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Company Press Release

Allstate Continues Crackdown on Auto Insurance Fraud

Chiropractors, Attorneys, Doctors and Individuals Named in Multimillion-dollar Suits

BRIDGEWATER, N.J., Oct. 19 /PRNewswire/ -- Allstate filed two suits today against 258 individuals suspected of participating in two staged accident rings in Camden and Perth Amboy. A third suit targeted chiropractors, doctors and related medical and business corporations allegedly involved in the creation of a dummy medical corporation to misrepresent a chiropractic facility as a physician-owned medical center. The scheme is connected to a seminar run by a California chiropractor and advertised on the World Wide Web.

``It is chilling to consider the growing sophistication of individuals out to defraud insurance companies,'' said Ed Moran, assistant vice president for Allstate's Special Investigative Unit. ``Yet these individuals should know as they grow in sophistication, so do our investigators, the technology available to us, and the civil and criminal laws that punish this type of crime.''

In the most complex of the three filings, Allstate accuses Atlantic County chiropractor J. Scott Neuner of setting up a phony medical corporation, Northfield Medical Center, PC, in order to circumvent a New Jersey health care regulation that limits chiropractors' scope of practice and regulations designed to reduce health care costs.

Neuner entered into the alleged illegal arrangement with Robban A. Sica M.D., a Connecticut physician, to create the appearance that Northfield was owned by Sica. Sica has or had suspected ownership interests in at least 14 other similar corporations in New Jersey.

Neuner was introduced to Sica through a seminar run by a California chiropractor named Daniel Dahan. Dahan runs a medical management consulting firm called ``Practice Perfect,'' advertised on a website at www.dahan.com. Dahan located Neuner's MD-for-hire and also supplied the instructions and paperwork to set up the bogus corporation.

In his testimony to Allstate, Neuner admitted he never personally met Dr. Sica nor had she ever visited the facility, invested in the corporation, or treated or supervised patients.

The suit was filed in Morris County Superior Court. Allstate expects to name additional parties involved in similar dummy operations.

In the second of the filings, a 43-year-old Camden County woman is the accused ringleader of a staged accident fraud ring believed to involve over 100 claims over a two year period. Named in the suit are three ``runners'' and 169 individuals accused of staging 25 automobile accidents in Camden.

``Fraud cheats every driver who pays an auto insurance bill in this state,'' said Richard C. Crist, Jr., president of Allstate New Jersey. ``We will aggressively continue to attack insurance fraud at all levels of operation from the individual who makes $200 participating in a staged accident, to the professional practitioner who makes a living from filing false claims or fictitious lawsuits.''

In a stunning series of confessions to Allstate investigators, several of the staged accident participants identified Iris Salkauski as the point person who recruited participants, staged accidents, and provided instruction on feigning injuries. Allstate alleges that Salkauski also arranged for participants to meet with attorneys and medical providers who paid her ``referral fees'' and were willing accomplices in the scam. Sixty medical providers are named as defendant providers and 51 as defendants in interest.

``New Jersey's recently enacted runners law was passed to address exactly the type of fraud activity engaged in by Ms. Salkauski and others in this scheme,'' said Moran. ``There are several staged accident rings currently operating in New Jersey at tremendous cost to New Jersey insurance consumers. The runner is the linchpin in the scheme and the new law will help us put these operations out of business.''

The suit was filed in Camden County Superior Court.

Continuing its legal assault against a major staged accident ring in Perth Amboy, Allstate filed a third action in Morris County Superior Court against 89 individual participants in staged accidents.

Allstate filed related complaints earlier this year against medical providers and the alleged ringleaders of the Perth Amboy ring, believed to involve more than 6,724 claimants and $14 million in paid claims. In July, the Office of Insurance Fraud Prosecutor arrested nine people in connection with their ongoing criminal investigation of this case.

With the three actions, Allstate New Jersey, Allstate, and the Allstate Indemnity Company are seeking restitution of paid claims, plus treble damages and an injunction to stop certain defendants from engaging in these allegedly unlawful, fraudulent and deceptive acts. Allstate is also seeking to block and recoup any payments pending or already made to the defendants in PIP arbitration proceedings, and has named the American Arbitration Association (AAA) as a defendant in interest in the complaint.

The actions are the result of over two years of investigation by Allstate New Jersey's Special Investigative Unit (SIU) in cooperation with the Office of the Insurance Fraud Prosecutor. Allstate works closely with law enforcement officials to facilitate the criminal prosecution of those accused of automobile insurance fraud.

Allstate New Jersey Insurance Company, headquartered in Bridgewater, N.J., was established in 1997 by the Allstate Insurance Company (NYSE: ALL - news) as a separate and distinct company to service the unique needs of the New Jersey insurance marketplace. The company is a major provider of auto, home, life and commercial insurance products exclusively in the state of New Jersey with more than 130 sales agencies and 700 experienced claim professionals throughout the state.

SOURCE: Allstate Insurance Company