Allstate New Jersey Fraud Suit Alleges Cherry Hill Medical Providers Pay Kickbacks to Runners

April 2, 2002 (Mt. Holly, New Jersey) — Citing multiple violations of the New Jersey Insurance Fraud Prevention Act and the New Jersey Administrative Code, Allstate New Jersey Insurance Company (Allstate New Jersey) and its affiliate, Encompass, today filed a declaratory action in Burlington County Superior Court against two New Jersey licensed doctors, Harvey S. Benn, a doctor of osteopathy, and Frank J. Getson, a chiropractor, as well as various other defendants. The suit seeks to stay all pending Personal Injury Protection (PIP) arbitration and potential Bodily Injury claims — $7.9 million — for injuries believed falsified in staged automobile accidents. Additionally, the two insurance companies seek treble damages of approximately $5 million, based on the alleged fraud perpetrated against them.

The suit alleges that the medical providers, both of Cherry Hill, operated a fraud ring by paying kickbacks for patient referrals from runners who they knew staged automobile accidents.

The legal action also contains allegations that the doctors allowed unlicensed and unsupervised employees to treat patients, self-referred patients to facilities in which they have an undisclosed financial interest, and devised a complex billing scheme to circumvent cost-reduction provisions within the New Jersey PIP statute, as well as other fraudulent acts. The alleged fraud took place in and around the Camden and Cherry Hill areas of southern New Jersey.

“Fraud cases remind all New Jersey drivers that the battle to rid the system of insurance fraud must be fought daily,” Richard Crist, Jr., President, Allstate New Jersey, said. “Allstate New Jersey will continue to be aggressive against auto insurance fraud in the Garden State. New Jersey’s strong court decisions and anti-fraud statutes serve as important tools in the ongoing fight against cheats.”

The suit alleges that the administrative staffs for Dr. Benn and Dr. Getson created reports indicating that patients had been treated at several different facilities when the patients had actually received all the modalities in one place at one time. The suit also alleges that the doctors employed other elaborate deceptions to subvert the multiple fee reduction formula allowed in New Jersey.

“Through the detailed review and analysis of corporate documents, medical bills and reports, as well as through information gathered during statements, we have been able to identify a very serious pattern of fraud,” said Edward J. Moran, assistant vice president for the special investigative unit of Allstate Insurance Company, Allstate New Jersey’s parent company.

The suit alleges that Dr. Benn is responsible for dealing with the runners and recruiting new patients. It contends that, other than perhaps an initial examination, Dr. Benn does not treat any patients but that it is actually Dr. Getson’s facilities that provide the bulk of the treatment, yet submit bills under Dr. Benn’s facilities’ names as a form of a financial kickback to Dr. Benn for the patient referral.

“The public’s health and safety is at risk with these two facilities,” Moran said. “Outrageously, on several occasions, treatment was carried out by unqualified and non-supervised personnel.

“New Jersey’s automobile insurance system cannot afford continued assaults from fraud perpetrators. Premium dollars must be spent only on legitimately injured victims, not parasites of the system. Ultimately, fraud impacts everyone’s car insurance costs.”

Allstate New Jersey Insurance Company, headquartered in Bridgewater, NJ, was established in 1997 by the Allstate Insurance Company as a separate and distinct company to service the unique needs of consumers in the New Jersey insurance marketplace. Allstate New Jersey is a major provider of auto, home and commercial insurance products. The Allstate Financial Group provides life insurance, retirement and investment products and services through Allstate New Jersey agents. Allstate New Jersey’s many sales agents and experienced claim professionals are conveniently located throughout the Garden State. Allstate Insurance Company is no longer licensed, and does not write business, in New Jersey.

Formerly CNA Personal Insurance, Encompass was launched in September 2000 as an insurance brand with more than 20 years of relationships established with independent agents and their customers. Encompass, as part of the Ivantage Group, a division of The Allstate Corporation (NYSE: ALL), is a brand devoted exclusively to independent agents, selling automobile, homeowner and related insurance to 1.2 million customers through a network of more than 3,400 independent insurance agents. Allstate is the nation’s largest publicly held personal lines insurer. Encompass maintains a web site at www.encompassinsurance.com.

FOR MORE INFORMATION:

Contact: James Griffin
Allstate New Jersey Insurance Company
Phone: 908-252-5036
Pager: 1-800-759-8888 / PIN # 1147422
E-mail: jgrik@allstate.com