Chiropractic Fraud – Perception Vs Reality


Are claims filed by chiropractors more likely to be a result of health care fraud than those made by other healthcare professionals? According to various news sources, the majority of reported health care fraud convictions or charges against chiropractors have not been found.

Fraud and abuse are common in all health care professions, including Chiropractic, Medicine, Physical Therapy, and others. No one discipline can claim a higher rate of fraud than another. In spite of this fact, insurers continue to investigate chiropractic claims. These investigations go far beyond evaluating the merits and medical necessity of claims in order to decide if they should or not be paid.

Insurers are now conducting “post-payment” audits of claims that were paid years ago. They focus on documentation issues in an attempt to make it easier for carriers to get the money back. Insurers have made large refund demands of chiropractors. Why?

Does it mean that the services weren’t performed? The insurer confirms the services were performed by talking to the patient. Does it mean that the chiropractor didn’t document the services? The services are documented as being performed. The reason why post-payment audits are necessary is that the insurer may have retroactively determined, possibly based on some sense of entitlement that the services weren’t adequately documented – i.e. to their satisfaction.

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Insurers are requesting reimbursements from providers for payment made. Armed with allegations that providers did not adequately document the services billed, they can file complaints with licensing and regulatory boards. The real test in such complaints will be to prove that the standards and documentation were not met. State health care licensing and regulatory boards establish the standards for documentation for health care providers. These boards are not managed care organizations or insurance companies. They provide administrative oversight and sanctions for licensees who break the rules.

Allstate Insurance has a clear policy of suing chiropractors alleging fraud, and issuing press releases with all the pomp of a New Year’s Day parade. Even chiropractic periodicals and news sources do not investigate or assess the facts of these suits before they join in lock-step to publish the release.

News media and the general public tend to believe that fraud is what Allstate alleges when it sues a provider of health care. Allstate must believe that both the provider and their insured were defrauded. This could also indicate that Allstate relied on the misrepresentations of the provider when they paid claims.

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According to the September 2007 decision of the United States 5th Circuit Court of Appeals, in the Allstate Insurance Co. et. al. case, this was clearly not the case. v. Receivables Finance Company, LLC et al. The Court ruled that Allstate is a major player within the casualty industry. Therefore, Allstate reviews every health care bill submitted to it by a chiropractor and then performs a utilization review. Allstate ends up paying a substantially reduced amount based on the explanation Allstate believes that a substantial portion of the bill was not medically necessary or properly documented. Allstate cannot then sue the same provider later claiming that the scam was perpetrated by the same provider.

Based on personal knowledge of Accident & Injury Chiropractic (“A&I”) as a defendant in the case, it was not the case. Following the execution of federal search warrants, I helped A&I implement a Health Care Compliance Program. This program was designed to identify and correct any fraudulent, false, or improper action by the company and/or its healthcare providers, primarily chiropractors. The federal investigation was officially closed after A&I implemented their compliance program.

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A&I’s Compliance program included extensive internal auditing, monitoring, and reporting to assist in the detection and correction of misconduct. Insurers and other interested parties were encouraged to submit concerns about alleged misconduct at the clinics or associated chiropractors to A&I’s Compliance Board.

Allstate knew about A&I’s Compliance Program implementation. However, Allstate never reported any concerns to the Compliance Board, as Allstate claimed in its highly publicized lawsuit. It is important to note that Allstate was not the only insurer to have concerns. Other insurers were also in similar positions to Allstate’s and these concerns were addressed to their satisfaction.

While I was an integral part in the creation and implementation A&I’s Compliance Program, my only contact with Allstate came after the company had filed its lawsuit. The contact was with Allstate’s paralegal. The paralegal said she understood that I had helped A&I with its Compliance program, and Allstate’s lawyer would love to speak with me. Allstate’s lawyer was never present at any of my conversations. Allstate’s lawyer refused to serve me domesticated process as an outside witness. This is the only reason I didn’t speak with him.

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We now reach Allstate’s March 2008 suit in Federal Court in Dallas Texas, viz. Allstate et al. v. Michael K. Plambeck, D.C., Chiropractic Strategies et al. Allstate claims that Plambeck, the owner and operator of Chiropractic Strategies Group (“CSG”) orchestrated a multistate scam that involved doctors, lawyers, and telemarketers to solicit auto accident victims for free chiropractic screenings. They claim that this was some form subterfugee that allowed CSG doctors “inform” patients that they had severe injuries. This also encouraged patients to sign up to legal representation to help them pursue insurance claims and/or participate in lawsuits against Allstate Insurance.

Allstate announced that the lawsuit against Plambeck was brought about by an extensive investigation conducted by their Special Investigative Unit. Edward Moran, Allstate’s assistant vice president in charge of the Special Investigation Unit was quoted as saying, “Insurance Fraud is a billion-dollar business that costs the average consumer $300 per year in higher insurance premiums… Allstate is aggressively fighting the fight against insurance fraudulent to protect consumers and keep insurance costs down.”

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Allstate’s special investigators must have done a thorough investigation! Allstate knew for more than ten years about the way Dr. Plambeck operated and managed his chiropractic clinics. This is what its press release describes!

I was a Special Agent with the National Insurance Crime Bureau (NICB). I was also familiar with other investigative agencies, including Allstate, more than a decade back with the specific types of alleged misconduct. Allstate’s Complaint actually identified activity that dates back to 1996.

The (2008) release contained no new information. However, the average cost passed on by insurance companies to consumers has risen to $300.00. This is an increase from the $100-200 figures cited in previous year’s.

Talk about righteous anger. Major casualty insurers regularly complain in the media that the high prices they pass on to the general public are due to health care fraud by chiropractors and other medical professionals. Carriers rarely, if ever mention that they have luxurious offices and pay multi-million-dollar salaries to their executives.

In the example above, Allstate’s CEO received a $10.7 million annual compensation package in his first year of employment. The departing CEO received $18.8 millions annually and $25.4 Million in retirement benefits. These costs aren’t passed on to the consumer in the form rate increases, but don’t let that stop you from thinking about it!

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Plambeck was the subject of an Allstate press release. It contained a ‘Call to Action’ asking anyone who has knowledge or been affected by the scheme alleged in a case against the chiropractic industry to contact the NICB. Why should this information be reported at NICB?

Does the NICB, a quasigovernmental law enforcement agency, assist Allstate in civil litigation against Plambeck’s activities? Is there a parallel, ten-year-long criminal investigation into Plambeck’s activities by the NICB?

NICB is a non-profit corporation, as defined by Section 501(c), (4) of Internal Revenue Code, that acts as a social welfare agency. Its mission is to fight fraud and theft for customers and the public via information analysis, forecasting and criminal investigation support, training and awareness.

Allstate has said that NICB would do the same thing. Allstate is its largest customer and funding source. They could also be able to assist them in civil cases, as they did in the case mentioned above. A&I discovered information about Allstate through discovery-filings. This included NICB claims as well as financial checks that were conducted on me.

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Is it the best way to aggressively pursue insurance fraud, to file a lawsuit using information that has been known for more than a decade and to try to influence public opinion?

According to an article published in the Dallas Morning News on March 7, 2008, Bill Mellander, Allstate’s Special Investigative Unit spokesperson, reported that Allstate’s adjusters have been trained to spot common fraud indicators such as similar dollar amounts or wordings in paperwork. Allstate receives Allstate’s concern when such indicators are found in a claim for health care. They then examine for other trends that could point to fraud or abuse in health care, possibly through a scam. According to Mellander, this is exactly what happened in Allstate’s investigation into Plambeck et. al. It took this action to recover money from fraudulent claims that Allstate had purportedly paid.

As Mr. Mellander reported, I believe Allstate adjusters have been trained to more than identify fraudulent trends and report them to Allstate’s SIU investigators. They are also trained in how to assess claims to determine whether they should be paid using sophisticated software programs such as Colossus or local peer review doctors, who are paid by insurance companies to review and reduce claims.

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The trained adjusters likely interviewed patients at Plambeck’s clinics in order to determine: (1) the circumstances of the accident; (2) if they were injured; (3) their complaints of injury; (4) if they sought medical attention; (5) if they are still being treated.

Why was Allstate unable to identify patients as co-defendants in its lawsuit alleging fraud and collusive schemes in the Plambeck or A&I cases? To be able to call this a “scheme”, there must have been a patient claim for payment that Allstate found fraudulent. Is it possible that the fraudulent claims were submitted by patients? Isn’t it possible to make a scheme like Allstate’s successful if there were willing victims? According to Allstate, not according to their actions.

Are you paying claims, then filing a federal suit seeking $10 million to recover money paid. This is to allege fraud for activities that have been known for more than a decade. It’s a way to protect consumers and keep insurance costs down.

The Coalition Against Insurance Fraud published Fraud Focus Spring 2008, in which it was reported that Plambeck allegedly cost Allstate such a lot that the insurer tried to “gut” his operation with a federal lawsuit worth $10 million. It is interesting that both Mr. Moran (an Allstate Vice President) and NICB CEO are on the Coalition Against Insurance Fraud’s Board of Directors.

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If Plambeck et al. If the defendants in Allstate’s lawsuit were actually involved in fraud, they should be dealt appropriately and held responsible by the appropriate authorities. But not by an insurance company that acts as a defacto Attorney General and wants to “gut” them in the public eye through press releases and press conferences.

Allstate provides large amounts of money to NICB in order to allow criminal prosecutions for the same type of activity that it alleged in its 2008 press release. In a 2006 Special Edition, NICB Upclose states that NICB has “just what the doctor ordered… NICB now boasts more than 25 Medical Fraud Task Force units throughout the United States that are creating a huge return on investment for NICB member”. Interestingly, NICB has task force units in all of the states listed in Allstate et. al. v. Plambeck et al.

Could the desire to shut down chiropractic businesses be behind their lawsuits against other chiropractors as well? This was evidently the case for a chiropractor from the east coast, who managed a variety of multidisciplinary practices. This provider needed my assistance with his Compliance program. The provider’s business was actually “gutted” by the bankruptcy proceedings to pay the legal fees for the defense of the lawsuit brought by the “Good-Hands”.

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Is it possible for Allstate to claim that it innocently relied upon Plambeck’s representations and was defrauded by them? Allstate claims that it “relied on Plambeck’s representations” to its detriment, despite the fact that Allstate has been probing Plambeck for over a decade.

This is the key to a fraud claim. One party may be convinced of fraud by another and transact business with them.

May Allstate, the “good people”, also claims to be the “clean hands”?

As Mr. Moran stated, health care fraud is a billion-dollar business. But the insurance industry is a TRILLION-dollar business!

Allstate is not being truthful when it reports that its fight against insurance fraud was to protect consumers and keep insurance costs down.

Allstate released a press release on August 18, 2005 regarding yet another federal lawsuit against chiropractic. This one was in Massachusetts against First Spine and Rehab. Mr. Moran stated that Allstate had received more than $55 Million in court judgments since 2001. “These judgments against crime range from individuals to sophisticated organized criminal syndicates.” It is interesting to note that Allstate’s press releases from 2004 are available on their website. They all mention chiropractors in the release.

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The American Association of Justice has ranked Allstate Insurance as the worst consumer insurer. They have a history of greed and refusing to pay legitimate claims. Employees are also rewarded for denials of claims with a strategy of “deny delay, defend.”

Over twenty years of experience working with fraud-fighters in health care – including regulators, law enforcement officers, and providers of health care – I’ve found that chiropractic fraud is a problem that only the most qualified people can stop.

These same individuals/entities are more likely to complain loudest about the severity of the problem!

Insurers targeting chiropractors to perform post-payment audits or civil lawsuits is not going to reduce HEALTHCARE FAUD, but it is a diversion tactic to convince everyone that something is happening.