Multi-Million Dollar Civil Suit Against Chiros in MN-solicitation
issue

Five Insurers File Multi-Million Dollar Civil Suit Against Group of
Chiropractic Clinics, Chiropractors & One Lay Person in Alleged Twin 
Cities
Fraud Scam

Progressive, Allstate, Encompass, Mutual Service Insurance 
Companies and
Western National File Civil No-Fault Fraud CaseMinneapolis ’ „ 
August 21, 2002
’ „ Progressive, Allstate, Encompass Insurance (through 
underwriting company
Continental Insurance Company), the Mutual Service Insurance 
Companies (MSI)
and Western National Mutual Insurance Group today filed a civil 
lawsuit with
Hennepin County District Court against five chiropractic clinics, 
their
alleged ’ ¶owners’   and four chiropractors. The suit alleges that 
the
defendants organized a scheme to steer accident victims to their 
clinics in
order to defraud the auto insurance companies by billing for 
unnecessary
treatments or for services not performed. The plaintiffs are seeking 
damages
in excess of $3 million.’ ¶It’ Ås estimated that insurance fraud 
costs each
Minnesota household $1,000 a year, primarily in the form of 
increased
insurance premiums,’   said Pat McCann, Minnesota special 
investigations unit
(SIU) manager for Progressive. ’ ¶We may be competitors, but our 
companies
have worked together in this fraud-fighting effort because we have 
an
obligation to our customers to help keep the costs of auto insurance 
down.’  
Named in the suit are five area chiropractic clinics, including Saint 
Paul
Spinal Health Center, Inc., Midwest Family Chiropractic Group, P.A., 
South
Metro Spinal Rehabilitation, Inc., Eastside Chiropractic and 
Rehabilitation,
Inc., Northeast Spinal Rehabilitation, Inc. Also named in the suit are 
the
clinics Å alleged owners,   Howard Pindyck and chiropractor Phillip 
Bruno.
The remaining defendants include chiropractors Michael Czichray, 
Leonard
Evangelist, Mark Soli and Russell Anderson.Based on a two-year 
investigation
by the insurers, the suit alleges that the clinics, led by Pindyck, 
obtained
motor vehicle accident reports and solicited the victims by phone to 
come to
the clinics for treatment. Runners  or cappers   would then transport 
the
solicited victims to and from the clinics and were paid for each 
victim they
delivered. The clinics allegedly developed a routine course of 
extensive and
medically-unnecessary treatments for victims, regardless of their 
actual
injuries, racking up thousands in bogus billing to the insurance 
companies.
In addition, the plaintiffs allege that the clinics billed for 
treatments
that were never provided or were provided by a lay person and billed 
as
chiropractic services. We joined this collaborative investigation 
because
we were not only concerned for the injured people treated by these 
clinics,
which allegedly provided excessive and unnecessary treatments, but 
also for
all consumers who ultimately pay the price for insurance fraud 
through
higher insurance rates,   said Edward Moran, assistant vice 
president,
Allstate. This case illustrates the need for further reform to 
Minnesota Ås
no-fault insurance system,  said Bruce Raines, SIU coordinator for 
MSI.
While we are encouraged by recent legislation that will assist us in 
the
battle against fraud, more must be done to reduce the incidence of 
fraud in
Minnesota Under Minnesota Ås no-fault insurance system, each 
driver's auto
insurance coverage pays for his or her own medical expenses, no 
matter who
caused the accident. No-fault laws are meant to pay auto accident 
victims
faster by avoiding the delays and expense of lawsuits, reduce the 
volume of
lawsuits by eliminating minor injury cases from the court system 
and
minimize overall motor vehicle insurance costs. However, provisions 
under the
current no-fault system are contributing to fraudulent activity and 
costing
Minnesotans hundreds of millions of dollars each year. One provision
requires insurance companies to deny or pay claims within 30 days, 
leaving
inadequate time to investigate suspicious claims. In addition, the 
law
guarantees injured parties up to $20,000 in medical care, which 
invites
unscrupulous medical providers to inflate their bills to take 
advantage of
this medical cost limit.Minnesota was one of only a handful of 
states
without a state level insurance fraud investigative unit. In April of 
this
year, a state law was passed that will launch an insurance fraud 
prevention
unit within the Minnesota Commerce Department in July 2003. The 
new law also
made acting as a runner   or capper   illegal as of August 1,
2002. According to the National Insurance Crime Bureau, insurance 
fraud is
the second most costly white-collar crime in America - only tax 
evasion is
more costly,  said Nancy Jacobson, SIU manager, Western National 
Insurance.
We hope this lawsuit sends a message loud and clear that insurance 
fraud
does not pay in Minnesota.