Dozens charged in U.S. auto insurance fraud Wed Feb 29, 2012 11:21am EST (Reuters) - Federal authorities unveiled charges on Wednesday against three dozen people suspected of involvement in a scheme to defraud automobile insurers that provide healthcare benefits to accident victims out of more than $275 million. The charges include conspiracies to commit racketeering, healthcare fraud and money laundering over a scheme dating back to at least around 2007, according to an indictment unsealed on Wednesday. Ten doctors and three lawyers were among those being charged, prosecutors said. Thirty-five of the defendants were arrested on Wednesday morning, an FBI spokeswoman said. The whereabouts of the 36th defendant was not immediately clear. According to the indictment, the scheme involved the creation of clinics in and around New York City that routinely billed auto insurers for treatments that were unnecessary or never provided. Some of the defendants received cash kickbacks for patient referrals, and some patients were coached about which fake injuries they should claim to support unnecessary treatments, the indictment said. The scheme was designed to take advantage of New York's "no-fault" auto insurance law, which lets drivers and passengers obtain up to $50,000 of benefits for accident injuries, regardless of fault, the indictment said. Two defendants, Mikhail Zemlyansky and Michael Danilovich, directed one of the two primary operating branches involved in the scheme, while defendants Yuriy Zayonts and Mikhail Kremerman operated the other, according to the indictment. It was not immediately clear whether the defendants have hired lawyers for their defense. A spokeswoman for the U.S. attorney's office in New York did not have an immediate comment. Insurers consider the New York automobile market one of the most difficult in the country to make a profit, in part because of the no-fault law. In a study released last year, the Insurance Research Council said 20 percent of no-fault claims in New York City in 2010 had elements of fraud, and as many as one-third of claims appeared to be inflated. Meanwhile, the Insurance Information Institute estimated last year that insured drivers in the state annually made more than $200 million of excess premium payments because of fraud. Allstate Corp, the largest publicly traded U.S. home and auto insurer, described the situation in the state as an "insurance fraud crisis." A spokeswoman was not immediately available to comment on the indictments. A news conference was scheduled for Wednesday afternoon to discuss the charges. U.S. Attorney Preet Bharara in New York and New York City Police Commissioner Ray Kelly were among the officials expected to attend. The case is U.S. v. Zemlyansky et al, U.S. District Court, Southern District of New York, No. Reporting By Jonathan Stempel in New York; Additional reporting by Ben Berkowitz in Boston; Editing by Lisa Von Ahn and Maureen Bavdek