First, the union leader pleaded guilty. Then, it was his business partner’s turn. On December 14, Lawrence Ackerman, head of a pair of shell insurance brokerages, pleaded guilty in U.S. District Court for the District of New Jersey to a superseding information for health care fraud, part of a long-running scheme that fleeced a United Auto Workers benefit plan and a Blue Cross Blue Shield affiliate out of a combined $6.6 million. He had been indicted in January 2017. Sergio Acosta, former president of United Auto Workers Local 2326, pleaded guilty to his role in the scam last April. The actions follow a joint investigation by the U.S. Labor Department’s Office of Labor-Management Standards, Office of Inspector General and Employee Benefits Security Administration.
Union Corruption Update has covered this case twice before (here and here). Lawrence Ackerman, now 54, a resident of Old Tappan (Bergen County), N.J., was a Fort Lee, N.J.-based businessman with good union connections. He saw a way to make a lot of off-the-books income with a corruptible union leader. Sergio Acosta answered the call. According to prosecutors, Ackerman set up a pair of fake insurance brokerages, Atlantic Business Associates and Atlantic Medical Associates, for the sole purpose of marketing health plans on a nationwide basis to persons whom he knew were ineligible for coverage through UAW Local 2326, now based in South River, N.J. Through these sham companies, the enrollees, who eventually numbered 700 to 800, obtained health insurance at inflated premiums, and once enrolled, filed inflated benefit claims. Acosta enabled this scheme by keeping the premiums instead of forwarding them as required to Horizon Blue Cross Blue Shield of New Jersey.
The scam went undetected for a decade. By then, Acosta and Ackerman had diverted $5.6 million in claim payments from Horizon Blue Cross Blue Shield to the plan’s straw participants, with Ackerman and Acosta taking their cut (Acosta, testing the limits of credulity, actually had claimed early on that he hadn’t enriched himself). Eventually, Horizon recognized it had a problem on its hands and rescinded the coverage. Acosta, not completely satisfied, for several months retained a portion of the ineligible participants, triggering an additional $1 million in false claim payouts over five months. But the Labor Department, now alerted, conducted a multi-agency probe. The department concluded that Acosta and Ackerman indeed had engineered a massive scam. Each would be charged in January 2017 on a variety of counts. In April 2018, Acosta pleaded guilty in Trenton federal court to theft, embezzlement and fund conversion. In a superseding indictment, Ackerman’s day of reckoning happened on December 14. He pleaded guilty to health care fraud for “delivering $481,500 in health care benefits to ineligible participants.” Under the terms of the plea agreement, Ackerman must make restitution to the union health plan and Horizon Blue Cross Blue Shield of New Jersey for losses he triggered. Sentencing is scheduled for March 20.