State Farm sues Toronto-area medical clinics

The company is seeking over $10 million in damages for fraudulent insurance claims

State Farm Canada has filed a lawsuit against a group of medical rehabilitation providers in Toronto for filing fraudulent insurance claims. The insurance company claims it paid over $1.2 million for medical services that were never provided.

“We’ve brought forth this lawsuit to help fight fraudulent activity,” John Bordignon, media relations specialist at State Farm told Canadian Insurance Top Broker on December 29. “Auto insurance fraud, specifically dealing with accident benefits, has become a serious industry and consumer problem. Fraud affects everyone – this is not a victimless crime, it’s a crime we all pay for. Honest insurance customers should not have to pay because of those who cheat the system.”

The defendants involved in the suit are: Ontario Rehabilitation Clinic, McNicoll Injury Management, North York Health & Rehabilitation Centre, Markham Rehab, Ontario Rehab Centre, and Care Plus Active Rehabilitation.

State Farm is claiming $5 million in damages for fraud, fraudulent misrepresentation, conspiracy, and/or unjust enrichment; $5 million in aggravated and/or punitive damages; declaration that State Farm is not required to pay any further or outstanding bills from the defendants; the costs of action; prejudgment and post-judgment interest; and HST.

An official Statement of Claim (SOC) was filed on Wednesday, December 15, 2010.

“State Farm will continue to take a proactive approach at fighting fraudulent claims activity, and have committed dedicated resources to further investigate and litigate against those who are engaged in insurance fraud,” added Bordignon.

Insurance companies seem to be taking a more aggressive approach to fight fraud. In New York, Allstate Insurance Company recently filed it’s seventh lawsuit since the start of 2010. The company is looking for more than $10.5 million in damages accrued through fraudulent claims by Quality Medical, Spartak Medical and Richmond Medical.

According to Allstate, these medical centers were owned by four people who were not physicians, and they “submitted or caused to be submitted, or otherwise facilitated, the submission of fraudulent claims to Allstate through medical professional corporations that were never eligible to bill or collect no-fault benefits.”

**This article was originally posted on December 29, 2010 and updated on January 4, 2011.

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