Dallas Accident Lawyer & Attorney : Fears Nachawati Law Firm : Personal Injury, Wrongful Death : Ft. Worth, San Antonio, Austin, Houston, Texas

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As reported by the Dallas Morning News, Allstate Insurance Co. filed a lawsuit Thursday in Dallas against Chiropractic Strategies Group Inc. of Arlington, accusing it of orchestrating a multistate scam involving doctors, lawyers and telemarketers.

According to the lawsuit, telemarketers working for Chiropractic Strategies solicited auto accident victims to come in for a free check-up. Doctors would tell the patients they had severe injuries, while personal injury lawyers at the clinic would sign the patients up to participate in lawsuits against Allstate's auto insurance customers, the company alleged.

Representatives of Chiropractic Strategies did not return phone calls Thursday requesting comment. According to the lawsuit, the company is owned by Michael Kent Plambeck, 52, of Dallas.

Federal law cited

In the 67-page lawsuit filed in U.S. District Court, Allstate seeks more than $10 million against Chiropractic Strategies and other defendants for violating the federal Racketeer Influenced and Corrupt Organizations Act.

"We're taking this action in an attempt to recover dollars from fraudulent claims paid by Allstate," said Bill Mellander, spokesman for Allstate's Special Investigative Unit.

"Those costs are passed on to the customer in the form of higher premiums."

Allstate's adjusters are trained to identify red flags, he said, such as similarities in dollar amounts or the wording on paperwork. The adjusters' questions are sent to Allstate's investigators, who can identify wider trends that may point to a scam.

"And that's exactly what happened here," Mr. Mellander said. "The majority of things usually passed along are totally legit."

Higher rates

Insurance fraud is a billion-dollar business that costs the average consumer $300 in higher insurance premiums every year, said Edward Moran, Allstate's assistant vice president over the investigation unit.

Mr. Mellander said telemarketers found prospective plaintiffs by poring through accident reports from 15 municipalities in Texas, eight in Ohio, one in Indiana and one in Alabama. Telemarketers working for Chiropractic Strategies in Kenner, La., would look at the accident reports to determine who was not at fault "and at times misrepresent themselves and say they are calling from Allstate," Mr. Mellander said.

Local clinics named

Allstate named seven Dallas-area clinics under Chiropractic Strategies' umbrella: Buckner 30 Chiropractic, Hampton Chiropractic, Webb Chapel Chiropractic, High Five Spine & Rehab, Grand Prairie Chiropractic, Haltom City Chiropractic and South Cooper Spine & Rehab.

Chiropractic Strategies, founded in 1984, has 180 employees in 17 locations who brought in $8.2 million in sales last year, according to commercial information company Dunn & Bradstreet.

Allstate, based in Northbrook, Ill., employs 2,500 people in Irving, including the Texas regional office and national groups handling claims, data and check processing, and special investigations.

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According to the Miami Herald, Allstate is facing contempt charges in Missouri -- with a $25,000-a-day fine -- and now it can't sell new auto policies in Florida, in part, because it wants to protect a report written by a corporate consultant.

Allstate has said those documents -- along with others that Florida regulators are seeking in their investigation into how the company sets insurance rates and pays claims -- are trade secrets.

What's so important that Allstate would risk so much?

According to an attorney who has seen the report from consultant McKinsey & Co., it advises Allstate on how to improve profitability: pay less on claims and take a longer time to pay those claims.
''The documents describe, in graphic terms, a scheme devised by Allstate and McKinsey & Co. to essentially turn the business of insurance into a zero-sum game,'' said David Bernardinelli, a Santa Fe, N.M., plaintiff attorney involved in a case against Allstate. He says he is the only person outside Allstate to have seen the report.
An Allstate spokesman didn't return a call seeking comment late Wednesday.

In the early 1990s, the corporate consultant advised Allstate to get tough with policyholders. Consumers who didn't accept a settlement offer from Allstate would have to fight in court to get their claims paid.
''This is the new insurance world that was created by McKinsey for a lot of insurers,'' Bernardinelli said.

Indeed, McKinsey did work for other companies, including State Farm. This insurer said it hasn't used McKinsey's services for more than a decade, according to a State Farm spokesman.

How did Bernardinelli get the report? In 2001, he was litigating a case against Allstate. He learned of the report and demanded to see it.

Allstate refused, claiming it contained trade secrets. It provided the same rebuff to the subpoena from Florida's Office of Insurance Regulation this week.

Bernardinelli got a break when a Santa Fe court judge ordered the insurer to provide Bernardinelli with a copy without any protective order.
After several attempts to block the judge's order, Allstate provided Bernardinelli a temporary set of documents while its appeal of the order was pending. The documents were printed in such a way that prevented him from copying or scanning them.
He spent two months going through 12,000 documents, reading them and taking copious notes. He ended up with 400 pages of notes.

In 2004, a Missouri court of appeals dismissed Allstate's appeal, and the company was once again ordered to provide the attorney with the documents. He turned over the set he had and demanded a clean set he could use in trials.

Allstate has refused again, and the case has gone to the Missouri Supreme Court.