Allstate Files Million-Dollar Insurance Fraud Case in New York
Laypersons allegedly illegally owned and controlled professional corporations that submitted claims for psychological services.
Insurance Networking News, June 24, 2011
Allstate Insurance is seeking to recover more than $1 million against 10 New York area defendants in its third insurance fraud lawsuit of 2011. The complaint, filed under the Racketeer Influenced and Corrupt Organizations Act ("RICO") and New York common law, alleges that four professional service corporations, a licensed psychologist and five laypersons illegally owned and controlled the professional corporations. Since 2003, Allstate has filed 30 fraud lawsuits in New York, seeking nearly $169 million in damages.
As detailed in the lawsuit, Allstate contends that professional service corporations were actually owned and controlled by laypersons, rather than by licensed professionals. In addition, the lawsuit alleges that the defendants submitted or facilitated the submission of claims for psychological services through professional corporations that were never eligible to collect no-fault insurance benefits. The suit contends that HK Psychological, P.C., Kingshwy Psychological, P.C., Omega Psychological, P.C. and Jay Psychological, P.C. were fraudulently incorporated through a scheme using the name of licensed psychologists, and that Ben L. Adler, Alex Gormakh, Milana Gormakh, Peter Kerner and Shari Matatov, none of whom were licensed practitioners, secretly owned and controlled the professional corporations. According to Forbes.com, one of the psychologists whose name was used was aware of the scheme, Allstate says in the suit. Attempts by INN to reach the defendants were unsuccessful at this writing.
Allstate is joined by other insurers and many New York State leaders in its pursuit for comprehensive reform of the no-fault system. In particular, the New York Alliance Against Insurance Fraud includes more than 100 insurers that write property and casualty insurance in New York. "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 to fix the broken no-fault system."
The lawsuit was filed following an investigation by Allstate's Special Investigative Unit and seeks reimbursement for personal injury protection benefits Allstate paid on behalf of its customers during timeframes specified in the lawsuit. The lawsuit is the latest in a string of actions taken by the insurer to protect consumers from these and similar activities.
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 hundreds of millions of dollars year-after-year. "In essence, honest, hardworking New Yorkers are paying a "fraud tax," said Krista Conte, spokesperson for Allstate's New York office. "We need lawmakers to enact meaningful insurance reform that puts the citizens of New York first."
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