Federal agents searched more than a half-dozen Twin Cities chiropractic offices Tuesday but declined to say why, noting that the search warrants remain under seal.

Agents with the FBI were searching between six and 10 office locations, according to FBI spokesman Kyle Loven. He said the offices were involved in “coordinated operations” but he declined to say more until the search warrants are unsealed.

The Minnesota Department of Commerce fraud bureau is working with the FBI on the case.

“For us, at least, this has been like 10 years in the making,” said Mark Kulda, vice president of public affairs for the Insurance Federation of Minnesota.

Kulda said he’s in close contact with insurance company investigators who have told the authorities for years about criminal rings engaged in staged accidents, fraudulent billing and related economic crimes.

He said he doesn’t know what triggered the searches, but said insurance company investigators have turned over voluminous information about chiropractors charging for services that were not rendered.

“We’ve been saying this fraud problem is a real problem to the tune of hundreds of millions of dollars in money that’s been siphoned off by the fraudsters” in Minnesota, Kulda said. “It’s gotten so bad that we think there are elements of the Russian mafia that have moved here.”

Kulda said that states like Minnesota that have no-fault insurance laws are particularly susceptible to fraud, which drives up premiums. He said on average, automobile insurance costs about $200 a year more in Minnesota than in surrounding states that don’t have no-fault insurance.

Insurance fraud occurs statewide but is concentrated in the Twin Cities, Kulda said. It sometimes involves immigrant communities, he said, and many times they become unwitting victims.

Kulda said that some chiropractors employ “runners” who use police reports to find the names of accident victims, whom they visit at their homes to persuade them to seek treatment with particular chiropractors. The bills go directly to the insurer, enabling them to overcharge without the patients knowing, he said.

In addition, Kulda said, rings of fraudsters will fake an accident, then seek chiropractic treatment. Usually, these people get paid cash and the chiropractor submits bogus bills in their names.

Another scam is called “passenger stuffing.” It involves loading up a car and staging a minor accident. The passengers all complain and the chiropractor submits bills saying they each need $15,000 in treatment.

Larry Spicer, executive director of the Minnesota Board of Chiropractic Examiners, said he knew nothing about the raids until someone alerted him to the news story Tuesday afternoon.

Spicer said it’s not uncommon for agencies such as the FBI or the Commerce fraud unit to do undercover investigations, then forward information to the board for actions against the chiropractors’ licenses. He said the board has not seen a spike in complaints, which tend to number between 150 and 200 a year.

 

Dan Browning 612 673-4493