Jay Fabrikant, owner and chief executive officer of a New York-based Medicaid managed-care plan, was arrested last week on charges of stealing $300,000 in taxpayer money from patients and 79 of the plan's 191 participating physicians.
The now-defunct plan he operated, 32,000-enrollee New York Health Plan, also faces multiple charges, ranging from grand larceny to fraud.
New York Attorney General Dennis Vacco announced the indictment, which his office claimed was the first ever against a managed-care organization and its top executive, last week.
Fabrikant, 41, was arraigned in New York Supreme Court in Manhattan and released on his own recognizance. He is scheduled back in court Dec. 16. If convicted, he could face up to 15 years in prison.
Some 32,000 Medicaid recipients in the Bronx and Queens received care from New York Health Plan, a primary-care plan that held a contract with the city of New York. After the plan's 1995 ejection from the Medicaid program for marketing abuses, state health officials implemented stricter standards for program participation.
A grand jury alleges that Fabrikant masterminded a rip-off after learning that his city contract was being terminated. In the final 60 days of the contract period, the former CEO allegedly instructed staff to remove some 6,700 patients from physicians' rosters. The purported fraud occurred during February and March of 1996, enabling Fabrikant to reduce spending and divert the savings to his company.
In 1996, Crain's New York Business, a sister publication, reported that Fabrikant's numerous healthcare ventures over the past decade have run afoul of government regulators and cost investors millions.
At deadline, MODERN HEALTHCARE was unable to contact Fabrikant or his attorney.