Allstate Insurance Co. is seeking $4 million in an insurance fraud lawsuit against 20 New York area defendants.
The lawsuit, filed May 5 in the U.S. District Court for the Eastern District of New York, cites six physicians, eight medical professional corporations and other lay-owned companies allegedly used to control the medical corporations. Allstate has filed 28 fraud lawsuits in New York state since 2003, seeking $165 million in damages.
The lawsuit alleges that eight New York medical professional corporations were fraudulently incorporated through a scheme using the names of licensed medical physicians. Those corporations are known as:
- Right Aid Diagnostic Medicine P.C.
- A Plus Medical P.C.
- Omega Medical Diagnostic P.C.
- Shore Medical Diagnostic P.C.
- Oracle Radiology of NY P.C.
- Atlantic Radiology Imaging P.C.
- Atlantic Radiology P.C.
- Aurora Radiology P.C
The complaint states that lay-owners, none of whom were physicians, secretly owned and controlled the professional corporations. Allstate's complaint further alleges that the defendants caused the submission of fraudulent car insurance claims and MRI reports to Allstate demanding payment of personal injury protection benefits.
How auto insurance fraud impacts consumers
Fraud and abuse in New York's no-fault auto insurance system cost the state's honest drivers and their insurers $204 million in 2010, according to the Insurance Information Institute (I.I.I.).
"The scale of fraud and abuse in New York state's no-fault auto insurance system today remains at crisis levels," I.I.I. Economist and President Robert Hartwig said last month in a hearing before the New York State Senate's insurance committee.
Fraud increases car insurance rates for all drivers. Allstate and other insurers are calling for legislators to reform the system.