Arizona AG: 9 arrested in $1.8 million insurance fraud scheme

Posted at 5:41 PM, Jan 11, 2017
and last updated 2017-01-11 21:26:00-05

Nine people are facing charges in a $1.8 million insurance fraud scheme, after allegedly faking illnesses then cashing insurance checks without paying their hospital bills.

The Arizona Attorney's General Office has charged nine people who, over the last two years, would go to Arizona hospitals with reportedly fake illnesses; rack up thousands of dollars in healthcare costs, then received insurance checks without paying their hospital bills. 

Authorities say 29-year-old Nicholas Scaffidi was the ring leader in the two-year-long scheme. Scaffidi bought health insurance for himself and eight others through the Affordable Care Act's healthcare Market Place. He would then allegedly scout out "out-of-network" hospitals that he and the others would go to with their fake conditions. 

In Arizona, the nine suspects visited hospitals in Gilbert and Florence complaining of fainting, chest pain, and abdominal pain. In some cases, authorities say they would tell care workers that "they fell down a flight of stairs" or "fell in the bathroom and hit their heads on the toilet bowl." In one instance, authorities say, Scaffidi refused to leave the emergency room without getting diagnostic testing.

Scaffidi had them use "out of network" medical facilities because under Blue Cross-Blue Shield policies, the payment is made directly to the customer, who is then responsible for paying the medical bills. 

The AG says all the checks were sent to mailboxes set up and controlled by Scaffidi. They were then deposited into bank accounts also set up by Scaffidi.

Authorities say the nine suspects have racked up over $1.8 million in medical bills, and have received $850,000 in checks so far.

Scaffidi who is from Fort Pierce, Fla., reportedly has prior arrests in eight states. The others reported addresses in New Mexico, Florida, and California, but have allegedly been going state to state committing this fraud.

In total, the nine suspects are charged with 38 counts of fraud, money laundering, and theft.

For more exclusive information on this story watch Jason Volentine's report on ABC15 News at 6.