Allstate Insurance Wins Multi-Million Dollar Fraud Lawsuit

Verdict in Los Angeles Tells Crooks: Stop Bogus Health Insurance Claims

Dec 11, 2012, 10:00 ET from Allstate Corporation

LOS ANGELES, Dec. 11, 2012 /PRNewswire/ -- Los Angeles County Superior Court is awarding Allstate Insurance Company more than $7 million in a qui tam action filed by the insurer on its behalf and on behalf of the People of the State of California against a Long Beach chiropractor, Daniel H. Dahan, D.C., and his business, Progressive Diagnostic Imaging, Inc., arising out of a scheme to defraud insurance companies.

In the judgment, Superior Court Judge Ernest M. Hiroshige found that Dahan and Progressive Diagnostic Imaging violated the state's Insurance Frauds Prevention Act in 487 claims presented to Allstate in radiology reports that were determined to be "falsified medical records" that "have no diagnostic, clinical, or medical value whatsoever." Hiroshige further concluded that health insurance claim forms and billing statements submitted in connection with the falsified radiology reports were "false and fraudulent."

The judge ordered that Dahan pay Allstate $4,870,000 in civil penalties, $918,516.78 in assessments and $1,222,151.62 in attorney's fees, costs and investigative expenses--$7,010,668.40 in all.

"Insurance fraud is not a victimless crime," said Allstate's California Field Vice President Phil Telgenhoff. "Fraud drives up the cost we all pay for insurance and stealing millions of dollars from insurers cannot and will not be tolerated in California or anywhere across the country."

Allstate alleged that Dahan purchased report-writing software that purported to analyze x-rays and form medical opinions and diagnoses, including opinions concerning permanent impairment ratings, and thereafter formed Progressive Diagnostic Imaging to solicit x-rays from chiropractors, with the assurance that "board certified radiologists" would analyze the films.

Allstate further claimed that, unbeknownst to patients and health care providers using Progressive Diagnostic Imaging, Dahan recruited untrained and unlicensed individuals to work with the report-writing software to prepare the fraudulent radiology reports. To make it appear that the reports were genuine, Dahan instructed his "technicians" to cut and paste the signatures of board certified radiologists to the reports, all without the knowledge, approval or authorization of the radiologists.  The reports and bills were presented to Allstate in support of claims, either directly by Dahan and Progressive Diagnostic Imaging or by plaintiff attorneys in auto accident cases.

At trial, four radiologists, whose names appeared on reports, testified they never wrote, reviewed, approved or signed the reports.

Allstate also alleged violation of California's Unfair Business Practices Act, claiming that Dahan was practicing medicine without a license, operating a professional medical corporation in violation of California's Moscone Knox Professional Corporation Act, and that he was falsifying patient medical records.  Judge Hiroshige agreed. 

Beyond the verdict, Hiroshige also issued an injunction prohibiting Dahan from owning, operating or working as an employee in any business engaged in the practice of medicine.  And he ordered that letters be sent to all of the affected patients and their referring healthcare providers, to advise them of the Court's findings and judgment, including the Court's order that the reports generated by Dahan and Progressive Diagnostic Imaging are "to be disregarded on the basis that such reports [are] . . . falsified medical record[s]" and have "no diagnostic, clinical or medical value whatsoever," and that "records are not to be considered by any person or entity as part of the . . . patient's medical history, medical record, or medical chart at any time and for any purpose." 

"Submitting a false insurance claim isn't just a bad idea – it's fraud and insurance fraud is a crime," Telgenhoff said. "Allstate will fight fraud wherever it lives to help protect our customers and keep their insurance costs down."

The Allstate Corporation (NYSE: ALL) is the nation's largest publicly held personal lines insurer, serving approximately 16 million households through its Allstate, Encompass, Esurance and Answer Financial brand names. Widely known by its slogan "You're In Good Hands With Allstate®," Allstate offers insurance products (auto, home, life and retirement) and services through Allstate agencies, independent agencies, and Allstate exclusive financial representatives, as well as via and 1-800 Allstate®. As part of Allstate's commitment to strengthen local communities, The Allstate Foundation, Allstate employees, agency owners and the corporation provided $28 million in 2011 to thousands of nonprofit organizations and important causes across the United States.


Jim Klapthor

Allstate Media Relations

(909) 612-6644

SOURCE Allstate Corporation