Allstate Sues Doctors and Clinics in CA to Recover $16mm
17 June 1999
Fraud Schemes Cost Consumers $20 billion a Year NORTHBROOK, Ill. -- Allstate Insurance Company began serving summons and
complaints this morning throughout California against 21 doctors, chiropractors
and health care providers and individuals accusing them of taking part in
various schemes intended to defraud or mislead the company's policyholders of
millions of dollars.
"This coordinated statewide effort is the first of its kind and highlights
the company's continued efforts to fight automobile insurance fraud," said
Edward J. Moran, assistant vice president of Allstate's Special Investigative
Unit. "Insurance fraud unnecessarily increases the cost of insurance. We
must act to put these fraud schemes out of business," he added.
Allstate filed two legal actions, one in the Superior Court of the County
of Sacramento, California and the second in the Superior County of Los
Angeles, California. Both filings are different in scope, but are typical of
the kind of fraud schemes that are costing consumers $20 billion a year
according to the National Insurance Crime Bureau.
In Los Angeles, Allstate is suing 15 doctors, chiropractors and clinics,
accusing them of engaging in a pervasive scheme of upcoding and billing for
treatment never rendered. Allstate's complaints seek nearly $15 million in
statutory damages and detail how these defendants allegedly attempted to
justify excessive charges by misleading Allstate regarding the services
rendered. Allstate is suing these defendants under a law that the State
Legislature enacted to help combat insurance fraud.
In Sacramento, a complaint filed accuses five doctors, chiropractors,
clinics and others of defrauding Allstate and its insureds, through the
creation, submission and prosecution of fraudulent, inflated, and exaggerated
medical bills and medical records, the performance of unnecessary medical
tests and treatments, illegal ownership of chiropractic and medical
corporations, the utilization of unlicensed physical therapists to treat
patients, and related claims for insurance benefits. Through this lawsuit,
Allstate seeks restitution of nearly $1 million and an injunction to stop the
defendants from engaging in these allegedly unfair, unlawful, fraudulent,
deceptive and misleading acts.
"We are determined to take the profit out of medical fraud for
professionals and their businesses. Our Special Investigative Unit is
cooperating with state and local law enforcement agencies and the Department
of Insurance's Fraud Division," Moran added.
The lawsuits served today are similar to others filed by Allstate
recently. Last year, Allstate filed a $107 million lawsuit in California --
the largest in auto insurance history -- against a group of individuals
believed to be involved in an organized insurance fraud ring in operation
since at least 1992.
Allstate has a 637-member Special Investigative Unit which gathers
evidence and prepares cases for prosecution. Allstate works closely with law
enforcement officials to facilitate the criminal prosecution of those accused
of automobile insurance fraud.
The Allstate Corporation is the parent of the Allstate
Insurance Company, the largest publicly held personal lines insurance company
in the U.S., insuring one in every eight homes and automobiles in the country.
The company provides insurance for more than 14 million households and has
approximately 15,500 full-time agents in the U.S. and Canada.
