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August 24, 2019

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Allstate suit alleges network of medical care fraud

Insurer claims it was bilked by professionals seeking phony profit

A major insurer says it was victimized by an elaborate conspiracy involving insurance fraud, unnecessary medical care and kickbacks, according to a federal racketeering lawsuit filed Monday in Las Vegas.

Allstate Insurance Co. filed the action alleging that a network of doctors, chiropractors, marketers, attorneys, ambulance and tow-truck drivers fraudulently arranged for accident victims to be treated for unnecessary care from 2004 through this year — with Allstate and other insurers footing the bill.

The suit was filed in U.S. District Court against six individuals and seven companies, including Richard Charette, who has been indicted by a federal grand jury in a scandal uncovered by the Las Vegas Sun last year in which patient data at University Medical Center were leaked to attorneys looking for clients.

Charette and an attorney sued by Allstate on Monday, Andrew Taylor, also are defendants in a class action lawsuit filed by UMC patients in July.

Pending in District Court in Clark County, that suit charges they conspired with unidentified UMC trauma center employees “to obtain money and property through the disclosure and use of confidential health information of UMC patients.” (UMC has been dropped as a defendant in that case, and Charette and Taylor have not yet filed a response.)

Allstate alleges the defendants in Monday’s federal suit are responsible for chiropractic treatments for 98 auto accident victims that in some cases were unnecessary and based on “falsely reported symptoms and complaints.”

The defendants presented to Allstate “grossly exaggerated bills for treatment that was either not performed, medically unnecessary and/or inadequately performed on the claimants,” the lawsuit says.

The insurer also alleges that defendants prepared or caused to be presented to plaintiffs medical reports that falsely reported symptoms and complaints that were either exaggerated or not supported by the facts of the accident. The reports, Allstate says, included unsubstantiated findings and diagnoses that prescribed treatment plans more consistent with creating or exaggerating claims than patient-centered and evidence-based treatment of patients’ actual clinical conditions.

The suit also charges fraud and intentional misrepresentations and seeks damages in excess of $1 million. It also seeks the imposition of a constructive trust to control funds as part of the alleged scheme.

Douglas Cooper and Cindy Wade, executive directors of the Nevada Board of Medical Examiners and Chiropractic Physicians’ Board of Nevada, respectively, said racketeering allegations made by an insurer against doctors and chiropractors in this state are unusual.

“For this board to have its licensees involved in something like that would be rare,” Cooper said.

Allstate says the scheme involved several companies, including Accident Injury Medical Center, 2619 W. Charleston Blvd.; and Accident Trial Lawyers, 2801 W. Charleston Blvd., which was managed by Charette. Taylor and another defendant in Monday’s suit, attorney Dennis Ramsey, were associated with Accident Trial Lawyers, Allstate alleges.

Accident Injury Medical Center was described as a practice involving its owner Dr. Sebastian P. Balle and chiropractic doctors Peter Mario Balle (Sebastian’s son) and Arthur Rossi. They were sued by Allstate on Monday.

The suit says Accident Injury Medical Center and Accident Trial Lawyers referred patients and clients to each other, paying referral fees or “kickbacks” and that some patients were referred to the defendants by unidentified doctors, tow-truck divers, ambulance drivers and even an insurance agent — all of whom allegedly received kickbacks.

Allstate says Accident Injury Medical Center provided treatment based on a “formula,” or “recipe,” with the “express purpose of creating trumped up medical bills that would be used to leverage artificially enhanced (claim) settlement values.”

The treatment formula included questionable X-rays and MRIs and referrals to other medical professionals, and some patients were billed for treatment never provided, according to the suit.

For instance, the lawsuit alleges an Accident Injury Medical Center employee has described a “wave procedure” in which patients would simply call in from home or show up at Accident Injury Medical Center “and merely wave at the receptionist and then go home” — a procedure that resulted in a bill for treatment.

“Accident Trial Lawyers and others would then knowingly take advantage of Accident Injury Medical Center’s inflated billing statements to negotiate artificially enhanced settlements — all in an effort to perpetrate a fraud on insurance companies, including Allstate,” the lawsuit charges.

The lawsuit alleges violations of the federal and state Racketeer Influenced and Corrupt Organizations acts involving conspiracy and “the unauthorized practice of law, the improper solicitation of accident victims as patients, the illegal referral of patients to lawyers in exchange for monetary kickbacks and the fraudulent chiropractic and ancillary services and billings.”

The RICO count further charges the defendants made false statements about medical records to support inflated and fraudulent settlement demands in personal injury cases and that these involved mail and wire fraud.

Charette, who is awaiting trial on the federal charges against him in the UMC case, couldn’t be located for comment Monday. He was indicted April 28 by a federal grand jury on one count of conspiracy to illegally disclose personal health information, in violation of the Health Insurance Portability and Accountability Act, or HIPAA.

Taylor, in a statement, said: “This lawsuit was brought without any factual basis. The allegations are false and I will be filing a motion to dismiss, refuting each and every claim.”

Ramsey, in a statement, said: “I categorically deny all the allegations and expect to make a counterclaim for defamation of character.”

A receptionist said Sebastian Balle was retired and could not be located. Peter Mario Balle, who according the suit supervises chiropractor Arthur Rossi, said he was unaware of the lawsuit and declined to respond to the allegations.

“I need to talk to my lawyer to see what’s going on,” he said.

In a statement, Allstate said the suit was filed “following an extensive investigation by Allstate’s special investigative unit.”

“Allstate is aware of the economic pressures that consumers face,” said Jim Murray, Allstate assistant vice president in charge of the unit. “Insurance fraud adds to the cost of the product. Allstate is aggressively pursuing the fight against insurance fraud to protect consumers and help keep insurance costs down.”

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