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Allstate Sues to Recover
Many More Millions

Stephen Barrett, M.D.

On October 19, 1999, Allstate Insurance Company filed two suits against 258 individuals suspected of participating in two staged accident rings in Camden and Perth Amboy, New Jersey. A third suit targeted chiropractors, medical doctors, and related medical and business corporations who allegedly created a dummy medical corporation to misrepresent a chiropractic facility as a physician-owned medical center. The scheme is connected to a seminar run by a California chiropractor and advertised on the World Wide Web.

The most complex of the three suits was filed in Morris County Superior Court. Allstate accuses Atlantic County chiropractor J. Scott Neuner of setting up a phony medical corporation, Northfield Medical Center, PC, in order to circumvent a New Jersey health-care regulation that limits chiropractors' scope of practice and regulations designed to reduce health care costs. Neuner entered into the alleged illegal arrangement with Robban A. Sica M.D., a Connecticut physician, to create the appearance that Northfield was owned by Sica. Sica has or had suspected ownership interests in at least 14 other similar corporations in New Jersey. Neuner was introduced to Sica through a seminar run by a California chiropractor named Daniel Dahan. Dahan runs a medical management consulting firm called "Practice Perfect," advertised on Dahan's website. Dahan located Neuner's MD-for-hire and also supplied the instructions and paperwork to set up the bogus corporation. In testimony to Allstate, Neuner admitted he never personally met Dr. Sica nor had she ever visited the facility, invested in the corporation, or treated or supervised patients. Allstate expects to name additional parties involved in similar dummy operations.

The second suit, filed in Camden County Superior Court, named Iris Salkauski of Camden County as the ringleader of a staged-accident-fraud ring believed to have been involved in more than 100 claims over a two-year period. Also named are three "runners" and 169 individuals accused of staging 25 automobile accidents in Camden. In a stunning series of confessions to Allstate investigators, several of the staged-accident participants identified Salkauski as the point person who had recruited participants, staged accidents, and provided instruction on feigning injuries. Allstate alleges that she also arranged for participants to meet with attorneys and medical providers who paid her "referral fees" and were willing accomplices in the scam. Sixty medical providers are named as defendant providers, and 51 are named as defendants in interest.

The third suit was filed in Morris County Superior Court against 89 individual participants in a staged accidents ring in Perth Amboy. Allstate filed related complaints earlier this year against medical providers and the alleged ringleaders of the Perth Amboy ring, believed to involve more than 6,724 claimants and $14 million in paid claims. In July, the Office of Insurance Fraud Prosecutor arrested nine people in connection with their ongoing criminal investigation of this case.

With the three actions, Allstate New Jersey, Allstate, and the Allstate Indemnity Company are seeking restitution of paid claims, plus treble damages and an injunction to stop certain defendants from engaging in these allegedly unlawful, fraudulent and deceptive acts. Allstate is also seeking to block and recoup any payments pending or already made to the defendants in PIP arbitration proceedings, and has named the American Arbitration Association (AAA) as a defendant in interest in the complaint.

The actions are the result of over two years of investigation by Allstate New Jersey's Special Investigative Unit (SIU) in cooperation with the Office of the Insurance Fraud Prosecutor. Allstate works closely with law enforcement officials to facilitate the criminal prosecution of those accused of automobile insurance fraud. Commenting on these cases, an Allstate official noted that "the runner is the linchpin in the scheme" and that New Jersey recently enacted a law to deal with this exact problem.

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Source: Allstate Press Release, October 19, 1999.

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This article was posted on December 30, 1999.