Progressive Recoups More Than $35,000 From Clinic Accused Of Bilking Insurers
Allegations Against Allied Medical Reinforce Urgent Need for PIP Reform in Florida
TAMPA, Fla. — April 16, 2003 —As a result of a year-long undercover fraud investigation of Allied Medical and Rehab Center, Inc. and Sunshine Collection Services, Inc. by the Hialeah Police Department, a forfeiture action was filed and approximately $252,000 of alleged ill-gotten gains were seized by the City of Hialeah in late 2002. Miami-Dade County Circuit Court Judge Phillip Bloom entered an order finding probable cause at which time insurance companies and other innocent owners were able to make a claim to receive restitution. Only Progressive, the country's third largest auto insurer, and U.S. Security, a subsidiary of Mercury General, the country's 16th largest auto insurer, filed claims with the court. As a result, Progressive has received more than $35,000 in restitution from Allied and Sunshine.
"Unfortunately this money represents just a fraction of what Progressive has paid in Florida as a result of fraudulent activity," said Juan Andrade, claims general manager, Progressive. "The good news is that we can use that money to help defray some of our costs and, by doing so, can help to keep the cost of auto insurance down for our Florida customers. It's surprising that only two auto insurance companies made claims for restitution."
The Hialeah Police Department investigation resulted in 20 felony charges being filed against the clinic's medical director, Alexander Roshko, 30, of Miami in April of 2002. Charges included filing fake or fraudulent insurance claims, grand theft, patient brokering and organized fraud. Further, the police alleged that Allied Medical fraudulently billed auto insurance companies as much as $4 million.
Auto insurance rates are based on the company's cost of doing business, which includes the cost of paying claims. Auto insurance fraud is rampant in Florida; all auto insurance customers are paying the price. In fact, the Florida Division of Insurance Fraud estimates that fraudulent insurance claims cost each family in the state an additional $240 a year.
Andrade said: "This investigation is the poster child for PIP reform and demonstrates the importance of the bills before the Florida legislature today. Among the reforms that would help to reduce auto insurance fraud in the state are increasing the criminal penalties for solicitation to a second degree felony, prohibiting people who have been convicted of crimes or prior acts of insurance fraud from owning or working in clinics and providing the Department of Insurance Fraud greater enforcement power including the ability to make unannounced on-site clinic inspections. Reforms should also require more stringent PIP billing forms that require medical providers and patients receiving treatment to verify that no improper solicitation or kickbacks have taken place."
"We're watching the work that the Florida Legislature is doing right now with great interest," said Andrade. "And so should every Florida driver. After all, it's each of them who is paying a steep price for the actions of a few who are actively defrauding the system."
The reform package before the current Legislative session includes toughening penalties for ambulance chasing and seeks broader regulation of medical fees, caps on attorney's fees and additional time for insurers to investigate suspicious claims.
The Progressive group of insurance companies (NYSE: PGR), in business since 1937, comprises the nation's third largest auto insurance group and provides drivers with competitive rates and 24/7, in-person service. The companies offer insurance by phone at 1-800-PROGRESSIVE, online at progressive.com and through more than 30,000 independent insurance agencies. The Progressive Corporation, the holding company, has headquarters in Mayfield Village, Ohio. More information can be found at progressive.com.
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