A Perth Amboy-based health care network was ordered to repay $20 million to Allstate Insurance.
A Superior Court judge has ordered that a network of dozens of shame pain-relief and medical care companies must pay $3.5 million in fine and repay insurance companies $20 million for fraudulent claims. (Tom Haydon | NJ Advance Media for NJ.com) ELIZABETH -- The network included dozens of supposed health care offices carefully organized to recruit car accident victims and send them to chiropractors, physicians and MRI clinics for unnecessary treatments, all to collect insurance payments, authorities said.
The alleged leader, Gregorio Lajara, 47, and his Perth Amboy-based company, Medico Management, worked with more than 60 people and companies in a system designed solely to repeatedly treat the supposedly injured people and run up bills, a Superior Court judge found.
Finally, an insurance company filed suit against the network and after a four-month-long trial, Judge James Hely in Elizabeth ordered the companies involved to pay $3.5 million in penalties for insurance fraud, said officials for the state Department of Banking and Insurance, which joined the insurance companies in the suit.
Hely also ordered the defendants to repay $20 million to Allstate Insurance, which, along with its affiliates, had filed the lawsuit against Lajara and other doctors and companies in the network, the officials said.
Hely, in announcing his decision in the lawsuit, cited the testimony taken from one of Lajara's former lawyers, who has since died.
The lawyer, Hely said, testified that "the Lajara offices were built around getting allegedly injured persons into the Lajara-controlled facilities to quote 'treat, treat, treat,'" according to a transcript of the judge's decision obtained by NJ Advance Media.
Lajara paid "runners" to recruit people who had been in car accidents and doctors and lawyers working in the Lajara network, said state Banking and Finance Commissioner Richard Badolato.
The people were sent for treatment by physicians, chiropractors, MRI facilities, pain management practices, and medical equipment suppliers, Badolato said.
"This case will act as a strong deterrent to potential fraudsters in New Jersey," Badolato said. "We will come after you, no matter how complex the case or how long it takes to resolve."
Hely, in his decision, noted that 41 patients were sent for brain MRIs, but were not sent to a neurologist for treatment of a suspected brain injury.
"The outrage here is that if a patient truly had a head injury and (the physician) was concerned about that, there should have been an immediate referral to a medical doctor," Hely said.
He said Lajara set up the network of companies in the early part of the last decade. People received treatment up to the monetary limits permitted for personal injury protection, or PIP, that is included in many automobile insurance policies, officials said.
State banking department officials said Medico Management allegedly controlled chiropractic facilities through disguised ownership arrangements with licensed chiropractors that Lajara had hired in exchange for percentages of the revenues.
Officials said Lajara allegedly used false sales contracts to transfer apparent ownership to the chiropractors without exchanging funds and maintained effective control so that he could receive monetary kickbacks from them.
Allstate and its affiliated companies filed suit against Lajara and more than 60 other companies in 2008.
Allstate's lead attorney, Michael Malia, declined to comment on the case.
There was no answer at Medico Management. Attempts to contact Lajara were unsuccessful.
Tom Haydon may be reached at thaydon@njadvancemedia.com. Follow him on Twitter @Tom_HaydonSL. Find NJ.com on Facebook.