Either organized crime is out of the healthcare business in New Jersey, never was in it or Tony Soprano put the fix in.
Four years ago, the New Jersey attorney general's office conducted a series of highly publicized mob-related raids on a variety of businesses that included Tri-Con Associates, a Hasbrouck Heights, N.J.-based third-party administrator. Six of Tri-Con's healthcare-related subsidiaries were also raided, and Tri-Con President and former Passaic (N.J.) police officer Stefano Mazzola was arrested.
But while the larger mob investigation yielded 18 guilty pleas in the past four years, the state attorney general announced late last month it had been unable to present a case to a grand jury against Tri-Con, its subsidiaries or Mazzola.
To date, mob involvement in healthcare has not been alleged in any other jurisdictions.
In August 1996, after a 21/2-year investigation, New Jersey State Police arrested Mazzola and 11 other men allegedly linked to the New York City-based Genovese crime family. While the investigation primarily targeted gambling and racketeering, the allegations of mob influence in the $1 trillion healthcare industry shocked many (May 19, 1997, p. 32).
"We are alleging for the first time the involvement of organized crime in the healthcare industry," then-New Jersey Attorney General Peter Verniero said at the time in an interview with the New York Times.
State authorities alleged that Tri-Con overcharged group health providers and blackmailed and extorted patients with information from medical records. Tri-Con claimed that it provided healthcare benefits to more than 1 million people in Florida, Montana, New Jersey, New York and Oklahoma--including members of several local units of the Laborers Union, a national labor organization that has faced its share of mob-related allegations. Tri-Con and its subsidiaries also allegedly paid kickbacks for referrals.
But late last month, current New Jersey attorney general, John Farmer Jr., appointed in June 1999, announced there was not enough evidence to support the healthcare-related allegations against Tri-Con, its companies--all of which are now defunct--or Mazzola, who is in jail on a 12-year sentence for his role in an unrelated stabbing.
Chuck Davis, a spokesman for Farmer, said the 1996 gambling and racketeering raid resulted in 18 guilty pleas, but allegations against Mazzola and Tri-Con weren't presented to a grand jury."
Though no formal healthcare-related fraud charges were ever brought, that portion of the investigation could not be formally dropped until the rest of the cases were completed, he said.
"We can't say there is or is not a mafia role in healthcare," Davis said. "All we can say is the arrests were made on allegations that did not meet the legal standards of going to a grand jury."
William Mahon, president of the National Health Care Anti-Fraud Association, said he hadn't heard anything about the case since it was first brought.
"We haven't seen other cases suggesting mafia involvement in healthcare fraud, so it was sort of a stand-alone phenomenon," Mahon said. "It's never triggered a groundswell of mob-in-healthcare cases."