Allstate Wins Landmark Fraud Case

March 12, 2001

On March 8, Allstate Corp., the second-largest auto insurer, was awarded $8.2 million in a landmark fraud case involving nine medical clinics accused of billing for treatments that were never rendered, according to an article in the Los Angeles Times.

It was the first case tried under a 1995 California law that allows auto insurers to pursue civil fraud allegations in court rather than rely on regulators to tackle the cases. An attorney for Allstate told the L.A. Times that the company hopes the ruling will have a deterrent effect on doctors who falsify billings or provide unnecessary treatments.

The L.A. Times also reported that Allstate filed suit in Los Angeles County Superior Court in 1999 against six doctors who ran nine Southern California clinics. The company accused the doctors and clinics of altering medical records and bills to support insurance claims or personal injury lawsuits against the insurer and its policyholders.

According to Dennis B. Kass of Manning & Marder, Kass, Ellrod, Ramirez, Allstate settled with three of the doctors for $180,000 and went after the other three in court. Kass told the Times that the jury deliberated for roughly two weeks before finding the doctors liable for fraud.

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