The president of the Otsego County Chamber was arrested Thursday on felony theft and fraud charges, a media release from the superintendent of the state's Department of Financial Services said.

Robert R. "Rob" Robinson, president and chief executive officer of the Chamber, was accused in an alleged scheme that enrolled ineligible members in health plans and led to the cancellation of health insurance policies of 520 people, the release said, at a cost of more than $1 million to the insurance provider.

However, Jon Hansen, chairman of the Chamber board of directors, said in a statement Thursday that members' policies were in effect.

Robinson, 58, of Oneonta, was charged with second-degree insurance fraud, two counts of second-degree grand larceny, first-degree falsifying business records and first-degree scheme to defraud, according to Benjamin M. Lawsky, superintendent of Financial Services. Robinson was accused of creating a fictitious membership category within the Chamber so that individuals living in the New York City metropolitan area could be enrolled in the Chamber's health plan.

"The New York City-area residents were enticed to buy the insurance coverage through Robinson on the basis that its premiums were significantly lower than health plans in New York City," Lawsky said in the release. "If this scheme had not been uncovered, it's conceivable that future insurance premiums for Otsego County residents could have gone through the roof because those premiums would have reflected the experience of people obtaining more costly health care in New York City."

The health insurance coverage of 400 New York City-area residents, unaware they were fraudulently listed as Chamber members, and coverage of another 120 legitimately enrolled Otsego County residents, was canceled when the scheme was discovered, the release said. Insurance coverage was restored under a new plan for those individuals who were legitimate Chamber members.

Felony complaints filed in Oneonta Town Court allege Robinson's actions caused provider Mohawk Valley Physicians Health Care to lose more than $1 million.

A message left for Robinson at the Otsego County Chamber office at 189 Main St. in Oneonta at about 2 p.m. wasn't returned by 10 p.m. Thursday. Eric Jervis, Robinson's attorney and also a member of the Chamber board, didn't return a message left Thursday afternoon at his law office at 493 Chestnut St. in Oneonta by 10 p.m.

Otsego County District Attorney John Muehl didn't return a message left Thursday afternoon on his cellphone by 10 p.m.

Rates for health insurance premiums in New York state are generally established by geographic region, the state Financial Services release said, and premiums in upstate areas are lower than downstate, where business expenses are higher.

Health-care fraud drives up the cost of health insurance and will be fought aggressively, Lawsky said. The Department of Financial Services, created by combining the state's Banking and Insurance Departments, aims to modernize regulatory oversight of the financial services industry.

The Otsego County Chamber is a private organization that promotes business development and tourism in Otsego County, and Robinson joined the Chamber more than 15 years ago.

"The Board is saddened by the news regarding charges brought against Rob," Hansen said in a prepared statement. "The board of directors will meet in the near future to discuss these recent events. We wish to assure all the members their health insurance is in and will remain in good standing."

Hansen said he had no further comments.

The state's release said the investigation, which is continuing, is being conducted by Assistant Deputy Chief Sean Ralph, assistant deputy chief of the Criminal Investigations Unit of the state Financial Services' Financial Frauds and Consumer Protection Division.

Robinson allegedly enrolled residents outside of Otsego County in the Chamber's legitimate health plan after he created a non-existent "associate member" designation for them, the release said. The coverage was provided by MVP Health Care, a Schenectady-based insurer, the release said. MVP contacted state investigators when the insurer noticed an unusual spike in new enrollments and saw that many of the enrollees lived outside of Otsego County.

Gary Hughes, spokesman for MVP, said the company has an aggressive fraud investigation unit. "We take a very aggressive posture toward fighting insurance fraud," he said Thursday.

Robinson was charged at about 11 a.m. Thursday, state police at Oneonta said. He was arraigned but didn't enter a plea in Oneonta Town Court before Judge Bruce Smith and was released on recognizance, court clerks said. Robinson is to reappear in court at 4 p.m. Dec. 22.

According to the felony complaints, the case stems from business Jan. 1, 2010, to Oct. 31, 2010, and Robinson was charged with:

"¢ second-degree grand larceny. a class C felony, for "intentionally and knowingly" stealing property consisting of $138,353 from MVP by allowing non-chamber members to obtain health insurance, resulting in an underpayment of premiums.

"¢ second-degree insurance fraud, a class C felony, for enrolling individuals as "associate members" when no such membership designation existed in the Chamber, causing MVP to wrongfully pay claims.

"¢ second-degree grand larceny for stealing property consisting of $939,813 from MVP in the form of claims paid out by enrolling ineligible individuals in the Chamber health plan.

"¢ first-degree scheme to defraud, a class E, felony, for engaging in a scheme to defraud more than 10 people by creating a fictitious membership designation of "associate member" of the Chamber to wrongfully enroll more than 300 people in a health insurance plan meant for bona fide members of the Chamber.

"¢ first-degree falsifying business records, a class E felony, for omitting making proper entries into membership records by enrolling individuals who didn't meet membership criteria.

According to a statement by MVP employee James Pescetti Jr. filed with the felony complaints, MVP entered into a renewable contract with the Otsego County Chamber on Jan. 1, 2008. The agreement allowed the Chamber to sell MVP health plans to Chamber members located in Otsego County.

On July 1, 2008, Michaels and Associates signed an independent broker agreement with MVP, Pescetti said, and on Oct. 24, 2008, MVP received a letter from the Otsego County Chamber signed by Robinson naming Michaels and Associates as the Chamber's sole broker. As sole broker, Michaels and Associates took over the responsibility of marketing, selling and ensuring that only eligible employer groups and sole proprietors were enrolled in the Otsego County Chamber plan offered through MVP.

Michaels and Associates began to submit Otsego County Chamber policies beginning in about January 2010 and continuing into October 2010, Pescetti said, and in October 2010, MVP noticed a large increase in membership enrollment in the Otsego County Chamber group and began to investigate.

The newly enrolled members overwhelmingly lived in the metropolitan New York City, Long Island and New Jersey areas, Pescetti said. Members interviewed by MVP said they weren't Otsego County Chamber members and weren't affiliated with that Chamber.

MVP identified about 400 policies as being written to individuals having no membership affiliation with the Otsego County Chamber, Pescetti said, and MVP had provided coverage to those members based on the eligibility misrepresentation. MVP lost more than $135,000 in premiums, he said, and MVP paid claims of more than $500,000 on behalf of these members, who weren't entitled to coverage as Chamber members.

Michaels and Associates president Norman Michaels Jr. didn't respond by 10 p.m. Thursday to an email or message left on his answering machine at about 4:45 p.m. The business offices in Armonk and Wappingers Falls close at 4:30 p.m., an answering machine said.

Robinson also is board chairman of the Chamber Alliance of New York State, an association of chambers of commerce in Albany. The organization aims to focus the collective influence and efforts of chambers, while contributing to growth and professionalism, its website said.

Trending Video

Recommended for you