropractors suspended Cohen's license for 30 months. An Essex County grand jury later convened and indicted Cohen on fraud and conspiracy charges along with 15 others, including chiropractors, lawyers, an insurance broker, and office workers. Cohen was unavailable for comment.