Allstate Files $2 Million Fraud Suit Against 27 NY Defendants

Allstate Corp. (ALL) filed a fraud suit against 27 New York-area defendants, in an effort to recover $2 million from several medical corporations the insurer alleges were incorporated in a manner that masked that none of the owners were physicians.

The company, which reiterated calls for change in the state, said the latest suit is part of a multiyear crackdown on no-fault benefit fraud in which Allstate has filed 37 lawsuits in New York state seeking more than $201 million in damages since 2003.

The company said that the latest suit names physicians, chiropractors, medical professional companies and clinic lay-owners, including 18 individual defendants under federal indictment.

The complaint alleges that nine New York medical professional corporations were incorporated using the names of licensed medical physicians and chiropractors and that lay-owners, none of them physicians, actually owned and controlled the businesses.

Allstate seeks reimbursement for no-fault benefits it paid on behalf of its customers.

The suit comes less than three months after Allstate in December said it was suing dozens of people in New York for insurance fraud and seeking recovery of $6.3 million. In that suit, Allstate named 83 defendants in New York state and alleged that they engaged in separate schemes to submit fraudulent and misleading bills to Allstate for durable medical equipment, medical supplies and orthotic devices.

Allstate filed seven insurance fraud suits in New York state last year.

Shares were down 11 cents at $32.45 in recent trading. The stock is up about 18% this year.

 
   -By Tess Stynes, Dow Jones Newswires; 212-416-2481; [e-mail]