Benjamin M. Lawsky, Superintendent of Financial Services, announced today that the president and chief executive officer of the Otsego County Chamber was arrested for running a fraudulent insurance scheme that led to the cancellation of the health insurance policies of 520 people.

Robert R. Robinson, 58, of Oneonta, was arrested following an investigation by the New York State Department of Financial Services (DFS). Robinson is accused of creating a fictitious membership category within the Otsego County Chamber so that individuals living in the New York City metropolitan area could be enrolled in the Chamber’s health plan.

The Chamber is a private organization that promotes business development and tourism in Otsego County.

The health insurance coverage of 400 New York City area residents, unaware they were fraudulently listed as Chamber members, along with the coverage of another 120 legitimately enrolled Otsego County residents, was cancelled when the scheme was discovered.

“This scheme put at risk the well-being of hundreds of people. This Department will fight health care fraud aggressively. It’s a crime that needlessly drives up the cost of health insurance for everyone,” Lawsky said.

The New York City area residents were enticed to buy the insurance coverage through Robinson on the basis that its premiums were significantly lower than health plans in New York City. Rates for health insurance premiums in New York State are generally established by geographic region. Premiums in Upstate areas are lower than Downstate areas where business expenses are higher.

“If this scheme had not been uncovered, it’s conceivable that future insurance premiums for Otsego County residents could have gone through the roof because those premiums would have reflected the experience of people obtaining more costly health care in New York City,” Lawsky said.

Robinson enrolled residents outside of Otsego County in the Chamber’s legitimate health plan after he created a non-existent “associate member” designation for them. The coverage was provided by MVP Health Care, a Schenectady based insurer.

MVP contacted state investigators when the insurer noticed an unusual spike in new enrollments and saw that many of the enrollees lived outside of Otsego County.

Coverage for all of the members of the Chamber’s insurance plan was cancelled after the fraudulent enrollments were uncovered. Insurance coverage was restored under a new plan for those individuals who were legitimate Chamber members.

MVP paid more than $654,000 in insurance claims for medical treatments filed by individuals who were unknowingly enrolled in the Chamber plan, plus $285,000 in claims for prescription drugs. The insurer also lost more than $135,000 in premium because of the fraudulent enrollments.

Robinson was arrested on charges of insurance fraud, a second degree C felony; two counts of grand larceny, second degree C felonies; falsifying business records, a first degree E felony; and scheme to defraud, a first degree E felony.

He is scheduled to be arraigned in Oneonta Town Court.

The investigation, which is continuing, is being conducted by Assistant Deputy Chief Sean Ralph of the Criminal Investigations Unit of DFS’s Financial Frauds and Consumer Protection Division under the supervision of Director Frank Orlando and Executive Deputy Superintendent Joy Feigenbaum.