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Auto insurers suing alleged New York City fraud ring for $36 million

Allstate Insurance Co., its subsidiary Encompass Insurance, and Progressive Insurance filed a lawsuit seeking $36 million in damages from an alleged insurance fraud ring in New York City.

"This one fraud ring, and we believe there are hundreds operating in New York, netted at least $12 million for the perpetrators."

The alleged fraud ring, including doctors, dentists, and even an acupuncturist, are accused of taking advantage of New York's no-fault insurance system to generate tens of millions of dollars in fraudulent medical bills.

According to the insurers, the ringleaders of the enterprise set up an extensive network of phony medical corporations, in many cases by paying to use the names and credentials of New York medical providers.

"This one fraud ring, and we believe there are hundreds operating in New York, netted at least $12 million for the perpetrators," says Edward Moran, assistant vice president of Allstate's Special Investigation Unit.

The suit seeks damages from 26 defendants affiliated with Fordham Medical Pain and Treatment P.C., later known as Plaza Medical & Pain Treatment P.C., which, according to the insurers, staged accidents and recruited accomplices to act as if they had been injured in order to generate a steady stream of income for the phony clinic.

"Unfortunately this is just one particularly outrageous example of how New York's no-fault insurance system, as it stands today, can be manipulated for the benefit of insurance cheats, with the costs paid by the honest consumer," says Moran.

The insurance companies' 24-count complaint seeks relief under the federal Racketeer-Influenced and Corrupt Organizations Act (RICO) and New York State law.

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