Federal agents investigate medical fraud at the Jersey Shore

ATLANTIC CITY, N.J. (WPVI) -- Federal agents are trying to determine if police and firefighters misused their health insurance plans at the Jersey Shore.

The federal subpoenas served to several shore towns requested info on employees' health benefits.

Sources say the investigation is delving into a potential health care fraud scheme.

Several mayors are now waiting to see how this plays out, and if and how it will impact their cities.

Ventnor City Mayor Beth Holtzman told Action News the first week of June federal agents served a subpoena to her clerk's office.

"What the subpoena states, they ask for all police, fire, city employees," Holtzman said.

The subpoena specifically inquired about all 186 city employees' health benefits.

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"That have the health benefit plan, state of NJ health benefit plan," Holtzman said.

The mayor of Margate City in published reports also confirmed a federal subpoena was served to his office the same month.

Atlantic City's mayor, Don Guardian in a statement said, "The city received a federal subpoena on June 5th requesting basic information related to city employees and their health insurance. We immediately sent them the information they inquired about."

Also in June the FBI served a search warrant on the Egg Harbor Township office of prominent endocrinologist Dr. James Kauffman.

At the time his attorney Ed Jacobs said the warrant mentioned health care fraud and homicide.

The prosecutor's office said it was part of a multi-jurisdictional investigation.

Kauffman's late wife April was killed in their Linwood home in 2012.

He has never been named a suspect in her murder.

Tonight Jacobs said, he has not been called by anyone in government or the investigation saying there is any connection with the subpoenas issued to the municipalities and his client.

Back in Ventnor, Holtzman says her office is fully cooperating, but she says if any employees are implicated in anything criminal she hopes it doesn't take away from the city employees that continue to serve proudly.

"I know the communities are upside down, and rightfully so. A lot of the upside down turmoil is because people are speculating from one end to the other. They just need to wait," Holtzman said.

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