Allstate Files Million-Dollar Insurance Fraud Case in NY

Jun 23, 2011, 14:32 ET from Allstate Corporation

HAUPPAUGE, N.Y., June 23, 2011 /PRNewswire/ -- Allstate Insurance is seeking to recover more than $1 million against 10 New York area defendants in its third insurance fraud lawsuit of 2011. The complaint, filed under the Racketeer Influenced and Corrupt Organizations Act ("RICO") and New York common law, alleges that four professional service corporations, a licensed psychologist and five laypersons illegally owned and controlled the professional corporations. Since 2003, Allstate has filed 30 fraud lawsuits in New York, seeking nearly $169 million in damages.

According to the Insurance Information Institute, the state of New York is in an insurance fraud crisis and no-fault fraud is costing New Yorkers hundreds of millions of dollars year-after-year. "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."

As detailed in the lawsuit, Allstate contends that professional service corporations were actually owned and controlled by laypersons, rather than by licensed professionals. In addition, the lawsuit alleges that the defendants submitted or facilitated the submission of claims for psychological services through professional corporations that were never eligible to collect no-fault insurance benefits. The suit contends that HK Psychological, P.C., Kingshwy Psychological, P.C., Omega Psychological, P.C. and Jay Psychological, P.C. were fraudulently incorporated through a scheme using the name of licensed psychologists, and that Ben L. Adler, Alex Gormakh, Milana Gormakh, Peter Kerner and Shari Matatov, none of whom were licensed practitioners, secretly owned and controlled the professional corporations.  

Allstate is joined by other insurers and many New York State leaders in its pursuit for comprehensive reform of 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."

The lawsuit was filed following an investigation by Allstate's Special Investigative Unit and seeks reimbursement for personal injury protection benefits Allstate paid on behalf of its customers during timeframes specified in the lawsuit.  The lawsuit is the latest in a string of actions taken by the insurer to protect consumers from these and similar activities.

For more information on the dangers of insurance fraud, and how you can help fight it, please visit Fraud Costs NY.

The Allstate Corporation (NYSE: ALL) is the nation's largest publicly held personal lines insurer. Widely known through the "You're In Good Hands With Allstate®" slogan, Allstate is reinventing protection and retirement to help nearly 16 million households insure what they have today and better prepare for tomorrow. Consumers access Allstate insurance products (auto, home, life and retirement) and services through Allstate agencies, independent agencies, and Allstate exclusive financial representatives in the U.S. and Canada, as well as via and 1-800 Allstate®.

SOURCE Allstate Corporation