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Allstate Insurance Wins Multimillion-Dollar Fraud Lawsuit

Allstate Insurance Wins Multimillion-Dollar Fraud Lawsuit

California judgment reinforces battle against systemic fraudulent claims.

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LOS ANGELES (Sept. 8, 2016) – Los Angeles County Superior Court ruled in favor of Allstate Insurance Company and the State of California in a lawsuit topping more than $2.3 million that ends the illegal ownership, kickbacks and fraudulent operation of two medical clinics in Los Angeles.

In its lawsuit, Allstate alleged chiropractor Byum Suk Kim violated the state’s Insurance Frauds Prevention Act when he submitted to Allstate more than 90 claims for treatment of patients at the two clinics that were illegally owned in violation of California’s Moscone Knox Professional Corporation Act. In its complaint, Allstate alleged the two clinics, Wilshire Spinal Disc Clinic, Inc.  and Allied Medical, Inc. were held out to the public as legitimate medical clinics incorporated in the State of California, but were actually owned and operated by Byum Suk Kim, D.C. in violation of the Moscone Knox Professional Corporation Act and Business & Professions Code sections 2052, and 2400, commonly referred to as the “corporate practice of medicine bar.” Both clinics are no longer operating.

Judge Terry A. Green agreed with Allstate and ordered Kim to pay $1.8 million in penalties, plus over $582,000 in assessments and fees – a $2.3 million judgment.

“Submitting even one false insurance claim is more than just a bad idea; it’s fraud, and insurance fraud is a crime,” said Allstate’s California Field Senior Vice President Phil Telgenhoff. “Fraud drives up the cost we all pay for insurance by stealing millions of dollars from insurers. This cannot and will not be tolerated in California or anywhere. Allstate will fight fraud to help protect our customers and keep insurance costs down.”

Allstate’s suit identified Kim as a chiropractor owning and operating the two medical clinics. The judgment was based on evidence submitted by Allstate showing Kim engaged in clinical and billing fraud in connection with claims that were submitted to Allstate, which included hundreds of individual violations of California Penal Code section 550. Specifically, the evidence showed Kim was responsible for the preparation of 91 separate reports for patients allegedly treated by him at Wilshire and Allied, each of which contained misrepresentations in violation of section 550 regarding the level and type of treatment purportedly provided.

Additionally, the billing records for the treatment allegedly provided were likewise fraudulent, as the evidence presented by Allstate showed there was illegal “up-coding” for services. The judgment was based on Allstate proving the medical records, narrative reports, and bills of patients purportedly treated by Kim amounted to billing and clinical frauds perpetrated and carried out by Kim on a systematic basis at both Wilshire Spinal Disc Clinic, Inc. and Allied Medical, Inc.

This is the second multimillion-dollar ruling against insurance fraud that Allstate has successfully argued in Los Angeles County Superior Court in 2016.

About Allstate
The Allstate Corporation (NYSE: ALL) is the nation’s largest publicly held personal lines insurer, protecting approximately 16 million households from life’s uncertainties through auto, home, life and other insurance offered through its Allstate, Esurance, Encompass and Answer Financial brand names. Now celebrating its 85th anniversary as an insurer, Allstate is widely known through the slogan “You’re In Good Hands With Allstate®.” Allstate agencies are in virtually every local community in America. In 2015, The Allstate Foundation, Allstate, its employees and agency owners gave $36 million to support local communities.