If you have issues viewing or accessing this file contact us at NCJRS.gov. ------

. r) 0, '" .y ,- i , " I

National Criminal Justice Reference Service ------~~------r

nCJrs 11 ' This microfiche was produced from documents received for inclusion in the NCJRS data base. Since NCJRS cannot exercise control over the physical condition of the documents submitted, Crime Comrrlission the individual frame quality will vary. The resolution chart on this frame may be used to evaluate the documel)t quality.

2 8 2 5 1.0 :~ 11111 . 11111 . ~ ~F2 I,Y u: Ii£ J w. Health Care Fraud: :i ~ L:. ~ 1.1 t:lI.;:.LI. II i'.. ~ : A Rising Threat 111111.25 111111.4 ~~ '." :."- lllll1.6 ,0

MICROCOPY RESOLUTION TEST CHART NATIONAL BUREAU OF STANDARDS-1963-A

- " i ..... c:= <

Microfilming procedures used to create this fiche comply with 'j, the standards set forth in 41CFR 101-11.504. .'tlr' -:4;"1 'I Points of view or opinions stated in this document are those of the author(s) and do not represent the official December 1981 pOSition or policies of the U. S. Depaliment of Justice.

National Institute of Justice, 10/26/82 .', Department of Justicte Washington, D. C. 20531 ,.

" r

. -' - --- -~-~,----,~-- -~------~--~

rf " \l ' (j - ~ ~;, .. _.______,11._ ~ __ ".'

., " , c ~, ..

COMMONWEALTH OF PENNSYLVANIA

o

Health Care Fraud: > . jARising Threat

t~~~~':'~:;'·-~c 'J; ~ ~~ '.. ~;~ ~, )!' 1ri i;;9 l -,~~i'\ ':>;'rv J :APR }~8 19az (> t I I . j) I) I ;j ,. ~ 0 • ~ ~ ; ; . Pennsylvania C~i\i{'1e Commission i \. j , \\11 .-j - r~ . " .

" ISBN 0-937972-02-9

Printed in the Commonwealth of Pennsylvania

" , 523 E. Lancaster Ave.\;L. , ' Post Office. Box 45 St. Dav~cts, PA 19087 (215r087 -6500 , ~. " l - I,' ".' / I)

·---....-~1-(--~------'----~-.,-..-----';--~---..,,.·"----:-::~ "'!" _, "~f - ".7:,?~--~'_:'---.'''-- . " .,," ~ , " .: ',.~,- .. ~ .'.'--- ~.-,.~"- .. ' .- The following agencies and individ· uals were instrumental in aiding the The Commission Acknowledgements Commission in its investigation: Pennsylvania.. Crime Commission The Pennsylvania Crime Commis· This report is the result of an inten­ Arizona Drug Control District, Tucson sion is an independent state agency sive investigation and analysis done California Department of Justice mandated to investigate organized Alvin B. I.ewis, Jr., Esq., Chairman by the Southeastern Regional Office Illinois Department of Law En- crime and PlJblic corruption, to issue with the cooperation of numerous forcement reports on these investigations to tile Clifford C. Coopelr, Esq. Malcolm L. Lazin, Esq. other agencies. Illinois Legislative Investigating Com· General Assembly and the people, arid Staff members who participated in mission to refer information on criminal viola­ Thomas F. lamb, Esq. Dean Roach the investigation under the direction Long Beach, California, Police Depart­ tions to prosecutors and other lawen· of Special Agent in Charge Frank ment forcement agencies. Booth are: Los Angeles, California, Police Depart· The Pennsylvania Crime Commis­ Wallace P. Hay, Executive Director Carl Brown ment sion Act (Act of October 4, 1978, P. L. Vincent Clemente . New Jersey State Police 876, No. 169) became effective on De· Victor DiCicco New York Department of Labor cember 4, 1978. Prior laws and execu· Donald Johnson, Esq., Df!puty Executive Director/Chief Counsel Jeannie McBride New York Police Department tive orders authorized the work of the Joseph Morace New York State Commission of Inves­ Commission sinCe 1967. Jack Murmylo tigation Due to the Commission's unique Albert Risdorfer New York State Task status, it can focus on broad or narrow Staff Victor DiCicco Nancy Monzi MAGLOCLEN Gerald Rockey Force patterns of organized criminal activity. Pennsylvania State Police Its purpose is not to 1001< at isolated, Sharon Beerman John Ditmore Joseph Morace Brooke Appleby Joseph Salerno Carol Salter Police Department transactional, incidents of criminal ac· Frank Booth Daniel Fedeanis Wasyl Polischuk Jean Degnan Phoenix, Arizona, Police Department John Contino, Esq. was the legal tivity in one municipality or another. Carl Brown William Foran Riverside County Sheriff's Office, Cali- Gerald Rockey Marilyn B. Peterson advisor to the investigation. Marilyn B. The Commission looks at patterns and Deborah Brown William J. Fry, III Sharon Rockey AlexanderJ. Rock Peterson edited this document. fornia interrelationships of criminal activities Nancy Checket Donna Groom Department of Justice across the state, which extend beyond Albert Risdorfer Warren B. Surdam Special acl

Permission to reproduce this ~hled material has been granted by • • Pennsylvania Crime CommlSSlon

to the National Criminal Justice Reference SelVice (NCJRS).

Further reproduction outside of the NCJRS system requires permis­ \1 sion of the ~owner. . ...

. .

"I I The Commission further investigat­ AHP employee, Carol P. Lozanoff, Contents Investigative ed the two local companies, A.M.M.A. which showed wide discrepancies be­ and AH P, to if there was any tween actual and reported usage of Investigative Summary ...... , 1 Summary fraudulent activities in the administra­ services of these two unions. In all, Conclusions ...... , 2 tion of dental and health plans offered AHP reported over $2 million in value This report is one result of a three­ Recommendations...... 2 by these companies. In both cases, it of services to the unions which were year investigation by the Pennsylvania was found that services rendered were never received. Chapter 1 A National Problem ...... 3 Crime Commission into the influence substantially over-reported to the Through the falsification of utiliza­ How Health Plans Work ...... , 4 of organized crime in the field of pre­ client unions and that the companies tlre)n reports and the omission of actual The Roles of Organized Crime...... 5 paid health care services and the ques­ were involved in questionable invest­ profits made from the contracts, both Union Trust Funds...... 7 tionable business activities engaged ments. companies were able to convince New Jersey Plan Tied to Bruno...... 7 in by some health care plan providers. In the case of A.M.M.A., the Com­ union leaders that their services were Fraud in New York ...... 8 As examples of these situations in mission obtained records from partici­ necessary and within a reasonable Federal Investigations...... 8 the health plan industry, the Commis­ pating doctors and clinics. These price range. sion looked into three companies: Current Laws...... , 9 reports showed that, in relation to a While the Commission was unable Labor Health Plans, Inc. (LHP), of Chi­ to determine the actual profits gar­ ERISA and Other Controls ...... 12 contract with Teamsters Local 837, cago; the A.M.M.A. Health Center, Inc., A.M.M.A. over-reported the value of ilered by either company, there are The Commission's Investigation ...... 12 in Philadelphia; and American Health services received by union members some indications that the companies Chapter2 Labor Health Plans, Inc ...... 13 Programs, Inc., (AHP), located in Tre­ by $254,715. had money readily available for some A Local Sales Pitch ...... 14 vose, Bucks County. AHP had several large contracts questionable investments. Frank D'Alfonso ...... 16 The Commission's investigation with local unions including AFSCME A.M.M.A., for example, was able to Helping the Union ...... 16 found links between traditional organ­ District Council 33 and the Retail loan nearly $160,000 to companies ized criminals and two of the com­ Coast to Coast Connections ...... 17 Clerks Union, Delaware Valley Health which had close ties to its owners over panies-Labor Health Plans and a three-year period. In some cases, Top Teamster Ties ...... " ..... " .... 18 and Welfare Fund. The Commission A.M.M.A. This report shows that La obtained worksheets prepared by an these loans were interest-free and Chapter3 A.M.M.A. Health Center ...... 19 Cos a Nostra members or associates were never repaid. Ties to Organized Crime ...... 20 were instrumental in helping these AHP used nearly $2.5 million for Dr. Silk ...... 21 companies receive union contracts. bonuses to top-level employees and Medical Fraud ...... 21 Moreover, there were indications that, loans and investments during a two­ The Only Contract ...... 21 in other cases, the unions were aware year period, A number of these invest­ that La Cosa Nostra groups would reap A,M.M.A. Wages ...... 21 ments have shown no appreciable re­ financial benefits if the contracts were turn to date. Utilization Reports ...... 22 awarded to particular companies. In summary, the Crime Commis­ A $16,000 Mystery...... 25 This association between some sion found that the three health plan Ledger·de·Main ...... 25 unions and traditional organized crime providers used questionable market­ Chapter4American Health Programs, Inc...... 27 figures displays the influence over ing techniques, did not provide their A Success Story ...... 28 ranking union members which organ­ clients with actual accountings of Cast of Characters ...... 28 ized criminals sometimes have. their services or profits, and utilized HCA: A Spawning Ground ...... 29 The investigation into American those profits in an unsound business manner. Marketing Techniques ...... 30 Health Programs (AHP) Inc. showed no From Trustee to Counselor .... ; ...... 31 links to traditional organized crime. "Keep Him Happy" .. , ...... 33 The company did, however, seem to have contacts in the unions or with Utilization Reports ...... 34 people close to the unions which in­ Lozanoff's Role...... 35 creased the likelihood of the~r fecalv­ Weisinger's Deals ...... 37 i ng the health plan contract. Often, Appendices these contacts were paid substantial The Evidence ...... 38 fees or commissions for their efforts. An Inside Look at Organized Crime: Fraticnno Testimony ...... 41 Remarks of Dr. Alan E. Berger...... 44 Index Individuals...... 46 Business Entities ...... 46 Unions and Associations ...... 47 ,

, . I . ;r I 6. Pennsylvania law does not regu­ late profit making pre-paid health care Conclusions plan organizations. Loopholes in the Recommendations As a result of the Crime Commis­ current law encourage the types of A. The Professional Health Serv­ sion's exhaustive investigation, the questionable activities found in this re­ ices Corporations Act in Pennsylvania following conclusions have been port. should be amended to include the fol­ reached: 7. Municipalities in the Common­ lowing provisions to regulate profit­ 1. Traditional and non traditional wealth have no authQrity over the making health care plan providers: organized criminals have infiltrated award and administration of health • the submission of clear and com­ pre-paid health and dental care plan or­ care benefit contracts for public sec­ plete statements of benefit coverage tor or municipal employees. ganizations throughout the country. • limitations on the amount that 8. These findings are not unique to These organized criminals and their these companies can spend on mar­ health care plan organizations in the associates have diverted millions of keting and administration Commonwealth. Similar activities have dollars from union health and welfare • the filing of detailed annual re­ been uncovered in other jurisdictions. trust hmds through these organiza­ ports tions. • the regulation of investments 2. Various union health and wel­ • a certification of authority to fare fund trustees and administrators transact business have neglected their fiduciary respon­ • the disclosure of the identity of sibility in the award and administration consultants to the company, particu­ of health care benefits. Such contracts larly t/lOse used for marketing are sometimes awarded on the basis • yearly audits and certification by of favoritism rather than cost-effec­ a Certified Public Accountant tivenes!). While the contracts are in • that incorporators must be com­ force, the unions may neglect to re­ petent and trustworthy quire the health plan organizations to • a strict conflict of interest provi­ provide them with detailed account­ sion ChaQterOne ings of services rendered, actual costs B. The Employee Retirement and and profits made. Income Security Act (ERISA), should 3. Some Pennsylvania-based pre­ be amended to cover trustees and ad· paid health care plan organizations ministrators of public employee health have submitted misleading and decep­ and welfare funds. A National Problem tive reports to union health and wel­ C. Municipalities should be al­ fare fund trustees regarding benefit lowed to audit health and welfare utilization by union members. These funds for which they provide funding reports have cQntained figures inflated and should be part of the benefit pro­ to as much as 600 percent of actual vider selection process. and have resulted in contract renewals D. The U.S. Department of Labor which might not have been given if the should conduct periodic and random actual m:mber of services had been re­ audits of union health and welfare and ported. pension funds. 4. Some pre-paid health care plan E. Union members should have the organizations have utilized question­ ability to initiate a civil action to re­ able marketing techniques. Payments cover trust fund money that has been have been made to individuals who lost through either criminal or negli­ were in some way associated with the gent conduct of the trust fund trustees awarding of health care plan contracts. or administrator. Substantial commissions and consult­ F. In the case of public sector ing fees have been paid to individuals unions, the governmental unit that in return for minimal services. 5. Pennsylvania-based health care supplies the funds for the purchase ?f benefit programs should have the abIl­ plan organizations have been involved ity to initiate a civil action to recover in financial transactions which re­ health and welfare fund money that duced the financial soundness of the has been lost through criminal or neg. organization. Several of these transac­ ligent conduct by trust fund trustees tions involved loans to or through indi­ viduals with close ties to the health or administrators. G. The government should have care plan organizations. the ability to recover on behalf of union trust funds, excess commis­ sions or finder's fees. H. Trustees and administrators should be liable for treble damages for losses resulting from theirconduct. ,

2 3 For example, a dentist might re­ {:4 t\lat~ona{ A board of truste th ~elve $5 per month per patient or lam­ plications from e~ en seeks ap. , I y as a fixed fee. This would compute A: They have connections. From the health care plan provid­ Probiem ,- care benefits. Thg~~vlder~ of. henlth a: How? er's point of view, the Cosa Nostra i? S60 per year per patient. If the pa- reviewed and the ap~lcatlons are The Roles Of lent only made one visit during that A: Well, they know that they have an members were acting as contacts with selected It h I provIder is then idea of who they are. They know ·that ~ear, and received $30 of sent­ , . s ou d be noted th f Organized Crime the Unions. Fratianno also explained they can get things done. :~es, the dentist would make an addi- provider Who contracts with th at .lie why the Cosa Nostra could act in this role: lanaI ~30 .. However, if the patient IS most often not the end e. union The Crime Commission's 1980 Re­ a: It's mainly through the connec­ health care. nathe~ it . prOVider of port, which looked at criminal activi· tions? Or is it also through the threats made frve VISitS at $30 each (total/1 tive company who hhiS an admlnistra· A: So he (Jack Presser) has an obliga­ S15~), the dentist Would 'lose' $907£1 ties during the 1970s, defined organ­ or implied threats of having a family cal and/ordental ~~aim~ndles the medi· ized crime as groups of people work· member involved? tion. And he knows that without them ~ervlces for that year, However. ther~ people he WOUldn't last two minutes in P Many health care be' n Ing together, usually on an ongoing A: That goes along with it; a little fear, ~so af!1 le opportunity, if the c~ntract are provided by packages basiS, in a mix of legal and illegal activo the Teamsters Union. n tInues, to recoup this 'loss'. establis~eedl you know. camp' 0 inSurance ities. It further noted that one goal of a: A little fear doesn't hurt in persua(j· a: Did you have a conversation with anl,es. thers are provided b Mr. Presser concerning Angelo Com· the covered.. organized crime is to achieve monopo· ing somebody to contract; 15 that it? ~i~~d_~~:~~~h~~rkbis in non:pro~lt health plan urganization Y mito? tio f b . , y a comblna- IIstic control over certain industries or A: That's correct. f:roflt-onented health plan organlz~~ A: Yes, sir. no aSlc fees received plus patient commercial ventures to fUrther their a: And if the fear doesn't work, they payments. ,?ns,_ The. types of companies dealt a: Would you please relate the cir­ thlS economic gain. might use actual force; is that correct? ~~~~thm , rep~rt ~re profit making The public and some law enforce­ A: It's very possible. It's been done. cumstances of the conversation you eraIT:~~~:!~fot~et~e tbheenefits are gen­ p an organIzations. had with Mr. Presser concerning An­ ment agencies view organized crime the connections that you've de· th f' consumer in Th.ere are two Ways that these a: .. , gelo Commlto? In ~h orm of mcreasing product costs as synonymous with La Cosa Nostra. scribed are through certain labor lead· benefit package plans can work. In one A: Well, I had some other business This misconception is one which de­ ers, certain people who control of have healt~ c:~~ ~:,rblicbempl?yee unions: f~~t ~he health care plan company es. with Jackie Presser. In the same con­ nies the mounting evidence of criminal access to the administrntion of these borne by the tax are eneflts costs are a IS es ~hat the usual and custom. versation I told him that Commito Th paye~ groups with varied ethnicities and funds, correct? ~ry charge 15 for various specific servo was-we were doing business with common, illegal, goals. A: That's correct, sir. cOllec~iv:~f;~r.e~ generally, through Ices. !~e employee or union member Commito, and that if he could help him HOlJiJ Health The Commission's investigation 0: Like you described (Jack) Presser· tributes an IOlOg agreements, can- ma~ VISIt the doctor or dentist of their in any way, it would mean money for , agreed upon amount f into health care plans documents in· and the other people such as that. c.holce, but the nealth plan organiza. us. Plans \lvork ust volvement in these plans by members A: (Witness nodded). ~~:~~~~t~o~ ttrh or health and w~- tlon only pays this customary fee and What was Mr. Presser's response? e purchase of he Ith and associates of La Cosa Nostra. And this enables them to take over a: any am.ount over that must be borne by a: A: He said he would (do) what he can However, in the section on American the funds and use them for their own ~:;i~~eo~e::~~ on b~half ot labor org~ni- the patIent. for him. Health Programs, Inc., It also shows adVantage. Do they have any competi­ e unron members In th Under the second method the Do you know whether Mr. Presser case of a union whO h . e the involvement of business and pro­ tion really? a: nici al IC represents mu- he~lth plan organization enlists p~rtici' was aware of Commito's involvement 'u dP or government personnel the fessional people who conspired on a A: Oh, there's a lot of people trying to patrn~ doctors or dentists in a geo. with Jac.;k Licavoli,·· also known as Ins are suppli db' continuing basis to conduct their busi· get these programs, sir. Whoever's got or state. e y the municipality graphtc. area and receives an agree. Jack White, and Angelo Felice? ness in a fraudulent manner. the best connection gets, gets the ~ent With the·se participating special. A: Well, he knew that whatever I did, Interestingly, the methods em­ contract. to accept a fixed fee per patient the Cleveland Family would get a per· Ist~ ployed by these dissimilar groups of So the competition is usually of the ThIS fee is pai? monthly by the health a: centage of. So it actually didn't matter. organized criminals appear to be quite illegal variety, isn't it? plan. <;>rga.nrzatlon and is received by similar. A: I would say 50, yes. partlclpatmg physicians and dentists The examples within this report a: And by getting the contracts, they In the example which had no r~~ardless of how many (or how few) show the relationship between tradi­ then inflate the prices, correct? known organized crime ties, American VISItS are made by the patient. tional organized crime and the health A: We!I, no. They don't inflate the Health Programs, Inc., other marketing agents were used. As is described in care plan industry. In the section on prices. It's 50 lucrative that you don't Labor Health Plans, Inc., La Cosa have to inflate; due to Inflation, they go Chapter 4, the Commission received Nostra members and associates are up anyhow. Every year they go up. The evidence that several people involved used as intermediaries to help the wages go up, the benefits go up, it in unions or closely connected to the unions received monetary or other company obtain contracts. A similar goes up anyhow. situation seemed to be in evidence But it's so lucrative that you actual· benefits for helping the company get with A.M.M.A. Health Center, Ine. Iy don't have to, to raise the prices too health care contracts with the unions. During the Commission's public much. Those individuals included a union hearings on July 28,1981, former Cosa officer, a union trust fund trustee and Nostra member Aladena "Jimmy the Fratianno, who acted as a contract an attorney. Like the Cosa Nostra Weasel" Fratianno testified about the for Angelo Commito and Labor Health members in the Labor Health Plans ex­ role which he and others played in re­ Plans, Inc., testified later that, "I was ample, they were in a position to exert gard to health care plan contracts in promised ten thousand a month, if I some control over the union's deci­ other states: got that program, for myself." sion. a: And the insurance and the health plans is a new avenue of making • Presser is the vice president of the In­ •• Licavoli is the head of the Cleveland money for the families, is it not? ternational Brotherhood of Teamsters. La Cosa Nostra family. Fratianno (A): They've been doing that quite a while. Q: Quite a while? A: Yes, they have. a: Now, how does it work exactly? Why is it important for the people who are participating in this to use a La , Cosa Nostra member? How does that l1elp them?

4

5

, . :r I . '\ ,

Guideposts for Union Trust Funds New Jersey Plan Union Trustees The key ingredient in the prOVision Tied to Bruno of health care services is the recipient In order to ensure the most effec­ of those services, the union or em­ In December 1980, the New Jersey tive operation of a trust fund and avoid ployee group member. It Is on their be­ State Commission of Investigation breaches of fiduciary responsibility, half, and ostensibly for their benefit, conducted public hearings and later is­ trustees and administrators should that these contracts are entered into. sued a public report detailing organ­ employ basic precautions in their gen­ Generally, it is the union's officials Ized crime Infiltration of New Jersey eral activities. The trustees should: or trust fund trustees who make the dental care plans. • be aware of their civil and crlm­ decision on who will provide the union The New Jersey report revealed inalliabllitles under the ERISA law. with health care services. As was nlen­ that North American Dental Plans, Inc., • employ an independent consul­ tioned in the previous section and is a Wayne, Pennsylvania, corporation, tant to analyse and evaluate the com­ detailed In later chapters, the Commis­ had hired a consulting firm, Ritten­ petitive bids submitted by potential sion found that some union officials house Consulting Enterprises, Ltd. of benefit plan providers. allegedly received financial remunera­ Cherry Hill, New Jersey, run by Law­ • ascertain to whom brokers' fees tion for their acquiescence to certain rence A. Smith, to secure a prepaid or commissions have been paid in rela­ contract proposals. dental benefit contract with Local 170 tion to the award of a benefits pack­ Labor racketeering and the infiltra­ of the Hotel and Restaurant Em­ age. tion of organized crime into union trust ployees Union in Camden, New Jer­ • employ a financial consultant to funds has been described as the na­ sey.· The union, which later became review the health plan provider's fi­ tion's number one investigative prior­ known as Local 33, was run by Ralph nancial and utilization records during ity by many law enforcement authori­ Natale and Albert Daidone, the vice­ the life of the contract. ties. It has been documented that once president of the local. •• • require In-depth periodic reports in control of that trust fund or the or­ The New Jersey investigation re­ by the benefit plan provider which ganization that is to provide health vealed that Rittenhouse had received should include figures relating to utili­ care benefits for the union members, SUbstantial monies from N.A.D.P.ln re­ zation by the eligible members, serv­ organized crime figures have been turn for obtaining the contract, ices received, an itemized cost of ad­ able to drain millions of dollars from although other work was supposed to ministration and the amount of trust the fund. be provided. The ir.vestigation also re­ fund monies actually spent to provide Marty Steinberg, Chief Counsel for vealed that the trustees of the health the benefits to union members. the United States Senate Permanent and welfare fund of the union made lit­ Sub-Committee on Investigations, tes­ tle or no determination as to which tified before the Pennsylvania Crime plan was to be chosen; rather they re­ Commission and described the meth­ lied upon the advice of one or two indi­ ods employed by organized crime fig­ viduals who were connected with or­ ures to fraudulently deplete union ganized crime. health and welfare trust funds. These methods include multiple billings to the trust fund by the health • NADP is run by Joseph R. Cusumano care provider, false or fraudulent loans of Devon, Pennsylvania. The company from the trust fund to outside parties, is a subsidiary of Health Corporation inflated service contracts, kickbacks of America, also located in Wayne, to union or trust fund officials, unnec­ Pennsylvania. For more on NADP and essary or inflated commissions relat­ H CA see page 29. ing to health care benefit contracts •• Ralph Natale is a close associate of and questionable investments. many organized crime figures and has In addition, Steinberg testified that been described by organized crime hit­ the health care provider or insurer of­ man Charles AI/en as a member of the ten billed the trust fund for services Philadelphia . Natale is that were never supplied or reported currenting serving a 12-year prison an inflated number of services. term for his role in the arson of the Mr. Instances such as those described Livingroom Furniture Store in Marlton, by Steinberg were found to occur in Aladena "Jimmy the Weasel" (hooded figure) testifying before the Pennsylvania Crime Commission, July 28,1981. NJ. Natale was also convicted in July several local health plan contracts. 1980 of smuggling cocaine into the The union's role in some instances United States. was possibly a complicit one. In other It could be argued that these ques· Non-traditional organized crime ac­ cases, the union was allegedly un­ t raditionel and non-traditional organ­ aware of the health plan company's ac­ tionable marketing techniques are not t ivity was further found in the daily op­ ized crime figures are heavily involved dissimilar to those used in the busi­ erations of American Health Programs, tivities. in at least some health care plan com­ A question remains, however, of ness world on a daily basis. Choosing Inc. and the A.M.M.A. Health Center, panies, and that their involvement is to do business with someone known Inc. Chapters 3 and 4 detail the way in the unions' responsibility to their , for the purpose of their personal finan­ members to demand accurate report­ rather than someone unknown is not a which both companies provided their cial gain. It is the belief of the Commis­ crime. Fratianno claimed that the unions with inflated reports on usage ing of service usage from the health sion and other law enforcement offi­ plan provider. union officials with whom he dealt of their services, and, in essence, de­ cials that the companies in this report were aware that their acceptance of ceived the union about what its em­ are indicative of similar operations in the health plan would be financially re­ ployees were receiving in return for the health care companies across the na­ warding to Fratianno and were agree­ health care premiums. tion. able to that. It can be seen, therefore, that both 6 7

, , The Sub-Committee's investigation As a result of the joint efforts by ity. The types of activity described in and the depletion of the company's re­ concluded that of approximately $39 Further Investigation revealed that New York authorities, the New York these cases will continue to grow, as serves by more than 20 percent in any million in union insurance premiums Smith could not account for approxi­ Fraud in New York State insurance Department in April this area continues to offer lucrative one year. In addition, it requires the fil­ obtained by Hauser's companies, mately $150,000 of the $800,000 Ritt~n­ 1980 was able to recover $1.3 million $11 opportunities for unscrupulous indi­ ing of annual reports and regu'iates, house had received in 1978. According In March 1981, the State Comm~s­ from' Trans World in relation to the million was diverted to other firms in viduals. generally, the investment of funds by the form of questionable commissions to the New Jersey Commission, this sion of Investigation in .New ",(ork IS­ commission paid for the Local 237 the non-profit companies. and commission advances, worthless cash was funneled to , sued a pUblic rsport entitled A Trust health and welfare benefits. The law contains criminal penalties deceased Philadelphia , Betrayed: Fraud, Breach of Fiduciary In yet another situation, the New and questionable investments, conver­ of a $3,000 fine or six months im­ sions to cash ,and the payment of per­ Current Laws through Natale and 'Philadelphia or­ Duty and Waste at the Teamsters Lo­ York State Insurance Department was prisonment for violations of the Act. sonal expenses and legal fees. ganized crime figure Raymond "Long cal 237 Welfare Fund." The report out­ able to recover an additional $345,426 A Significant aspect of the Crime Several of its provisions, however, Hauser, who operated with Bernard John" Martorano.' lined the various transactions regard­ of allegedly improper service .fees that Commission's investigation showed are unique to its stated purpose of pro­ Rubin, President of the Southeast Flor­ The influence of organized crime in ing Teamsters Local 237, a union r~p­ had been paid to the Connecticut Gen­ that profit-making health care plan or­ viding health services to low-income ida laborer's unions in Miami, , the selection of union health care pro­ resenting over 14,000 New York City eral Life Insurance Company. ganizations are not subject to any gen­ persons. was convicted in 1977 for his activity in For example, the non-profit entities viders was amply portrayed in the New employees. ' These fees had been paid in rela­ eral regulatory authority in the Com­ In Barry Feinstein became attempting to bribe union officials to are exempt from state tax laws and Jersey investigation through con­ 1967 tion to health and welfare benefits for monwealth of Pennsylvania. In addi­ do business with his firm, National must set standards for the provision of fessed Mafia hit-man Charles Allen, president of the union and chairman ?f the Operating Engineers Local 138, tion, the fiduciary responsibilities Prepaid Health Plans in California. health care services to low income who testified before the New Jersey the fund's board of trustees. As chair­ Farmingdale, New York; Teamsters Lo­ placed on union trust fund officials by In 1979, Hauser also pleaded guilty people. If, as the Commission recom­ Commission. Allen testified that man of the board of trustees, Feins~ein cal 282, Elmont, New York; and the the federal Employee Retirement In· to federal charges in Arizona for relat­ mends, (see page 2) amendments to "Ralph Natale had it all set up for, for selected William Wallach, a longtime Amalgamated Transit Union Local come Security Act (ERISA) is not appli­ friend and relative by ma'rriage, as the ed activities. Rubin pleaded guilty in this law are proposed, a careful analy­ his cousin to run the dental plan, but 1181, Ozone Park, New York. cable to public sector union officials. fund's insurance broker and consult- December 1978 for his involvement sis of which provisions would be appli­ he was called to Philadelphia by An­ The State Insurance Department These loopholes in the law allow gelo Bruno." Allen further testified with Hauser in Arizona. cable to profit-making companies ant. . .. contended that these fees had been health care plan organizations to act in that "Angelo told him, 'No, Ralph, your Together with CalVin Winick, an- In a related matter which further would have to be made. improper because they not the manner uncovered by the Commis­ .s~ould documents organized crime infiltra­ Pennsylvania law also regulates cousin's not going to have the dental other insurance broker, Wallach de­ have been paid, were for minimal work, sion in this report. tion into this area, a federal grand jury plan, Larry Smith is going to have. it.'. " frauded the fund of over $3 million or were for services duplicating those health maintenance organizations, un­ The New Jersey State Commission from through The Commis­ in Florida on June 4, "1981, indicted 14 der the Pennsylvania Health Mainte­ 1972 1980. done by the insurance company of the Pennsylvania Law of Investigation also focused on a sion concluded that this could not men on charges of violating the Fed­ nance Organization Act. This act only welfare fund employees. North New Jersey dental plan called have happened if the trustees of the eral Racketeer Influenced and Corrupt Profit-making health care plan applies to entities that provide a full Joel S. Sokol, D.D.S., P. A. The investi­ fund had properly exercised their fidu­ Organization Act (RICO). Among the companies are not covered under any spectrum of basic health care serv­ gation illustrated that the plan utilized ciary obligations to preserve the individuals indicted were the boss of Pennsylvania law, but similar types of ices, and was amended in 1980 to in­ out of state organi:zed crime connect­ fund's assets. the Tampa, Florida based organized companies that offer comparable clude profit-making entities. ed advance men in its creation and em­ The investigation focused on how Federal crime family Santo Trafficante and the benefits are regulated. For example, Other States ployed Comillo Molinaro, an ~dmitted Wallach and Winick defrauded the Investigations boss of the Chicago organized crime insurance companies which offer pre­ organized crime member, on ItS ~rem­ fund by obtaining illegal commissions family Anthony "Big Tuna" Accardo. paid health care benefits to union At the present time, thirteen states ises as a janitor to look after the inter­ from the fund's insurer, Trans World While the federal investigations of Joseph Hauser was named in the in­ groups are subject to state insurance have enacted comprehensive controls ests of John Riggi. Life Insurance Company of New York, this area are too numerous to list or de­ dictment as an unindicted co-con­ laws. for fixed-fee dental and profit malting Riggi has been described as the in­ in return for plaCing the fund's bu~i­ tail several substantive cases of cor­ spirator. In addition, non-profit corporations health care plan organizations. States dividual in charge of Simone (Sam) De­ ness with Trans World. These commis­ rup't and questionable activity have The indictment charged that the that offer health, dental, optometric, or with such legislation include Arizona, Cavalcante's New Jersey organized sions which were concealed from the been documented throughout the principals had established a scheme other medical service pians are regu­ California, Colorado, Connecticut, crime family. Riggi had been involved fund,' were passed on as premium country and should be mentioned. whereby insurance companies would lated under the Professional Health Florida, Indiana, Nevada, New Jersey, in the Sokol program contract awards. charges to the fund. In 1979, the Committee on Govern­ I:)e established or expanded to obtain Services Plan Corporations Act. Non­ New Mexico, South Carolina, Texas, In addition the investigation re­ The investigation further revealed ment Affairs of the United States Sen­ the pension, health, vision and dental profit companies fall under the guid­ Virginia and Washington. As of June, vealed that th~ Sokol plan provided the efforts Feinstein made to assure ate Permanent Sub-Committee on In­ policies of the Laborer's International ance of the Pennsylvania Departments 1981, legislation was pending in free service to organized crime mem­ that Wallach and Winick would con­ ves'tigations, issued a report of i.ts in­ Union of North America which repre­ of Health and Insurance.' Nebraska, Ohio and Utah. (See charts, bers and associates, inflated invoices tinue to receive exorbitant payments vestigation into the labor union insur­ sents 75,000 workers. The companies The Professional Health Services pages 00 and 00, for types of legisla­ for equipment and fixtures prior to even after he knew of their fraud, in­ ance activities of Joseph Hauser and would then kickback part of the profits Plan Corporations Act (40 p. s., 6301 et tion covering health care industry in transferring the overage into cash, and cuding his efforts to influence the his associates. to the principals. The indictment al­ seq.) was enacted to provide adequate these and other states.) further drained cash from the opera­ progress of an audit by the New Y~rk According to the Sub-Committe~'s leged that as part of the scheme, a health services to low-income per­ Generally, health care plan legisla' tion through inflated constn.ction in­ City Comptroller's office and a later in­ report, Hauser carried u;Jt a massive land development company was estab­ sons. tion requires a certificate of authority voices and fictitious vendors and vestigation by the New York State In­ insurance sales scheme targeted at lished through which the funds would This law requires the issuance of a to transact business as a health or payees.' , surance Department. union health and welfare trust funds in be laundered. Seven union officials Certificate of Authority to the non­ dental care plan entity and certain fil­ The report also detailed the failure Florida, Indiana, Massachusetts, Ari­ were also indicted. profit company after its approval by ings must be made to obtain such cer­ of those entrusted with the preserva­ zona and the Teamsters Central While the above instances are but a the Pennsylvania Department of tificates. These laws also have f'clven­ 'For more inform;}"Hon regarding Mar­ tion of the fund's assets, including States Southwest and Southeast area few of the situations that have been Health. It requires an initial financial cy provisions requiring the submission torano's involvement in the health care Feinstein, the trustee~, and the fund's health 'and welfare funds.' Hauser and experienced with relation to organized reserve and a continuing reserve fund of a fidelity bond in specified amounts industry see page 20. counsel, to prevent the fund from ~e­ his associates had acquired the busi­ crime's infiltration and the corruption which ensures service to enrolled sub­ on behalf of each officer responsible ing victimized. The New York Commis­ ness from the labor union trust funds of union health and welfare funds and scribers. for conducting corporate affairs. In ad­ sion concluded that the approximately gen!Hally through the influence of per­ "New Jersey reported that the Sokol the health care providers administra­ It further requires approval by the dition, a number of states require the Plan had connections with John (Cur­ $140 million in health and welfare sonti close to the unions. tion and insurers, they serve to docu­ maintenance of a surety bond or cor­ funds provided by the city of New York Department of Health of the com· ly) Montana, identified by f:Jew Je~sey ment the prevalence of such activity pany's rates, the form and content of porate reserve fund guaranteeing serv­ are almost entirely unregulated. authorities as a Cleveland organtzed • Haus'af controlled the Farmers Na­ throughout the nation and further dis­ contracts, methods and rates of pay· ices under the plan. crime figure, and Carl Rizzo, identified tional Ufe Insurance Company, a small play the complex nature of such act iv- ment to partiCipating doctors, acquisi­ Another feature of the legislation by New Jersey authorities as an organ­ 'This local is the largest Teamster's financially troubled Florida insurance tion costs in procuring subscribers in four states is a decreasing limitation , ized crime figure from Buffalo, New public employee union in the nation. company and a subsidiary of Farmers on the amount of funds that may be York. Rizzo was found garroted in the used for marketing, administration and in Arizona, Family Provider Ufe Insur­ , On October 30, 1981, the Pennsylva­ trunk of a car in April 1980. For more ance Company. solicitation. on Rizzo's connection to the PCC in­ nia Department of Insurance issued an opinion that profit-making health plan vestigation see page 18. providers are not subject to current in­ surance laws and are not within the ju­ risdiction of the Department. 9 ..... 8

" "If' .' , ;;:1, / ~, I LEGISLATIVE ENACTMENTS OF SELECTED STATES LEGISLATIVE ENACTMENTS OF SELECTED STATES continued

WASHINGTON VIRGINIA TEXAS STATE ARIZONA COLORADO NEW MEXICO NEW JERSEY INDIANA WASHINGTON VIRGINIA TEXAS STATE ARIZONA COLORADO NEW MEXICO NEW JERSEY INDIANA HEALTH HEALTH HEALTH HEALTH HEALTH HEALTH HEALTH HEALTH CARE CARE CARE PLANS REGULATED DENTAL DENTAL DENTAL DENTAL ,- CARE PLANS REGULATED DENTAL DENTAL DENTAL DENTAL CARE CARE CARE CARE

(H) REGULATtON OF AGENTS License ReqUired WRroW~DA~~roR~~R~E~A~~run,.a~.~~m~B.~~E~E~~~I~~II=====~=====~gE~~Z~E.m~~q"inancial Slatement • Disciplinary Provisions tndependent Certified Audit Regulation of Broker or Finder Fees Proposed Provider Contract Consultant Regulation and Reporling Requirements Propesed Form of Membership Coverage Malpractice Coverage for PrOViders Plan Description Officer Identification (t) MEMBERSHtP COVERAGE PROVtStONS Organizational Docum~nts Must I ssue Evidence of Coverage Description of Proposed Methoa of Marketing Newborn Child Coverage ProVision Source of Working Capital Descnption of Ptan Benefits EVidence of Quality Assurance Program 1------1------­ DeSCription at Plan Limitations Cost Accounting Program ~-----+-----_l-----­ Identification of 'nformatlonSeNlces Evidence of ComplBlnt Review System ~-----+-----_l------Member Payment Obligations OfficerConllict of Interest Disclosure L _____..L _____..J ______L _____.L _____ J ______1.,;.; ...... :;,;.;;=~;iL.------l EVidence of Coverage Must Be Approved (B) tSSUANCE OF CERTtFtCATE OF AUTHoRtn De£cnptlon of Complaint System

(Fottowing Conditions Must Be Satisfied) "I111.i1ZIil~=====::JBJ.!~~rJ~ (J) ADVERTtSING AND SOLICITATION REGULATtON Corporate Officer Integrity ,. Approval of AdvertiSing Matenal Career Offender Cartel ProviSion Unfair Trade and Fraud ProviSions Financial Responsibility Regulation of Corperafe Name AlternatIVe Coverage Provision Ethical Requirement for Sales Promollon Sufficiency of Providers Agreement Prohibition on PrOVider Evaluallon Satisfactory Rate SChedule

(C) SUREn OR FtDELln BOND (K) PERIODtC PLAN EXAMINATION BY STATE Corporate Bond Based on Enrolled Members Revlewa'­ Officer Bond-S50.000 FinanCial Status Officer Bond Set By tnsurance Department Conduct of BusIOess Corperale Bond. 25% of Gross Annual Fees or 250.000 Delivery of Care Bond Amount Set By tnsurance Department Compiamt S,'Stem Compliance With RecordkeepIOg ProvIsions Compliance With Laws General Examlnallon

(L) MtSCELLANEOUS PROVtSIONS Regulaflon of Loans bya Ptan AuthOrity to Promulgate Regulations (EJ CORPORATE TAX LIQu',dahon ProVISions 1 %of Annuat Net Prepayments on Domestic Plans ~,,¥~~:: :~1 ~;;.~,~ . 1.{, "~, Regulaflon at Investmenls bya Ptan 2% of Annuat Net Prepaymenfs on Foreign Ptan ""_"'''- ""! '/. : i< ~.~" • Cancellation of Coverage PrOVISions Other Anti-DISCrimination ProviSions Illegat Rebate ProvIsions (F) REGULATtON OF OPERATIONAL EXPENSES Employee Payment Assumpt.,-o PrOVISIOO' Expenditures LimIted To: Underwriting HeQUlrements 30% of Prepaid Charges in First Year Open Enrollment PrOViSion and ExceptIOns 25% of Prepaid Charges In Second Year OlflcerFlduclary Responslbll,ly ProVISion 20% of Prepaid Charges Therealter Out of Area 5e'rvlce ProviSion For: AdmInistration Marketing (M)PENALTtES Solicitation Revocaflon of Certificate of Aulhonty General Expenses SuspensIOn of Certificate of Authonty AcquiSitions Cease and DeSiSt Order Taxes and Licenses CnmIOal Penalty C,Vlt FlOe 5100 to S500 (G) ANNUAL REPORTING REQUtREMENTS 5500 to 51.000 Financial Statement StO,OOO Modification From Prior Reports Number of New Members Number of Members Terminated Total Members Cost of Care Provided Units of Care Provided ••••••• Proposed Amendments by State Commission of tnvestigation Operation Costs Paltern of Service Utiti~ation Complaints Received Malpractice Experience CertIfied Audit Annual Report. Public Document Source at Funds Disposition of Funds \ Anancial Report Enrollees Ofher Repert for Enrollees

_epa Statutory Provisions

Proposed Amendments by Stale Commission of Investigation

11 10

\ . - -- - -~~-~--- --.,....,--..",..,...,...,..---

Under almost every statute, the fits provided to public employees even Those who fought the Commission's health care plan organization must is­ though they provide the funds to cover subpoenas and the length of the court sue a clear and complete statement of the costs of those benefits. cases follow: benefit coverage, furnishing to every In Philadelphia, the City has been Robert Fleuhr (AMARC) -4 months enrolled member the plan description, able to obtain some representation Robert Rovner -3 months benefits available, limitations on serv­ and review authority over contracts for Howard Davidson -4 months ice, co-payment responsibilities, and the provision of benefits by including Thomas Garvey -5 months deductibles. It must also state where the provisions for such authority in '(he Merrill Glickstein -6 months and in what manner information re­ collective bargaining agreements. In Alan Cohen and James Cox fought garding the benefit program is avail­ addition, the City is currently attempt­ their subpoenas in court for less than a able. ing to pass an ordinance that would month. Health care plan organizations con­ give the City certain authority in rela­ During the course of this investiga­ trolled by these laws must also file de­ tion to the expenditure of city funds tion, allegations of criminal or civil tailed annual reports, including finan­ for health and welfare benefits. wrongdoing were forwarded to the cial statements and utilization infor­ However, municipalities may be United States Attorney (Philadelphia), mation. Other provisions included in preempted from enacting laws govern­ the United States Strike Force (Phila­ the laws provide for the licensing of ing to public sector health and welfare delphia), the District Attorney (Phila­ brokers and agents, approval of adver­ funds by virtue of the fact that there delphia) and the Internal Revenue tising material, regulation of invest­ are two state statutes governing pub­ Service. ments, and civil and criminal penalties lic union labor relations. As a culmination to the investiga­ for violations of the law. tion, the Commission held public hear­ In addition to the above provisions, ings in Philadelphia on July 28,29 and the New Jersey State Commission of 30. Testimony was received from Com­ ------Investigation has recently recom­ The Commission's mission personnel, law enforcement mended amendlT'ents to the New Jer­ officers from other jurisdictions, and sey law. Included in these recom­ Investigation persons involved with the three com­ mendations are provisions that would panies being investigated. A signifi­ The investigation by the Pennsylva­ require the financial statement filed by cant witness at those hearings was ChaQterTwo nia Crime Commission into the medi­ the organization to be audited and cer­ Aladena "Jimmy the Weasel" Frati­ cal and dental plan industry was, by tified by a Certified Public Accountant. anno. His appearance and security far, the most complex investigation Also, it would require regulation of and were arranged through the cooper­ the Commission has done to date. disclosures by all consultants to the ation of the United States Strike Force The fnitial resolution to open the in­ organization and the regulation of in Los Angeles, California, the United Labor Health Plans, Inc. vestigation was passed by the Com­ broker or finders fee paid to such indi­ States Marshall's Service, and the missioners in the spring of 1978. When viduals. Also regulated would be loans Pennsylvan ia State Police. the Commission was reformed in 1979, made by health plan organizations. In addition, testimony has been re­ another resolution continued the in­ While these provisions do not con­ quested and given by Crime Commis­ vestigation. A total of two and a half stitute the full range of considerations sion personnel before the Pennsylva­ years was spent on the investigation. in the development and regulation of nia House Committee on Consumer - The financial complexity of the prepaid health care plan organizations, Affairs (September 9, 1981), and the case required substantial and lengthy they do reflect some of the common United States House of Representa­ fiscal analyses by Special Agents who concerns in other states. tives Select Committee on Aging (No­ are Certified Public Accountants. The vember 4, 1981). magnitude of the case required the close cooperation with a multitude of other law enforcement agencies. ERISA and This investigation required a total Other Controls of 128 subpoenas to be served. Sev­ enty-one were for public or private tes­ The federal Em ployee Retirement timony, while 57 subpoenas were giv­ Income Security Act (ERISA) does not en to banks, corporations or other enti­ cover public sector union health and ties for records. welfare trust funds, but most other un­ Of the persons who were subpoe­ ion groups are guided by the restric­ naed to testify, 29 asserted their con­ tions in this law. stitutional right against self-incrimina­ Generally, ERISA places strict fidu­ tion. Immunity was later granted to the ciary responsibility on health and wel­ following four persons: fare fund trustees and on the adminis­ Carol Lozanoff (AHP) trators of such funds. A breach of this Libby Barland (AHP) responsibility, either through neglect Sanford Roth (AH P) or intention, may result in either civil Roseann DiGrazio (AMMA) or criminal liability. As is noted on SIxteen litigations were entered in- page 00, the Commission recom­ to during the investigation, for the pri­ mends that ERISA be amended to mary reason of enforcing subpoenas. cover public sector unions. Pennsylvania tras two laws which , relate to public sector unions, but neither have prOVisions similar to ERISA. In addition, many muniCipali­ ties in Pennsylvania have no power or authority over health and welfare bene-

12 13

. ~, These men were accompanied by ation which purportedly was in exist­ D'Alfonso and drove to Philadelphia In­ ence from 1972 to 1981. Labor Health ternational Airport where one, later While in Philadelphia, Allu was in­ identified as Angelo T. Commito, troduced by D' Alfonso to Nathan Plans, Inc.: boarded a Chicago-bound flight. A pic­ Steven Montrose, an insurance broker. From Chicago ture of Commito obtained during this Montrose later introduced account­ surveillance is on page 00. ant Alan Cohen to Commito. Cohen to the Coasts In November of 1980, a man named was purportedly going to help get fi­ John James Allu· met with D'Alfonso nancing for the venture. Labor Health Plans, Inc., of 230 and Mario Riccobene at Riccobene's During January of 1981, D'Alfonso North Michigan Avenue in Chicago, residence. Allu, of New York, is an as­ flew to Palm Springs, California and came to the attention of the Crime sociate of the Genovese Cosa Nostra was observed in a meeting by Califor­ Commission when its owner, Angelo family. He is a former Teamsters Union nia enforcement officials. Two of the T. Commito, began an attempt to mar­ official. ** individuals attending that meeting fit ket his plan in the Philadelphia area. A the descriptions of Commito and Allu. further investigation of Commito and Furthermore, one of the vehicles used his company showed a pattern of activ­ by these individuals was registered to ity which had been repeated in loca­ an address used by Commito. tions from coast to coast. Also attending this Palm Springs Commito's usual procedure for meeting was a man identifiec:l as Frank gaining health contracts in various Pries, also known as Frank Gulmi. New states was to first make contact with York authorities identify Pries as an the local organized crime family. In the administrative assistant for the Hotel world of La Cosa Nostra, this contact and Restaurant Employees Union Lo­ is necessary protocol for anyone who cal 69 in Long Island, New York. They wishes to do business in another fam­ also claimed that Pries has associated ily's territory. with Sonny Franzese, an influential Moreover, these contacts can help member in the the potential health plan provider to in New York. find sources of financing for his local On February 6, 1981, Commito and effort (as Commito attempted in Phila­ Allu were again seen meeting with delphia), or they can provide him with Frank D'Alfonso and Harry Riccobene introductions to local union leaders in Philadelphia. During this meeting, (as Commito found in Arizona and Commito and Riccobene left the Ohio). house and walked around the block The following sections illustrate three times while they spoke. They these contacts and their value to the then re-entered the house. health plan company. JohnJ. Allu When Commito departed, he was overheard mentioning Harrah's Hotel When the Commission checked Casino in Atlantic City, New Jersey. the registration of the car driven to He also said that " ... arrangements Raymond "Long John" Martorano, long-time associate of murdered mob boss Angelo Bruno, with James Cox, President of Philadelphia by Allu, it found that the have been made for an eight o'clock A Local Sales Pitch the Amalgamated Meatcutters' Union and Theodore Manuele, the vice president of Pickwell Markets. See page 20 for more car was registered to Labor Health meeting at Bookbinder's; the account­ details. Labor Health Plans, Inc. is a Chi­ Plans, Inc., Commito's company. ant, Alan Cohen, will be there." cago-based corporation which admin­ Moreover, it learned that the registra­ The Bookbinder's meeting took Harry "Hunchback" Riccobene, a La Cosa Nos­ isters medical and dental programs for tion for Labor Health Plans in New place just five days later on February tra family member, and Angelo Commito walk­ Angelo Commito and Frank D'Alfonso during one of Commito's visits to unions. It is operated by Angelo T. York is 12-29 31st Avenue, which is 11. Present were Commito, Allu, D'AI­ ing on a street. Philadelphia. Commito, who has residences in Chi­ Allu's address and the address of a , local entertainer Jerry Blavat, cago, Illinois and Sausalito, California. James Calandrillo, identified as a and Alan Cohen, a Philadelphia ac­ During an attempt to market those Gambino family member. countant. services locally, Commito was ob­ Mario Riccobene is a close associ­ The Crime Commission was later served meeting on several occasions ate of Philadelphia organize,d crime able to obtain information on the pur­ with high-level organized crime figures figures including his half-brother, Har­ pose of the meeting from Alan Cohen in the Philadelphia area.· ry "Hunchback" Riccobene, who is a in a private hearing. Cohen said that Commito's first observed local member of the Bruno/Testal? crime Commito discussed the financing of contact took place on July 24, 1980. family. In February of 1981, both of the an Atlantic City building which he was During a routine surveillance, special Riccobenes were indicted by a federal trying to purchase to be the site of a agents saw several men leaving the grand jury in Philadelphia for their al­ health clinic to be used by members of home of Frank "Frankie Flowers" D'AI­ leged roles in an illegal gambling oper- the Teamsters Local 331. During the fonso, a significant Philadelphia or­ meeting, Commito telephoned a Team­ i ganized crime figure. (See D'Alfonso ster's official, Dick Kavner, in St. summary, page 16.) ., • Allu has had several convictions for Louis, Missouri and introduced him to 1 '1 perjury in relation to his testimony dur­ Cohen. Arrangements were then made "For information ch1 Commito's mid­ ing investigations into corruption in for Cohen and Kavner to meet at Har­ west and west coast organized crime the Teamsters Union in New York City. rahs rogarding the project. connections, see pages 17 to 19. Commito has twice been convicted on ". It is hypothesized that the reason for Internal Revenue Se;yice violations in Allu's role was that the union being Illinois and Ohio. Th~ Ohio conviction solicited to was in Atlantic City and was related to a jntal plan he pro­ the New York and Philadelphia crime vided in Columbus. families share control of that area. 1 ,J15 14 ,1 1 , .. .,' - 'e;ce:',,·' j". ,._-;- "-.,--;,,---'------, .. ; 1 ',' , Cohen also detailed results from other meetings he had with Commito and his associates. He said that he Frank Helping the Union ORGANIZED CRIME ASSOCIATION WITH UNION HEALTH PLANS first met Cbmmito in April of 1980 D'Alfanso In the course of their marketing ef­ when he,was introduced to him by N. fort, Commito and Allu weriJ also pres­ Steven Montrose. A meeting was held e Member of LCN "family 0 Associate of LCN Member(s) 0 No LCN association Frank D'Alfonso is a major gam­ ent at a meeting with union officials in Cohen's office between Montrose, bling figure and a significant associate John Allu and Commito. and Harrah's management which re­ of the Bruno/Testal? crime family in solved sorne employee complaints. Angelo T Commjlo 8. Assoc roo'NNERSOF According to Cohen, the discus­ Phi ladelphia. John Allan, the manager of Har­ CONDOMINIUM sion during this meeting involved the SAUSALITO. CA 0' Alfonso, of 821 South 9th Street, rah's, told law enforcement officials ; ; types of financing that Cohen could Philadelphia, has risen to power since that during the winter of 1980, commis­ provide for clients. At the time,Cohen the death of former Cosa Nostra boss sary workers at Harrah's had various was not given the specifics of the proj­ Angelo Bruno in 1980. D'Alfonso is complaints. The employees were ect for which financing was needed. now active as the liaison for the Phila­ members of Local 331 and the hotel's I: During. the summer of 1980, a sec­ delphia Cosa Nostra with other organ­ management entered into negotia­ ond meeting was held at Palumbo's ized crime families. tions to resolve the complaints with Nostalgia Room Restaurant in South Michelene D'Alfonso, Frank's wife, Local 331 representatives Jack Miller Philadelphia. The participants at this owned the South Philadelphia restau­ and Bob Cericola. L&G livery meeting included Montrose, Cohen New York. NY rant, Cous', at which Bruno had his The problem could not be resolved Allu, Commito and D'Alfonso. As i~ last meal before being murdered. Har­ and, in an effort to settle the dispute the first meeting, only generalities were discussed. ry "Hunchback" Riccobene, a member Allan metwith Francis Kelly, the direc: In January of 1981, Cohen was con­ of the Cos~ Nostra family, has tor of Harrah's Casino Relations de­ operated a Sizeable loan-shark busi­ partment; Harold J. Gibbons, Interna­ J tacted and a meeting was arranged at the coffee shop of the Bellevue Straf­ ness out of a storefront owned by tional Teamsters vice president; An­ 1; D'Alfonso. ford Hotel in Philadelphia. Cohen met gelo Commito; John Allu; and Richard I' D'Alfonso has run bingo games for with Commito, Montrose and Allu. For Costello, a labor consultant from New St. Paul's Roman Catholic Church in York. the first time, Commito related the specifics of his plan. South Philadelphia. In November of The meeting had been arranged af­ 1980, the Philadelphia Police raided Commito was attempting to market ter Kelly, attending a function in New one of those games and confiscated Teamslers a prepaid health plan with the Team­ York in January of 1981, met a former Local 654 24 illegal slot machines. No arrests friend, Richard Costello and Com­ New York NY sters Local 331 in Atlantic City. He Teamslers were made. NJ wanted to purchase a building to mito. Kelly told the men ~f the union house the medical facilities which On October 29, 1981, D'Alfonso problem. Costello and Commito said would serve the union members. was brutally attacked on the street they could be of assistance in the ne­ Cohen was asked to forward a letter to near Cous' Restaurant. He was report­ gotiations and the meeting was ar­ ranged. the attorney for the union outlining edly beaten with a baseball bat and a what. services Cohen could provide, as tire iron, and suffered several major in­ At another meeting the same day, ==b======taeneraIManager juries. It is not known if this had any the health plan project was discussed, ~~~J~:-Tr:~·e~.',n '~'~~==~f=M='- appearance 0 r. Gi bons' name on tEe. Harrah. the financing of the building was to be n HoleiCaslOO connection to his role in La Cosa assured by the union health and wel­ but no decision was made at that time. Crime Commission Chart is presently in AII.nlle QIY. NJ Nostra. fare fund. Both Gibbons, the International vice litigation in Pa. Commonweallh Court. Teamsters Local 331 was a unit of president, and Commito spoke in favor the Chauffeurs, Warehousemen and * Frank D'Affonso and Harry Ricco­ of the health plan. John Allan later said bene were subpoenaed to testify be­ that Commito was like a "godson to Helpers of America and represented Alan Dorfman, a key advisor for the In­ been involved in the corporation but various employees of Harrah's Hotel fore the Pennsylvania Crime Commis­ Gibbons." sion but they refused to testify on the It is interesting to note that during ternational Brotherhood of Teamsters' that he had disassociated himself from Casino in Atlantic City. Coast to Coast Central States' Pension Fund. In 1972, Commito. About one week after the Book­ basis of their Constitutional privileges. the time negotiations were in prog­ ress, Allan was introduced to Frank 0' Dorfman was convicted of conspiring Arizona Health and Benefit Plans binder's meeting, Cohen met Team­ Connections to accept a $55 000 kickback in return Inc. had obtained prepaid dental con­ sters officials Dick Kavner and Jack Apolito. D'Apolito was at Harrah's in 1 the company of Allu and Richard Cos­ Because of Commito's interest in for arranging a $1.5 million loan from tracts with labor groups representing Miller at Harrah's. During this meeting, the Pension Fund. Dorfman was sen­ Tucson City employees. Investigation Kavner and Miller outlined the health tello. According to New Jersey offi­ obtaining health contracts in this area, cials, D'Apolito is a member of the the Crime Commission investigated tenced to one year in prison. by Arizona authorities revealed that plan they were attempting to put to­ Commito and Fishman were also the funds for the city employees were gether for the approximately 2,000 in New York. some of his out-of-state dealings. D'Apolito is affiliated with the Team­ Labor Health Plans, Commito's involved in another corporation called being directed into a trust account in a members of the local union. The union the Arizona Health and Benefit Plans, Phoenix, Arizona bank and then to needed between $4 and $7 million in sters Local 854 in New York. Among company, is located at 230 North h is close associates are Anthony Michigan Avenue in Chicago, Illinois. Inc. This corporation was formed on Labor Health Plans in Chicago. loans for the project. Cohen, after re­ August 4, 1975 by Lawrence P. D'An­ Investigative background material viewing the union's cash flow and re­ Zappi, a Gambino crime family mem­ it was incorporated on March 30, 1973. ber and secretary of Local 854 and Et· The president of the company at tonio, Esq. and Garven W. Videen. regarding Angelo Commito also re­ payment ability, decided to attempt to Fishman was listed as president of vealed an association with Michael find financing for the project. tore Zappi, a capo in the Gambino fam­ the time of its incorporation was ily. Leonard Fishman. Angelo Commito this corporation and Commito was list­ Rizzitello, a key member of the Dragna Cohen, however, was unable to get ed as vice-president. Law enforcement crime family in Southern California. the financing, despite his aoproaches In addition, it should be noted that was its secretary and Anthony Ponzio Angelo Commito was introduced by was treasurer. Commito and Nancy authorities in California and Arizona Law enforcement authorities in to several lenders. Consequently have indicated that one of the direc­ California have revealed that in No­ Commito's plan fell through. ' Steven Montrose to Wendell Young, Fishman were also listed as directors. president of Local 1357 of the United Also in 1973, Commito formed an­ tors of this corporation was Joseph vember 1977, Commito and Rizzitello Food and Commercial Workers Union other company known as Angelo T. latarola, a bodyguard and associate of met with a California dentist; Gunder in Philadelphia. Commlto attempted to Commito and Associates. Official rec­ organized crime figure Joseph Bonan­ Hansen, who was a union organizer for market a foot care program for Local ords indicate that Commito, Anthony no. lataro!a's name, however, was re­ Teamsters Local 692; and James Hall, 1357 members, but Young was not In­ Ponzio and Leonard Fishman were the moved from the corporation shortly af­ former business agent for Local 692. terested in this program. principals in the venture. This busi­ ter an interview with the Federal Bu­ The meeting took place at a restaurant ness was an insurance agency. reau of Investigation. latarola acknowl­ in San Pedro, California. Prior to this Leonard Fishman, Commito's part­ edged to law enforcement officials meeting, Commito had met with Rizzi­ 16 ner, Is a close business associate of during a 1975 interview that he had tello and William Darnold in August of 17

\ ~ I . l 1977 at a Los Angeles delicatessen. a: Now what, if anything, did you and a: And what is that connection? Darnold has been identified by Califor· Mr. Rizzitello do for Mr. Commito? A: Well, at the time I was out, he never nia officials as an explosives expert: A: Well, I took him to one of the lead­ made a move unless, unless Jack In addition, Commito met with ers of the Teamsters in San Francisco. White gave the okay. They practically Aladena "Jimmy the Weasel" Fratian­ I also took him to a fellow by the name run him. no, former co-boss of the Dragna Fam­ of Rudy Tham. And I took him to a guy a: Jack White ran Presser? ily in September of 1977. by the name of Tim Richards. A: The Cleveland family, whoever the At the Crime Commission's public Q: ... Who was Mr. Tham? boss is. It doesn't matter. hearings on July 28, 1981, Fratianno A: Well, Tham was the head of a local a: Why, to your knowledge, would the testified about his introduction to there. And he also was Vice-president Cleveland family have control over the Commito through Mike Rizzitello. Fra­ of the joint council. vice-president, International Vice­ tianno had become a government wit­ a: Do you know what particular locals president of the Teamsters, such as ness in 1977 after he learned that there he was the head of at the time that you Mr. Presser? was a murder contract out for him. Fol­ brought Mr. Commito to him? A: Well, how do you think he got up lowing are some of Fratianno's state­ A: I think it was Local 856 ... there? That's how he got up there. ments about Cornmito during the Com­ Fratianno attempted to use his in­ Was Mr. Tham to make any money mission's hearing." a: fluence with Presser to assist Com­ out of this himself, if he was to give mito in obtaining contracts with a: Mr. Fratianno, do you know an indi­ the work-the contract to Mr. Com­ vidual by the name of Angelo Com­ unions: mito? mito? a: Did you have a conversation with A: Yes, sir. Mr. Presser concerning Angelo Com­ A: Yes, sir. And how did you know that? And how did you know Mr. Com­ a: mito? a: Well, I told him he'd get some A: A: Yes, sir. mito? money from rne. A: Well, Mike Rizzitello introduced me a: Would you please relate the cir­ to Commito, and I don't know if it was a: Who is Tim Richards? cumstances of the conversation you late '66 or early '77 (sic). I don't actuHlly A: Well, he had Local 80 or 85, I forget had with Mr. Presser concerning An­ recall the time. which one of the two it is. He also has gelo Commito? a big local. ChaRter Three a: And who was Mike Rizzitello? A: Well, I had some other business A: ... He was a capo in our family. a: Was it the same procedure: You with Jackie Presser. In the same con­ (N. T. 121) were to introduce Mr. Commito to Mr. versation I told him that Commito a: What was the purpose of Mr. Com­ Richards, and if Mr. Commito got the was-we were doing business with mito's introduction to you by Mr. Rizzi­ contract, you and Mr. Rizzitello would Commito, and that if he could help him tello? receive money and some of it would be in any way, it would mean money for A.M.M.A. Health Center A: Well, Mike wanted, asked me about passed on to Mr. Richards? us. A: That's correct. getting him to meet some union peo­ a: What was Mr. Presser's response? ple so he can put out these programs Commito had obtained dental con­ A: He said he would (do) what he can that he had. He had some different tracts with at least two other addition­ for him. kind of medical programs. al unions in the midwest. Labor Health Although Fratianno was not aware Ties to Organized Crime a: By "medical programs," sir, are Plans °received a contract with the If Commito obtained any contracts to you referring to dental and health Teamsters Local 413 in Columbus, supply health and welfare benefits to plans for union members, where con­ Ohio in 1975. This contract was negoti­ unions, his testimony did establish the tracts are made with the union itself ated by Commito and Vito Mango, then close connection that Commito had for the services of the program to the president of Local 413. with various organized crime figures. benefit of the members of tile union? According to Mango, Commito Fratianno, in fact, identified Commito "wined and dined" him prior to the A: Yes. Well, not particularly dental as an organized crime associate. * or-they had eight or ten different pro­ Signing of the contract. Commito also grams; life insurance. And they had all provided Mango with a trip to the Ba­ hamas. kinds of programs. 'It is interesting to note that in an ad­ a: Mostly related to health and wei­ Mango later introduced Commito to John E. Scales, Business manager dress book found on the body of Carl fare benefits? Rizzo, an associate of the Magaddino A: Right .... of Teamsters Local 423 in Columbus, Ohio. Commito was subsequently Crime Family in Buffalo, N. Y., the a: ... What, if anything were you and name Angelo Commito, 619 West Ran­ awarded a contract with this union in Mr. Rizzitello to get out of the assis­ dolph Street, Labor Health Plans of November of 1977. This contract was tance you were giving to Mr. Commito, America was written. Rizzo was found also for prepaid dental services. if he landed some of these plans? garroted in the trunk of a car in April of A: Well, at that time Commito was giv­ 1980. A rope was looped around ing Mike some money .... Commito Rizzo's neck and then tied to his did tell me that we would make a lot of ankles so that as his body relaxed he money if we got any of these programs High Teamsters Tie strangled himself to death. A note ap­ to the union. Now how· much, I don't parently from Commito to Rizzo also know .... During his testimony, Fratianno claimed that Jack Licavoli (aka Jack found on the body read as follows: Fratianno then told of the introduc­ "This is a good friend with an interest­ White), boss of the Cleveland La Cosa ~ , tions he made for Commito to various ing idea. An issue you can help her , . union officials. Nostra family, has a close association u", ' with Jack Presser, Vice-President of with. Please do take care, Angelo." Fratianno identified Rizzo as an LCN the International Brotherhood of ""More of Fratianno's testimony can Teamsters. member. be found in Appendix B. a: Do you know whether Mr. Presser has any connection with Mr. Licavoli? A: Yes, I do, sir.

18 19 '."

.... i

, ,

If I Under the terms of the contract, A.M.M.A. Health - the Health and Welfare Fund would Dr. Silk The Only Contract pay $8.50 each month for each union Center, .Inc. Dr. Raymond Silk is a Philadelphia The only contract that A.M.M.A. member. In return the union members Ties To physician. He was temporarily sus­ Health Center, Inc. has secured since and their dependents could utilize the pended from participating in the pub­ Its inception was with the Health and outpatient and diagnostic services of Organized Crime lic Medicare program in 1980 by the Welfare Fund of Local 837 of the In­ the participating physicians and clll'l­ Pennsylvania Department of Welfare. dustrial Workers Union, an affiliate of Ics. The contract was signed by The involvement of local traditional Silk's suspension resulted from an in­ the International Brotherhood of Joseph Martorano on behalf of organized crime figures in the delivery vestigation Which alleged that he per­ Teamsters. The offices of this fund are A.M.M.A. and by Pasquale Tavella for of health care services is demonstrat­ formed unnecessary surgical proce· located at 8033 Old York Road, Phila­ the fund. il ed by the A.M.M.A. Health Center, Inc. dures and charged fees that were high­ delphia, PA. In October of 1980, the contract If A.M.M.A., a subsidiary of Advance er than they should have been. A sub­ The Health and Welfare Fund con­ with A.M.M.A. was renewed for a term Project Corporation, is located at 2001 sequent agreement with the Depart,­ stitutes the contributions of employ­ of five years at the increased cost of South 29th Street in Philadelphia. * ment revoked the suspension and al­ ers (pursuant tn collective bargaining $10 a month for each union member. A.M.M.A. is a Pennsylvania corpo­ lowed Silk to participate subject to agreement) that are to be used to pur­ The entire contract renewal consisted ration which administers, on a prepaid certain limitations. Silk resigned from cllase various health, medical, insur­ of a one-page letter dated May 8,1980, basis, out-patient health care benefits A.M.M.A. in February, 1980. ance-and welfare benefits for the ap­ requesting the above terms. According for union members and employee In 1979, Dr. Silk, John Martorano proximately 2,000 union members and to Bucher, this contract was approved John's Wholesale Distributors, Inc., at 2001 South 29th Street, is also the loca· in October 1980. A copy of this con­ ,. groups. The corporation enlists the and Dr. Paul Felix, a Philadelphia their dependents. ii tion of the A.M.M.A. Health Center, Inc. tract was Signed by John Martorano ii services of area physicians and clinics dentist, attempted to establish an­ The Health and Welfare Fund is I to perform out-patient treatment for In addition, John Martorano was a Manuele denied, when intervie'wed other outpatient and dental benefit governed by a board of six trustees and Howard Bucher. union or employee groups. The union 55 percent owner of A.M.M.A. The 10' by Commission agents, that he had company known as Life Check. Life who make the ultimate decisions in fund pays A.M. M.A. which, in turn, cation of A.M.M.A. at that time was been shown the facilities by Mar­ Check was to be located in Atlantic the overall management of the fund. * pays the physicians on a pre-arranged also the location of the Broad Street torano, but later, in the Commission's City, New Jersey, Clnd according to The day·to-day operations of the basis. Hospital, of which Silk was a principal public hearings, admitted it. Silk, attempts were made to negotiate Health and Welfare Fund are governed A.M.M.A. Wages A.M.M.A Health Center, Inc. was and the medical director. According to Furthermore, the Crime Commis­ with the building trades council and by fund administrator Howard H. incorporated as the Golden Block Silk, he invested $2,500 in A.M.M.A. sion obtained sworn testimony from a security guard unions in that city. The Bucher. Bucher has held the position A review of records revealed that Medical Center, Inc. at 3922-26 North Joseph Martorano invested $2,000 and former employee of A.M.M.A. which program was never established ac­ of administrator since 1966. wages paid by A.M.M.A. for the period 5th Street, Philadelphia. It was formed John Martorano invested $5,000. The clearly indicated Raymond Martor­ cording to Silk. The A.M.M.A. program was intro­ of October 1 to December 31, 1978 for to act as a medical health clinic, main­ location of A.M.M.A. was later moved ano's involvement in soliCiting busi· duced to the trustees by Howard the five employees of the company ly through the efforts of Joseph Mar· to the 2001 South 29th Street location. ness for A.M.M.A and in the operation Bucher and Pasquale Tavella, who was was reported as $54,518.76. Key em­ torano, a cousin to Raymond Mar­ Dr. Silk also fUnctioned as the of A.M.M.A This former empioyee then the President of Local 837. ployee wages for the three months torano. Joseph Martorano was a Ii· medical director of A.M.M.A. His claimed to have been informed by one Bucher testified before the Pennsylva­ were as follows: censed pharmacist in Pennsylvania. clinic, the Broad Street Hospital, was of the corporation's officers that Ray­ Medical Fraud nia Crime Commission that prior to the John Martorj'lno $22,675 However, efforts to secure funding for the largest of the clinics through mond Martorano was soliciting union acceptance of the A.M.M.A. program, Raymond Silk 12,025 this clinic were unsuccessful. which A.M.M.A. delivered health care. business for A.M.M.A. and was the On July 1, 1981, Joseph Martorano, he contacted other health care provid­ Joseph Martorano 18,600 On October 26, 1978, a Certificate The day-to·day activities of company's contact with various Jesse Gutman of Rydal, and Martin I. ers such as Blue Cross/Blue Shield, A.M.M.A. had no other contracts of Amendment was filed in the Penn­ A.M.M.A. were originally operated by unions. Askin of Philadelphia were sentenced and he found the costs of such pro­ with unions or employee groups in sylvania Bureau of Corporations Joseph Martorano. He wa's, however, The former employee also stated for a forgerl and conspriacy convic­ grams to be prohibitive. Bucher did that period. The profit for 1978 shown changing the name of Golden Block to replaced by John Martorano in ap­ that Martorano attended management tion. The three had operated the 817 not, however, obtain written bids from in the utilization report combined with the A.M.M.A. Health Center, Inc. The proximately February of 1979. meetings of A.M.M:A., has shown the Medical Clinic on North 42nd Street these companies, and made the con­ the cost of administration equals address of A.M.M.A. at that time was In addition to the above-mentioned office facilities to the representative of from May of 1975 to January of 1977. tacts by telephone. $49,448.50. There appears to be, there­ 739 South Broad Street, Philadelphia. individuals, the Crime Commission a union fund, and had questioned the Although none were licensed physi­ Bucher further stated that when fore, a discrepancy of over $5,000 be­ The corporate papers listed Dr. Ray· learned that Raymond Martorano was employee about how many patients cians, they treated patients and then A.M.M.A. was originally being consid­ tween what monies A.M.M.A. spent on mond Silk as president. The com· also involved in certain aspects of the were being served at the VarioUs satel­ fraudulently billed State medical pro­ ered he had been dealing with Joseph employees and what funds it had to pany's books and records, however, grams for more than $21,000. Gutman Martorano, but after Martorano's dis­ 'i A.M.M.A. business. Raymond "Long lite clinics. spend. Moreover, other records for ! show John Martorano as president and John" Martorano was a long-time as­ A final bit of evidence was ob· was sentenced to 11 V2 to 23 months in association with A.M.M.A. all transac· 1978 show John Martorano receiVing a Joseph Martorano as secretary. prison, 5 years probation, and a $3,500 sociate of deceased mob boss Angelo tained when the P~nnsylvania Crime tions were conducted through John salary $2,000 over what was carried on Bruno and is recognized by many law Commission subpoenaed the records fine; Martorano to 9 to 23 months in Martorano. the first records. * This location also houses John's enforcement authorities as an organ­ of the A.M.M.A. Health Center and the prison, 5 years probation, and a $2,500 The contract with A.M.M.A. was Ul­ Calendar 1980 records show Wholesale Distributors, Inc. and an­ ized crime figure. company's cancelled checks were re­ fine; and Askin to 4 to 23 months in timately approved by the board of $45,848.33 in wages paid to up to four prison, 3 years probation, and a $1,000 other Advance Project subsidiary, While Raymond Martorano's name viewed. Two checks were found which trustees. However, several of its mem­ employees. $30,910 of this was paid to Med-Bus, Inc. John's Wholesale Dis­ does not appear as an owner or officer were, apparently, written as entertain­ fine. bers later admitted to the Crime Com­ John Martorano. The utilization report In addition, Martorano was indicted tributors is a wholesale outlet for of A.M.M.A., evidence strongly sug· ment expenses for A.M.M.A. Check mission that they were not very fa­ for th is period shows $32,500 as the cigarettes and other tobacco prod­ on June 9,1981, by a federal grand jury miliar with the specifics of the cost of administration, which is gests that he did have a role in the #146, written on November 14,1978, to on charges of making false Medicare an' ucts. Angelo Bruno, the assassinated company. the D'Medici Restaurant in the amount A.M.M.A. contract, and one stated that prOl

\ ' and, as can be observed in the report, It should also be reiterated that the AM.M.A. also did not give a thorough original contract between A.M.M.A. Utilization Reports breakdown of the services rendered. and Local 837 ran for two years and The report for the following year, was renegotiated in 1980. Declining Profits 1979, Indicated a total of 3,234 office Local 837 officials apparently Won­ The profits which A.M.M.A. visits for a total value of $122,745. Lab­ dered how A.M.M.A. was managing to oratory and X-ray services for that peri­ stay in business wit.h such low profits - claimed to have obtained through its A.M.M.P>-.. HEALTH CENTER, INC. P. O. Box 20135 Philadelphia, Po. 19145 (215) 389.,Q350 management of health care services od were val ued at $39,726 for a total in 1980. Howard Bucher testified that for Local 837 can be seen by reviewing value of $162,471. AM.M.A. claimed at a June 1981 meeting, A.M.M.A. to:d its utilization reports. $32,847.29 as the cost of administra­ his trustees that the value of doctors The utilization reports generally de­ tion. (See page 23.) and laboratory fees listed was not scribed for the fund members the num­ The premiums paid by the fund for money actually paid by A.M.MA ber of office visits as wp-Il as the value this period was $234,623.50 and A.M.M.A. did not, however, explain of these visits and the value of labora­ A.M.M.A. reported a net profit of why then those figures were used in tory and X-ray services. The reports $39,305.21. their reports to detarmine annual net AplVU 9, 1981 also indicated the costs of administra­ The utilization report covering the profits and no one asked. tion and further indicated the net profit year of 1980 can be observed on page for A.M.M.A. in relation to the contract. 00. The report indicated that office Falsified Reports BoaJtd on TILuJ.,:te.u A copy of the submitted utilization re­ visits numbered 4,164 for a total value Te.amJ.J:teM IndU!.Jw.a.£. UrU.on The Crime Commission has deter­ port which covers the years 1978 and of $122,047. The value of X-ray and LOQal 837, H~ai:th & We.i6aJte. Fund 1979 is four,o on pago 23." laboratory services was portrayed as mined that the figures reported to the Health and Welfare Fund of Local 837 The report shows 387 office visits $16,343 for a total value of $198,390. by AM.M.A. were significantly higher ATTN: HoWCVLd BUQhvr., AdmJ...nl.J.dJl.a;tOIt from October 1978 to December 1978. A.M.M.A.'s cost of administration was The reported value of thp. office visits $32,500 and when subtracted from the than the actual figures. was $14,679. The reported value of fund premium payment of $235,707, To make this determination, the RE: U~zatJ...on Re.poltt 601t Me.dJ...Qal laboratory and X-ray services was A.M.M.A. was supposedly left with an Commission used several sets of documents. The primary source of the Ou;t- PatJ...e.n:t Svr.vJ...Qe.J.J $2,098 for a total value of $16,777. annual net profit of $4,817. A.M.M.A. showed the cost of adminis­ The report from these three years figures was from the doctors' or clin­ ics' records themselves. A secondary Ve.M Mfr.. BUQhvr.: tration as $9,285.57. show a dramatic decrease in profits, source of information was from Th~ fund had paid premiums of both in dollars and as a percentage of ledgers maintained by A.M.M.A. which $66,3~o.50 for the period covered and the whole. The following chart summa­ The. noliowJ...ng .v.. a. J.JummaJty on c1.ct-i..rn6 a.c.:tJ...vUy nolt paJr..t.,i.c.J...pa.W on LOQal 837 were obtained under subpoena. The A.M.M.A. reported a profit of rizes the percentages of costs (office 601t :the. pe.nJ...od On Octobvr., 1978 :t~ough Ve.Qe.mbvr., 1978 a.nd Ja.nua.Jty, 1979 $40,262.93. A.M.M.A. did not detail the visits and lab fees), administration third source of information was from :thnough Ve.Qe.mbvr., 1979. elements of cost of administration fees and net profits. copies of billings from various doctors and clinics maintained by A.M.M.A. which were obtained by the Crime Commission under subpoena. The A.M.M.A. Contract With Local 837 fourth source of information,. which A.M.M.A. Claims of utilization of monies was used only in a few relatively minor in their relationship to total premiums paid instances, were the checking account Value of Services Administrative records of AM.M.A. obtained by sub· Ave.ll.a.ge. numbvr. 06 c1.cUmJ.J pvr. mon:th 270 (Doctors & Labs) Fees Profits poena of the Pennsylvania Crime Com­ 19,(8 25% 13% 62% mission. AvVta.ge. doUaJt 06 value. pvr. c1.cUm $50.15 1979 69% 13% 18% The actual reported figures are shown on page 23 and 24. These fig­ 1980 84% 15% 1% To.tal plte.mJ...u.m pcU.d, Ja.nua.Jty 1979 :t~ough Ve.QembeJr. 1979 ures relate to both the number of of­ $234,623.50 fice visits and the value of services To:ta£. doUaJt value. 06 J.J eJr.vJ...Qe.J.J lte.ndeJr.e.d J.Jame. pe.nJ...od 162,471.00 rendered. A.M.M.A, Costs For 1978, the Commi·ssion was able 72,152.50 Repor'led vs. Actual to document 308 office visits with a to­ COJ.J:t 06 AdmJ...nJA:tJr.aU.o n (14 %) 32,847.29 1978 1979 1980 tal value of $4,633. This contra!')ts sharply to the utilization report figures Reported $16,777 $162,471 $198,390 Annual Net. Plt06U $ 39,305.21 ~ .- Value of Services of 387 visits and value of services of ji $16,777. The documented visits repre­ ! Actual 4,633 29,994 88,296 ft Billings sent only 79 percent of those reported. Reported 9,285 32,847 32,500 Documented billings were only 27 per­ I hope. :tha.:t :tfU,o J.Jumma.Jty wli.1. be. J.Ja.,t,iA 6a.ctolty :to youJc.. ne.e.rL6. I! Administration cent of the claimed value of services 'i reported to the union. h Prepayment 66,325.50 234,623.50 235,707 Tha.nk yOtt 601t yoult Qoopvr.a.:Uon J...n thi.6 ma.:t:t.vr.. il from Union For 1979, the Commission was able Ii Reported 40,263 39,305 4,817 to document 1,677 visits and $29,994 in \1 Profit billings .. These figures are even more [I Monies $5.~,-4D6 $171,782 $114,911 di.sparate from reported figures than H" Remaining* those in 1978. Documented visits rep­ .' 'Derived from adding actual billings with reported administrative costs and sub­ resent 51 percent of the figures report­ ,1 , tracting that sum from the premiums paid by the union. ed. Documented billings were only 18 ~ percent of the claimed value of serv­ MARTORANO II ices reported to the union. NISTRATOR 1J "It is interesting to note that the re­ For 1980, 3,522 office visits were ports of utilized services for 1978, 1979 documented, which is 84 percent of Ii. and 1980 were not submitted to the the 4,164 number of visits reported. union until 1981. $88,296 in documented billings were Ij 'j 22 found, which represents 44 percent of 23 , II \1 ,

~~., -,.~. "'--- --::---'-.. ,- ~"''-'-. ",.,. ~ oJ ...... ". ~t I .' the $198,390 in value of services re­ more than justifies our partici­ This money was the first income of ported to tile union. pation in this program. The en­ the AM.M.A. Health Center, Inc. The utilization reports from this 28- closed information has been pro­ Agents of the Pennsylvania Crime month period show a total of 5,307 vis­ vided by A.M.M.A. pursuant to are· Commission interviewed representa­ its and $377,638 in services billed. The quest made by this office."· tives of the SEIU Health and Welfare A.M.M.~. HEALTH CENTER. INC. P. O. Box 20135 Philadelphia. Po. 19145 (215) 389"()350 Commission was only

24 25

., .11 .

~r J ~~----,,------' ------8 ,7 I I!l , I ! A.M.M.A. I li Number of Visits and Dollar Billings n [:'L(::I ACTUAL _ REPORTED DOLLAR NUMBER 11 OF AMOUNT OF II VISITS Il BILLINGS Ij 4.164 (. 11 II Ij IJ lj I, 150.000 I, 3.000------I] I'

i i j, 100.000 j ChaRter Four 50.000 American Health $16.777

o o I:i !1 NO. OF VISITS DOLLAR BILLINGS NO. OF VISITS DOLLAR BILLINGS NO. OF VISITS DOLLAR BILLINGS ,j Programs, Inc. "'I 1978 1979 1980

q II ii i1 In addition, the records showed As noted previously, A.M.M.A. Both John and Raymond Martorano H were subpoenaed to appear before the that A.M.M.A. paid a $90,000 manage· rented space at 2001 South 29th 'I'~ ment fee to Med·Bus in 1979. although Street. This location is owned by John Crime Commission but they declined ij records show no money changing Martorano (majority owner of to testify on the basis of their Consti· ii hands. A.M.M.A.) and his wife, Theresa. From t utional privileges. !j rl Since A.M.M.A.'s records show a February to May of 1979, A.M.M.A. II net income of $87,300 that year and books indicate that it paid John Mar· fi' Med·Bus suffered a loss of $92,387. torano $500 a month for the rent on ap­ both companies showed a year·end parently only one room. I! loss after the transfer. As a result, In June of 1979, however, the rent A.M.M.A. successfully avoided paying escalated by 700 percent to $3,500 per state taxes on its profits. month. ~ A.M.M.A. also loaned John Mar· Another tenant of the building, III torano $25,000 on March 6, 1981. On Med-Bus, paid Martorano $500 per },j 11 that same date, Martorano loaned his month for its space until June of 1979. P other business, John's Wholesale Dis­ The rent then escalated to $1,750 per U tributors, $32,000. On March 12, Mar­ month. According to the company's " torano received a .check for $25,000 accountant, A.M.M.A. and Med-Bus I! t' from John's Wholesale and issued a share the same office. ~ check for the same amount to Evelyn John's Wholesale, the primary ten­ jl , Martorano, his brother Raymond's ant of the building, paid only $1,000 r wife. As of September 1981, A.M.M.A. per month in rent until mid-1980, at tl r1 had not been repaid. which time it began paying $2,000 per month. fj 1 'j /1 IIII 26 27 ii [j ..... II

,". .\ . :< I On October 15,1978, AHP signed a AHP operates on a fixed-fee per While at DDS, Kravitz attempted to se­ one-year dental, vision, and drug pre­ Commercial Workers Union (LJF & family (capitation) basis as opp~sed to HCA: cure several large contracts including scription contract with Police Health CWU). The Tri-State Fund represented American the more traditional fee-for-servlce ba­ about 14,000 workers. a contract with AFSCME District Coun­ Administration, Inc., a corporation es­ sis. In its programs, AHP assigns pa­ A Spawning cil 33 in Philadelphia and the Pennsyl­ tablished to administer dental, viSion, At the time NADP received this Health tients who are being serviced under vania Social Services Union. and drug prescription benefits for the Ground contract, one of the company's em­ contracts to participating dentists who It is interesting to note that min­ Programs, Inc.: Philadelphia Fraternal Order of Police, ployees was Robert Fluehr, the agree to treat these patients at a fixed utes of a board of directors meeting Lodge #5. In October 1979, PHA Health Corporation of America bruther-in-Iaw of Wendell Young, chair­ fee per family per month. Once as­ man of the Health and Welfare Fund's for DDS dated October 3, 1974 listed A Success Story renewed its contract with AHP for two (HCA) was formed as a Delaware cor­ signed, AHP pays the participating board of trustees. Fleuhr, of Philadel­ Steven Sheller, Esq. and Berle Schiller, years. The contracts, wh ich service poration in 1972. It began when North The Pennsylvania Crime Commis­ dentists their monthly fees each phia, was later involved in another Esq. as marketing agents for DDS. * about 8,000 union members, costs ap­ American Dental Plans Inc., a Pennsyl­ sion's investigation of American month regardless of whether or not health provider known as AHP. (For Schiller, a Philadelphia attorney, is the proximately $4.2 million a year. vania Corporation, was consolidated Health Programs, Inc_ (AHP) Uncov­ they treat any patients. * with a Delaware entity, Capital Re­ more on this connection, see page 00). nephew of former Pennsylvania Gov­ ered questionable marketing tech­ The theory behind this approach to AHP also had a contract with the According to Louis Mattucci, ernor Milton Shapp. Sheller was legal International Brotherhood of Team­ sources Industries Inc. In October of niques, falsified utilization reports and dentistry is that it will motivate the par­ 1972, NADP was reincorporated in D.D.S., of Philadelphia, he was con­ co-counsel for the Pennsylvania Social sters Local 169 at Leaseway Ware­ suspicious loans and investments to ticipating dentists to bring their pa­ Pennsylvania as a wholly owned sub­ tacted by Wendell Young to review the Services Union board of trustees. houses, Incorporated in Cornwells companies and individuals with ties to tients to a state of good dental health sidiary of its holding company, HCA, various dental plans that were being Dental Delivery Systems attempted Heights. That contract was awarded in AHP. as quickly as possible after which the for the purpose of operating, adminis­ considered by the health and welfare to obtain the contract with the Tri­ Although no direct links were dentists can look forward to collecting the spring of 1976. tering and designing prepaid dental fund. Dr. Mattucci placed these pro­ State Fund of the Retail Clerks Union. The following sections of this re­ found between AHP and traditional or­ their monthly fees while providing plans. HCA and NADP were estab­ posals in order of priority and his top This effort was led by Mattucci, who port document, in each of these con­ ganized crime figures, evidence was minimal services. lished by Joseph R. Cusamano of recommendation was for the selection had reviewed the dental programs for '.1 obtained which shows that AHP pro­ AHP has been the major non-insur­ tracts, the questionable business Devon, Pennsylvania and were orig­ of the NADP program. Tri-State when it originally awarded H. methods of American Health Pro­ lJ vided inflated benefit utilization re­ ance company prepaid dental bene.fit inally located in King of Prussia, but Subsequent to this review that Mat­ the contract to NADP. 'I ports to unions in order to ensure the provider in southeastern Pennsylva~la. grams, Inc. later relocated to the Valley Forge Ex­ tucci conducted for Young, he ob­ MattUCCi, Dr. Bertram Serota, David H successful renewal of its contracts At one point, it considered expanding tained a position with NADP. As part of Spratt and Claude Collier formed a " ecutive Mall in Wayne. J with these unions. into New Jersey, using a Margate con­ The executive vice president and his pOSition, Mattucci made the formal company known as Health Systems American Health Programs, Inc. dominium as a branch office. secretary for NADP was John David NADP proposal to the health and wel­ Management Inc. (HSM). HSM was was formed in 1975 as a Delaware cor­ In the past several years, AHP has Cast of Characters Gamer.' As noted in Chapter 1 of this fare fund board of trustees. then to utilize DDS as its primary con­ poration by Dr. Charles K:a~itz and hac! four major contracts. In April of report, NADP had obtained a contract In 1976, North American Dental tractor for the dental program. Mat­ Claude Collier. AHP was originally lo­ 1976, it signed -:-< contract for services Philadelphia dentist Dr. Charles with Local 170 of the Hotel and Res­ Plans was fined $50,000 by the New tucci testified that HSM was formed at cated at 1950 Street Road in Cornwells with the Pennsylvania Social Services Kravitz and Claude Collier incorpo­ taurant Workers Employees Union in Jersey Board of Dentistry in connec­ the suggestion of Wendell Young, Heights, Pennsylvania, but later was Union, Pennsylvania Employment Se­ rated American Health Plans,lnc. in Camden, New Jersey. An investigation tion with a consent decree the firm President of Local 1357 of the Retail relocated to its present office at One curities Employees Association 1975. Kravitz bought out Collier's by the New Jersey State Commission signed to restructure its operation to Clerks and a member of the Tri-State Neshaminy Interplex, Suite 106, Tre­ (PSSU/PESEA) which represents about shares in 1977. of Investigation revealed a close con­ correct what the board termed as de­ fund board. According to Mattucci, vose, Pennsylvania. 12,000 Commonwealth of Pennsylva­ Robert Fluehr, an insurance sales­ nection with organized crime figures fects in proced ures, design offer, and this was done to obtain the contract af­ In 1977, Kravitz, a Philadelphia area n ia employees. That contract was in man who had been involved in HCA, in relation to that contract. the administration of its dental plans. ter it was taken away from NADP, but dentist, wanted to obtain full owner­ force for approximately one year. NADP and DDS, is AHP's marketing During the early stages of HCA's In 1974, several of the HCA and this never occurred. ship of AHP and therefore bought out From August 15,1976 to August 15, representative. Fluehr is the brother­ operation, Cusumano contracted with NADP employees left and established As a result of internal problems, Collier. In March 1977, when Collier 1978, AHP had a dental contract with in-law of Wendell Young, who heads Gary Garramone to market the a company to compete with HCA and Mattucci reSigned from DDS. Kravitz needed money, Kravitz made Collier a the Delaware Valley Health and Wel­ the Retail Clerks Union Local 1357, HCA/NADP program. Garramone' was NADP. Among them were Dr. Louis left to form his own corporation, Amer­ cash offer of $90,000 for his shares of fare Fund of the Retail Clerks Union. with which AHP obtained a contract. then operating through National Cor­ Mattucci and Dr. Charles Kravitz. The ican Health Programs. AHP and Collier accepted, leaving After August 1978, this contract was Prior to his involvement with AHP, porate Consultants (NCG) and received newly formed corporation was known Kravitz as sole stockholder of AH P. continued on a month-to-month basis Fluehr was affiliated with the Retail approximately $50,000 for his services. as Dental Delivery Systems (DDS). 'In 1974, Garner, then president of Kravitz did not have the $90,000 in through December 1980. The annual Clerks Union in Philadelphia. According II') Cusamano, Garramone DDS, like NADP, administered prepaid Garner LaboratOries, a King of Prussia if cash at that time, and as a result Krav­ cost of this contract was approximate­ Carol P. Lozanoff, who had been did not bring any business into HCA. dental services plans for union or em­ Cosmetics firm, was barred by the itz raised $40,000 through personal ly $250,000, and it serviced about 3,000 Dr. Kravitz's secretary, provided some NCC was located in Upper Darby, PA. ployee groups. Robert Fleuhr also left Pennsylvania Securities Commission savings and bank loans. In addition, union members. funds to Kravitz to buy Collier out of In September of 1972, NADP ob­ HCA and became the director of mar­ from being associated with any secu­ Carol Lozanoff, Kravitz' receptionist On March 23, 1977, AHP signed a AHP. As a result, she was given a sal­ tained a dental contract with the Tri­ keting for DDS. rity broker, dealer or investment of­ and secretarY,loaned AHP$50,OOO.* three-year contract with District Coun­ ary and bonuses equal to Kravitz's. State Health and Welfare Fund of the Dental Delivery Systems was incor­ ficer, or offering the sale of securities In return for Lozanoff's loan, Krav­ cil 33 of AFSCME, the American Fed­ She was also responsible for colating Retail Clerks Union. This union later porated in New Jersey in 1973. At that in Pennsylvania for four years. This itz agreed to pay Lozanoff a salary eration of State, County, and Munici­ the information on usage for the com­ became known as the United Food and time, its principal place of business probation resulted from an investiga­ was 101 North Lakeview Drive, Gibbs­ equal to his own at AHP and make her pal Employees. In March 1980, tl1e con­ pany's utilization reports to the un­ tion alleging fraud that had been per­ , an officer of AHP. Lozanoff had been tract was renewed for an additional boro, N. J. petrated upon public investors regard­ ions. 'In July of 1974, Garramone was con­ j "" earning approximately $130 per week three years. The annual cost of this ing Garner Laboratories. Dr. Sanford Roth, who had been in­ Victed, along with several other individ­ In 1973, DDS filed an application in in salary. Her new base salary, as that contract, which serviced about 17,000 volved in Dental Delivery Services, also uals, of federal gambling charges in the State Bureau of Corporations to do of Kravitz, was $70,000 annually plus union members, was $2.4 million a became employed by AHP as its Dirf,lc­ connection with the operation of an in­ business in Pennsylvania. Mattucci 'An employee of DDS informed the I i.l bonuses. year. tor of Professional Relations. Through signed the application as president Crime Commission that, while Schiller lj American Health Programs, Inc., terstate sports betting business. Also Roth, Dr. Kravitz was introduced to convicted were Robert J. Lumio, for- and Kravitz sign~d as secretary.' and Sheller were listed as marketing 1\ commonly referred to as AHP, is a 'It should be noted that AHP does not Berle Schiller, Esq., who aided AHP in 1,1er secretary/treasurer of Local 54 of agents, they were never actual em­ H company which creates and adminis­ remit any payment to the participating jl getting the Pennsylvania Social Serv­ the Hotel, Restaurant and Bartenders 'In addition to Kravitz and Mattucci, ployees of DDS. They were listed as ,i ters dental, vision and drug prescrip­ dentists until a patient contacts AHP marketing agents reportedly so they requesting dental services. The union ices Union contract. Union in Atlantic City, NJ; Albert J. other principals or investors in DDS II" tion plans on a contract basis for un­ could receive a finder's fee if DDS se­ j, premium payments remain with AHP Catalano, Jr.; and Emilio Joseph Tra­ were Dr. Peter Cassalia, Dr. Alan ions and employee groups. The most Haimes and Mario Mele, who even­ cured a contract. significant portion of its business per­ until such time. montino, Jr. Garramone also at­ tempted to arrange gambling junkets tually obtained controlling interest in ,Ifl tains to dental programs. In order to Ii to Las Vegas in 1976 through National the company. Joseph Alston was em­ l' , operate its dental programs, AHP has a Corporate Consultants. ployed by DDS as a marketing repre­ network of participating dentists who sentative. Alston was also involved 'I provide the dental services. with John and Joseph Martorano in !i * Lozanoff obtained these funds from Med-Bus, Inc. (See page 25.) " three bank loans totaling $35,200 and $14,800 in savings. :l 29 ";1 28 Ii ~ J "

~I f , ,

Graf was questioned further by the PSSU benefits provided in each, unclear and A: That Berle Schiller was involved whet.her or not Steve Sheller would Commission and made the following . AHP's f!rst major contract for servo unmeaningful prevailing fees etc.­ ·with .. . continue recommending the award to Marketing statements: Ices was wl~h the Pennsylvania Social will make i.t difficult if not impossible a: ... How do you know that Sheller AHP or relating it to the Board that Techniques a: Was any offer of money or anything Services UnIon, Pennsylvania Employ. for such a clear and concise statement got a part of it? maybe it wasn't the greatest contract of value ever offered to anyone in the n:ent Securities Employees Associa­ of benefits to be made." A: After the contract was awarded I and they should look elsewhere." The Crime Commission's investi­ awarding of this contract? tIon (PSSU/PESEA), which represents AHP, however, had retained Berle was told that was the finder's fee. ' Approximately one year after the gation showed that, during negotia­ A: Yes ... at the suggestion of Dr. about 12,000 Commonwealth em­ Schiller, Esq. in its attempt to secure Q: Who toid you that? contract award to AHP the contract tions with unions for four separate Kravitz, six hundred dollars was of­ ployees. the contract. Schiller, who had also A: Dr. Kravitz. was terminated. Source~ indicate that contracts, AH P used questionable fered to Jimmy Wise as a compensa­ In Oqtober of 1975 PSSU's health been involved in DDS, had practiced Roth was later asked how the fee AHP lost the contract because the in­ marketing techniques. This was found tion for the additional time put into the and weltilre fund trustees considered law with Steven Sheller, PSSU's coun­ was paid out. He replied, surance agent who signed on behalf of in regard to Teamsters Local 169 in contract on behalf of his people. At contracting for health care services sel. AHP's Director of Professional " ... Berle Schiller got the total Beneficial National Life Insurance Relations, Dr. Sanford Roth summar­ Cornwells Heights, the Pennsylvania that time we were informed by Dr. with one of four providers. Among the' sum. He then obviously deposited that Company (the co-insurer) did not have ized Schiller's role in his i:nmunized Social Services Union, AFSCME Dis­ Kravitz that that would probably assure health plan proposals was one from total sum in PNB, ... and he would the authority to sign the contract. testimony: trict Council 33 and the Philadelphia us the contract on any other basis, and AHP. write Steve Sheller a check." Fraternal Order of Police. he asked me to give Jimmy Wise a The trustees' counsel, 8.1even a: Now, you mentioned Berle Schiller. In addition to the testimony of Roth, the Crime Commission received The cornerstone of AHP's market­ check for six hundred dollars, which Sheller, suggested in January of 1976 What was his role in this contract at­ similar information from a confidential ing techniquea appeared to be the would be reimbursed from American that expert advice be sought in eval­ tempting to secure this contract? ' source. According to that source a 10 From Trustee awarding of so-called 'finders fees' to Health Programs, which never uating the varied proposals. A: Okay. He knew a Steve Sheller who percent finder's fee was paid fdr the persons who were affiliated with the was ... Actually, initially we were talk­ The following month, Peat, Mar­ was an attorney ... I think he was at to Counselor unions or had some influence in union ing to him about more than that. In one time in Berle Schiller's law PSSU contract and that this fee was wick, Mitchell and Company an ac­ split between Roth, Schiller and Shell­ leader's decisions. These 'finders fact, Dr. Kravitz suggested a thousand firm-that was involved with the counting firm, presented an eV~luation er. Schiller received approximately After the PSSU contract was over fees' ranged from an alleged $600 pay­ dollars, and I refused vehemently unions in terms of benefits or negotiat­ of the four plans presented, plus two $22,700 as h is part of the fee. Dr. Kravitz was involved in some per: ment to a Local 169 shop steward to a about that and said, "No way." And he others. That report made some nega­ ing for benefits, and that's how we got sonal dealings with Norman Hahn 14 percent commission on the suggested six hundred, and that was tive comments about AHP's plan inc· the appointment to go speak as one of Berle Schiller denied transmitting who had been the chairman of th~ AFSCM E contract which went to a what was given to Jimmy Wise ... luding the following: ' the possibilities for a dental contract. any of the 10 percent finder's fee to board of trustees of the PSSU during company owned by Peter J. Serubo. What was Mr. Sheller's position or Sheller. Sheller was subpoenaed to who authorized the offer to be "The apparent higher costs for par­ a: contract negotiations with AHP. Dr. Charles Kravitz also entered a: ... fUnction? testify before the Pennsylvania Crime made? ticipating dentists, the lack of con· .This serves as another example of into business associations with sever­ A: From what I remember, he was an Commission but refused to answer an Interested party benefiting from his A: Well, Dr. Kravitz talked with myself, sistancy between the Group Pre­ any questions posed. In response to al individuals who were closely asso­ attorney. I don't remember whether he relationship with AHP and must be Mr. Fluehr, and the three of us talked paid allowances and coverages the question of whether he received ciated with the contract award or who was a union or Commonwealth attor­ considered a substantial conflict of in­ about it. We, Mr. Fluehr and myself, and the insured Plan, would tend to any type of fee or payment in relation apparently had a connection to the make this proposal unattractive. ney. If I remember, there Were Com­ terest. people who controlled the contract had objected to it. Dr. Kravitz rein­ monwealth trustees, and there were to the award of the contract, Sheller forced the importance of a contract. This does not appear to be a vehi­ After AHP was awarded the PSSU award. union trustees there, Which I don't re­ asserted the attorney-client privilege. We agreed to it ... cle which can offer maximum con· contract, Hahn was hired as adminis­ Following are the details. member. Regarding the commissions paid trator of the health and welfare fund at How much was paid to him? trol of costs to either the Fund or for the award of the PSSU contract a: a: Was he present when you made $32,000. He replaced Nathan Kolbes. A: Six hundred dollars. the individual employee." William Graf testified that AMARC your presentation? wa~ The administrator is responsible for Local 169 a: Who paid Mr. Wise the money? As a result of this report the board to have received a 15 percent commis­ A: Yes, he was. the daily operations of the fund. One of the first contracts AHP re­ A: I wrote him a check from my ac­ of trustees authorized legal counsel sion for the award of this contract. ceived was for the employees of Com­ for the joint Commonwealth trustees, On April 19, 1976, the contract be­ In order to act as administrator count. tween AHP and PSSU/PESEA was ~raf wa.s informed, however, by Krav­ Hahn formed a company known monwealth International incorporated to enter into negotiations with Blue Itz, Collier and Schiller that additional a~ which later became Leaseway Ware: Special agents of the Pennsylvania signed. Roth further testified that Fund Administrators, Inc., 13 North Crime Commission confronted James Shield. expenses had to be paid regarding this houses Incorporated. Leaseway is lo­ Shortly after AHP was notified that Sheller received a "finder's fee" reo Progress Avenue, Harrisburg. Wise with the allegations presented contract and AMARC would have to re­ cated in Cornwells Heights and em­ it had not received the contract award, garding the award of the contract. Between April and June of 1977 and Wise vehemently denied that he linquish 10 percent of the commission ploys about 70 members of the Interna­ Eileen Kerlin, a union trustee, began to a: '" Was there what we have called AH P disbursed four checks totaling had received any fee for his role in the to Schiller. tional Brotherhood of Teamsters Local speak out on behalf of AH P. a finder's fee in this particular con­ $6,256.62 to FUnd Administrators. One award of the contract. During a second tract? Graf testified regarding a meeting 169. On March 2, 1'976, Kerlin advised between Schiller, Collier, Fleuhr and of .these che?ks had the notation "pre­ interview with Crime Commission rep­ A: Yes. paId consulting fee." The first of these The Commission has uncovered the board of trustees that she had himself, in which Schiller told the men evidence that the shop steward for the resentatives, Wise was shown a copy A: Are you aware' of who received it checks was disbursed during the last of the cancelled check and at that time been contacted by representatives of and what the amounts were? why he would receive the bulk of the ,1 local union received a "finders fee" for month of the PSSU contract with AH P. 'I admitted that he had received the fee. AHP, who stated that they had been A: From what I remember, Berle Schil­ commission on the PSSU contract: L his role in ensuring the award of the Hatln said that the money from J Wise further acknowledged that pursu­ misrepresented by Peat, Marwick, ler got three percent, I got three per· " ... He alluded to the fact that if :1 contract to American Health Pro­ Mitchell and Company. As a result the agreement (to give him 10 percent) AHP was for services rendered by him grams, Inc. ant to the agreement, he was to have cent, and Steve Sheller got three per­ as an investment advisor. He stated he !( received an additional four hundred AHP was allowed to submit a second cent. were not executed, that in no way The principal negotiators on behalf bid for the contract. On April 2, 1976, would we get that contract, that he had purchased securities for Dr. Krav­ dollars. It was a total of ten split three ways of AH P for the Leaseway contract were the trustees approved the content of a: was in-he was in a position at that itz with money from a money market Although Wise stated that the offer between Steve Sheller, Berle Schiller Dr. Kravitz, Robert Fluehr, and William the new AHP bid, but decided to with­ point ... to either make sure that the fund in Harrisburg. In return for his of this money was never made to him and yourself? services, Hahn was to be given $3,000 J. Graf, Jr. (See Cast of Characters) hold actual approval of the contract contract was awarded or not ..." personally by Dr. Kravitz, it is clear that A: And myself. each month. Graf testified that the chief nego­ until the Martin E. Segal Company Graf was asked if Schiller had told tiator for Leaseway was James Wise a Graf had paid this money in an effort to a: Why did Steve Sheller get a third? Some securities were purchased in secure the dental benefit contract for could review the program. him how Schiller would prevent or al­ Local 169 shop steward. He further A: I don't know that. I had nothing to low the contract to be awarded and the name of the Philhar Company lo­ AHP. In an eight page letter to the board said that the approval of the health do with it. Graf replied: cated at the office address of Dr. Kav­ of trustees, the Segal company stated: Were those payments made direct­ itz. Over $84,000 was involved in the plan contract by the company was con­ "If we were the consultants to the a: " ... It seems that an attorney for sidered only a formality. ly by American Healttl Programs ... the Board of Trustees named Steve Philhar Company account. board, we would recommend that this A: Yes. The Commission also learned that agreement not be executed in its pres­ Sheller ... was to work out the details a: ... to Steve Sheller? of the contract between himself and during the fall of 1976, Hahn traveled ent form." A: To Berle Schiller. AHP, who was represented by Berle to Tampa, Florida, at the expense of The analysis went on to note: Q: To BerleSchiller? Schiller at that time. So the conversa­ AHP, purportedly to discuss with Krav­ "We add only one more point ... A: Yes. tion alluded to the fact that he was itz problems in the dental service con­ Ii We believe that the nature of this pro­ How did Steve Sheller receive his a: working very closely with Mr. Shelle~ tract. gram as set out in the contract partici­ one-third? Ii,) pating and non-participating, different and, depending upon his attitude and 'I how he handled it, would determine II 11 ~ 30 31

r-, , .'

:t I AFSCME countered with the dental program. On behalf of AHP, Rovner made fre. The phone numbers to call, however, )) quent calls to the members of the FOP satisfied witli AHP. He further claimed were sold. But, the money has still not Dr. Charles Kravitz met Peter J. Ser­ when a problem was encountered and w~s succe~sful in persuading the ubo in 1975, when Kravitz was Presi­ were AHP's. ' "Keep Him Happy" that, apart from one unsuccessful been repaid. • * comml,ttee to give Kravitz another op­ transaction in Atlanta, he had not been As a result of his PEC operation dent of Dental Delivery Services. He As a result, the $30,000 a month in Thomas Garvey, former head of the portunity to obtain the contract I involved in any business ventures with Garvey received a salary of $15,090.95: was introduced to him by Berle Schil­ commissions to Serubo appear to have statewide Fraternal Order of Police fa~t, Kravitz appeared before the c~m~ Kravitz. ** He also received $3,000 for expenses ler. been paid only for his role in helping (FOP), was a friend of Dr. Charles Krav­ mlttee at lea~t four more times. The It was determined that, at the time although this money was reimbursed: Serubo, who was at the time the AHP obtain the contract. itz, the owner of AHP. He was also, ac­ other companies were only permitted of the Garvey' interview, PEC had al­ Information reoelved also indicates owner of the Serubo Cadillac Agency, In addition to the monthly commis­ .cordlng to Steven Passin, former AHP two presentations. ready received $70,000 from AHP, pur­ that Garvey used PEC as a political was purportedly assisting Earl Stout, sion payment that AHP made to Thom­ President, If ••• one of the people that . For his services, Rovner was to re­ suant to the agreement. base. Garvey was able to purchase American Federation of State County as Peters Management Company, AHP had to be kept happy ... " and Municipal Employees Union ceive s.even percent of the contract or In accord with the agreement, the sporting event tickets and entertain paid an additional $15,000 to Peter Ser­ appr?xlmately $294,000. Originally When Garvey heard, in 1978, that various political dignitaries. As an ex­ (AFSCME) President, in reviewing var­ ubo. This money was paid in March of the Pennsylvania Crime Commission money was "advance commissions" ious prepaid dental care programs. Kravitz had informed Rovner that th~ against money PEC would earn if and ample, when a large number of Phila­ 1977. usual fee for such services was 15 per­ was investigating AHP, he voiced a delphia Police officers were laid off Kravitz presented the DDS plan to Ser­ After the signing of the contract, continuing concern about that investi­ when it sold an AHP contract. In the ubo but no positive action was taken cent: however, due to the fact that event that Pr;:C sold no contracts, the Garvey concentrated a lobbyist effort Kravitz paid for a trip to Bermuda for K.r~vltz purportedly had to pay other in­ gation. via PEC to enact a bill that would pre­ by the union. himself and his wife and for Peter Ser­ Twice in 1978 and again in 1979, money waS£(J l,ave been repaid. Two years later, after the formation diViduals, he could only pay Rovner ,Duringi('.fJ18-month agreement be­ vent this. ubo and his wife. Kravitz testified that half of the customary fee. Garvey or his intermediaries contacted In addition to Garvey, PEC allocat­ of AHP, Kravitz outlined the program he did this because he was fearful that the Commission in an effort to find out tween Pf.(;./and AHP, no contracts being offered by his new firm to Ser­ Some time around August 17 1978 ed $2,085.50 to the law firm of David­ Serubo would have the contract taken the committee decided to make th~ what, if any, wrongdoing on the part of son, Aaron and Tumini for legal fees. uboand Stout. away from AHP, and Kravitz wanted to AHP had been uncovered. *PEC also represented the immediate One week later, Serubo informed award to AHP. When the contract was Relief Association af the Pennsylvania As the name indicates, this is the firm create "good Will". He said he was concerned, on be­ of Alfonso Tumini, the FOP attorney. Kravitz that he wanted a commission if awarded, no formal vote was taken nor State Police. This association was in­ In total, the Crime Commission half of the FOP, about the proposed PEC also paid a total of $4,400 to the AHP received the contract. According were any minutes kept of the meetings volved in supplying life insurance for found that approximately $600,000 of AHP/FOP contract and wanted to do Pinto Security and Investigative Sys­ to testimony by Kravitz at a federal at which the proposals were dis­ the state police. taxpayer's money was disbursed to cussed. what was best for the FOP. tems, Inc. These payments were for trial, Serubo requested 25 percent of Peter Serubo merely for his role of Garvey may, however, have also PEC also had an agreement to do labor Interestingly, AHP was chosen to work and consulting work for the background investigations on arbitra­ the gross receipts that AHP received bringing Earl Stout and Charles Kravitz had an interest in the welfare of AHP. tors. Joseph Pinto was a FOP member. from the union. Eventually it was be the. p~ovider of dental, vision and On January 4, 1979, he incorporated 36,000 members of the statewide FOP. together. The work that was supposed­ prescription services even though the The last corporate address of Pinto's agreed that Serubo would receive a 14 ly to be completed by Serubo's com­ Public Employees Consultants, Inc. This could seemingly be a conflict of com~a~y had neve~ been involved in interest due to the fact that PEC could operation was the law firm of D3.vid­ percent commission. pany, Thomas Peters Management, (PEC) as its sole stock holder. PEC was the vIsion or prescription field prior to first get the municipality to pay for son, Aaron and Tumini. An agreement was drawn up be­ was minimal and for the most part located in Suite 1300 of the Payne­ this time. benefits, getting paid by the police for In any event, AHP was responsible tween AHP and Serubo's firm, Thomas never done. Shoemaker Building, 246 North Third for setting Garvey up in business. Gar­ Peters Management Company. This Street, Harrisburg, PA. This location their efforts, and then try to sell the po­ lice the benefits getting paid a com­ vey resigned as president of PEC and company, located in Jenkintown, had FOP was the office of Attorney Gary Light­ transferred his interest to Paul Light­ been formed by Serubo and his Cadil­ man, the individual who had been in­ mission by the provider. In 1978, the City of Philadelphia PEC also was attempting to organize man, Gary's father, on April 11, 1980, lac agency partner, W. Thomas Plach­ volved in the arbitration decision 11 days after he was elected FOP ter. agreed to a union contract which ex­ whereby the FOP was awarded a bene­ casino guards in Atlantic City. panded its previous employee benefits President. There is no indication that During the course of the District fits package which included $4.2 mil­ Garvey was paid for his interest. ~ouncil 33/AHP contract, Kravitz paid plan available to members of the lion for dental and vision care con­ Fraternal Order of Police (FOP) and the * * Thomas Garvey was subpoenaed to During the time period of mid-1979 In excess of $600,000 in commissions tracts. Lightman was the attorney for appear before the Crime Commission to March of 1980, AHP employed Gar­ to Serubo. Initially, the funds were dis­ Philadelphia Firefighters Association this corporation. * (PFA). but declined to testify on the basis of vey's wife, Catherine, and Michael Pin­ bursed to Thomas Peters Management The Commission found that Gar­ his Constitutional privileges. to, the son of Joseph Pinto. Mrs. Gar­ A committee was formed to review Company, but later the commission vey, for PEC, signed a marketing agree­ vey was paid $3,026.19 and Pinto re­ prop.osals su~mitted by health plan payments were made to Dental Care ment with AHP on April 12, 1979. Un­ ceived $8,121.33 for the three fiscal providers. ThiS committee included Programs, Inc., another Serubo com­ der this agreement, PEC was to pro­ quarters. pany. representatives from the FOP and a cure dental contract application for d In return for this commission, the representative from the PFA. The PFA AHP. AHP advanced a total of $90,000 * * It is interesting to note that PEC II claimed it had performed services to­ :1 Thomas Peters Management Company subsequently decided to independent­ to PEC between April 1979 and Febru­ Ij was to act as a liaison between AHP ly seek a health care provider. ary 1980. talling $118,500. PEC then forwarded a bill to AHP showing the $90000 reo 'IIi and AFSCME and organize, update, According to a confidential infor­ In October of 1979, Garvey was in­ !, mant, the committee decided that it ceived and showing a balanc~ due of il and verify lists of eligible union mem­ terviewed by two Commission agents. I,'I bers under the plan. did not want to deal with Kravitz after Garvey stated that he had done a com­ $28,500. Gary Lightman informed the Crime Commission that his bill was a II .., While the agreement between AHP the second proposal, mainly due to the plete background on AHP prior to its d' and Thomas Peters outlined the var­ adverse publicity on him. selection as a health plan provider to ploy and it was merely forwarded to I! ious functions to be performed by Ser­ At that point in time, Kravitz uti­ the FOP and that he was completely placeAHPon the defensive. II ubo, the Commission has received in­ lized another contact to Insure AHP's \.'J formation that his company did mini­ securing the contract. This contact IT!al work. Thomas Peters initially as­ was former State Senator Robert Rov­ 11 sisted AHP in obtaining the union ner.* II member eligibility information but this * Dr. Kravitz was introduced to Rovner ~ function was eventually assumed by by Chester Weisinger. For more on U AHP. Weisinger, see page 37. . 11 The brochures that were provided !~ to the union's eligible workers were Rovner refused to testify before the Crime Commission when he was sub­ !,~ , paid for by AHP and Distrirt Council i~ 33. It should also be noted that the poenaed. Management Company was also to act as a liaison between AHP and mem­ 11 bers of District Council 33, regarding Ij any problems that the members en- .rj II 32 33 , 'f ;{ .... :1 ~ ""

'~.. :r I In terms of percentages, the . Wh~n I asked her why she was AFSCME reported figures were up to dOing It she said that she carried the Utilization Reports 20 times higher than actual. The re­ actual figures in, to the best of my ported figures in the Retail Clerks utili­ recollection, and I think she was told AMERICAN HEALTH PROGRAMS, INC. The Crime Commission's investi­ zation report were up to 392 times gation showed that AHP significantly they wer~ too low to report, and as I re­ UTILIZATION ACTU,t~~,yS. REPORTED FIGURES* higher than actual. member It, she was being directed to increased the figures in the utilization In total, the actual number of basic Ie" ·1 ACTUAL _REPORTED reports it provided to the Retail Clerks by Charles Kravitz, to change the fig: NUMBER VALUE and complex services rendered to ures. What the exact conversation OF 35,508 OF and AFSCME District 33. In both cas­ AFSCME was 23,373, a third less than SERVICES SERVICES es, the unions received reports indicat­ was, I wasn't privy to that," RENDERED RENDERED were reported. The actual value of According to the Landay, Lozanoff ing that they were saving substantial those services, $568,407, was almost amounts of money. had ~een "greatly troubled" by this 32.000----= 1------$1.600,OQ" one half of the reported $1,161,012. practIce and approached him: AHP works on a capitation or fixed­ The actual number of basic and com­ fee basis with its dentists. That is, the plex services rendered to the Retail dentists receive a fixed amount of Clerks was 7,366, less than a quarter of 0: What was her specific problem money per family per month, regard­ the reported 31,809. The actual value ~hen she came to you? You men­ less of the amount of services that of those services, $247,071, was less tIoned that she was having problems family receives. However, the utiliza­ than one sixth of the reported with these figures; what was her prob­ tion reports show the value of services $1,622,800. lem? received on the basis of prevailing fees A: I think she wanted to know how to times actual services rendered, even Of further interest in these utiliza­ tion reports is that they do not reflect do this without doing it, how to do this though the prevailing fees did not rep­ without using two sets of figures resent actual payments to the dentists the cost to AHP of these services, since AH P paid the dentists a fixed fee Which she couldn't do. Here her prob. 1, 800,000 in this case. lem was, that she had giVen, as best as These utilization reports, which per family per month rather than pre­ vailing rates. I can remember, she had given Kravitz AHP agreed to provide to its clients, a very accurate utilization report to be were prepared by its staff. They also The Commission could not, there­ fore, determine what AHP's actual submitted to his accountant for cost detailed the percentage of union mem­ and fees and she was being told that bers utilizing the service, the value of costs for dental services were, what the administration of tile plan cost, or they were too low. 400,000 the services compared to the cost to 0: How do you know that? the union, and the savings to the union what profits AHP made. As will be seen later in this chapter, however, it is A: I think she told me that. I think the and its members as a result of the con­ way it was, the words were, we can't tract. interesting to note that Dr. Kravitz and Ms. Lozanoff received a total of send them in like this, something like Portions of AH P's utilization re­ that. She said that to me, ports to AFSCME District 33 and the $379,300 in loans and bonuses from o o the company in 1977 and 1978, on top 0: What was her response to you? Retail Clerks Union can be seen in Ap­ A: "She showed me what the real NUMBER OF SERVICES VALUE OF SERVICES NUMBER OF SERVICES VAl.UE OF SERVICEIl pendix B. In summary, the AFSCME re­ of their $70,000 salaries. The Crime Commission learned of problem was she was dealing with, and port, covering April 1 to September 31, that was a real problem; how can she Retail Clerks AFSCME District Council #33 1977, showed 35,508 basic and com­ AHP's inflated reporting from a former 15 AUG 76-31 DEC T1 1 APR 77 -31 SEP 77 employee, Dr. Merwyn Landay, who construct a utilization report that was plex services rendered with a value of closer to what Kravitz wanted to see. I $1,161,012. The Retail Clerks report, testified that Carol Lozanoff had told guess that was a falsification of data 'Figures pertain only to basic and complex services; which covered August 15, 1976 to De­ him the figures were altered. He testi­ fied that: and that was what she was struggling specialty services are not included. cember 31,1977, showed 31,809 basic With." and complex services delivered at a "The actual services rendered were far below what the benefits were, and Landay also gave some inSight into value of $1,622,800. how the figures were derived: :i The Commission became aware the premiums were coming in and tl were very low, and of course American 0: Was she working backwards from 'I that these figures were falsified when the dollar figure to arrive at the number 1) Health Programs didn't want that re­ The Crime Commission also sub­ she wanted me to approve. When I it obtained worksheets which were of services? q ported. In a series of discussions with poenaed the former president of asked her how the numbers were con­ !j made up by Carol P. Lozanoff, an AH P A: Yes, that was my understanding. Carol, she began to show me these American Health Programs, Inc., Stev­ structed, she just laughed. She said, Lozanoff's Role ~ employee. Portions of these work­ 11 sheets can be found in Appendix A. -documents, the documents she was 0: By dividing the total dollar figure by en Passin. While employed by AHP, 'Don't you know? We don't construct The Crime Commission subpoe­ ~, On these sheets, the discrepancy I

36 37

.. ' ! \ W.elfare Fund show similar disparlti: Appendix A with their companion worksheets. A portion of AHP's utilization report to Evidence the Aetail Clerks for the period of August 15, 1976 to December 31,1977 AFSCME District Council 33 The Pennsylvania Crime Commis­ can be seen on page 40. Once again Utilization Report Figures sion's investigation showed that column two contains the reported American Health Programs (AHP) Inc. n um ber of services obtained by unioh substantially inflated the figures it pro­ members through the plan. Also on vided to union groups in its utilization page 40 is an accurate reproduction of reports. another Lazonoff worksheet which A portion of the AHP's report of covers the 16-month period of the Re. Basic Services rendered to AFSCME tail Clerks contract. Worksheet Figures District 33 members between April 1 In the column headed "Aggregate and September 30, 1977 can be seen 16 mos." once again sub·columns of on page 39. Column 2, headed "Total # "A" and HA" are seen. The figures Prevaili.'1g of Svcs. Aendered," is the key column shown in column 2 of the utilization reo Fee in this report. port are again identical to those in sub. Total If of Also on page 39, there is an accur­ column "A" of the worl(she:.t. Prevailing Svcs. ate reproduction of a worksheet pre· A comparison between the figures ervice Rendered pared by Carol P. Lozanoff which the in sub-columns "A" and "A" show that Fee Commission obtained. This worksheet each of th&19'fine items increase from also pertains to AFSCME District 33 "Au to "A'f'. On line 11, a '1' in "A" be. ~ \SIC SERVICES over the six months mentioned above. comes 392 in "Alf. On line 2, the num. The worksileet contains hand writ­ ber 271 ill "A" becomes 1,370 in sub­ Clinical ExarniD~tian 10 4,350 ten numbers referring to actual and re­ column"R." ported services rendered. Complete Intra-oral X-rays 28 2.994 The totals at the bottom of the col· Individual Periapical X-rays 3 2:8l3 Under the column titled "Prevailing umns meaSUre the great discrepancies Fee," two sub-columns are marked between "A" figures and "R" figures. Bite Hing Series 11 1,897 "A" and "A". These stand for 'actual' The "Alf colu'mn adds up to 6,034 or Panorex 23 333 and 'reported.' By comparing sUb-col­ less than one-quarter of the "A" sum Study MJdels 13 1,606 umn "A" in this report with column 21n of 24,646, Treatment Planning 1,156 the utilization report, we see that the In all cases, these reports of serv­ figures are identical. ices rendered were! then multiplied by A comparison between sub­ prevailing fees. The dollar amounts :ub- DIAGNOSTIC SERVICES columns "A" and "A" shows that the which resulted were then reported to ·.)tal 15,149 figures in HA" are inflated over those the unions as the va.lue of 'the services in column "A" in nine of 15 cases. On received by the unions. Because tilese line two, for example, the number 944 usage figures were inflated and, can· Prophylaxis 15 2,532 becomes 2,994. On line seven, the sequently the value figures were in· number 156 under "A" becomes 1,156 f1ated, the unions believed that they Fluoride Treatment 15 1,824 under "A". The total amount of basic were receiving more services at a high· Comprehensive Disease Centrol Prog. 30 1,127 services under "A" was not added up ervalue than was actually the case. on the original sheet, but comes to The Commission determined that .!.;"-'- PREi}Et\JTIVE SERVICES 20,208 services rendered. The reported AHP reported approximately )L:al 5;483 I number of basic services rendered " $1 968332 in value of services that was 29,589; almost a third more. w~re ~ever received by the members The utilization reports for the Aetail of three unions over a short period of Clerks Delaware Valley Health and Silver Fillhig - L Strrface 12 3.087 time. Silver FillL"1g 2 Surfaces 20 2~430 Silver Filling - 3 or more S~faces 27 l.778 "C; Plastic ,j~ "145 Composite ·Resir...s 24 1,517

..:b- BASIC RESTORATIVE )tal 8,267

.::.u. BASIC SERVICES 28,399

~ I .\ 11 'I 38 ~ 39 I 11 ~'

~I

-,-~ .-....- '._ ".4-,_ " • .." ~

to.· I II I I , t~ -., .-;.:.- . -'. - -- ,- . ~', ---~------

,

A: After I was proposed, yes. Maybe a Appendix 8 few-four, five months after I was pro­ Retail Clerks Union posed I became a member, sir. (8/15/76-12/31/77) Fratianno a: Who proposed you into that family, Testimony sir? Utilization Report Figures A: Johnny Roselli. Excerpts a: Did you have to do anything special to become proposed? Worksheet Figures The Pennsylvania Crime Commis­ A: No. Just to have their trust. And sion held public hearings on July 28, they would check your background 29 and 30 in relation to health care plan and inquire about you, from where ,. " ... ,. , I ,~e;;c;Jef{t<;IIt,:' organizations. On July 28 at 1 p.m., you're from. a: When you become a made mem­ '·/4""~i.·; Aladena "Jimmy the Weasel" Fratian­ Total # of no took the stand. ber, I assume that is a term that means Prevailing Services Fratianno came heavily guarded by that it separates the members from Fee Perfo:t:"I"red ···.·.~trt:~ U. S. Marshals. The self-admitted La someone else, when you use the term Service Cosa Nostra member and hit-man has "made"; is that correct? been in the Federal Witness Protec­ A: Yes. When you're made, you're BASIC SERVICES tion Program since December of 1977. generally in the family. As was seen on earlier pages, a: Now when you became made, sir, Exam and Diagnosis 10 3,631 'J~3t, Fratianno had personal knowledge of did you have to go through a tradition­ Complete Intra-oral X-ray 28 1,370 Labor Health Plans, Inc. operator An­ al ritual? Individual Periapical X-rays 3 1,902 gelo Commito, and. aided Commito in A: Yes, sir. h is attempts to secure health care plan a: And could you describe what that Bite Ning Series 11 2,190 ~s:~b%~f'1' l;/:~o . contracts in Ohio (see page 18) and ritual was? Panorex 23 311 California (see page 18). A: Well, at the time I got made there Study l·t::dels 13 90 Following are some of the other was five of us got made at the same Treabnent Planning 10 2,030 statements made by Fratianno during time. They take you in one at a time. fi'.~0!i!~~.fJ his testimony. You hold hands. They stand up. They lock hands. They have a long table, Sub- DIAGNOSTIC SERVICES 11,524 La Cosa Nostra such as this'; real long. They have a rl'otal a: Have you ever been a formal mem­ sword and a gun crossing one another. ber of an organized crime family or La You hold hands. Then the boss Cosa Nostra? says something in Italian. It lasts may­ Prophylaxis 15 2,629 A: Yes, sir. be two, three minutes. And after that a: And what family was that, sir? they prick your hand with the sword or Fluoride TreatmP-nt 15 1,356 with a pin and draw blood. Then you Control Visits 30 850 A: The Los Angeles Family I started with. kiss each member on the cheek and Nuva-Seal (Sealant Treatment) 24 392 a: And what was the title of that fami­ they introduce you to each member. ly at the time you started with them? Then they give you rules later. They Sub- 5,227 A: Well, was the boss. tell you what the rules are. PREVENTIVE SERVICES a: Now who is present during the pro­ 'Ibtal They called it the Dragna Family, La Cosa Nostra. ceedings of this ritual? a: Now when did you become a mem­ A: Well, practically iI!'J whole family. ber of the Dragna Family in Los Angel­ Whoever could attend, you know. 1 Surfac~ 12 2,820 Silver Filling es? a: Is it ceremonial within the family, Silver Filling - 2 Surface 20 2,747 A: It was either in late 1947 or early the process of being made? Silver Filling - 3 or more 27 1,156 1948. A: Yes. It's like a ceremony. In some 24 998 a: All right. Now how does one be­ states they have-cities, they have big CCXTq?Osite dinners, after the people are made. 8 28 come a member of a recognized Cosa Pin Amalgam Restoration Nostra family? Some don't. Pin Cc:mposite 8 19 A: Well, there's a lot of ways. You can You know, they have like a little Nuva-Fil 35 117 be a son of a made member, which is party. Gold Inlay 150 10 easy to get in that way. You can be a a: Now is there also a code of relative. Or you have to be proposed. silence? Somebody has to vouch for you. A: Yes sir. Omerta. Sub­ BASIC RESTORATIVE 7,895 And it might take a year, two years a: What is that? Total before you get in. As a rule, you've got A: Well, they call it omerta; silence. to do something in order to become a The code of silence. member. a: Is the 'omerta' described at that a: Now when you became a member ceremony at the ritual? in 1947 of the Dragna Family, did you A: Well, they explain all the rules to , become a member after being pro­ you. I mean I'll more or less tell you a posed? few of them.

41, ------~-- \ \

You are not allowed to speak to any A: Well, the boss has to authorize any ship, you would have been compelled agencies of any kind; FBI, any lawen­ hit. or-but-now you asked how they get and type of involvement that they A: What do you mean, how do they to carry out the execution of f?rce~ent. You can't answer no ques­ When, from your experience, sir, involved with the Teamsters. have? control it? tions In no grand juries. a: Bompensiero if you were so requested v.:hen someone from within a family is Well, I was one of the founders of A: They got somebody there that's a: How do they protect or continue it You can't fool with anybody's fami­ by the boss. Is that correct, sir? hit, do you have any experience as to A: Yes. That's correct, sir. the Teamsters in 1929. There was probably got a piece of it. on constantly, generally speaking? ly, their wives or anything like that. the probabilities of where that hit twenty-five hundred members, Italian a: Why do you think that? A: Well, who's going to bother them? You cannot indulge in narcotics. could come from? a: . No:-" re!ating that to the Philadel­ people who actually formed the A: Well, I don't say every casino now. If somebody bothers them, they'll find phia Situation, and I think you've said They're very, very against that. Teamsters, if you go way back in the Because that's the way it works. I themselves in the lake, in the ocean, For example, could a member of you felt that the Philadelphia problem a: Is that the use of narcotics or the one family hit a member of another twenties. know how it works in Las Vegas. Same you know. sale of narcotics? family? was ~ne from within, an internal prob­ And they've had it ever since. How thing. I know that there's other, other a: So violence does become the ways ~: The s:ale, selling, dealing in narcot­ A: No, sir. lem, It would therefore not surprise do you think Hoffa got in there? Do ways of making money; garbage. and the means, is the bottom line, so ICS or uSing narcotics. Them are some a: Why not? you !hat members of the former Bruno you think he got in because his name There's a lot of ways. Selling them to speak? were executing each other, and of the rUles, the main rules that they A: It's just against the rules. Fam~ly was Hoffa? I introduced Hoffa to Joe slot machines. There's a lot of ways of A: I say if they have to. But people tell you. ~hat I~ the reason for this series of kill­ Blimpobo, one of the heads of La Cosa making money. know what they're doing. You know, a: In Philadelphia in the last year al­ Ings; IS that correct? a: Those are the rules that were told legedly there have been-there have Nostra in Chicago. a: Could you describe for us some of they ain't going to buck anybody. They to you in 1947? A.: That's my opinion. That's correct And they were against Hoffa. And the ways that organized crime has know what's going been several murders of alleged organ­ SIr. ' to happen to them. A: That's correct, sir. this was in 1952, during the convention made money in Las Vegas that might ized crime figures from within what a: But if another family who were The Bruno Family has been known as the Philadelphia at the Statler Hotel in Los Angeles. I in­ be areas of interest likewise in New His Role In La Cosa Nostra to, for example, the Philadelphia Family. clos~ troduced him to the guy in La Cosa Jersey? You personally sir, have you had Family, were asked by the boss or a: a: Did you ever move up in the ranks Nostra. The following five years, after A: Skimming. Skimming money out of any direct involvement with any of the Would you have an opinion as to , or whoever was in charge from within the Dragna Family? where those hits would have had to bringing him in, Hoffa got in to be the casinos. There's so many ways. I Philadelphia members, the members A: Yes. In 19521 became a capo. come from? ~t the time, to assist in a contract kill­ president. Hoffa did. How did you mean it's pretty hard to, you know, tell Ing, they would do that? of the Bruno Family? a: And had you done anything special A: Right in the family, sir. think he got in? you how. There's so many ways to take A: Yes, I have, with one. But he, I think between '47 and '52 to elevate you to Why is that? A: I don't get what you mean, sir. You So it's the same way with these in­ money out of a casino, it's just unbe­ he's died in the past year. a: mean if-let's, let's ... that status? A: Well, because that's the way it ternational vice-presidents. lieveable. Who was that, sir? Say a New York Family was asked a: A: I did quite a bit of work, sir. Yes, sir. works. I go back thirty-two years. And I a: Look at Roy Williams. Do you think You could take it from the slot ma­ A: "Freddie Red Shirt." His name is to assist in a contract killing of a Phila­ a: What kind of work? ain't never heard of a man from an­ he's there because his name is Roy chines. You could take it from the of­ Freddie Felice. He's with the Bruno A: Well, up to that time I personally delphia member by the boss of the Williams? So I'm just trying to tell you fice. They can throw money at you Family. He's been with the Bruno other family kill somebody in another Philadelphia Family. participated I think in four killings an- how it works. when you're playing. There's so many Family for years. And in 1976 and '77 family, unless they would ask for help. A: Oh, yes. otheronein'53. ' a: In your judgment does organized ways. he was selling artichokes to New York. But that-I participated actually in a: Okay. Now elaborating on the pOint a: They would do that? crime continue to have the same influ­ Somebody can come in and win a: And you worked with Mr. Felice, five. And I did other work you know that you made, that in almost all situa­ A: It's happened many times. Yes. ence today in International Team­ eighty thousand. That ain't no money "Freddie Red Shirt" Felice? like putting a bomb under ~omebody'~ tions a, when a family member is mur­ a: Many times. And Los Angeles and sters? in these casinos. Nothing to win A: Yes, sir. We were partners, sir, also house. ?e!"ed, that it is from within that family, CI~veland cooperated, just as Philadel­ A: Absolutely. More. eighty, a hundred thousand. with Terry Zappi. IS It also your experience that it is not phia or New York might have? a: Why do you say "more"? a: Okay. In 1954 you were sent to pri­ Success and Violence a: In the right-hand corner of this son; is that correct? ~nc~mmon t~at after a family member A: Exactly. Exactly. A: Because I know. You say how do I chart they have three names up there; A: That's correct, sir. IS. h~t there IS some retaliation from say it. I know who runs Roy Williams. I have just a couple questions. Mr. Sonny Franzese, James Calandrillo Presser's Connections a: a: For what offense? Within that family also? They all have a man. They all have Fratianno first you mentioned that and John Allu. Do you know of any of A: Conspiracy to extort. A: Absolutely. somebody that looks after them. And several of the older members of the those individuals? Yes. You indicated that Mr. Presser Where did you serve? a: So that there may be a series of a: in return they got to give some favors_ families had millions, many millions of A: I know of Franzese, but I don't a: was owned by organized crime, and mur~~rs from within one family. So a: Who does run Roy Williams? dollars, untold millions. know him personally, sir. A: I served approximately six and a that the way that that occurred was half years in California. that It sail intrafamily related? A: Nick Civella, Joey Aiuppa, Tony A: That's correct. Other than Fred Felice, did you that organized crime helped to pave a: When you came out of prison did A: It's happened many a time, sir. Giordano out of st. Louis. They're all What, in your opinion, are the two have any personal involvement with a: the way to him ultimately becoming a: you still have the title of capo within a:. In the book, "The Last Mafioso", bosses. They started Roy Williams, go­ or three primary reasons why they any other members of the Philadelphia the Dragna Family? the Vice-President of the International ing way back. In fact, Bill Presser is the written about,Y0u, it indicates that you Teamsters. have been so successful and why the Family? A: Well, as far as I knew, yes. personally directly were involved in one that nominated him for interna­ organized crime activities, the tradi­ A: Well, years ago. Yes. Could you detail for us, as much as Fratianno further stated that he ele~en murders and indirectly in twen­ tional vice-president back in 1961 or tional family activities, have been so a: Who was that? ty-five. Many of those murders were y~u can, the ways in which organized '62. successful in making money criminal­ A: With Blinky Palermo. That's going had asked to be transferred to the Chi­ crime was helpful in terms of assisting cago Cosa Nostra family in 1960 or members of your own family. Is that Who do you think Bill Presser is? ly, and how do you see it in relation to back a lot of years. not correct? Mr. Presser in his career? 196~. In order to get permission, both He was told to do that. How do you law enforcement efforts? a: At that time was he a member of A: (No response) A: I-well, this goes way back, you family heads had to agree. Fratianno think Tony Pro (Provenzano) got in A: You mean how have the crime ele­ the Bruno Family? Some? know. See, Bill Presser, I knew Bill named Sam Giancana as the head of a: there? Because his name is Tony Pro? ments been so successful? A: Yes, sir. A: Some. Presser when he was working with Yes, sir. Anyone else? the Chicago organized crime family jukeboxes. You know, I'm just trying to explain a: a: In fact, the Bompensiero murder A: Well, it dates back to years ago, A: That's about it. Anybody that I and Frank DeSimone, whom he said a: They eventually stepped him in a to you how these things work. And you was an attorney, as the leader of the was a member of your own family was asked me how do I know. I've been a when they founded it, when they knew quite well. I met Frank Palumbo he not? ' position where they could make started it. Politically they do-like in years ago. Los Angeles family. money with him. member for thirty-four years. I'm one In 1975, he asked permission to be A: That's correct, sir. of the originators of the Teamsters New York, they got everything going a: Through whom? a: Bill Presser was Jack Presser's there. They got the garment industry, A: Through Blinky Palermo. transferred back to Los Angeles. The a: And Bompensiero himself was a father? Union, going back to 1929. very clo~e friend of yours, was he not? they got the sky lock, they got the num­ a: Frank Palumbo, the restauranteur? Cosa Nostra bosses involved in that A: Jackie's father_ That's correct. And decision, according to Fratianno were A: That s correct, sir. The Casinos bers, they got everything. A: Yes, sir. In fact, when you and he were in then. when his father retired, they put a: Was Mr. Palumbo a member of any Louis Dragna in Los Angeles and Joey a:. Jackie Presser in there. Well, his father a: ... do you have any opinion as to a: They control everything, is what Aiuppa in Chicago. prison together in California you family, to your knowledge? told him what he's got to do. what if any influence organized crime you're saying? A: No, he wasn't a member, sir. Blinky worked together inside the prison A: They control it. That's correct. One Murder Etiquette walls. Is that not correct? See, there's a man in Cleveland has in the New Jersey casinos? was a member. A: Well, I know they got some involve­ family controls the trucking industry, A: V'fell, we were together. But we that handles Jackie Presser without \ ~: You testified that you participated the family knowing anything ~bout it. ment. Because I heard talk when I was another family controls the garment in­ In a number of killings or hits while dldn t ~ork together. We was in the same prison. Whenever they wanted to see in New York. dustry. It's different things. So in a pe­ you .were a member of the Dragna Jackie Presser, whenever I wanted to There is involvement in New Jer­ riod of years you, you accumulate a lot Famlly_ Could you please describe to a: He helped you when he was a clerk sey, although maybe it's hard to find. of money. when you came to that prison? ' see him, we'd go through this this fel­ us th7 procedure for authorizing a hit? They use front men. How you going to A: Yes_ Tha.t's right. Yes. low in Cleveland, a guy by the'name of a: How do they maintain and protect Who If anyone must authorize that hit? find out? that enterprise? How do they control a: And notWithstanding that relation- Rockland_ Machie is his name. Machie. 42 I forget his last name_ Rockland a: What do you believe is the nature that inflow of money? 43 : .... ----~-

------~-~ -,-- , -' administer a viable Quality Assurance utilization. This was done purely. to the value of services rendered by the Internal Use of Utilization Reports Program conducted by our consultant share the information available With· dentists versus the amount of pre· A capitation program should c~I·. out any Intention to mislead. Indeed, staff which Includes: mium paid. Based on these figures, de· lect data on general utilization of the artificially increasing the value or num· Appendix C ductibles are determined and premium benefits as well as on the quantity and a. Procedural audits ber of services rendered would be de· rates rise or fall. distribution of services. This Inf~rma· b. Analytical audits trimental to the Intended goals of the Remarks of Doctor Alan E. Berger, C. Clinical audits In a capitation prograrn utilization tion is valuable to us as the admlnrstra· program. Vice President of Health Care Services reports are not relevant. AHP is mar· tors for internal use only. When prop· 1. selected offices and pa· We believe we have a system that keting good oral health and is not In· erly compiled it allows the consultant tlents is cost effective from the point of view for American Health Programs, Inc'. terested in determining how much fee staff of AHP to analyze, evaluate,. and 2. specialty pretreatment of the client be it a business, union, or for service dental care can be pro· compare the performance of t~~ dlf~er. screenings in orthodon' government~1 unit. The premium of our tics and periodontics Mr. Charirman, members of the expert on capitation programs. Dr. vided. Utilization in a capitation plan ent doctors within our participating contract is fixed for the life of the con· Commission, Commission Staff, Schoen has stated, means generalized use-how many network. What we look for is a ratio be· d. Peer review when necessary tract (in some cases three year.s), and ladies and gentlemen: "Where no bills or claim forms are members and their families are avail· tween different services performed. unlike insurance programs, which are required for payment the dentist of­ i ng themselves of the benefits by reo For example, how many extractions Conclusion I thank the Pennsylvania Crime During the six years AHP has ad· experienced rated, as stated earlier, Commission for permitting me the op­ ten is reluctant to tabulate details questing and accepting assignment to versus root canal procedures to deter· our program is one of the only where on services with any degree of ac­ the dentists and thereafter following mine the preventive orientation of an ministered prepaid dental capitation portunity to appear voluntarily and ad­ programs, we have by necessity been the premium is fixed. dress certain matters that have been curacy. A developing network must up this aSSignment with a visit as the individual practitioner. As stated by Dr. Over the past years, AHP h~s .of· use a combination of persuasion beginning of their treatment which will innovative In our approach as there presented at the hearings today. The Schoen, were no generally accepted prece· fered assistance to Dental Societies purpose of my presentation is to clari­ and withholding of payment (or a insure good oral health. and other agencies, includi~g t~e portion thereof) to bring partici­ The analysis of compiled data is "over a period of time the incidence dents to follow. We have come to real­ fy a misunderstanding that I believe ize and accept the fact that the materi· Pennsylvania Crime Commissl~:>n, In pating offices into compliance. By also different in a successfully ad­ of extraction should decrease both the creation and implementation of exists concerning the value of utiliza­ in absolute numbers and as a per· al we gather and compile under a gen· tion reports in a capitation program. the time a system has matured or ministered capitation program be­ legislation surrounding dental plans.ln stabilized, this problem should be cause the number and value of servo centage of restorative ~ervlces: Di· eral heading of utilization must be co~· the Commonwealth of Pennsylvania. Capitation Defined rected and extrapolated to approxi' overcome, but several years may be ices performed should decrease as pa· agnostic and preventative services We welcome others in our emerging Capitation programs are defined by mate the level of operation within our involved. In the interval, estimates should increase as a percent of to· industry to assist AHP in establishi.ng the American Dental Association as an tients are treated into a state of good system. Our earlier reports to member alternative approach to the fee for must be used which are based on oral health. In essence the dollar pre­ tal services." guidelines which will help standardize samples of offices which are Our internal use of utilization and groups Included a c.o.nventional ~tiliza. service method of rendering profes­ miums received in a capitation pro· tion report in addition to capitation the health care b~nefit industry. sional services and dispensing known to be reporting accurately, gram should eventually exceed the procedural reports has enabled us to remuneration to the professional pro­ and selected samples of other of­ dollar value of service rendered. This vider. Capitation programs cannot and fices. Data are then extrapolated to fact allows capitation plans to leglti· should not be evaluated by guidelines approximate the level of operation mately claim that they are cost effec· of fee for service programs. It is a sys­ of the system." tive. As Dr. Schoen has stated, the tem by which the participating dentist In the early years of operation, AHP value of services rendered is immate­ is compensated at a fixed per capita as an emerging organization experi­ rial in a capitation program since rate, usually on a monthly basis, in re­ mented with a number of reporting "capitation rates are not based on the turn for agreeing to provide specific, techniques which had been developed total of 'fees' produced." predetermined dental services as ap­ in order to properly obtain information The important statistic then for the propriate and necessary to eligible concerning our program. Two prob­ client in a utilization report is useage. subscribers. Payments made by the lems immediately were apparent: We want useage to be high in the American Health Programs, Inc. many participating dentists did not sense of the members availing them· (" AHP") to the dentists are based upon provide reports of the services ren­ selves of the services provided, in or· the number of persons assigned for dered and, of those who did, the re­ der to initiate treatment and promote dental treatment during the length of ports were largely incomplete and con­ good oral health. Our goal is to arrive the contract whether or not the en­ tained obvious aberrations of data. at a maintenance level as quickly as rollees use the dental services during With this in mind, a number of meth­ possible. this period. There is no correlation be­ ods were developed to provide our Op­ We have honored our pledge to our tween the dollar value of services erations Department with sufficient in­ clients to take steps to promote use­ rendered and the dollar amount the formation on which evaluations can be age. Our Operation Department corio provider receives. made, using the techniques recom­ tinuously evaluates, along with the Data Gathering mended by Dr. Schoen sunh as with­ Marketing Department, ways in which Capitation benefit programs do not holding payment and not assigning to promote optimal use of services, require the submission of pre-author­ new patients to a facility. and in this vein provides information ization forms, bills for services Utilization Reports for client pubiications, meetings with rendered, or other claim forms which Utilization reports containing the shop stewards, and seminars to ac· are required for payment of services in compilation of specific services ren­ quaint members with the services an insured program. The professional dered and the dollar value of those which are available under their benefit provider or dentist is often remiss in services are relevant only in insured program. Pamphlets and brochures are providing details on services he has fee for service programs as adminis­ developed for members defining the rendered as the information he is re­ tered by an insurance company. An in­ specific areas of coverage and steps quested to furnish AHP (the adminis­ surance company must have this infor­ for using their benefits. trator) has no bearing on the dollars he mation to determine its premiums and In summary, under our plan no utili· , earns. The method of gathering data, its financial exposure or risk. If the risk zation reports are necessary because the compilation and the interpretation is high, the premium goes up or the it is a capitation, not a fee for service of that data must by necessity be dif­ contract is cancelled. reimbursement system. We are provid­ ferent. An increase in demand for services i ng prevention and good oral health: Our own experience and frustration such as crown and bridge, prosthetics, We are not marketing dental services. in trying to gather accurate data has orthodontics, etc. means greater finan­ If one understands the value and coo­ been substantiated by Dr. Max cial exposure that the insurance com­ cept of capitation, one then would see Schoen, Chairman and Professor, Sec­ pany must face when administering a that to increase the value or number of tion of Public Health and Preventive fee for service reimbursement benefit services rendered in a utilization reo Dentistry, U.C.L.A., the acknowledged plan. A determination must be made of port would be self-defeating. 45 44

-,- ,

Gibbons, Harold J., 16, 17 Schiller, Berle, 28-32 Harrah's Hotel and Casina, 14, 16, 17 Unions and Associations Magaddino Crime Family, Buffalo, 18 Index Glancana, Sam, 42 Serata, Bertram, 29 Health Corporation .of America, 7, 28, Amalgamated Meatcutters-Loeal Operating Englneers-Loea/138, 8 The Inclusion of a name in these in­ Giordano, Tony, 43 Seruba, PeterJ., 30, 32 29 196,20,25 Pennsylvania Social Services Union, dices does not connote criminal activ­ Glickstein, Merrill, 12 Shapp, Mlltan, Gavernar, 29 Health Systems Management, Inc., 29 Amalgamated Transit Union-Local 28-31 ity on the part of a business or individ­ Graf, William J., Jr., 30, 31 Sheller, Steven, 29-31 Jael S. Sokal, D.D.S., P.A., 8 1181,8 Philadelphia Firefighters ASSOCiation, ual. Grasso, Michael, Jr., 37 Silk, Dr. Raymand, 20, 21 John's Wholesale Distributors, Inc., American Federation of State, County 32 Please check the page references Gulmi, Frank, 14 Simane, Jahn, 20 20,25,26 and Municipal Emplayees Police and Firemen's Medical Associa­ listed to see the role of the business or Gutman, Jesse, 21 Smith, Lawrence A., 7, 8 Labor Health Plans, Inc., 1,5,14,17,41 (AFSCME)-Distriet 33, 1, 28-30, tion, 32 individual in this investigation. Hahn, Norman, 31 Smith, Timathy P., 25 Leaseway Warehouses, Incorporated, 32,34,36,38 Police Health Administration, 28 Government officials, commis· Haimes, Dr. Alan, 29 Sakal, Jael S., D.D.S., 8 , 17 Relief Association-Pennsylvania sions and authors are not indexed. 28,30 Hall, James, 17 Spratt, David, 29 Life Check, 21 Bruno/TestaJ? Crime Family, Philadel­ State Police, 33 Accardo, Anthony "Big Tuna", 9 Hansen, Gunder, 17 Staut, Earl, 32 Martin E. Segal Company, 30 phla,14,16,17,42,43 Retail Clerks Union-Local 1357, 1, 28, Aiuppa, Joey, 42, 43 Hauser, Joseph, 8, 9 Tavella, Pasquale, 21 Med-Bus, Inc., 17,20,25,26,29 Chauffeurs, Warehausemen and Help­ 29, 34, 36-38 Alessi, Lenard, 35 Intorola, Joseph, 17 Tham, Rudy, 18 Mr. Livingroom Furniture Store, 7 ers of America-Loea/331, 16 Retail Clerks, Delaware Valley Health Allan, John, 16, 17 Kavner, Dick, 14, 16 Trafficante, Santa, 9 National Corporate Consultants, 29 Cleveland Organized Crime Family, 5, and Welfare Fund, 38 Allen, Charles, 7, 8 Kerlin, Eileen, 30 Tramontina, Emilio Jaseph, Jr., 29 National Prepaid Health Plans, 9 18 Retail Clerks, Tri State Health and Wel­ Allu, John James, 14, 16, 17,43 Kolbes, Nathan, 31 Tumini, Alfansa, 32, 33 North American Dental Plans, Inc., 17, Colombo Crime Family, New Yark, 14, fare Fund, 29 Alson, Joseph, 25, 29 Kravitz, Dr. Charles, 28-37 Videen, Garven W., 17 28,29,37 17 Service Employees International Union-Loea/36,25 Askin, Martin 1.,21 Landay, Merwyn, 34 Wallach, William, 8 Palumbo's Nostalgia Room, 16 DeCavalcante Crime Family, New Jer­ Barland, Libby, 12,36 Licavoli, Jack, aka White, 5,18 Weisinger, Chester, 32, 37 Peat, Marwlck, Mitchell & Campany, 30 seY,8 Teamsters, International Bratherhood Blavat, Jerry, 14, 17 Lightman, Gary, 33 White, Jack (see Licavali) Philadelphia National Bank (PNB), 31 Dragna Crime Family, Los Angeles, 17, of Teamsters, 5, 16, 17 Blimpobo, Joe, 43 Lightman, Paul, 33 Williams, Ray, 43 PhilharCompany, 31 18,41,42 Loea/169, 28, 30 Loea/237,8 Bompensiero, Frank, 42 Lozanoff, Carol P., 1,12,28,34·38 Wilsan, Sam, 25 Pickwell Markets, 20 Fraternal Order .of Police-Lodge #5, Loea/282,8 Bonanno,Joseph,17 Lumlo, Robert J., 29 Winick, Calvin, 8 Pinto Security and Investigative Sys­ Philadelphia, 28, 3D, 32, 33 Loea/331, 14, 16 Bruno, Angelo, 8,16,20,37 Mango, Vito, 18 Wise, James, 30 tems, Inc., 33 Gambino Crime Family, New York, 14, Loea/413,18 Bucher, Howard, 21,22,25 Manuele, Theodore, 15, 20 Yaung, Wendell, 28, 29 Premru Productions, Inc., 37 16,17 Loca1423, 18 Calandrillo, James R., 14, 17,43 Martorano, Evelyn, 26 Zappl, Anthany, 16, 17 Public Employees Consultants, Inc., , New York, 14, Loea/692,17 Cassalia, Peter, 29 Martorano, John, 17, 20, 21, 25, 26, 29 Zappi, Ettare, 16 33 17 Local 837, 1, 17 Catalano, Albert J., Jr., 29 Martorano, Joseph, 20, 21,25,29 Rittenhause Consulting Enterprises, G iancana Crime Family, Chicago, 42 Zappi, Terry, 43 Local 854, 16,17 Cericola, Bob, 16 Martorano, Raymond "Long John", 8, Ltd., 7, 8 Hotel and Restaurant Workers Employ­ Teamsters Central States Pension Civella, Nick, 43 15,17,20,26 Businesses and Entitles St. Paul's Roman Catholic Church, 16 ees Union-Local 33, 7 Fund, 8, 17 Cohen, Alan, 12, 14, 16 Martorano, Theresa, 26 Advance Project Corporatian, 17, 20, Serubo Cadillac Agency, 32 Loea/69,14 Trafficante Crime Family, Tampa, Fla., Collier, Claude, 28, 29,31 Mattucci, Dr. Louis, 29 25 • Stalter Hotel, 43 Local 170 (see Local 33) Thomas Peters Management Com­ Hotel, Restaurant and Bartenders 9 Commito, Angelo T., 5,14-18,41 Mele, Mario, 29 American Health Pragrams, Inc., 1, 5, United Food and Cammercial Workers Costello, Richard, 16, 17 panY,32 Union-Local 54, 29 Miller, Jack, 16 7,26,28,30,31,34-38 Union,16 Cox, James, 12, 15,20,25 Molinaro, Comillo, 8 American Marketing and Research TNS Medical Dynamics, 21 Industrial Workers Union-Loea/ 837, Cusamano, Joseph R., 7, 29 Montana, John "Curly", 8 Carporatian,31 Trans World Life Insurance Company, 21,22,25 Laborers International Union of North D'Alfonso, Frank, 14·17 Montrose, Nathan Steven, 14, 16, 17 A.M.M.A. Health Center, 1, 5, 7, 17,20· 8 TPS Enterprises (also TSP), 25 America, 9 D'Alfonso, Michelene, 16 Natale, Ralph, 7, 8 22,25,26 817 Medical Clinic, 21 Licavoli Crime Family, Cleveland, 5 D'Antonio, Lawrence F., 17 Ostruff, Len, 3, 5 Angela T. Cammito & Assaclates, 17 D'Apolito, Frank, 16, 17 Palermo, "Blinky", 43 Arlzana Health and Benefit Plans, Inc., Daidone, Albert, 7 Palumbo, Frank, 43 17 , Darnold, William, 17, 18 Passin, Steven, 33, 35 Atlantic Financial Services, Inc., 37 Davidson, Howard, 12 Pinto, Michael, 33 Bellevue Straffard Hatel, 16 DeCavalcante, Simone (Sam), 8 Pinto, Joseph, 33 Beneficial Natianal Life Insurance DeSimone, Frank, 42 Plachter, W. Thomas, 32 CampanY,31 DiGrazio, Roseann, 12 Ponzio, Anthony, 17 Blue Crass/Blue Shield, 21 Dorfman, Alan, 17 Premru, Glen, 37 Baokbinder's,14 Dragna, Jack, 41 Presser, Bill, 42, 43 Braad Street Haspltal, 20 Dragna, Louis, 42 Presser, Jack, 5, 18 Church .of Christ Manars, 37 Feinstein, Barry, 8 Pries, Frank, 14 Cammanwealth International Incor· Felice, Freddie "Red Shirt", 43 Provenzano, Tony "Pra", 43 parated,30 Felix, Dr. Paul, 21 Riccobene, Harry "Hunchback", 14-17, Cannectlcut General Life Insurance Fishman, Leonard, 17 20 Campany,8 Fishman, Nancy, 17 Rlccobene, Marlo, 14, 17 Cous' Restaurant, 16 Fluehr, Robert, 12,28,30 Richards, Tim, 18 , Davldsan, Aaran and Tumlnl, 33 Franzese, Sonny, 14,17,43 Riggi, Jahn, 8 Dental Care Pragrams, Inc., 32 Fratianno, Aladena James, 5-7, 12, 17, Rizzitello, Michael, 17-18 Dental Delivery Systems, 28·32 18,41,42,43 Rizzo, Carl, 8,18 D'Medlci Restaurant, 20 Garner, John David, 29 Raselli, Jahnny, 41 Family Provider Life Insurance Co., 8 Garramone, Gary, 29 Roth, Dr. Sanfard, 12, 28, 31 Farmers National Life Insurance Co., 8 Garvey, Catherine, 33 Rovner, Rabert, 12,32 Fund Admlnlstratars, Inc.,31 Garvey, Thomas, 12, 33 Rubin, Bernard, 9 Garner Laboratories, 29 Gavin, Francis X., 32 Scales, Jahn E., 18 Golden Black Medical Genter, Inc., 20 47 46 ---~------

, Abuses and Criminality In the Ball Bond Business In Pennsylvania Pennsylvania Crime Commission (1977) A Chester City Racketeer: Hidden In­ Published Reports 1969-1980 terests Revealed (1978) Interstate Shipment of Gambling Para­ Task Force Report: Goals for Justice Report on an Investigation into the AI· phernalia and its Distribution and (1969) leged Fixing of Certain Harness Sale Within the Commonwealth Task Force Report: Assessment of Races at Pocono Downs Track in (1978) Crime and Criminal Justice in 1971 (1972) Racketeering In the Casualty Insur­ Pennsylvan ia (1969) Gambling and Corruption in Phoenix­ ance Industry (1978) Task Force Report Corrections in ville (1973) Maclng and Extortion In the Pennsylva­ Pennsylvania (1969) Corruption in the Philadelphia Police nia Department of Transportation Task Force Report: Alcohol and the Department (1973) (1978) Criminal Justice System (1969) A Case Study of the Second Class Voting Irregularities In Philadelphia A Report on the Inquiry into Gang Vio­ Township Code-Chartiers Town­ (1978) lence in Philadelphia (1969) ship (1973) The Penn State Group: A Study In Criminal Justice Planning and Action Investigations in Delaware County­ White Collar Crime (1978) in Pennsylvania (1969) Macing and Corruption (1973) Racketeering In the Commercial Loan Comprehensive Plan for the Improve­ Corruption in the York Police Depart­ Brokerage Industry (1980) ment of Criminal Justice in Penn­ ment (1974) A Report of the Study of Organized sylvania (1969) A Case Study of the Pennsylvania Crime's infiltration of the Pizza and Report on Organized Crime (1970) Election Code (1974) Cheese Industry (1980) Report on the Conditions of Organized Migration of Organized Crime Figures A Decade of Organized Crime: 1980 Re- Gambling and the Administration from New Jersey into Pennsyl­ port (1980, second printing 1981) of Criminal Justice in , vania; A Case Study of Syndicated Annual Report(1981} Pennsylvania: 1970-71 (1971) Gambling in Bucks County (1976) Report on the Investigation in Dela­ Conflict of I nterest and Self Dealing by Ali the publications prior to the 1980 ware County, Pennsylvania, with Local Public Officials and Employ­ Report are no longer In print. Members Particular Reference to Abuses in ees: Pocono Township, Monroe of the public may obtain a copy of the Bail Bonding: 1970-71 (1971) County and Marple Township, Dela­ 1980 Report, at a nominal cost, Criminal Infiltration of Legitimate ware County (1977) through the State Bookstore, 10th and Business in the Philadelphia Area The Administration of the Criminal Market Streets, Harrisburg, PA 17125. (1971) Justice System-Liberty Borough Report on Professional Crime in Penn­ and West Mifflin Borough (1977) sylvania (1972) Gambling and Its Effect Upon the Report on an Investigation of Liquor Criminal Justice System-Patterns and Penal Code Violations and En­ of Sentencing in Allegheny County forcement Policies in the Locust Gambling Cases (1977) Street "Strip" Section of Philadel­ Absentee Voting Irregularities in Dela­ phia(1972} ware County (1977) Fraudulent 'Cents-Off' Coupon Re­ demption Schemes (1977)

,

(' 48

~- ',', ------~ ----

I'1

I 1

'c''- f ··1 ~~~_,~ __""",~"'f'-;:.r{;,t,i