Allstate Wins $7 Million Judgment
in Another Chiropractic Fraud Case

Stephen Barrett, M.D.

A Los Angeles Superior Court Judge has ordered Daniel H. Dahan, D.C., and his business, Progressive Diagnostic Imaging, to pay Allstate Insurance Company $7,010,668.40 in a qui tam ("Whistleblower") lawsuit arising out of a scheme to defraud insurance companies [1]. The total included $4,870,000 in civil penalties, $918,516.78 in assessments, and $1,222,151.62 in attorney's fees, costs and investigative expenses. The judge also prohibited Dahan from owning, operating or working as an employee in any business engaged in the practice of medicine.

Dahan is president of Practice Perfect Management & Consulting Services, of Long Beach, California, which specializes in helping chiropractors set up clinics that combine chiropractic, medical, and physical therapy services. Its Web site states that MD/DC and DC/PT "integration" are likely to increase income through expanded services and fewer rejections of chiropractic insurance claims [2].

Allstate's lawsuit alleged that Dahan purchased report-writing software that purported to analyze x-rays and form medical opinions and diagnoses, including opinions concerning permanent impairment ratings, and thereafter formed Progressive Diagnostic Imaging to solicit x-rays from chiropractors, with the assurance that "board certified radiologists" would analyze the films [3].

Allstate further claimed that, unbeknownst to patients and health care providers using Progressive Diagnostic Imaging, Dahan used untrained and unlicensed individuals to prepare the fraudulent radiology reports and to cut and paste the signatures of board-certified radiologists to the reports. The bogus medical reports had the effect of fraudulently increasing the settlement value of injury claims, causing Allstate to pay substantially more than would have been paid if Allstate had known the reports were untrustworthy. At trial, four radiologists, whose names appeared on reports, testified they never wrote, reviewed, approved, or signed the reports [4].

Allstate also alleged violation of California's Unfair Business Practices Act, claiming that Dahan
was practicing medicine without a license, operating a professional medical corporation in
violation of California's Moscone Knox Professional Corporation Act, and that he was falsifying
patient medical records. The judge agreed.

The judge also ordered that all of the affected patients and their referring healthcare providers be advised of the Court's findings and judgment, including the Court's order that the reports generated by Dahan and Progressive Diagnostic Imaging should be disregarded because they are "falsified" and have "no diagnostic, clinical or medical value whatsoever."

In September 2012, a New Jersey judge ordered Dahan., Practice Perfect, and Robert H. Borsody, Esq. to pay Allstate nearly $4 million for violating New Jersey's Insurance Fraud Protection Act. The judge also ordered Dahan and Medical Neurological Diagnostics, Inc. (MNDI) to pay an additional $10,125 [5-9]. Practice Perfect seminars taught chiropractors how to set up medical corporations that appeared to comply with state regulations as to ownership and control, but would actually be under the chiropractor's control through devices such as undated documents, penalty clauses, and one-sided agreements. Borsody, who practices law in New York City, devised the legal strategy and forms used to provide the "integration." The suit focused on the billings of Scott Neuner, D.C., a New Jersey chiropractor who became a Practice Perfect client. Allstate noted that soon after the clinic began operating (a) Neuner raised his charges for accident cases from $67.50 per visit to $90 per visit by billing as though services were performed by more than one provider instead of just by him and (b) for each patient tested by an MNDI technician, Neuner paid an average of $106.50 but billed Allstate between $1,400 and $2,150.

Additional Information

References

  1. Judgment. People of the State of California ex. rel. Allstate et al. vs Daniel H. Dahan and Progressive Diagnosic Imaging, Inc. Los Angeles Superior Court Case No. BC-3976954, filed Nov 16, 2012.
  2. Practice Perfect Web home page, accessed Nov 19, 2012.
  3. Complaint. People of the State of California ex. rel. Allstate et al. vs Daniel H. Dahan and Progressive Diagnosic Imaging, Inc. Los Angeles Superior Court Case No. BC-3976954, filed Sept 8, 2008.
  4. Allstate Insurance wins multi-million dollar fraud suit. Verdict in Los Angeles tells crooks :Stop bogus health insurance claims. Allstate news release, Dec 11, 2012.
  5. PQA wins $3.9 million verdict against chiropractor and lawyer for "Doc-in-a-Box" scheme. News release, Pringle Quinn Avzano, P.C., Sept 15, 2012.
  6. Hansbury SC. Order of judgment. Allstate Insurance Company et al. vs. Northfield Medical Center, P.C., et al. Superior Court of New Jersey, Law Division, Morris County, Docket No. MRL-L-3228-99, filed Sept 12, 2012.
  7. Hansbury SC. Amended order of judgment. Allstate vs. Northfield et al., filed Oct 15, 2012.
  8. Hansbury SC. Order of judgment. Allstate vs. Northfield et al., filed Jan 18, 2012.

This article was posted on December 14, 2012.

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