A Katonah insurance agent was arrested on a grand larceny charge, accused of collecting $62,000 in commissions after he sold phony policies to more than 400 people, officials with the New York State Department of Financial Services said Wednesday.
Norman J. Michaels Jr., 61, wooed clients in the New York City region with promises of cheaper health care coverage by enrolling them in plans offered by Schenectady-based MVP Health Care that were available through the Otsego County Chamber of Commerce, according to state officials.
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As part of the scam, Robert R. Robinson, 59, a former chamber of commerce president, created a phony membership category that allowed the downstate residents to be enrolled with MVP, said a statement from the state Department of Financial Services. However, the individuals were ineligible to be enrolled in the upstate health care program, as they did not reside in the company’s coverage area.
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MVP, which paid nearly $1 million in health care costs associated with the victims, became aware of the scam in late 2010 after noticing that a large number of enrollees were from downstate, the release said. The company then quickly canceled the victims’ plans.
“If this scheme had been left uncovered, it could have led to higher premiums for people living in Otsego County,” Benjamin M. Lawsky, superintendent of financial services for the state Department of Financial Services, said in a statement. “Their premiums could have begun to reflect the health care costs of people obtaining more costly services in New York City.”
Robinson, of Oneonta, was fired from his position with the chamber after his arrest in 2011, when he was charged with insurance fraud, grand larceny, fraud and falsifying business records, according to a statement from the state Department of Financial Services. He has not yet been tried.
Michaels, who sold the coverage for roughly a year, was arrested Tuesday and charged with grand larceny, state officials said. He was arraigned in Town of Oneonta court on Tuesday and released on his own recognizance.
A message left at Michaels’ Katonah residence was not immediately returned Wednesday.
A spokeswoman for MVP said the company will continue to work with authorities as the case moves forward.
