Allstate NJ, Encompass Lawsuit Seeks $22 Million in Fraud Damages from North Jersey MDs

June 19, 2003

Allstate New Jersey Insurance Company and its subsidiary, Encompass Insurance, announced the filing of civil actions under the New Jersey Insurance Fraud Prevention Act, in the Superior Court of New Jersey (Morris County), asking for a total of more than $22 million in damages from several North Jersey doctors.

The actions were filed against Juan Carlos Fischberg M.D., owner of Hudson Rehabilitation Medical Center, P.A., in West New York, New Jersey, and Boris Benson M.D., owner of a pain treatment and rehabilitation center in Teaneck, New Jersey, and various other defendants alleging that they have defrauded the companies “out of millions of dollars in automobile insurance medical benefit payments.”

“The lawsuit alleges that Drs. Fischberg and Benson have individually and jointly engaged in a fraudulent scheme that has resulted in the companies being defrauded out of millions of dollars in automobile insurance medical benefit payments,” said the announcement. “According to the suit, the fraud operation involved the misrepresentation and fraudulent documentation of injuries and complaints of injuries in more than one thousand Allstate New Jersey and Encompass insureds and others.”

It noted that since 1996,” Allstate New Jersey and Encompass have paid over $7.6 million in Personal Injury Protection (PIP) insurance benefits to Drs. Fischberg and Benson,” according to company officials. “Under New Jersey law, the companies are seeking treble damages within the lawsuit. In addition, the suit is aimed at securing a declaratory judgment from the State court reflecting that Allstate and Encompass are not obligated to pay medical insurance benefits to Drs. Fischberg and Benson due to fraud.”

The suit also seeks “restitution of the substantial PIP insurance benefits that have already been paid out to these doctors.” Including PIP restitution, the costs of investigation and suit, and treble damages, the companies will demand more than $22 million from the defendants.

Richard C. Crist, Jr., President of Allstate New Jersey, stated: “Allstate New Jersey believes that the fight to rid the system of insurance fraud is a crucial one; it continues daily. Auto insurance fraud is not a victimless crime. It impacts everyone’s car insurance costs.”

Edward J. Moran, an assistant VP who heads Allstate Insurance Company’s Special Investigative Unit, indicated that “the investigation of Dr. Fischberg began when it was discovered that the medical findings and treatment regimens for virtually all his patients are remarkably similar, and because he documents a very high rate of severe injuries in his patients. Likewise, the investigation of Dr. Benson began for similar reasons, and because of the referral relationship between the two doctors.”

Moran noted that “On average, the two facilities have billed the companies over $1.0 million per year,” and that the two physicians “continue to submit bills and to pursue unpaid bills via New Jersey’s PIP arbitration system.” The companies are also seeking “a stay of all PIP arbitrations and State court matters that have been filed by or on behalf of Drs. Fischberg and Benson for the payment of insurance benefits.”

The lawsuit also alleges “that an aspect of the doctors’ fraudulent activities was to obtain pre-certification for medical treatment and testing through the practice of fraudulently documenting, misleading and misrepresenting its insureds’ complaints and injuries, according to Moran. The fraudulent documentation increased the doctors’ success at arbitration and court hearings and also increased the value of the insureds’ personal injury claims.”

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