Allstate targets podiatrists and alleged co-conspirators in a sweeping lawsuit, accusing them of masterminding a large-scale fraud against New York’s No-Fault auto insurance system.
Allstate Insurance Company and its affiliates have filed a lawsuit in the United States District Court for the Eastern District of New York, alleging that two New York podiatrists and a group of unnamed associates orchestrated a scheme to defraud the insurer out of hundreds of thousands of dollars. The case details a web of sham medical practices, illegal kickbacks, and fraudulent billing that, according to Allstate, has plagued the state’s No-Fault insurance system.
The lawsuit names Dr. Jeffrey I. Kriegel and Dr. William Michael Levine, along with their respective sole proprietorships and a series of unidentified “John Doe” defendants. Allstate alleges that, beginning in 2023, unlicensed individuals recruited Kriegel and Levine to serve as the nominal heads of podiatry practices that existed in name only. These practices, the insurer contends, were organized and controlled by unlicensed laypersons for the purpose of submitting hundreds of claims for podiatry services that were either medically unnecessary, unlawfully rendered, or not rendered at all.
Central to the allegations is the claim that the defendants established improper referral and kickback arrangements with at least sixteen No-Fault clinics located throughout the New York metropolitan area. These clinics, Allstate says, acted as sources of patients, providing a steady stream of insured individuals to the podiatry practices. In exchange, the defendants allegedly received access to patients whose auto insurance policies could be billed for a range of services.
The complaint outlines a pattern of billing for initial consultations, treatments described as “Extracorporeal Shockwave” and “Percutaneous Electrical Neurostimulation (PENS),” and medical supplies. Allstate asserts that these services were often medically unnecessary, not performed as described, or performed by unlicensed technicians rather than the licensed podiatrists whose names appeared on the paperwork. The insurer claims that the documentation supporting these bills was routinely fraudulent, with identical treatment records and templated reports submitted for different patients.
According to Allstate, the defendants submitted fraudulent billing totaling more than $705,385.09, resulting in wrongful payments of $86,176.77. The insurer maintains that these practices were in violation of New York laws prohibiting lay ownership and control of professional healthcare entities, as well as regulations barring reimbursement for services not rendered by licensed professionals.
The lawsuit also highlights the use of improper billing codes and the concealment of the true nature of the services provided. Allstate alleges that the defendants submitted “corrected” claims with new billing codes after the original submissions were challenged, in an effort to induce payment for services that were not reimbursable under the applicable fee schedule.
Allstate is seeking to recover the funds it says were wrongfully paid, as well as additional damages under federal racketeering statutes. The insurer is also asking the court to declare that it is not obligated to pay any further claims from the defendants and to issue an injunction to halt the alleged conduct.
While these are allegations and no final determination has been made, the case highlights the challenges insurers face in addressing organized fraud within the No-Fault system. The outcome could have implications for insurers, claims professionals, and those responsible for fraud prevention and regulatory compliance across the industry.
