Amtrak® Rocked by $12M Health Fraud Ring

At first, it looked like a blip - a few strange insurance claims. But what investigators found next unraveled a sprawling web of deceit involving dozens of Amtrak^® employees and crooked healthcare providers. By the time the dust settled, more than 100 workers had allegedly helped siphon over $12 million from the national railroad’s healthcare plan in a scheme that ran for years, right under management’s nose.

This wasn’t just petty theft or accounting errors. What unfolded was the largest employee fraud investigation in Amtrak history, and it has left the company - and taxpayers - reeling.

A Scheme on the Rails

Between 2019 and 2022, 119 Amtrak employees allegedly teamed up with several New York and New Jersey-based healthcare providers in a kickback scheme targeting the company’s healthcare system. According to the Amtrak Office of the Inspector General (OIG), employees gave their insurance details - and sometimes even their children’s - to providers who filed fake or inflated claims for services never rendered.

In return, these employees received cash payouts. One undercover OIG agent, posing as an Amtrak worker, reported being handed an envelope filled with $1,000 in cash during a visit to an acupuncturist’s office in Long Island City, where they were also asked to sign 30 undated treatment forms for nonexistent services.

The Main Players

Two of the ringleaders - Devon Burt from Pennsylvania and Hallum Gelzer of New Jersey - recruited fellow Amtrak employees and even threatened a provider who hesitated to pay up. Both men pleaded guilty to charges of conspiracy to commit healthcare fraud and to communicate extortionate threats. Burt was ordered to repay nearly $1 million. Gelzer? About $1.66 million.

Among the providers was acupuncturist Punson Figueroa, also known as “Susie,” who submitted millions in bogus claims. She pleaded guilty and was sentenced to three years of supervised release and over $9 million in restitution.

Also charged were Dr. Muhammed Mirza of New Jersey - sentenced to 26 months in prison and fined $1.37 million - and New York podiatrist Michael DeNicola, who awaits sentencing after pleading guilty to multiple charges, including firearm possession.

Red Flags and Fallout

The case began when OIG agents noticed a pattern - a suspiciously high number of Amtrak employees all visiting the same small group of medical offices. From there, the pieces began to fall into place. When the full picture emerged, the scandal reached from New York to D.C., involving workers in seven states.

Amtrak responded by terminating or accepting resignations from dozens of involved employees - but not all. As of the latest report, 61 of the 119 implicated individuals remain employed at the company. Amtrak has promised increased oversight and internal education to prevent future misconduct.

Of the total $16 million billed fraudulently to Amtrak’s insurer, over $12 million was paid out before the scheme was caught.

Bigger Questions

The magnitude of this fraud raises uncomfortable questions: How did a scheme this large go unnoticed for so long? And how did a culture of fraud take root in a taxpayer-supported company?

Some critics have compared this scandal to previous schemes uncovered in other rail systems - like the Long Island Rail Road disability fraud case - suggesting a pattern of exploitation that stretches beyond one company.

For now, the criminal cases continue. Meanwhile, Amtrak is left to clean up the damage - both financially and reputationally - as it tries to reassure passengers and lawmakers that it’s no longer being taken for a ride.

References: Amtrak taken for a ride in wild $12M scam by 119 employees, crooked docs – but more than half kept their jobs: bombshell probe | Amtrak Employees Criminally Charged In Medical Fraud | More than 100 Amtrak employees involved in fraudulent insurance scheme, watchdog says