State Farm Lawsuit Accuses N.J. Medical Providers of $2.6M Fraud Scheme

Insurer State Farm is fighting what it says is a fraudulent medical scheme that has been exploiting New Jersey’s personal injury protection (PIP) benefits law since 2014.

The insurer is seeking to recover $2.6 million in what it claims are fraudulent auto injury claims and a declaratory judgment that it need not pay any further claims submitted by the providers involved in the alleged scheme.

State Farm’s suit accuses 12 chiropractic and spine clinics and doctors of fraud, unjust enrichment and violations of the New Jersey Insurance Fraud Prevention Act. The insurer alleges these providers used a “predetermined protocol” for all patients and a patient referral system for services that were either not performed or were not medically necessary for the individual patients. Instead, the services were carried out to enrich defendants by exploiting the patients’ eligibility for PIP benefits, according to the complaint.

The suit accuses the providers of failing to legitimately evaluate patients to determine the true nature of their injuries and of reporting the same or similar findings for all patients to justify a predetermined course of treatment that was substantially the same for all patients.

Part of the “predetermined protocol” for patients with soft-tissue injuries of the neck and back consisted of hot and cold packs, chiropractic manipulations, massage, mechanical traction, physical medicine and rehabilitation, and manual therapy, administered to almost every patient on almost every visit, regardless of each patient’s unique circumstances and needs, according to the complaint.

Also, according to the insurer, the chiropractors would refer patients to diagnostic clinics, some allegedly illegally owned by the chiropractors, for an “unnecessary and predetermined course of pain management and invasive treatments” including injections. State Farm says the doctors would submit false documentation for each case representing that the treatments were legitimately performed and medically necessary.

The 80-page complaint details case after case where the patient’s responses to questions and tests were the same or similar, allegedly serving as a “pretext to justify” the chiropractors’ wide range of treatments.

State Farm Guaranty and State Farm Indemnity claim they are entitled to compensatory damages, together with interest and costs.

New Jersey’s Automobile Insurance Cost Reduction Act (AICRA) requires automobile insurers to provide PIP benefits to pay for medically reasonable, necessary and appropriate treatment. An insured is permitted to assign his or her right to PIP benefits to healthcare providers for payment of their treatment. Providers can submit claims directly to insurers.

The defendants in the complaint filed in U.S. District Court for New Jersey are Tri-County Chiropractic and Rehabilitation Center, Robert Matturro, D.C., Advanced Spine and Pain Management, Varinder Dhillon, M.D., Nicholas Rosania, D.C., Bloomfield UAI, Dov Rand, M.D., Primary Medical Services, Louis J. Citarelli, M.D., Chiro Health Center P.C., Marc Matturro, D.C. and Marco Tartaglia, M.D.