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NRI Doctor couple, convicted of health plan fraud by Federal Jury in Maryland


Ashok Shaw

On Thursday, NRI Dr. Maruthi S Manney, 49, and his wife Lakshmi, 46 were convicted by Federal Jury in Greenbelt, Maryland of defrauding employee groups in Texas in a health plan.

Maruthi S Manney's attorney said that the company, created in 1998, hit financial trouble a year later and was unable to keep up with its growing client base.

Lakshmi Manney's attorney said that that they never made any false representations to anyone and the company ended up going bankrupt.

It was a civil matter that should never have been prosecuted criminally. Maruthi was convicted of one count of wire fraud and eight counts of mail fraud. Lakshmi Manney was convicted of mail fraud but was acquitted on the wire fraud charge


Diverted Over $500,000 in Plan Assets

Deptartment of Justice
36 S. Charles Street
Fourth Floor
Baltimore, Maryland 21201-2692

Greenbelt, Maryland, June 9, 2006
Dr. Maruthi S. Manney, age 48, of Montgomery Village, Maryland was sentenced today to three years in prison, followed by three years of supervised release and his wife, Lakshmi Manney, age 46, was sentenced to 21 months in prison, followed by three years of supervised release after being convicted of mail fraud stemming from their operation of SAI Plus, a health benefit plan they co-founded, announced United States Attorney for the District of Maryland Rod J. Rosenstein. Dr. Manney was also convicted of one count of wire fraud. U.S. District Judge Deborah K. Chasanow also ordered the Manneys to pay restitution of $615,932.71.

“Maruthi Manney and Lakshmi Manney took premium payments from school districts and other businesses for health insurance that they never intended to provide,” said United States Attorney Rod J. Rosenstein. “When the victims submitted claims for medical care, the Manneys just did not pay.”

"One of the Department of Labor's highest priorities is to protect the benefits of workers and their families," said Ann L. Combs, Assistant Secretary of Labor for Employee Benefits Security. "These defendants robbed workers of their health benefits, thereby leaving them without health coverage at a time when they needed it most. Today's criminal action demonstrates the government's commitment to use its collective enforcement authority to protect the benefits of workers from abuse."

Acting Special Agent in Charge Frank E. Goetz, of the Baltimore Office of the Federal Bureau of Investigation stated, "We are priviledged to be part of an investigation that ended the criminal exploitation of innocent, hardworking individuals."

According to evidence presented during the three week trial, Dr. Manney and Lakshmi Manney executed a scheme to defraud several employer groups in Texas who sought health insurance for their employees. The employer groups included several school districts and businesses in East Texas. The defendants made numerous misrepresentations regarding the health benefit plan: Dr. Manney falsely told the various employer groups that SAI Plus was a licensed third party administrator in Texas; that the plan would process and pay claims within 30 to 60 days; and that SAI Plus would obtain excess loss coverage for each group, and maintain a separate trust account for each groups’ health care contributions.

Lakshmi Manney was in charge of the claims department. The evidence also showed that SAI Plus routinely processed the claims and printed the checks, but kept the printed checks in a file cabinet and later in a locked office. Law enforcement officers executed a search warrant at SAI Plus’ office in Rockville, Maryland and seized in excess of 4,902 printed checks. The evidence showed that Dr. Manney used $500,000 of plan assets to invest in another venture, $12,000 for a holiday party and approximately $7,600 to purchase club level seats to the Washington Redskins.

United States Attorney Rod J. Rosenstein praised the Federal Bureau of Investigation, the U.S. Department of Labor - Employee Benefits Security Administration and the U.S. Postal Inspection Service for their investigative work. Mr. Rosenstein commended Assistant U. S. Attorneys Bryan E. Foreman and Gina L. Simms, who prosecuted the case.

NRI Dr. Couple convicted in a health plan fraud

Washington, September 29, 2005
Ashok Shaw

NRI, (non-resident Indian) Dr. Maruthi Manney and his wife, Dr. Lakshmi Manney of Montgomery Village were convicted by Federal Jury in Greenbelt, a Washington suburb in Maryland for running a bogus health insurer and collected premiums from several east Texas schools and businesses. They failed to pay for the medical care of their clients.

Prosecutors said the couple used 500,000 dollars taken from the health care plans to pay for another business. Couple spent $12,000 on a holiday party and $7600 for Washington Redskins.

The couple was convicted of one count of wire fraud and eight counts of mail fraud. Dr. Lakshmi Manney was found guilty of eight counts of mail fraud.

When federal agents raided the Rockville office of SAI Plus LLC in November 2000, they found more than 4,900 checks for health insurance claims printed and marked for delivery to independent school districts, businesses and government agencies — sitting in a file cabinet.

The Manneys, who listed an address in the Eastgate neighborhood of Montgomery Village but could not be reached there, started the company in October, 1998, with Dr. Manney, 47, its chief executive officer and his wife Lakshmi, 45, supervising its claims department.

By April 2000, SAI Plus was processing health insurance claims for more than 40 self-insured employers, most in east Texas. By February 2001, the Texas Department of Insurance had ordered SAI Plus to settle its outstanding claims: by June of that year, the company had shut down operations and filed for liquidation under federal bankruptcy laws.

Dr. Maruthi Manney established the company in 1998, got financial trouble a year later but always had been troubled with its growing client base.

Manney's attorney, claimed, "This was a valid company that paid medical claims and never made any false representations to anyone. The company ended up going bankrupt."

NRI couple may face a maximum of five years in prison for each count, along with a $250,000 fine.


Regulators shut down unlicensed Maryland insurer

DALLAS, March 29, 2001
Dallas Business Journal
Michael Whiteley
American City Business Journals

Following months of delays at the Office of Administrative Hearings, a Rockville, Md.-based company that sold health insurance across much of Texas without a license agreed Thursday to cease doing business immediately.

State insurance regulators said SAI L.L.C. has agreed to make good on claims filed by an unknown number of Texans or face a $1 million in fines.

But he said SAI sold policies to 60 employers, including small, independent school districts in Brock, Gladewater, Pinetree, Poolville, Troup, Waskom and Winnsboro.

The company also sold group policies to businesses and government agencies in Addison, Arlington, Austin, Canton, Carrollton, Dallas, Deer Park, Duncanville, Fort Worth, Groves, Houston, Kilgore, Lubbock, Mansfield, Plano, San Antonio, Seguin, Southlake, Sunnyvale, Tyler, Weatherford, Winters and The Woodlands.

The agreement came four months after Insurance Commissioner Jose Monetmayor first asked the state adminsitrative hearings panel to fine Dr. Maruthi S. Manney, his wife, Dr. Lakshmi Manney, and their company $1 million for selling health polices to at least 60 employer groups in the state.

"There were several attempts to get this before an adminsitrative law judge, but they (SAI executives) fought us all the way," Jim Davis, a spokesman for the Texas Department of Insurance.

"We agreed to waive the million-dollar fine if they agreed to pay restitution," Davis said. "We felt the important thing was to get this over with and to get restitution for those who would be hurt."

Davis said SAI was never licensed to sell any type of insurance in the state.

He said the agency acted on complaints of unpaid claims from more than 140 of the company's insureds. The Manney's signed a consent decree Thursday and canceled their request to become a third-party adminsitrator (TPA).

TPA's process and pay claims for insurance companies, but do not underwrite policies.

Davis said investigators found only one license for SAI in the United States, and that was as a TPA in Maryland.