Chiropractors & Recruiter Convicted in $Millions PIP Fraud

WEST PALM BEACH, FL – A federal jury in West Palm Beach delivered guilty verdicts today against four key players in a sprawling scheme to defraud insurance companies through staged automobile accidents and bogus chiropractic claims. The convictions mark a significant victory in “Operation Sledgehammer,” a four-year investigation that has exposed a network of fraud across Palm Beach and Miami-Dade Counties.

Kenneth Karow, 54, of West Palm Beach, Hermann J. Diehl, 44, of Miami, Hal Mark Kreitman, 50, of Miami Beach, and Joel Antonio Simon Ramirez, 29, of West Palm Beach, were all found guilty of conspiracy to commit mail fraud (Title 18, United States Code, Section 1341 & 1349) and conspiracy to commit money laundering (Title 18, United States Code, Sections 1956(a)(1) & 1956(h)). The jury deliberated for six weeks before reaching its decision in the case presided over by U.S. District Judge Kenneth A. Marra.

The prosecution laid out a detailed case alleging the defendants operated a sophisticated operation designed to bilk insurance companies out of Personal Injury Protection (PIP) payments. The scheme involved recruiting individuals to participate in fabricated accidents, or exploiting those involved in legitimate accidents who reported no injuries, and funneling them to chiropractic clinics controlled by the defendants. These clinics then submitted fraudulent claims for treatments never rendered, or medically unnecessary, reaping millions in illicit profits. Karow faced the most serious charges, ultimately convicted of 48 counts of substantive mail fraud and 11 counts of substantive money laundering. Diehl was convicted of two counts of mail fraud and three of money laundering. Kreitman faced 21 mail fraud and 2 money laundering counts, while Simon-Ramirez was convicted of eight mail fraud and one money laundering charge.

Federal prosecutors detailed how the defendants circumvented Florida’s licensing regulations by using “named owners” for the chiropractic clinics, while others secretly controlled the finances. They allegedly avoided collecting co-pays and deductibles from patients, failing to disclose this to insurance companies. The funds collected were then converted to cash, used to pay off recruiters, “patients,” and further enrich those involved in the conspiracy. The indictment specifically accuses the defendants of submitting claims for treatments that were not medically necessary and were never actually provided.

This case is the latest in a series of charges stemming from Operation Sledgehammer, a joint effort between the U.S. Attorney’s Office for the Southern District of Florida, the FBI, the IRS-Criminal Investigation, the Florida Chief Financial Officer, and the Palm Beach County State Attorney’s Office. To date, 93 individuals have been charged as part of the investigation, with 57 facing federal charges. The scope of the fraud suggests a systemic problem within the Florida auto insurance system, and authorities have vowed to continue pursuing all those involved.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, George L. Piro, Special Agent in Charge of the FBI’s Miami Field Office, Jose A. Gonzalez, Special Agent in Charge of IRS-CI, Jeff Atwater, Florida Chief Financial Officer, and Dave Aronberg, State Attorney for Palm Beach County, jointly announced the convictions. Sentencing dates for the defendants have not yet been scheduled, but each faces significant prison time and financial penalties. Grimy Times will continue to follow this case as it develops.