From the February 2012 issue of Claims Magazine •Subscribe!

Allstate’s Latest Fraud Suit Targets 16 New Yorkers

Sixteen New Yorkers are the targets of the latest fraud lawsuit filed in the state by Allstate Insurance.

Allstate is seeking to get back more than $1.1 million from what, according to the company, was its ninth insurance fraud lawsuit in 2011. The suit was filed in Federal District Court on Dec. 30.

The latest suit names individuals involved in the alleged illegal ownership of professional medical corporations, and alleges that the defendants submitted fraudulent claims for services that were done by independent contractors—a violation of the state’s no-fault auto-insurance law.

Allstate and other insurers, as well as state leaders, are currently seeking to reform the New York no-fault law. The system is plagued by fraud, which costs the state’s residents millions of dollars each year in what amounts to what the insurance industry has coined a “fraud tax.”

The Northbrook, Ill.-based insurer has sued to recover more than $185 million in fraud-related damages in New York since 2003.

In its latest court filing, Allstate claims a chiropractor and others supposedly controlled two medical corporations allegedly owned by a medical doctor, and used these entities to submit fraudulent claims to the insurers. Four others are named as defendants for their alleged roles in being part of this scheme.

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