Allstate Insurance Company Files $2.1 Million Insurance Fraud Case

HAUPPAUGE, N.Y., May 19, 2011 /PRNewswire/ -- Allstate Insurance Company is seeking to recover $2.1 million against 37 New York area defendants in its second insurance fraud lawsuit of 2011. The complaint, filed under the Racketeer Influenced and Corrupt Organizations Act ("RICO") and principles of the common law, alleges that the defendants engaged in a scheme in which fraudulent and misleading bills were submitted to Allstate for durable medical equipment, medical 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.

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 higher premiums. "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."

Among the allegations in the complaint are that the retailers (through their respective individual owners and in conspiracy with the wholesalers and their respective owners) submitted or facilitated the submission of fraudulent and misleading bills and medical records to Allstate for reimbursement under New York State's no-fault law.

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 to recover 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 is the nation's largest publicly held personal lines insurer known for its "You're In Good Hands With Allstate®" slogan. Now celebrating its 80th anniversary as an insurer, 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 www.allstate.com and 1-800 Allstate®.

SOURCE Allstate Insurance Company