Allstate Seeks $2.1 Million for Insurance Fraud

The Allstate Corporation is the nation’s largest publicly held insurer and is celebrating their 80th anniversary. The defrauding of insurance companies also appears to be turning into a huge business. This means that numerous insurance companies are bound to run into some issues, as Allstate has in New York recently.  

According to Breitbart.com, Allstate has filed its second insurance fraud lawsuit of 2011 and is looking to recover over two million dollars from 37 New York area defendants. The complaint, which was filed under the Racketeer Influenced and Corrupt Organizations (RICO) Act, alleges that the defendants engaged in a scheme in which they submitted fraudulent and misleading medical bills to Allstate for equipment, supplies and orthotic devices.

The complaint specifically cites 11 durable medical retail equipment companies, owned by nine individuals, and 11 durable medical wholesale companies, owned by six individuals. This comes about two weeks after the company filed a $4.7 million insurance fraud suit in New York. Since 2003, Allstate has filed 29 fraud lawsuits in New York State seeking more than $167 million in damages.

The Insurance Information Institute noted that the state of New York is in the middle of a huge insurance fraud crisis, with no-fault fraud costing New Yorkers hundreds of millions of dollars in higher premiums.

This lawsuit was filed due to an investigation by Allstate’s Special Investigative Unit. They are seeking to retrieve personal injury protection benefits that they paid on behalf of their customers during the timeframes specified in the lawsuit.

“In essence, honest, hardworking New Yorkers are paying a ‘fraud tax,’” said Krista Conte, spokesperson for Allstate’s New York office. “We need lawmakers to enact meaningful insurance reform that puts the citizens of New York first.”

One of the accusations in the complaint states that under New York State’s no-fault law, the retailers (through their individual owners or in working with the wholesalers and their owners) are submitting or aided in the submission of fraudulent and misleading bills and medical records to Allstate for reimbursement.

Many New York state leaders are joining Allstate in the fight for an extensive reform to the no-fault system.  

“The no-fault system is being exploited and responsible citizens are the victims,” Conte said. “Without the support of lawmakers, incidents of fraud will continue to increase. We need to work together to fix the broken no-fault system.”