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Allstate wins $8.2 million medical fraud judgment

Allstate Insurance Co. has won an $8.2 million judgment in a medical fraud case in which the insurer accused three doctors and nine clinics in Southern California of billing for services that were not rendered and tampering with its billing code to force the insurer to pay more in medical claims.

"[Those penalties] carry a lot of teeth."

The lawsuit, which was filed in 1999, alleged that nine clinics owned by Dr. Hisham Muhyeldin were "upcoding" their billing to Allstate, meaning they were manipulating billing codes to charge more money. The clinics also billed for services and therapies that were never rendered to Allstate claimants. A jury delivered the verdict in Allstate's favor in Los Angeles County Superior Court on March 8, 2001.

"We owe it to our policyholders to fight insurance fraud," says Edward Moran, assistant vice president for Allstates Special Investigative Unit. "These kinds of fraudulent activities, if not stopped, drive up insurance rates for consumers."

Along with Muhyeldin, Drs. Feras Haddad, and Elyas Khury were found guilty of fraud in the same case. The nine clinics that were also found guilty are: Anaheim Walk-in Medical Clinic, Carson Community Medical Clinic, Carson Medical Clinic, El Monte Valley Health Center, Tri-Star Family Health Center, Value Care Medical Clinic, Van Nuys Family Health Center, Wilshire Rampart Health Center, and Wilshire Tri-Star Medical Clinic.

Dennis Kass, an attorney representing Allstate, says the lawsuit covered the alleged fraud that took place from 1993 to 1998, and covered 318 medical claims. He says it is difficult to judge the amount Allstate overpaid as a result of the billing, but he estimates it is well over $1 million.

Prior to the case going to trial, Allstate settled allegations with three chiropractors listed in the original lawsuit for a total of $180,000.

Kass says this is the first verdict as a result of a 1995 insurance fraud law passed in California in which a person guilty of insurance fraud pays the insurance company three times what the medical bills were under the alleged fraud, along with $5,000 to $10,000 for every violation. "[Those penalties] carry a lot of teeth," Kass says.

Kass, whose firm has represented other insurers who have alleged similar allegations, such as State Farm Mutual Automobile Insurance Co., 21st Century Insurance Co., and Farmers Insurance Group, says that about $60 million has been recovered by insurers under the regulation.

Buddy Clark, an attorney representing the plaintiffs, could not be reached for comment.

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