Fake Hospitals Flourish While Authorities Sleep: Gurgaon Police Bust ₹1-Crore Insurance Fraud Racket

In a startling revelation that raises serious questions about oversight in the healthcare system, Gurgaon Police have uncovered an elaborate ₹1-crore medical insurance fraud network allegedly run through sham hospitals that existed largely on paper while siphoning money from insurance companies.

The racket, according to investigators, thrived in plain sight as fake medical facilities generated fabricated treatment records, bogus patients and forged bills—while regulatory agencies remained unaware for years.

Raid Exposes Suspicious Hospital Operations

The scam surfaced after police conducted a raid at Galaxy One Hospital in Gurgaon last month.

During the operation, officers arrested A.S. Yadav (55), who was operating the hospital in New Nihal Colony, along with his two sons, on February 25. Earlier, three employees had also been detained during the February 18 raid.

Police officials said the so-called hospital functioned less as a medical centre and more as a hub for fraudulent insurance claims.

According to ACP (West) Abhilaksh Joshi, the investigation soon revealed that the operation extended far beyond a single building.

“Yadav was not running just one facility. Our probe indicates he had established four additional fake hospitals in places such as Farukhnagar in the Gurgaon district and Dwarka.

These institutions were created purely to facilitate insurance fraud and existed mainly on documentation,” Joshi said.

Authorities believe the establishments operated between 2018 and 2020, generating bogus insurance claims throughout that period.

Dozens of Fraudulent Claims Unearthed

During the raid at Galaxy One Hospital, investigators recovered nearly 60 suspicious insurance claim files connected to around 25 different companies.

Preliminary estimates suggest the fraud has already crossed ₹1 crore, though police suspect the final amount may be much higher as the investigation continues.

Ironically, the illegal activities came to light only after a separate irregularity triggered suspicion.

Last year in May, the Chief Minister’s flying squad had inspected the same hospital after receiving complaints about insurance fraud.

During that visit, officials discovered that a doctor working at the facility was using MBBS and MD qualifications without possessing legitimate medical degrees.

That discovery prompted a long investigation that culminated in a detailed report submitted earlier this year.

Based on that report, a formal complaint was lodged on February 14 at Bajghera police station, leading to the registration of an FIR and the eventual police raid.

A “Hospital” That Barely Functioned as One

The building housing Galaxy One Hospital stands on the main road of the locality,y falling under Palam Vihar Phase 1.

The three-storey structure, marked by faded blue signage and posters advertising surgical procedures, maternity services and medical consultations, appeared like any other neighbourhood clinic.

But according to police, the facility was little more than a front for financial fraud.

Yadav had reportedly rented the property and set up the hospital to lend legitimacy to the claims filed in its name.

How the Insurance Fraud Worked

Investigators say the scam relied on a carefully organised network involving doctors, hospital staff, middlemen and individuals posing as investigators.

The first step involved creating a hospital that looked genuine enough to pass scrutiny.

Once operational, staff would prepare fake hospital admission records, laboratory test results, pharmacy invoices and treatment bills.

These fabricated documents were used to show that patients had been admitted and treated for various ailments—even though the treatments never actually occurred.

To support the deception, the gang allegedly recruited people willing to act as “patients.”

These individuals would provide their Aadhaar cards and other personal information, allowing insurance claims to be filed in their names.

Once the claim amount was released by the insurance company, the money was transferred to the patient’s bank account.

The fake patient kept a share of the payout before handing over the remaining amount to the organisers of the racket.

The Role of Fake Investigators

Perhaps the most crucial role in the scheme, police say, was played by individuals posing as private investigators (PIs) responsible for verifying insurance claims.

In standard practice, insurance companies rely on such investigators to confirm hospital records and treatment details before approving payments.

However, in this case, police suspect the investigators themselves were key players in the fraud.

“These individuals would identify doctors willing to cooperate in the scam,” ACP Joshi explained.

“The doctors would then arrange hospital premises and prepare forged medical reports. Once everything appeared legitimate on paper, the claim would be submitted and eventually cleared.”

Hundreds of Fake Patients Suspected

Police believe the operation may have involved over 500 people acting as bogus patients.

Three employees arrested during the raid have been identified as Sapna and Varsha, both residents of Gurgaon, and Gaurav from Rajasthan. Investigators say they helped create paperwork and manage the filing of fraudulent claims.

Authorities also allege that Yadav’s two sons played a key role in planning and executing the scheme. In fact, the Nihal Colony hospital itself was registered in the name of one of the sons.

Fake Medical Degrees Raise Further Concerns

The investigation has also uncovered alarming irregularities regarding Yadav’s own qualifications.

Police say he claimed to possesan s MBBS and an MD degree, but earlier inspections had already established that the MD certificate was forged. Authorities are now verifying the authenticity of the MBBS degree as well.

A Wider Network Still at Large

Police suspect that Yadav was merely one link in a much larger network involved in insurance fraud across multiple cities.

Bank accounts linked to him have already been frozen, though investigators said they found little money in them—suggesting that the proceeds of the fraud were quickly distributed through cash transactions and multiple accounts.

A Special Investigation Team (SIT) headed by ACP Joshi is now attempting to track down the remaining participants in the scheme, including the fake investigators and other collaborators.

Health department officials are also being brought in to assist with further inspections and raids on suspected establishments.

Tracking the Money Trail

Authorities say following the financial trail is proving difficult because much of the money appears to have moved through cash transactions and layered banking routes.

Police are currently examining account details, transaction records and other financial evidence to establish the full scale of the operation.

Officials have not ruled out involving central agencies such as the Enforcement Directorate if evidence of large-scale financial crimes or money laundering emerges.

Possible Asset Seizure Under New Law

Police are also exploring the use of Section 107 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), which allows authorities to seize and auction the assets of individuals involved in criminal activities to compensate victims.

If successfully implemented, officials say the case could become one of the first major instances where these powers are used in a large-scale fraud investigation.

For now, investigators say the case highlights a disturbing reality: while fake hospitals flourished and insurance money flowed freely, regulatory systems meant to monitor healthcare facilities appeared to remain asleep.

#InsuranceFraud #FakeHospitalScam #GurgaonCrime #HealthcareScandal #InsuranceRacket #IndiaCrime #FraudNetwork