Conman used phishing techniques to defraud insurers out of millions

A New York businessman has been found guilty of using email and SMS to con medical insurance companies out of $600 million, the Department of Justice (DoJ) announced.

Mathew James, 54, of East Northport, ran a medical billing company and abused his position to overcharge for medical procedures that were either more serious than what the patients he was claiming on behalf of had, or that they never underwent at all.

When insurance companies balked at the inflated rates, James used phone calls, email, and SMS to impersonate the patients he was supposedly claiming for, in what appears to have been an elaborate twist on the classic phishing scam.

“James orchestrated a fraudulent medical billing scheme to steal from insurance companies and businesses, in order to line his own pockets,” said assistant attorney general Kenneth Polite of the DoJ’s criminal division.

James will now go before a federal district judge and faces up to 20 years in prison for healthcare fraud and conspiracy, plus the same tariff for each of three cases of wire fraud, and a two-year mandatory minimum sentence for each of three aggravated identity theft counts.

US attorney Breon Peace said James “used insurance companies like ATM machines” but stressed that they were not the only parties to suffer because of his crimes.

“He stole hundreds of millions of dollars until he was finally exposed by a paper trail a mile long, phone recordings on which he impersonated patients, and text messages and emails with his co-conspirator doctor clients demonstrating his nefarious billing practices. Healthcare fraud is not a victimless crime, because fraudulent billing ultimately affects consumers who must pay the cost of higher insurance premiums.”

James was brought to justice by the FBI, and his case was prosecuted by the eastern district of New York. However, the DoJ did not make it clear what, if any, sentence his said accomplices in the medical profession are facing.