In a civil case involving claims of insurance fraud, the fact-finder is properly instructed to consider factors beyond the formal indicia of ownership in determining the actual ownership of a medical services professional corporation (PC) for purposes of examining the PC’s entitlement to payment from an insurance carrier of claims assigned to the PC by a patient under New York’s no-fault insurance law.1 Now, that principle applies in the criminal context. The U.S. Court of Appeals for the Second Circuit, in United States v. Gabinskaya,2 ruled in mid-July that a fact-finder in a criminal case may also go beyond the formal indicia of ownership. Going forward, the decision will make it easier for the government to criminally prosecute cases of no-fault insurance fraud in this state and also will serve as an important precedent in civil cases brought by insurance carriers to recover monies paid to ineligible medical providers.

Background

To be eligible to receive reimbursement from an insurance company under a no-fault insurance policy, a medical services PC must, among other things, comply with all applicable licensing requirements, including that it must be owned and controlled by a licensed physician.3 For over the past decade, New York law has been clear that, in civil cases, ownership of a PC means more than merely formal ownership of stock certificates.

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