INSURANCE FRAUD: Allstate Sues California Doctors

      Several California doctors are being sued by Allstate Insurance Co. for allegedly overcharging car accident victims for medical services, and in some cases charging for "phantom services." The AP/Bakersfield Californian reports that the insurer filed lawsuits yesterday in Los Angeles and San Bernardino counties against "13 doctors, chiropractors and health companies." Allstate investigators say they "have identified 331 cases of possible insurance fraud connected to this suspected ring of medical professionals," but say that number could increase as the investigation continues (8/24). The Chicago Tribune reports that the Northbrook, IL-based insurer is seeking $25 million in damages (Wahl, 8/25). Bloomberg News/Chicago Sun-Times reports that the lawsuits accuse medical workers of swindling Allstate "by making claims for treatments that weren't performed or by inflating treatment costs" (Hampton, 8/25). Allstate contends that doctors saw "patients for two or three minutes after auto accidents" but billed the insurer "for hourlong treatments in a practice known as 'upcoding,'" according to Dennis Kass, the attorney representing Allstate. The doctors would then charge Allstate for "extensive and expensive treatments far in excess of the injuries," according to the suit. "It's like treating someone for an earache and then billing as if it were a cancer patient," Kass said.

Whiplash?
      The Los Angeles Times reports that the new "lawsuits continue Allstate's aggressive anti-fraud campaign and move the insurer into an area previously left to government law enforcement agencies." Other lawsuits concerning overbilling have been filed by the federal government against HMOs and hospitals for defrauding Medicaid and Medicare (Pulliam, 8/25). A suit filed earlier this year by Allstate sought $107 million from 45 California doctors, lawyers and others for "staging crashes to file claims," Bloomberg/Chicago Sun-Times reports (8/25). According to the National Insurance Crime Bureau, fraudulent overbilling totals between $20 billion and $30 billion a year, raising average the policyholder's premiums by $200 to $300 annually. Edward Morgan, head of Allstate's special investigative unit, said the insurer is pursuing its anti-fraud campaign more aggressively to cut down on added costs. "The purpose of this whole effort is to make sure doctors and chiropractors and others know that it's not a victimless crime. They're raising your premiums and my premiums by doing this," he said (Chicago Tribune, 8/25).

Backlash
      But some are skeptical of Allstate's numbers, according to Bloomberg/Chicago Sun-Times. "I don't think it's as big as they try to make it out to be," said former Texas Insurance Commissioner Robert Hunter, currently the director of insurance for the Consumer Federation of America. Hunter said it is likely that only $80 of a consumer's insurance premium is due to fraud, which he said, is still "a huge amount of waste" (8/25). Others, including consumer advocate groups, trial attorneys and medical groups, believe insurers are exaggerating the extent of fraud and may be using "fraud as an excuse to deny legitimate claims or to intimidate doctors from pushing for more treatment." Elizabeth McNeil, director of medical policy and economics for the California Medical Association, said, "We get just as many complaints from physicians that insurers are 'downcoding' inappropriately ... refusing to pay, not paying on time."

Defendants Named
      The Los Angeles Times reports that L.A.-based Faircare Medical Group and San Bernardino-based Unity Medical Group are named in the suit. Neither commented on the court case. The state and counties "all have declined to pursue charges against the clinics," the Times reports (8/25).