Allstate Insurance Company Files $29.9 Million Insurance Fraud Case

HAUPPAUGE, N.Y., May 11, 2012 /PRNewswire/ -- Allstate Insurance Company has filed a $29.9 million insurance fraud lawsuit against 52 New York area defendants.  The Complaint names 17 members and associates of an organization that owned and controlled multiple fraudulent medical clinics (the "No-Fault Organization"), 10 licensed medical professionals, 3 personal injury attorneys, and 22 medical professional corporations.  All of the individual defendants are currently under federal indictment, and have been charged with health care fraud, racketeering, and other related charges, in connection with their involvement in a systematic scheme to defraud private insurance companies of more than $279 million under New York's No-Fault automobile insurance law. 

In the suit, Allstate alleges that the No-Fault Organization has engaged in a massive and sophisticated scheme to defraud Allstate of millions of dollars by establishing and operating medical clinics that were operated and controlled in violation of New York law.  In order to mislead Allstate, the true owners and controllers of these medical clinics almost all of whom were unlicensed members and associates of the No-Fault Organization paid licensed physicians, chiropractors and acupuncturists to incorporate medical clinics as professional service corporations, and to act as their "papers owners."  These fraudulently-incorporated clinics were then used to bill Allstate for reimbursement of No-Fault benefits.  Because each of the clinics were illegally operated and controlled by laypersons, none of the clinics were eligible to recover No-Fault reimbursement under New York law. 

The alleged scheme is the largest single No-Fault automobile insurance fraud ever exposed to date.  The lawsuit is the latest in a string of actions taken by Allstate to fight the growing problem of insurance fraud.  Allstate is the first private insurance carrier to take a stand against this pervasive No-Fault Organization—and the massive scheme it perpetrated against the New York automobile insurance marketplace and the public at large by initiating a civil lawsuit seeking restitution of No-Fault proceeds unlawfully obtained by the fraudulent medical clinics on behalf of their layperson owners.  Since 2003, Allstate has filed 41 fraud lawsuits in New York State seeking more than $ 227 million in damages.

According to the Insurance Information Institute, the state of New York is in an insurance fraud crisis and no-fault fraud is costing New Yorkers millions of dollars year-after-year in higher premiums.  "In essence, honest, hardworking New Yorkers are paying a 'fraud tax'," said Krista Conte, spokesperson for Allstate.  "We need lawmakers to enact meaningful insurance reform that puts the citizens of New York first."

Allstate is joined by other insurers and many New York State leaders in its pursuit for comprehensive reform of the no-fault system.  "The no-fault system is being exploited and responsible citizens are the victims," Conte said.  "Without the support of lawmakers, incidents of fraud will continue to increase.  We need to work together this legislative session to fix the broken no-fault system."

For more information on the dangers of insurance fraud, and how you can help fight it, please visit Fraud Costs NY at www.i-issues.com/new-york

The Allstate Corporation (NYSE: ALL) is the nation's largest publicly held personal lines insurer known for its "You're In Good Hands With Allstate®" slogan. Now celebrating its 80th anniversary as an insurer, Allstate is reinventing protection and retirement to help nearly 16 million households insure what they have today and better prepare for tomorrow. Consumers access Allstate insurance products (auto, home, life and retirement) and services through Allstate agencies, independent agencies, and Allstate exclusive financial representatives in the U.S. and Canada, as well as via www.allstate.com and 1-800 Allstate®.

SOURCE Allstate Insurance Company

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