Allstate Files $6.3 Million Fraud Case

Fraud suit against 83 New York-area defendants is Allstate’s seventh such case of 2011.

Insurance Networking News, December 23, 2011

Jennifer Morrell

Allstate Insurance Co. is seeking to recover $6.3 million against 83 New York-area defendants in its seventh insurance fraud lawsuit of 2011. The complaint, filed under the Racketeer Influenced and Corrupt Organizations Act (RICO) and principles of common law, alleges that the defendants engaged in separate, but parallel, schemes in which fraudulent and misleading bills were submitted to Allstate for durable medical equipment, medical supplies and orthotic devices.

The complaint specifically cites 30 durable medical retail equipment companies and 25 individuals who allegedly owned one or more of these retail companies and 18 durable medical wholesale companies and 10 individuals who allegedly owned one or more of the wholesale companies. Since 2003, Allstate says it has filed 34 fraud lawsuits in New York State seeking more than $185 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.

Among the allegations in the complaint are that the retailers (through their respective individual owners and in conspiracy with the wholesalers and their respective owners) submitted or facilitated the submission of fraudulent and misleading bills and supporting documents to Allstate for reimbursement under New York State's No-fault Law.

Allstate says the lawsuit was filed following an investigation by its special investigative unit and seeks to recover personal injury protection benefits Allstate paid on behalf of its customers during timeframes specified in the lawsuit.

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