State Farm is being sued in New York for conspiring with medical practitioners to produce fraudulent medical reports. Apparently, State Farm has been instructing doctors who review medical claims for insurance purposes to systematically deny claims. In insurance practice, doctors who review these claims ultimately report back to the insurance company about whether or not they should pay for your medical bills.
The lawsuit, which can be read here, alleges that State Farm and more than 15 co-defendants conspired to defraud over a million dollars by creating thousands of fraudulent documents for the purpose of denying claims. The suit also alleges that State Farm has been paying excessive fees and kick-backs to the independent medical examiners in exchange for the sham reports.
The plaintiff in the lawsuit, interestingly, is not a State Farm customer, but another New York physician. He claims that his constitutional rights were violated by State Farm because State Farm made it known that if physicians did not provide sufficient denials within the evaluation reports, State Farm would stop using those doctors for IME services.
The lawsuit was brought under the Racketeer Influenced Corrupt Organization (RICO) Act. RICO, which was initially drafted to to make it easier to prosecute organized crime, allows private parties to sue for damage to their business or property if they can prove a “criminal enterprise.”