Eric Turkewitz, The Turkewitz Law Firm, New York, NY
Thursday, February 14, 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.
Labels: Insurance Industry
FEEDBACK COMMENTS *********************
posted by Eric Turkewitz # Permanent Link Comments:
I assume New York also has the rule that communications with an expert are not privileged - i.e. the expert can be deposed and asked "Did you talk to anyone about this case", "What did you and Mr. Defensecounsel discuss," etcetera? -----------
# posted by mythago : February 15, 2008 1:01 PM
There is no privilege attached to attorney-expert communications.
But there are also no depositions in state court. So the trial attorneys rely on doing the high-wire dance in front of the jury in the vast majority of cases without really knowing the answers that may come out.
This particular RICO suit, however, was filed in federal court so that type of discovery would be allowed. ----------
# posted by Eric Turkewitz : February 15, 2008 1:06 PM
Very interesting post, Eric. We tried something similar here in Kentucky under our states "bad faith" statute; however, the court ruled that a 3rd party physician did not have standing to sue the insurance carrier. -----------
Hans Poppe www.PoppeLawFirm.com/Blog ---------------------------- # posted by Hans Poppe : February 16, 2008 6:13 PM
TY, Eric. We who practice in workers' comp are well familiar with the "usual suspects" from the two IME companies, especially Drs. Amato, Cole, and Diamond. Oy Vey is Mir!!!
"Independent" is not in their dictionary nor in the medical criteria they use. ************** Jim McCarthy # posted by Anonymous : February 26, 2008 3:15 PM
posted
I bet this practice is widespread in insurance companies.
Posts: 8430 | From Not available | Registered: Oct 2000
| IP: Logged |
luvs2ride
Frequent Contributor (1K+ posts)
Member # 8090
posted
Lou,
I was a claims adjuster for 10 yrs and I can promise you it was not widespread. However, State Farm and Allstate had a very bad reputation among its peers during the years I worked in claims. We jokingly called State Farm, Snake Farm.
I am sure you can easily google either of those companies and find endless lawsuits as well as many government punitive actions against both carriers for past fraudulent claims practices.
State Farm had to close their doors for 24 hrs once as punishment and that cost them millions.
A friend of mine was an adjuster for State Farm in the 80's and she told me that at meetings they were encouraged to try tactics to avoid paying claims such as: State Farm client hits you and is at fault. But you own an older vehicle and only carry liability insurance. They deny your claim for any stupid excuse they can drum up. You can't go back to your insurance company because you don't carry collision coverage. Your only recourse against State Farm is to go to court. Your damages aren't significant enough to bother, or you are not saavy enough to realize your rights. You talk to an attorney, but guess what, attorneys aren't interested in your property damage claim. No money in that. They only want injury claims. You aren't injured. So you give up.
State Farm would do that consistently and a lot of claims would never have to be paid. If you were one who pursued your claim in small claims court, then they would pay. They lost nothing by trying to get out of your claim. That is just one example of how they kept claims cost down.
Their reputation was so bad, the company I worked for wouldn't hire a State Farm adjuster. They felt it was too hard to untrain the bad claims settlement training and too risky having them practice that training on our customers.
State Farm has not been convicted in this New York incident. But it wouldn't surprise me in the least if they are guilty as charged.
I haven't heard anything negative about Allstate in a long time. Perhaps they have changed their ways.
Luvs
-------------------- When the Power of Love overcomes the Love of Power, there will be Peace. Posts: 3038 | From america | Registered: Oct 2005
| IP: Logged |
Truthfinder
Frequent Contributor (1K+ posts)
Member # 8512
posted
Boy, the news about insurance companies, in general, just gets worse and worse.....
Thanks for the info here....
-------------------- Tracy .... Prayers for the Lyme Community - every day at 6 p.m. Pacific Time and 9 p.m. Eastern Time � just take a few moments to say a prayer wherever you are�. Posts: 2966 | From Colorado | Registered: Dec 2005
| IP: Logged |
posted
Thanks for the info, luvs. I was shocked that State Farm would be involved in this because they are a mutual company and presumably less greedy. Have had house and auto ins with them for years, only collected once when a deer jumped out in front of my car. No problems in collecting, and I was not injured.
My previous comment had to do with the number of disability and health insurers who send lymies or their files to so-called independent medical people who invariably say they don't have lyme or need anymore treatment. These same "independent experts" testify against lymies in court cases. This is why I have assumed that most ins cos have some corrupt and dishonest practices. And when you see what the executives of those companies get paid......it is obscene.
Posts: 8430 | From Not available | Registered: Oct 2000
| IP: Logged |
bettyg
Unregistered
posted
lou, we also have house and car insurance with state farm; perhaps 5+ years; NO claims to date.
IP: Logged |
The Lyme Disease Network is a non-profit organization funded by individual donations. If you would like to support the Network and the LymeNet system of Web services, please send your donations to:
The
Lyme Disease Network of New Jersey 907 Pebble Creek Court,
Pennington,
NJ08534USA http://www.lymenet.org/
UBBFriend: Email this page to someone!
![[Frown]](frown.gif)
Printer-friendly view of this topic