Allstate Files $6.3M Insurance Fraud Case Against 83 N.Y. Defendants

December 22, 2011

Allstate Insurance Company 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 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 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 has filed 34 fraud lawsuits in New York State seeking more than $185 million in damages.

‘New York Is in an Insurance Fraud Crisis’

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.

“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.”

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 is joined by other insurers and many New York State leaders in its pursuit for comprehensive reform of the no-fault system.

“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 to recover personal injury protection benefits Allstate paid on behalf of its customers during timeframes specified in the lawsuit.

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