CareFirst of Maryland has filed a federal lawsuit against Avraham and Eliezer Rappaport, alleging that the brothers executed a large-scale health insurance fraud scheme that defrauded the company of over $50 million.
The lawsuit, submitted to the U.S. District Court for Maryland on Monday, describes the Rappaports' operation as a "health insurance fraud conspiracy of breathtaking scale and audacity." The brothers operated from their business in Towson, Maryland.
According to the complaint, the scheme involved international patients traveling to the U.S. for costly specialized medical treatments, which were billed to CareFirst. The patients enrolled in BlueCross BlueShield insurance plans based in Maryland, using various addresses linked to the Rappaports. After receiving treatment, the patients would return to their home countries and cease premium payments.
The lawsuit claims that from 2018 to 2022, the Rappaports facilitated this fraudulent activity with at least 259 patients. The civil suit cites violations of federal and state laws and is filed under a federal racketeering statute typically used to combat organized crime.
Avraham Rappaport, residing in Olney, allegedly submitted fraudulent insurance applications that listed multiple clients at the same Baltimore-area addresses, sometimes with as many as 20 clients sharing one location. The brothers reportedly profited from hundreds of thousands of dollars in commissions and kickbacks.
CareFirst's lawsuit also mentions 20 unnamed co-conspirators, some of whom may have unknowingly participated in the scheme, including charities and religious organizations that lent credibility to the Rappaports.
The insurance company stated that some policyholders were instructed to provide falsified documents to support their claims of residency when questioned by CareFirst. The insurer ended up covering millions in high-end medical treatments across the country, as patients held their policies just long enough to obtain the necessary services.
While CareFirst does cover out-of-state care for certain rare services, officials believe the Rappaports exploited this provision.
CareFirst has not commented on the ongoing litigation, and attempts to reach the Rappaports for a response were unsuccessful. The Maryland Health Benefit Exchange initially flagged potentially fraudulent policies, leading to an investigation that resulted in the rescinding of over 200 policies by CareFirst.
Avraham Rappaport's broker license was revoked last year by the Maryland Insurance Administration, which also imposed a $4,000 fine. He signed a consent order but did not admit to the agency's findings.
The lawsuit comes amid legal troubles for a third Rappaport brother, Jacob Rappaport, who pleaded guilty to bank fraud earlier this year related to a separate real estate scheme.
Reported by HarborBeat based on The Baltimore Banner (source).
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