Allstate Insurance was hit late last week with a 78 page racketeering complaint, charging the good hands people with conducting sham medical exams. The rigged exams were done to deny payments for future treatment, according to a civil complaint filed in the United States District Court for the Eastern District of New York. McGee-v-Allstate.pdf

This racketeering allegations were filed by a physician, John McGee, just one month after he filed a similar racketeering complaint against State Farm. The doctor charges that Allstate conspired with medical evaluation companies and physicians to contest the necessity for care and treatment rendered by McGee to his patients. Allstate, through these companies and physicians, conducted "independent" exams to see if treatment was still needed, but which exams McGee says were rigged. Those companies and doctors are co-defendants in the suit. He alleges a scam to "defraud over a million dollars through the creation and submissions of thousands of fraudulent documents created for the sole purpose of denying [McGee] his constitutional rights to practice medicine in the state of New York."

According to McGee, the defendants were producing boilerplate medical evaluation reports and falsely represented that the tests were independent under New York's No-Fault law. The medical evaluators profited, it is alleged, due to the increase in business from Allstate while Allstate profited by not having to pay for medically necessary future treatments.

McGee also alleges that kickbacks are involved, with Allstate paying an amount in excess of the No Fault fee schedule, with a portion getting kicked back to the evaluation company.

The defendant evaluation companies include D&D Evaluations, Medimax and Allegiance Healthcare. These companies had merged to become another defendant, Hooper Evaluations, in 2006, and are owned by Hooper Holmes, Inc. (AMEX-HH). The company has seen its stock tank from $4.30 last April to $0.65 cents at its close on Friday.

[A related story on allegedly "independent" medical exams is here: How to Fool a Jury (Is It Insurance Fraud?)]

Plaintiff's counsel is Bruce Rosenberg of Bellmore, New York, who also filed the suit against State Farm.

Full Disclosure: I have pending personal injury litigation where Allstate and State Farm are the insurance carriers and where one or more defendants may be involved with medical exams.

Update: 3/3/08 -- A Doctor Sued, In Insurance Company RICO Suit, Responds To The Charge

Labels: Insurance Industry