Norman J. Michaels Jr. of Katonah was arrested yesterday and charged with grand larceny for allegedly enrolling more than 400 people in a phony insurance category and taking $62,000 in commissions, Benjamin Lawsky, state superintendent of financial services, announced today.
Michaels, 61, is accused of stealing the commissions from MVP Health Care of Schenectady. According to the state Department of Financial Services, he improperly enrolled the individuals in small group and sole proprietor health plans insured by MVP and offered through the Otsego County Chamber of Commerce. The policies were sold to downstate residents who supposedly were enticed to purchase them because they were less expensive than policies in the New York City area. In most cases, however, people must live or work in the geographical area where a plan is offered to be eligible.
MVP discovered the fraud after noticing an unusual spike in new enrollments. The company noticed that a large number of enrollees were from downstate. The insurer paid nearly $1 million in health-care costs for the improperly enrolled individuals. All the insurance policies were canceled, state officials said.
Michaels was arrested by investigators with the state Department of Financial Services’ Frauds Bureau following an investigation by the agency. He was arraigned in the Town of Oneonta Court.
Lawsky said in a statement that the “scheme put the health care of hundreds of people at risk.” If it had continued, the premiums for people living in Otsego County could have increased to reflect the higher health-care costs of people in the New York City area, he said.
Michaels allegedly conspired with Robert Robinson, a now-former president of the Otsego County Chamber of Commerce, who is accused of creating a phony chamber membership category so the downstate residents could be enrolled in its small group plan. He was fired from his position after his arrest in 2011 on charges of insurance fraud, grand larceny, fraud and falsifying business records. Court action is pending.
(Journal News file photo.)