Allstate sues for $25M, alleges provider fraud

Taking its lead from recent government investigations, Allstate Insurance Company has filed suit against 13 doctors, chiropractors, and other health care providers in an effort to recover $25 million in what it says are fraudulent charges from upcoding and other deception, plus legal fees.

Allstate accused the providers of taking part in "an elaborate scheme to defraud" the company of millions of dollars. Much of the care at issue involved people supposedly injured in auto accidents. Allstate filed two suits in Los Angeles County and San Bernadino County, alleging the providers engaged in insurance fraud, including upcoding and charging for services not rendered.

The company first suspected fraud from the providers in November 1997, says Edward Moran, assistant vice president of its Special Investigative Unit. The investigation revealed 331 claims Allstate considers fraudulent, and Moran says more may turn up. The unit comprises 600 analysts and investigators trained to identify suspicious claims and prepare cases for civil and criminal prosecution.

Allstate has filed similar suits in other parts of the country recently, including a 1997 suit in New Jersey involving 1,000 people the company said were conspiring to fake auto accidents and file fraudulent health care claims.

Moran notes the insurer will cooperate with federal prosecutors if they decide to pursue criminal charges against those being sued.