“You’re in good hands.”
Those words have a profoundly different context if you happen to be part of a group of individuals who submit “creative” claims to Allstate. In that case, those good hands will be locked in death grip around your throat, letting go only when a jury rules that you and your cohorts must remit to Allstate three dollars for every one you claimed—plus Allstate’s attorney fees.
It’s enough to make someone think about earning an honest living.
Imagine the angst this creates. You go through the trouble of recruiting a bunch of your friends and their friends, along with finding, uh, sympathetic lawyers and medical service personnel and/or their staffs to help submit claims—and you wind up owing money?
“We have zero tolerance for [fraud],” said Mike Trevino, spokesman for Allstate.
The word tolerance doesn’t belong in that sentence. Empathy maybe, but not tolerance. Allstate is to insurance fraud rings what Florida is to presidential elections. Really, really disruptive. To wit:
• SEATTLE—A King County Superior Court jury awarded Allstate $850,000 after the jury found two Northwest chiropractic clinics and two individuals liable for fraud. Allstate is now seeking treble damages, $2.55 million, and attorney fees. The award already represents Allstate’s largest ever fraud recovery in the Northwest.
• BRIDGEWATER, N.J.—Allstate New Jersey Insurance Co. filed a civil suit in Morris County Superior Court against 10 defendants. The suit alleged violations of the New Jersey Fraud Pre-vetion Act and the state’s anti-racketeering statute in connection with an Elizabeth, N.J.-based staged auto accident ring. The defendants are accused of staging 29 accidents in Elizabeth and Perth Amboy, N.J., and filing 37 claims for personal injury protection, bodily injury and vehicle losses. In total, the defendants filed more than $2 million in PIP and BI claims. [Note to defendants: Last year, a New Jersey jury awarded Allstate $7 million in compensatory and treble damages in a fraud case quite similar to this one.]
• RALEIGH, N.C.—Allstate Insurance Co. and Allstate Indemnity Co. filed suit against Beck Chiropractic Center, Pa., in Wake County Superior Court. According to the suit, the center’s owner, Woodrow W. Beck Jr., allegedly operated a scheme of excessive billing, fraudulent billing and billing for unnecessary treatment. Allstate has identified more than 700 claims that form the basis of its racketeering lawsuit. The lawsuit seeks treble damages as well as other damages and costs.
• TAMPA—Allstate Insurance Co. and Allstate Indemnity Co. filed lawsuits in Florida against a chiropractic group and a Florida diagnostic brokering company, alleging each engaged in large-scale schemes designed to defraud policyholders. The first lawsuit charges Family Chiropractic Group with systematically billing Allstate and its insureds for services that were never rendered. The second lawsuit alleges Advantage Medical Diagnostics Inc. billed for MRIs and other medical services it never provided. Allstate charges that Advantage Medical Diagnostics, operating out of a post office box, did not even own an MRI machine. [Writer’s note: Oops.]
• LOS ANGELES—Following a six-week trial, a Los Angeles jury awarded Allstate Insurance Co. $8.2 million in a medical fraud case. The jury found that three doctors and nine Southern California clinics billed Allstate and its insureds for services that were never rendered, as well as manipulated billing codes in an attempt to justify excessive charges. This was the first lawsuit tried under a 1995 California law designed to augment law enforcement’s efforts to prosecute defrauders. Allstate has filed a number of similar lawsuits under this statute.
The preceding would represent a good year or two for most large personal lines insurers. For Allstate, it represents March and April of 2001. If you’re looking for the secret of or even some insight into the company’s success, you won’t get much out of Trevino and other Allstate offcials other than a statement averring zero tolerance.
Trevino did let on that “some of these investigations have taken place over five, six, even seven years and involved hundreds of [alleged perpetrators] and thousands of billings.” He didn’t say that Allstate is more persistent in going after fraud than most of its competitors, but it’s easy to make that inference. Allstate’s number of SIU personnel, more than 600, is not exceptional.
Perhaps the secret is as simple as the strength of the grip in those good hands.
Richard Rambeck, the former editor of InsuranceWeek, has written about insurance issues for nearly a dozen years. He can be reached via e-mail at email@example.com.
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