March 2nd, 2008

Allstate Slammed With RICO Charge Over Sham Medical Exams

Allstate Insurance was hit late last week with a 78 page racketeering complaint, charging the good hands people with conducting sham medical exams. The rigged exams were done to deny payments for future treatment, according to a civil complaint filed in the United States District Court for the Eastern District of New York. McGee-v-Allstate.pdf

This racketeering allegations were filed by a physician, John McGee, just one month after he filed a similar racketeering complaint against State Farm. The doctor charges that Allstate conspired with medical evaluation companies and physicians to contest the necessity for care and treatment rendered by McGee to his patients. Allstate, through these companies and physicians, conducted “independent” exams to see if treatment was still needed, but which exams McGee says were rigged. Those companies and doctors are co-defendants in the suit. He alleges a scam to “defraud over a million dollars through the creation and submissions of thousands of fraudulent documents created for the sole purpose of denying [McGee] his constitutional rights to practice medicine in the state of New York.”

According to McGee, the defendants were producing boilerplate medical evaluation reports and falsely represented that the tests were independent under New York’s No-Fault law. The medical evaluators profited, it is alleged, due to the increase in business from Allstate while Allstate profited by not having to pay for medically necessary future treatments.

McGee also alleges that kickbacks are involved, with Allstate paying an amount in excess of the No Fault fee schedule, with a portion getting kicked back to the evaluation company.

The defendant evaluation companies include D&D Evaluations, Medimax and Allegiance Healthcare. These companies had merged to become another defendant, Hooper Evaluations, in 2006, and are owned by Hooper Holmes, Inc. (AMEX-HH). The company has seen its stock tank from $4.30 last April to $0.65 cents at its close on Friday.

[A related story on allegedly “independent” medical exams is here: How to Fool a Jury (Is It Insurance Fraud?)]

Plaintiff’s counsel is Bruce Rosenberg of Bellmore, New York, who also filed the suit against State Farm.

Full Disclosure: I have pending personal injury litigation where Allstate and State Farm are the insurance carriers and where one or more defendants may be involved with medical exams.

Update: 3/3/08 — A Doctor Sued, In Insurance Company RICO Suit, Responds To The Charge

Comments:

Eric – [A related story on allegedly “independent” medical exams is here: How to Fool a Jury (Is It Insurance Fraud?)]???? As the comments to that story indicated, it really is not a “related story”. It really is a totally different matter. Nothing in the lawsuit as reported speaks of leaving things out. It appears to allege that the reports set forth untruths, for if not, then what is the big fuss.

# posted by Blogger

Louis Schepp : March 02, 2008 11:05 PM

It’s related in that it deals also with “independent” exams, a company that provides those services, and the allegation of dishonesty in creating them.

# posted by Blogger

Eric Turkewitz : March 03, 2008 6:48 AM

Something doesn’t make sense. If McGee is being “investigated” by State Farm et al then why would they choose him to be on an IME panel?

Also what doctor in NY that treats PI patients has not been “investigated” by State Farm et al?

# posted by

Anonymous : March 04, 2008 12:16 AM

State Farm is commencing a RICO suit against McGee, he wanted to beat them to the punch.

# posted by

Anonymous : March 07, 2008 5:03 PM

State farm was bring the same suit that was brought again Rozenberg et al.
He knew it was coming…..

# posted by

Anonymous : March 08, 2008 6:18 AM

By what law or right could SF or Allstate bring a claim. Maybe either you or the Insurance company or their lawyers should read the contract that was sold to the citizens of the state of New York and by which are receiving hundreds of millions of dollars.

# posted by

Anonymous : March 08, 2008 11:28 PM

several fundemental issues are here. The first is that several of the “named cases” in the McGee V Allstate were never seen at all. The second, is that MCGEE, has been known for YEARS to treat without necessity and has failed to document physical findings that would be consistent with the treatments rendered. Moreover, McGee, will create evaluations to appear like radiculopathy at almost EVERY claimant he treats. Months later, it would appear the claimant really has a rotator cuff tear or a tear in the knee, requiring surgery because McGee’s false physical findings while benefitting his own pocket as he provides unnecessary tests and treatments NEVER actually gets a patient the treatment they do need. McGee and his attorney, like Rozenberg and his attorney, were under suspicion because they have been fraudulently rendering testing and treatments. This was a pre-emptive strike to avoid the suspension of his license and possible jail time. IF he were to prove something as outlandish as this, then Allstate could not press on with their charges. HE IS ALSO suing STate Farm and all of their IME vendors.

# posted by

Anonymous : April 24, 2008 4:27 PM

I was injured in an auto accident Dec 2003.I’ve been receiving physical therapy since, and eventually surgery for right scapula winging Oct 2007..As far as IME doctors & Allstate. It is bad enough injured parties loose time & pay @ work for PT, then we have to take time off for IME’s..This is insane, the only purpose is to DENIE, DENIE, DENIE our injury & treatment.

BRM 5/19/2008 Albany NY

# posted by

Anonymous : May 18, 2008 5:38 PM

5/20/2008–IME’s are for one reason only..DENIE, DENIE, DENIE, so our insurance companies do not have to pay for our medical expenses and treatment. It’s bad enough we loose time & pay from work for treatment. Then we have to see an IME that only skims through our medical records & has no idea what we have been or going through. I HOPE ALLSTATE GETS WHAT THEY DESERVE AS WELL AS ALL INSURANCE COMPANIES.. SOMEONE SHOULD CHANGE THE LAW…WHAT GIVES IME DOCTORS THE RIGHT TO DENIE US TREATMENT????

# posted by

Anonymous : May 18, 2008 5:44 PM

Hey has everyone lost interest? Why isn’t there any new comments? Personally, I hope everyone involved keeps involved and teach all the insurance companies that “WE” don’t have to take their abuse, and their IME doctors insults, claiming we don’t need treatment.

# posted by

Anonymous : July 24, 2008 8:24 PM

Feb 20,2009–Has everyone given up going after these insurance companies that keep sending us to IME doctors to denie our claims? How can they refuse us treatment for injuries they have medical proof for. Whats the update on this case?

# posted by

Anonymous : February 20, 2009 8:40 PM

DOES ANYONE HAVE AN UPDATE AS TO ALLSTATE RICO CHARGE AND THE CASE? I’M STILL FIGHTING WITH ALLSTATE TO APPROVE MY SURGERY..PLEASE RESPOND..

# posted by

Anonymous : March 27, 2009 12:49 PM

Yeah,there is an update: Apparently Bruce Rosenberg filed a similar lawsuit on behalf of two patients where there were similar allegations. the case is Sundahl vs State Farm, et al.. The case was tossed out by a Federal judge on 3/31/09. The Allstate case will likely be tossed next since it is essentially the same. Sorry, Bruce you cannot go into court as a mickey mouse attorney and make up lies about people with not a single shred of evidence. LOL, LOL

# posted by

Anonymous : April 14, 2009 12:27 AM

To the anonymous person who commetted on april 14, 2009. How do you know the case was thrown out & what makes you think Mr.Rosenberg will also loose the Allstate case? Where did you get the info from. I give Mr. Rosenberg alot of credit for standing up to these insurance companies, tell me another attorney who would do this.

# posted by

Anonymous : May 26, 2009 7:10 PM

How do I know? Lets, see (scratching head)…I can READ. I have the order of the judge in front of me, which indicates the case is to be dismissed with prejudice dated 3/31/09 in Central Islip by judge Joanna Sybert….it is public record. The case with Allstate will be thrown out eventually because it is all lies and just things Rosenberg made up. I am 100% sure of that.

You applaud Rosenberg for smearing doctors and just making up lies about people…well, thats interesting…Don’t worry, what comes around goes around 🙂

# posted by

Anonymous : June 05, 2009 8:17 PM

The State Farm Case involving the IME docs and IME vendors was dismissed today with prejudice by the Federal judge. Interestingly, most Federal RICO claims, if dismissed are done so, without prejudice. However, the cases brought by the so called attorney, BR, were so preposterous, that the judge dismissed them with prejudice. And, please to all bloggers, do not ask me how do I know it was thrown out since I am looking at a copy of it now.

Interestingly, because the Federal judge does not have “jurisdiction” over State matters, the court dismisses the State claims without prejudice. Anyway, how ya’ feeling now Brucey? 🙂

# posted by

Anonymous : July 14, 2009 7:48 PM

Some have commented that the initiation of the law suit way back when was due to McGee and others being pursued by State Farm….apparently that is true…below is a copy of an order of a federal judge affirming a prior judge’s decision.

What is interesting is that apparently McGee did not want to be deposed because he felt that the information provided in a deposition would result in disciplinary action by a licensing board against him…hmmm…now why would he NOT want to be deposed? What is McGee afraid of? I know, but I will leave that open to interpretation…here is the document:

http://royamura.googlepages.com/StateFarmv.CPTMedicalServs..pdf

# posted by

Anonymous : September 21, 2009 7:27 PM

I had an IME in Jan 2009. The IME doctor recommended surgery for two tears in my right shoulder that was the result of a serious auto accident. Forward another month and the same IME changed the report and never recommended surgery. Again, one month later I see the same IME. I walk into the office and he tells me that my shoulder is healed before he turns around. The IME doctor spends a total of 10 seconds examining my arms. I get a letter from Allstate stating that they will no longer cover my injuries.

With all the documentation I have I know the doctor gave Allstate the information they wanted. If the IME doctor had not given Allstate the report they wanted I would have been at an IME exam every month. The nurse at one of these IME’s told me that she has seen people at the IME more than a dozen times.

# posted by

Anonymous : February 28, 2010 11:32 AM

New York’s No-Fault Law Problem With "Serious Injuries"

New York has a No Fault law that applies to injuries from car accidents that limits the rights of people to bring suit unless they have a “serious injury.” And my upstate colleague Jim Reed at ZiffLaw described a fundamental problem with that law, via an email exchange with a prospective client: If you are lazy and “milk” the injury, you qualify to bring suit under New York’s statute, but if you struggle back to work, and work despite the pain and limitations you might have, you don’t qualify. The “serious injury” law, in other words, works as an incentive for people to be lazy and complain instead of being as productive as they can.

This problem arises because, under New York’s No-Fault Law, one can only bring a suit after an auto accident if the “serious injury” fits one of these definitions:

A personal injury that results in death;
Dismemberment;
A significant disfigurement;
A fracture;
The loss of a fetus;
Permanent loss of use of a body organ, member, function or system;
Permanent consequential limitation of use of a body organ or member;
Significant limitation of use of a body function or system; or
A medically determined injury or impairment of a non- permanent nature which prevents the injured person from performing substantially all of the material acts which constitute such person’s usual and customary daily activities for not less than ninety days during the one hundred eighty days immediately following the occurrence of the injury or impairment” (See, for example, Oberly v. Bangs Ambulance; Insurance Law § 5102 [d]).

This significant restriction on bringing suit was a trade-off for the guaranteed health benefits of the No-Fault Law that started in 1973 and was amended in 1977 to the present formulation. But it also works in the counter-productive manner of encouraging people to stay home and not work. And that makes for bad public policy.

It also means that a fractured pinky that heals in a few weeks would qualify as “serious” under the law, but soft tissue back pain that lasts for years might not, especially if objective results don’t turn up on radiological studies or the physician does a poor job documenting the injury and the specifics of the limitations.

It is this conundrum that brings up the problem with “medical mills” that some folks complain about. In order to document the injury properly, one needs physicians who are familiar with the legal requirements of satisfying a statute that includes a “significant limitation of use of a body function or system.” That may not be the type of language that doctors learn in medical school or the way they were taught to make their medical records, creating a problem and cottage industry of those doctors who will document the way the legislature wants, and who will also find the time to testify in court.

And it brings yet another problem: Treating doctors may need to exaggerate certain claims of the patient to fit into legislatively defined categories in order to keep the tap open from the insurance company that is paying the bills, because the real injuries may not qualify. And the insurance company, by contrast, as an incentive to hire “independent” doctors to check the patient and rig the exams to show no injuries to close down the tap, even if the injuries are real. In fact, this is the subject of two lawsuits that have been brought in New York, that are discussed here:

Now some of these problems will exist anyway, even without the statutory framework. But it seems to me that the statute has exaggerated the problem, and it may be time for New York to revisit the subject to clean things up.

February 14th, 2008

State Farm Hit With Civil RICO Claim Over Sham Medical Exams

State Farm has been sued for racketeering in New York with a claim that it conspired with “Independent Medical Exam” companies and medical practitioners to produce fraudulent and sham medical reports. The suit, filed January 30th in the Eastern District of New York, is brought under the Racketeer Influenced Corrupt Organization Act (RICO). (This story has not been previously reported.)

State Farm acted in concert with “IME” companies and doctors to furnish fraudulent and boilerplate reports, according to the suit. The objective was to procure “scientifically dishonest reports in order to terminate benefits.” The Complaint is here: McGee-v-StateFarm-RICO-Complaint.pdf

Of particular interest is that the plaintiff is not an injured accident victim that was wrongfully deprived of insurance benefits, but John McGee, a physician practicing rehabilitative medicine. The physiatrist asserts that claims submitted to State Farm are being wrongfully denied, thus depriving him of the revenue he should be receiving for the treatment he rendered. He alleges that “sham” examinations were done by the defendants to procure false findings so as to cut off the benefits, resulting in the claims he submitted being denied.

The Complaint alleges that State Farm and the other defendants communicated that the evaluations and reports must deny that its insureds needed future treatment and that there was a lack of medical necessity for prior treatment. The Complaint goes on to state that State Farm engaged the other defendants with the expectation that reports received would be favorable to the insurance carrier, and to the detriment of the insured.

McGee states that “State Farm made it known to the other defendants that if they did not provide sufficient denials within the evaluation reports then State Farm would not use their IME services.”

The defendant “IME” companies are Independent Physical Exam Referrals, Inc., and Metro Medical Services, LLC.

According to the website of Independent, they play no role in the production of the report:

We have addressed the “independent” part of the examinations by requiring all reports to be independently processed by the medical provider, typed and forwarded on their own stationary. IPER does not participate in the production of the reports, thus ensuring an arms length transaction for our clients. IPER reviews all reports by a registered nurse only to ensure that essential components of the report are present and that your questions are answered. The medical opinions rendered are those of the examining physician and based upon his/her clinical assessment and review of medical records.

This description, however, is directly at odds with the allegations of the complaint, which states that “boilerplate medical evaluation reports” are used. That may be an easy thing to prove if identical language is used in many different reports.

Whether these companies are like Integrated Risk Services Inc. — a company I wrote about Tuesday that specifically states it doesn’t want information favorable to the plaintiff included — remains to be seen. (See: How to Fool a Jury (Is It Insurance Fraud?))

Another part of the Complaint alleges that State Farm pays an excessive fee to the IME company for the doctor’s services, and that the money is then shared with the IME company or a kick-back is given to non-medical personnel. The complaint sets forth (in paragraph 19) that felonies have been committed with respect to the sharing of medical fees with non-medical personnel.

Thanks to my anonymous tipster for the heads up.

The plaintiff is represented by Bruce Rosenberg of Bellmore, New York.

Update 3/2/08 — Allstate was just hit with a similar suit: Allstate Slammed With RICO Charge Over Sham Medical Exams

Update 3/3/08 — A Doctor Sued, In Insurance Company RICO Suit, Responds To The Charge

February 12th, 2008

How to Fool a Jury (Is It Insurance Fraud?)

This is a lesson on how to fool a jury. And how to get caught. It’s about doctors and lawyers and ethics that belong in the sewer. It’s about potential insurance fraud. And it is an exposé of a very seamy side of personal injury trial practice. And I will name names. It might be the most important post I’ve made since I started blogging, and it comes out of a Manhattan trial that just concluded.

The story emerges because doctors who performed “independent” medical exams in a personal injury case were told, in writing, to game the system. A document was discovered in the file of a neurosurgeon that included this: If prognosis appears good, then state that – otherwise be silent.

We start with a basic aspect of personal injury practice: When you claim injuries to your body in a lawsuit the other side is entitled to have a doctor (or two) examine you to see if your claimed injuries are legitimate. Courts and defense lawyers like to call these “independent” exams. But are they?

The scene is Supreme Court in Manhattan (this is the main trial court, not the top appellate court). And on the stand is Harvey Goldberg, a physiatrist that was hired by the defendants to examine the plaintiff, Gerard Malloy. Malloy had suffered a terrible back injury when he tripped over an exhaust fan that had been left in a darkened hallway in a building. In the well of the courtroom stands David Golomb, one of the city’s top trial lawyers, cross-examining Goldberg.

But all is not right with the report from the exam that Goldberg holds in his hands, because something seems to be missing. Like his opinions. So Golomb asks him, on a hunch, if there was another version of the report that did contain his opinions. Ummmm, well, now that you mention it, there had been another version comes the reply. Golomb presses on and discovers that Goldberg had not only been asked to edit his original report, but complied. He apparently took his opinion on the cause of Malloy’s injuries out of the original report. The testimony looked like this from a transcript provided to me:

Q: So why is the report dated more than [one month after the exam], December 12 of 2006? Why? If you don’t know, you can say that too, Doctor.
A: I don’t know.
Q: Was there a prior version of this report? Was it sent to anybody to look over or edit?
A: There may have been a prior draft that was corrected.
Q: Changed? We don’t know, do we?
A: There was an instance of the causality originally being requested, and then I was told that the causality was not requested.
Q: So if I understand you, you were told by the people asking you to prepare this report not to offer any opinion on what the cause of Mr. Malloy’s injuries, if any, or problems, if any, were? Did I just understand that answer correctly?
A: Yes.

Why was removing causation so important? Because plaintiff Malloy had been in a car accident five years earlier, and the issue of whether it was the car accident or the trip that caused the back injury was pretty darn important. And Goldberg was asked to take his opinion out. And he complied, thereby creating a new report that he knew was incomplete.

Remarkable? Keep reading because it gets worse. The next day neurosurgeon Douglas Cohen prepares to take the stand, as he had also examined Malloy for the litigation. But before Cohen takes the stand, Golomb sees the doctor talking with the defense lawyer in the hall. And the defense lawyer is holding a paper in his hand that came from the doctor’s file. And the lawyer is looking surprised, and very unhappy. And he knows that Golomb is watching the interaction.

With Cohen on the stand, Golomb discovers what that paper is. It is the instruction sheet for the doctor directing him to omit opinions from the “independent” report that are favorable to the plaintiff. Those marching orders, published here for the first time, included (IntegratedInstructions.TIF, another version of the file IntegratedRisk-Instructions.jpg):

Point out whatever findings or claims are not related [to the lawsuit]. Otherwise be silent on causal relationship.

If prognosis appears good, then state that – otherwise be silent

If you can state that plaintiff can participate in all normal activities, do so. If not, be silent

This instruction sheet form from the folks that hired him came from a company called Integrated Risk Services Inc., whose job it was to set up these “independent” medical exams. The instructions appear clear that this was not to actually be an independent report, but in fact, was designed to be a deliberately incomplete and therefore deceptive report. And Cohen had errantly brought it with him to court. That form instruction sheet, by urging deliberate omissions, essentially asked the doctors to falsely claim their exams and reports where “independent.”

So who runs this company and asks these doctors to do this?

A review of the website for Integrated Risk Services, Inc. reveals that this is “ATTORNEY MANAGED INDEPENDENT MEDICAL CONSULTATION SERVICES.” Attorney managed, eh? I wonder which attorney is urging deceit for “independent” exams? A corporate search through the New York Department of State web site reveals the company registered without a name in a post office box in Great Neck, New York, while the web site for the company gives a different PO box in Syosset, New York, also without any names. Nice.

Edit: On 3/25/08 Steven Fruchtman, an attorney out on Long Island, called to say that the company was his. My prior investigation, which tracked the company down through a residential address of his father, has now been rendered moot and been removed. Steven Fruchtman informs me that his father has nothing to do with his business.

Is it called lying when you deliberately omit pertinent opinions in an exam you are claiming is “independent?” Is it suborning perjury by asking someone else to do that on the witness stand? Is it insurance fraud to be so deceptive if the objective is to deprive an individual of insurance funds to which they may entitled? If a plaintiff was deceptive, would the insurance industry and big business scream fraud and go running to the American Tort Reform Association? Is there one standard or two?

I leave it to you, dear reader, to ponder whether ethical violations have occurred for doctors and attorneys involved. And this is not just left to the reader, but to the NYS Department of Health. And to the attorney ethics committees of the state if, in fact, this was an attorney managed company and perhaps, to the NYS Attorney General should any of them stumble upon this little exposé.

Update, 3/25/08: After Steven Fruchtman called today, I made edits to this post as a courtesy to him, including the removal of information regarding his father. He has been invited to comment here if he sees errors.
——————————————————————————–

Full Disclosure: I know David Golomb for over 25 years and he trained under my father when he was a newly minted attorney.

December 26th, 2007

My Car Accident – A Short Postscript

I had an accident on a local parkway on December 7th that I wrote about, after a car stopped suddenly in the left lane, I stopped, and was then rear-ended.

So here is the end of the story: There were no injuries of any kind to anyone that I know of. The little twinge I felt the night of the accident was just that, a little twinge of zero significance.

As to the property damage, my loss was covered 100% by the car that plowed into me. This isn’t always the case, as new blogger Jim Reed discusses today.

Since I occasionally take my shots at various insurance companies on this blog for various acts of malfeasance, then fairness dictates I should also acknowledge a company when it does the right thing. The car that hit me was insured by Liberty Mutual.