Brooklyn therapist sues employer for fraudulent insurance submissions

October 3, 2013 By Charisma L. Miller, Esq. Brooklyn Daily Eagle

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An occupational therapist filed suit against her former employer after learning that the facility submitted insurance claims in her name for services she did not provide. Though the therapist filed suit under federal employment law and New York tort law, Brooklyn federal court dismissed a significant portion of the suit on the grounds that the therapist failed to adequately state her claims.

Charlotte Yantha worked as an occupational therapist at the Omni Childhood Center in Midwood, Brooklyn. In normal course of business, Omni would seek reimbursement from various health insurance providers for Yantha’s services. In April 2012, Yantha was alerted to an audit scheduled on the reimbursements requested in her name. Unsure of which reimbursements were in question, Yantha conducted her own research and discovered the reimbursements were for services performed at Omni’s Williamsburg, Brooklyn location, where Yantha had never worked.

Yantha confronted Omni about the reimbursements and the audit. According to Yantha, an Omni director informed her that her job would “be in jeopardy if she did not go along with the fraud.” Court papers further state that Yantha’s salary was reduced from $140,000 to $106,000 and her vacation time was slashed.

Hoping to find recourse and remedy in law and equity, Yantha filed a suit against Omni alleging violations of the federal Employee Retirement Income Security Act (ERISA), defamation, unfair competition, and breach of employee contract.

In New York, “an act of… impersonation [that] imputes facts to the person impersonated that damage him in his trade or profession” supports a claim for defamation, Brooklyn Federal Judge Allyne Ross, wrote in her decision to deny, in part, Omni’s motion for dismissal. Here, Omni filed false insurance claims in Yantha’s name making “it appear that [Yantha] herself was engaged in a fraudulent scheme,” Ross ruled. Although Yantha did not request to specify a damage award as to her defamation claim, Ross found that Omni’s intentional submission of false insurance claims damaged Yantha’s professional reputation enough to satisfy a claim of defamation per se.

Yantha was not as successful on her claim of unfair competition. Ross noted that while Omni “used [Yantha’s] name for their own gain… and that at least one insurer was actually deceived or confused by [Omni’s] actions,” Yantha was unable to establish that she lost any profits or suffered any direct financial loss as result of the misuse of her name. “Not every act, even if taken in bad faith, constitutes unfair competition,” Ross wrote, citing case precedent. Yantha did not, and likely would be unable to, allege that “she was actually entitled to the proceeds of the fraudulent reimbursement claims.” Therefore, Ross continued, “[Yantha] cannot allege a direct competitive injury.”

Ross did allow some room for relief in Yantha’s breach of employment claim. Yantha alleged that she had an agreement with Omni whereby she would provide occupational therapy services in exchange for a set salary of $160,000. Though she was unable to provide a copy of the employment contract and although the supposed provisions of the contract were “somewhat nebulous,” Ross explained that a breach of contract claim cannot be dismissed solely because the complaint does not specify whether or not the contract was oral or written. Here, Yantha’s allegations that she had a contract for a specified salary and that Omni breached the contract when it failed to pay the specified salary was sufficient in Ross’ determination to allow a breach of contract claim to go forward.

Ross did not have to address the alleged violation of ERISA, as Omni did move to dismiss that particular claim.