Commonwealth Serves $90,000 Fine on Injury & Rehab Centers of Kentucky

As a result of a hearing requested by Grange Mutual Casualty Company, the Kentucky Cabinet for Health & Family Services has fined Injury & Rehab Centers of Kentucky (a.k.a. Accident Injury
Medical Centers) $90,000 for the reported willful violation of Kentucky law.

The $90,000 fine was the maximum allowable according to the administrative hearing officer who issued the fine and is the first major fine in the 25 year history of Kentucky’s certificate of need law.

In October 2003, Grange requested a hearing before an administrative
hearing officer of the Cabinet. Hearings were held in January and again in March of 2004.

“Our request for the hearing detailed the reasons we believed Injury &
Rehab had been operating illegally,” said LaVawn Coleman, Grange’s assistant secretary. “The administrative hearing officer in this case found that Injury & Rehab knowingly sought to avoid licensure and other commonwealth requirements.”

In Kentucky, most insured persons carry Personal Injury Protection (PIP) benefits up to $10,000 as part of their automobile policies for reasonable and necessary medical treatment. During the hearings, Grange reportedly presented evidence that Injury & Rehab’s medical protocols were developed by a former chiropractor, Larry Lammers, who has been arrested three times for practicing without a license and who personally treated patients, gave injections and referred patients for diagnostic testing without physician supervision.

“We took this action for the benefit of our policyholders and are pleased with the outcome,” said Coleman. “We have an obligation to combat insurance fraud in an effort to hold down premiums for the consumer. According to the National Insurance Crime Bureau, the cost of fraud is $30 billion annually in the insurance industry. That is a cost that everyone shares.”

Grange continues to pursue formal fraud and civil racketeering charges
against Injury & Rehab, which have not yet reportedly reached a resolution.