Sergio Acosta, Health Care Benefits Fraud, NJ 2024

Two New Jersey men are facing federal charges in a brazen $6.6 million health care fraud scheme that exploited union benefits and duped one of the nation’s largest insurers. Sergio Acosta, 66, of Passaic, New Jersey, former president of United Auto Workers (UAW) Local 2326, and Lawrence Ackerman, 53, of Old Tappan, New Jersey, an insurance broker, were each indicted on one count of conspiring to defraud Horizon Blue Cross Blue Shield and one count of conspiring to defraud the UAW Local 2326 self-insured health care plan.

According to the indictment unsealed in Newark, Acosta abused his position of trust for years, first as president of the local union from 2002 to 2008 and later as trustee of its health care plan even after moving to a role with the UAW International Union. During that time, he allegedly opened the door for Ackerman to funnel hundreds of ineligible individuals into the union’s health coverage — all under the false pretense that they were employees of shell companies.

Labor prosecutors say Ackerman ran a network of phantom businesses — including Atlantic Business Associates (ABA) and Atlantic Medical Associates (AMA) — that existed only on paper. These shell firms were used to fabricate employment records for 700 to 800 people across the country who had no real affiliation with the companies. Through this ruse, Ackerman marketed health insurance to non-employees, using Acosta’s influence to get them improperly enrolled through the union’s plan.

The scheme first bilked Horizon Blue Cross Blue Shield out of $5.6 million before the insurer caught on and cut ties with Local 2326. But instead of shutting it down, Acosta allegedly allowed the same ineligible participants to continue receiving coverage under the union’s self-insured health care plan. Within just five months, the fraud drained another $1 million from the plan’s reserves.

Each count carries a maximum penalty of 10 years in prison and a $250,000 fine. Federal authorities stress that the indictment is not a conviction — both Sergio Acosta and Lawrence Ackerman are presumed innocent until proven guilty in court. An arraignment date has not yet been set.

The investigation was led by the U.S. Department of Labor’s Office of Inspector General, the Employee Benefit Security Act (EBSA) division, and the Office of Labor Management Standards. Senior Litigation Counsel V. Grady O’Malley is prosecuting the case. Ackerman is represented by Robert Kipnees, Esq. of Roseland, New Jersey. Acosta’s attorney is Alan Silber, Esq., also of Roseland.