New Jersey UAW President, Insurance Broker Charged in $6.6M Health Plan Scam

Health care fraud these past several years has been a growth industry, especially when union leaders help create it. On January 9, Sergio Acosta and Lawrence Ackerman were charged in Newark, N.J. federal court with defrauding a union-sponsored health care plan out of about $6.6 million. Acosta and Ackerman, respectively, the former president of United Auto Workers Local 2326 and a ranking officer of several insurance companies, allegedly recruited hundreds of ineligible participants from across the U.S. to pose as plan participants. Each defendant was indicted on one count each of conspiring to defraud Horizon Blue Cross Blue Shield and conspiring to defraud the union health plan. An arraignment date has yet to be set.

Sergio Acosta, now 66, a resident of Passaic, served as president of the Edison, N.J.-based UAW Local 2326 during 2002-08. Following that tenure, he was a representative of the international union and a trustee of the local health plan. Somewhere along the line, he saw a money-making opportunity with the plan. According to prosecutors, Acosta and an area businessman, Lawrence Ackerman, now 53, a resident of Old Tappan, N.J., developed an elaborate scheme to pad the benefit rolls and divert payments to themselves. Ackerman was the chief operating officer of Atlantic International Group, Pro-Tech Automotive Services, Atlantic Business Associates (ABA) and Atlantic Medical Associates (AMA). The first two companies were legitimate; the latter two were merely shell companies Ackerman had created to market health insurance plans to people who were not ABA or AMA employees. In other words, Ackerman established these two firms for the sole purpose of providing the appearance of verified employment necessary for Local 2326 health plan coverage.

The nationwide marketing effort apparently was successful. Acosta and Ackerman allegedly conspired to defraud Horizon Blue Cross Blue Shield of New Jersey out of $5.6 million via claims paid to around 700 to 800 ineligible persons. Eventually, however, Horizon discovered the scheme and rescinded their coverage. But Acosta wasn’t done. He retained a portion of the ineligible participants in the health plan, incurring another $1 million in insurance company losses in five months. The U.S. Labor Department’s Office of Labor-Management Standards, Office of Inspector General and Employee Benefits Security Administration eventually conducted a joint probe, which led to a Justice Department prosecution. Each of the counts listed in the indictment carries up to 10 years in prison and a $250,000 fine.