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News Release

New Jersey Department of
Banking and Insurance

Commissioner Richard J. Badolato

For Immediate Release:
July 27, 2016

For Further Information:
Ed Rogan or Marshall McKnight (609) 292-5064

Christie Administration Sends Strong Civil Insurance Fraud Message with $3.5 million Recovery

TRENTON — New Jersey Department of Banking and Insurance Commissioner Richard J. Badolato today announced the Department has recovered $3.5 million in fines, penalties, and attorneys’ fees in an insurance fraud case against Gregorio Lajara of Perth Amboy and a host of individuals, health care practitioners and facilities who were involved in a broad scheme to defraud Allstate and other insurance companies of personal injury protection (PIP) benefits through a widespread personal injury mill. In a companion case connected to the same operation, Allstate Insurance recovered more than $20 million in damages, attorneys’ fees and costs from settlements, judgments and trial.

“This case will act as a strong deterrent to potential fraudsters in New Jersey. We will come after you, no matter how complex the case or how long it takes to resolve,” said Commissioner Badolato. “I would like to thank the Department’s Bureau of Fraud Deterrence, the Attorney General’s Office and Allstate Insurance for their hard work and tenacity on this case.”

Lajara, who operated 10 chiropractic facilities through his firm, Medico Management, allegedly was the mastermind of a scheme that included physicians and chiropractors, medical imaging and pain management practices, medical equipment and billing companies, employees, owners and shareholders of those practices.  It also included individuals who acted as “runners” who recruited individuals involved in motor vehicle accidents and referred them to doctors and lawyers in violation of the New Jersey Insurance Fraud Prevention Act.  

The defendants performed services in violation of medical professional regulations; billed for services that were unnecessary, or provided by unlicensed personnel; engaged in unlawful fee-splitting and paid kickbacks for patient referrals. Once auto accident victims were recruited by “runners,” they were referred to Lajara’s chiropractic facilities for treatment and were then referred for mandatory MRI tests, acupuncture treatments, neurological and pain management testing and durable medical equipment orders.

Medico Management allegedly controlled chiropractic facilities through disguised ownership arrangements with licensed chiropractors Lajara hired in exchange for minimum percentages of gross revenues. Using false sales contracts, Lajara transferred apparent ownership to the chiropractors without exchanging funds and maintained effective control so that he could receive monetary kickbacks from them.

Allstate New Jersey Insurance Company and its affiliated companies Encompass Insurance and Commercial Insurance of Newark filed a civil suit against Lajara and more than 60 other defendants in the case in December 2008.

The Department intervened, or joined, the case in 2012. The Department’s case involved settlements with 30 defendants. In addition, the Department obtained default judgments against 10 defendants, obtained summary judgment against two and secured trial verdicts against eight  defendants. The cases of Allstate and the Department were heard together before Judge James Hely in the Superior Court of New Jersey, Union County with the penalty phase being resolved on June 29.  

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