MANHATTAN (CN) - The nonprofit Gracie Square Hospital claims a doctor created a "fraudulent scheme to siphon off insurance reimbursements," with help from a woman who misrepresented herself as a hospital representative. Dr. William Belfar did this "so that he can obtain up to half of the insurance reimbursements paid to the hospital for each patient," the hospital claims in New York County Court.
The psychiatric hospital sued Belfar and Stephanie Markbreiter and Belfar's office, East Side Psychiatric Services.
Gracie Square's address is 420 E. 76th Street. Belfar's East Side Psychiatric Services is at 416 E. 76th St. Gracie Square says that Belfar is "the sold shareholder of East Side."
Gracie Square claims the defendants capitalized on its practice of accepting patients from overcrowded medical centers nearby.
Gracie Square claims that since September 2008, Markbreiter has been "falsely identifying herself as 'Lorraine from Gracie Square,'" and giving referring hospital her own cell phone number for return calls. It claims that she has been doing this "at the direction of defendant William Belfar, M.D."
"The goal of the defendants' fraudulent scheme is to admit patients to Gracie Square nominally under East Side and Belfar's care so that Belfar and East Side will wrongfully receive a portion of Gracie Square's reimbursement for both Medicare patients and patients with private health insurance," the complaint states.
In some cases, the hospital says, it has had to turn away patients after Markbreiter informed the referring hospital that Gracie had beds open. "In this manner, the defendant's misappropriation of the Gracie Square name has damaged plaintiff's reputation and caused confusion through the community."
Gracie Square says it became aware of the scheme in September 2009. Since then, it says, it has "repeatedly" told the defendants to stop their misrepresentations, including a cease and desist letter in October 2009.
"Yet the defendants continue to confuse and mislead the public by falsely representing themselves as representatives of Gracie Square," according to the complaint.
Gracie Square demands more than $1 million in actual damages and $10 million in punitive damages. It is represented by Douglas Cooper with Ruskin Moscou Faltischek in Uniondale.