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TheStreet Open House

Allstate Wins Multi-Million Dollar Insurance Fraud Lawsuit

Stocks in this article: ALL

LOS ANGELES, Sept. 26, 2013 /PRNewswire/ -- Los Angeles County Superior Court has ruled in favor of Allstate Insurance Company and the State of California in a lawsuit topping $7 million that ends fraudulent business and billing schemes by unlicensed medical and chiropractic personnel.

In its lawsuit, Allstate alleged Maria Miranda, Frank Rivera and LA Healthcare Management, Inc. violated the state's Insurance Fraud Protection Act when they submitted to Allstate more than 390 chiropractic claims that were falsely generated by unlicensed and untrained personnel, or because the billed treatments did not reflect patients' physical needs.

Judge William Fahey agreed with Allstate and ordered Miranda and Rivera to pay Allstate $3.9 million in penalties, plus $3.8 million in assessments and fees—a $7.7 million judgment.

"Submitting even one false insurance claim is more than just a bad idea—it's fraud, and insurance fraud is a crime," said Allstate's California Field Vice President Phil Telgenhoff. "Fraud drives up the cost we all pay for insurance by stealing millions of dollars from insurers. This cannot and will not be tolerated in California or anywhere."

"Allstate will fight fraud to help protect our customers and keep insurance costs down," Telgenhoff said.

Allstate's suit identified Miranda and Rivera as two unlicensed non-professionals operating through LA Health Care and Lynwood Health Care clinics and catering to attorneys representing people who all made claims of soft tissue injuries. The clinics are no longer in operation.

Allstate successfully argued that Miranda violated California's Unfair Business Practices Act, claiming that—as owner of L.A. Healthcare Management, Inc.—she was solely responsible for overseeing and directing the fraudulent operation of both clinics, which included the recruitment and steering of patients, setting standard operating procedures for patient treatment regardless of medical need, and submitting false narrative reports and bills.

Other violations recognized by the judge include Miranda and Rivera practicing medicine and chiropractic without a license, operating a professional medical corporation in violation of state law and falsifying patient medical records.

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