Allstate New Jersey and CNA Companies Sue Spring Lake Psychological Group For Insurance Fraud > >N.Y. Board of Education School Psychologist Named in Suit > > MORRIS COUNTY, N.J., March 23, 2000 /PRNewswire/ -- Allstate New Jersey Insurance Company (Allstate New Jersey) and two insurance subsidiaries of CNA, Continental Insurance Company of New Jersey and Commercial Insurance Company of Newark, N.J., yesterday filed suit against the Spring Lake Psychological Group, P.C. (Spring Lake), its principals and a third individual for alleged participation in an insurance scam to defraud the companies out of thousands of dollars in claim payments for phony psychological services. The three-count suit was filed in Morris County Superior Court. > >The companies accuse Spring Lake co-owners, Dr. Warren Goldberg and Carmela Gutierrez, of engaging in several illegal practices constituting a pattern and practice of insurance fraud in violation of the New Jersey Insurance Fraud Prevention Act and the New Jersey Administrative Code. Among the major allegations, Allstate New Jersey contends that Spring Lake is a shell corporation established solely to bill insurance companies for fictitious or inadequate psychological testing, psychological counseling and biofeedback treatments, and to funnel kickbacks for illegal patient referrals. > >"There are a variety of scams taking place in New Jersey that drive up the cost of auto insurance for the consumer. Bogus psychological care is one of them," said Joseph L. Scrimo, Jr., Manager, Allstate New Jersey Special Investigative Unit. "Though you might not connect auto insurance fraud with billing for phony psychological services, we see a proliferation of this type of fraud and our investigations in this area are increasing." > >The plaintiffs allege that Gutierrez and Goldberg, who is a full- time school psychologist with the New York Board of Education, provided illegal kickbacks to chiropractors by paying excessive rent to lease office space within the chiropractors' facilities. Spring Lake had no established office location but rather "rented" space from several chiropractors specializing in auto accident cases. All of Spring Lake's clients were allegedly undergoing chiropractic care for minor soft tissue injuries resulting from auto accidents. > >Esther Del Pino, a named defendant in the suit, is accused of illegally providing patient referrals to the Spring Lake practice. Del Pino, the office manager of Lexington Chiropractic Center, was indicted one year ago by a Passaic Grand Jury for fraudulently billing insurance companies and for kickbacks. > >Allstate alleges that individuals referred to Spring Lake often had no psychological complaints warranting a referral. Regardless, each patient allegedly underwent cursory testing resulting in a multi-page evaluation. Upon investigation, it appears all Spring Lake clinicians used one template report, listing the same symptoms, diagnoses and treatment plan for every patient evaluated. Except for certain biographical data, these evaluations were interchangeable among Spring Lake's patients. > >"Individual fraudulent claims are sometimes difficult to detect at first glance," said Scrimo. "Often, it is only through extensive analysis that patterns of fraud like Spring Lake's emerge." > >As a further illustration of the fraud, a majority of Spring Lake's clients were fluent only in Spanish, yet almost all its psychotherapists were exclusively English speakers. This allegedly necessitated the use of interpreters, usually an uncertified employee of the chiropractic facility, which violates standards of practice and patient confidentiality. In many instances, the language barrier allegedly prevented patients from even knowing they were undergoing psychological evaluation. > >Spring Lake also billed Allstate New Jersey and the CNA companies for treatments that included numerous counseling sessions and biofeedback therapy. Allstate New Jersey and CNA contend that Spring Lake had neither the equipment, nor the trained personnel to provide effective biofeedback therapy, but routinely billed the companies for such services. The biofeedback treatment given was allegedly little more than patients listening to tapes of music or calming sounds for a few short minutes. > >For Allstate New Jersey, the suit involves 402 separate claims for the period November 1993 through March 1999 and total billing by the defendants of over $691,227. This number is expected to increase as additional claims are identified. Allstate paid $290,222 prior to suspending payments. The CNA companies had billings of $21,830 with $17,049 paid. > >The companies are seeking restitution of the monies paid, plus treble damages and expenses. They are also seeking to deny payment of all pending and future bills submitted by the defendants and to block and recoup any payments pending or already made to the defendants in PIP arbitration proceedings. > >This action is the result of over a year of investigation by Allstate New Jersey's Special Investigative Unit (SIU) with the cooperation of CNA. This is the first joint legal action taken by Allstate New Jersey and CNA since Allstate initiated an acquisition of the personal auto and homeowners operations of CNA last year. This action was also taken in cooperation with the New Jersey Office of Insurance Fraud Prosecutor. > >In 1999, the work of Allstate's SIU resulted in legal action against 388 suspected defrauders totaling $54 million. In 1998, the company also established a front-end Fraud Prevention Unit, to help identify and eliminate potential fraud at the time of application. > >Allstate New Jersey Insurance Company, headquartered in Bridgewater, N.J., was established in 1997 by the Allstate Insurance Company as a separate and distinct company to service the unique needs of consumers in the New Jersey insurance marketplace. The company is a major provider of auto, home and commercial insurance products. ANJ also offers life insurance through Allstate Life and Savings. Allstate New Jersey's many sales agents and experienced claim professionals are conveniently located throughout the Garden State. In October 1999, Allstate initiated the acquisition of the auto and homeowner operations of CNA, known as CNA Personal Insurance. CNA Personal Insurance is marketed exclusively through independent agents. > >According to the testimony of the principals of Spring Lake Psychological Group, Spring Lake allegedly leased office space within the following chiropractic facilities: