HAUPPAUGE, N.Y., May 9, 2012 /PRNewswire/ -- Allstate Insurance is seeking to recover more than $796,000 from eighteen New York-area defendants. The complaint, filed in Federal District Court as a Declaratory Judgment/Recovery action, alleges that two medical doctors, along with four laypersons and five lay entities illegally owned and controlled two professional medical corporations allegedly owned on paper by a medical doctor and used them to submit fraudulent billing to Allstate. In addition, two other individuals and three other companies were also named as being part of the overall scheme to submit fraudulent bills to Allstate. Since 2003, Allstate has filed thirty-nine fraud lawsuits in New York, seeking nearly $204 million dollars 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 medical professionals. In addition, the lawsuit alleges that the defendants submitted claims for services that were performed by independent contractors in violation of the No-Fault Law. The suit contends that Kingscare Medical, P.C. and FOT Hamilton Medical, P.C. were fraudulently incorporated through a scheme using the name of licensed medical doctors, Humphrey Iroku, M.D. and Xeumei Qu, M.D. However, those medical entities were actually run by laypersons Sam Yu, Ruilen Weng, Astrid Schneider, and Man Tat Tsui. None of these individuals is a medical doctor. There are also five management companies that were utilized to effectuate this scheme. They are NY Acucare Management Corporation, OMD Management Corporation, Powermark Express, Inc, ABS Marketing & Consulting, Inc. and 268 Management Corp.

Included in this lawsuit are claims for unjust enrichment against Aashik Merchant and his companies Wellcare Physical Therapy, P.C. and Theraplus Physical Therapy Services & Assessment, P.C.; and Hong Zhuan Chen and his company Kingscare Acupuncture, P.C.

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 [ www.allstate.com ] and 1-800 Allstate®.

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Allstate Files $796,000 Insurance Fraud Case in NY

Allstate Files $796,000 Insurance Fraud Case in NY