Allstate Wins $3.96 Million Judgment
in Chiropractic Fraud Case

Stephen Barrett, M.D.

A New Jersey Superior Court Judge has ruled that Daniel H. Dahan, D.C., Practice Perfect, and Robert H. Borsody, Esq. should pay Allstate Insurance Company nearly $4 million for violating New Jersey's Insurance Fraud Protection Act [1]. The judge also awarded an additional $10,125 against Dahan and Medical Neurological Diagnostics, Inc. (MNDI). Allstate was ably represented by the law firm of Pringle Quinn Anzano.

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]. Borsody, who practices law in New York City, devised the legal strategy and forms used to provide the "integration." MNDI, also located in Long Beach and operated by Dahan, provides a variety of electrodiagnostic services through leasing arrangements.

Background History

The New Jersey Insurance Fraud Prevention Act (N.J.S.A. 27:33A-1), which became effective in 1983, prohibits practitioners with a limited license (such as chiropractors or corporations owned by chiropractors) from employing practitioners with a broader-scope license (such as medical or osteopathic physicians). This provision is intended to ensure that medical doctors maintain the independent ability to manage patient care. The Act also calls for payment of attorneys fees and tripling of damages if the court finds that the defendant "has engaged in a pattern of violating this act." (In this case, the basic amount of $1,320,413,40 was tripled to $3,961,240.20.) [3,4]

Practice Perfect seminars taught chiropractors how to set up medical corporations that appeared to comply with appropriate state regulations as to ownership and control, but due to various devices, undated documents, penalty clauses, and one-sided agreements would actually be under the chiropractor's control. By having the doctor sign an undated resignation and stock-transfer forms, the chiropractor would have complete control over the medical corporation and could replace the doctor at will by inserting another doctor's name on the back of the stock certificate [5,6].

After attending a seminar in 1995, a New Jersey chiropractor named J. Scott Neuner followed this advice, created Northfield Medical Center, and hired Robban Sica, M.D.—whom Dahan had recommended—to purportedly own the facility. Neuner also set up a management company that arranged for all of the facility's profits to go to Neuner. Later, when Sica expressed an interest in actually participating in the practice, Neuner quickly replaced her with another physician. Their lack of bona fide ownership was evident because neither of the doctors ever met Neuner in person or visited any office, met or treated any patient, or supervised any Northfield employee [5,6]. Nor did they have any signature authority over any bank account maintained by Northfield [5,6].

Allstate noted that soon after Northfield began operating, 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 [5]. Additional evidence in the case indicated that (a) Neuner paid Practice Perfect $25,992 to enter the Practice Perfect consulting agreement and to buy the documents he would need to control Northfield, (b) the contract guaranteed that if after one year, Neunan's income did not increase by this amount, the difference would be refunded, and (3) for each patient tested by an MNDI technician, Neuner paid an average of $106.50 but billed Allstate between $1,400 and $2,150 [5,6].

The Practice Perfect Web site states that the company has set up more than 1,250 practices with billings of up to $3 million [7,8]. The New Client Contract calls for payment by the chiropractor of from $30,720 to $42,480, depending on the options chosen.

Allstate's Suit

The case began in 1999 when Allstate sued Dahan, Borody, Neuner, and several others for creating a dummy medical corporation (Northfield Medical Center) to misrepresent a chiropractic facility as a physician-owned medical center. In 2001, in dealing with a preliminary motion, the court ruled that the set-up was "suspicious and indicative of a sham ownership." During the same year, a New York judge ruled that Borsody's insurance carrier had no obligation to defend or indemnify him because his policy excluded coverage for acts "arising out of any dishonest, fraudulent, criminal or malicious act, omission or deliberate misrepresentation committed by or at the direction of, or with the knowledge of any Insured." [9]

Sica, who had more than 40 such arrangements [10] and was named a co-defendant in the original filing of this suit, settled her part in 2004 in an agreement with undisclosed terms. The case was then delayed for many years while arguments about legal standards were considered. The definitive proceedings took place in two parts. The first part was a 3-week trial that was held June 2011. Because Neuner cooperated in testifying against Borsody, Dahan, and Practice Perfect, Allstate did not pursue its claims against him. In January 2012, the judge concluded:

Borsody and Dahan promoted what they knew was essentially a lie. The business model they promoted was intended to appear to be one way and yet, in reality, be another way. They both were motivated to provide to the chiropractor the ability to manage a practice which included medical doctors. Dahan knew that a chiropractor could not own a majority interest of a multi-disciplinary practice since his California corporation was established so that he was a minority shareholder himself. Borsody knew that he was placing in the hands of the chiropractor the control that was lacking in his first experience in New York. The simple fact that the practice was intended to look as though a medical doctor was in control yet, with various side agreements, he was not, constitutes a sufficient basis for the Court to conclude that Borsody knew what he was doing was not proper [6].

The damage awards, determined in separate proceedings, were announced in September and October 2012 [3,4].

The Bottom Line

The key question in looking at "integrated" MD/DC practices is whether they are used to provide unnecessary services. I have no way to determine how many of Dahan's clients have engaged in abusive billing. But documents from this lawsuit makes it clear that they have the tools to do so [5,6].


  1. 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.
  2. Practice Perfect Web home page, accessed Nov
  3. 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.
  4. Hansbury SC. Amended order of judgment. Allstate vs. Northfield et al., filed Oct 15, 2012.
  5. Hansbury SC. Order of judgment. Allstate vs. Northfield et al., filed Jan 18, 2012.
  6. Villanueva C. Opinion. Allstate vs. Northfield et al, filed April 21, 2001.
  7. Multidisciplinary centers: What's in them for me? Practice Perfect Web site, accessed Nov 19, 2012.
  8. How to choose a consultant. Practice Perfect Web site, accessed Nov 19, 2012.
  9. Sweet RW. Opinion. Chicago Insurance Co. v Robert Borosky. U.S. District Court, Southern District. Case No. 00-CV-4837, Sept 27, 2001.
  10. Barrett S. Regulatory actions against Robban Sica, M.D. Quackwatch, July 30, 2012.

This article was posted on November 21, 2012.

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