NU Online News Service, March 15, 12:41 p.m.EDT

Allstate Insurance Co. is continuing its drive to recouphundreds of millions of dollars allegedly lost to fraud, as theinsurer has filed another lawsuit inNew York—this time seeking $2million from 27 defendants.

Since 2003 the insurer has filed 37 lawsuits in New York looking to get back $201 millionin damages related to alleged fraudulent activity in the state'sno-fault, personal injury protection auto-insurance system.

The latest lawsuit names 18 individuals currently under federalindictment, says Allstate.

The lawsuit alleges a group of medical-professional corporationswere fraudulently incorporated using the names of licensed medicalphysicians and chiropractors, when in reality a group of unlicensedphysicians actually owned and controlled the operations.

The insurer has pushed for “meaningful insurance reform thatputs the citizens of New Yorkfirst,” says KristaConte, Allstate spokeswoman, in a statement. Fraud in thesystem has resulted in a “fraud tax” onNew York drivers via higherpremiums insurers seek because of the fraud, she adds.

Several studies point to the existence of rampant PIP fraud inNew York. A study released last year by the Insurance ResearchCouncil (IRC) reports 20 percent of no-fault claims in the BigApple in 2010 had elements of fraud, and as many as one-third ofclaims appeared to be inflated.

The Insurance Information Institute estimated last year thatinsured drivers in the state annually made more than $200 millionof excess premium payments because of fraud.

These observations have led to a new regulation, which the Department of Financial Services isissuing under the direction of Gov. Andrew M. Cuomo.

The order implements a 2005 law that affords DFS the power toregulate doctor participation in the no-fault system. Doctors foundto be abusing the system by billing for unnecessary services ortreatment that was never rendered to auto-accident victims would bebanned from the PIP system altogether and possibly stripped ofcertification.

The announcement came on the heels of an indictment against 36 people allegedly involved in creatingclinics that habitually billed auto insurers for treatments thatwere either medically unnecessary or never rendered in and aroundNew York City.

The indictment says this network of clinics, within origins asfar back as 2007, cheated auto insurers out of more than $275million.