A long-time Washington physician pleaded guilty in U.S. District Court yesterday to two counts of mail fraud in connection with an alleged scheme to submit phony and inflated medical reports to insurance carriers.

The government had charged that Dr. Daniel Jackson Veal Jr., 54, filed claims for office visits that never occurred, falsely stated that medical services were rendered to patients and exaggerated the extent of injuries in order to increase the insurance paid in connection with auto accidents.

Assistant U.S. Attorney Eric B. Marcy said yesterday that a prosecution witness, attorney Zollie Richburg, sent hundreds of clients to Veal from 1973 to 1977 after learning Veal would prepare inflated bills for insurance claims. Veal's office is at 221 Florida Ave. NW.

Richburg pleaded guilty in 1978 to three fraud charges in connection with a scheme involving false insurance claims. He was placed on probation by a federal judge and ordered to pay about $38,000 in restitution.

As part of a plea agreement reached with Veal in yesterday's case, the government plans to dismiss 12 additional criminal counts against him. Judge Harold H. Greene scheduled sentencing Jan. 7. Veal faces up to five years in jail and a $1,000 fine on each of the two mail fraud charges.

The case against Veal is part of a broader grand jury investigation here of schemes in which doctors and lawyers allegedly work together to overcharge insurance carriers on auto accident claims.

The investigation is being supervised by the U.S. attorney's office. The U.S. Postal Inspection Service and the Insurance Crime Prevention Institute, a nonprofit organization representing 370 insurance carriers, are also participating.