Pa.: State Farm Adequately Pled Chiropractor Billing Fraud

PHILADELPHIA, May 20 — A federal judge has denied a motion to dismiss State Farm Mutual Automobile Insurance Co.’s amended complaint of billing fraud against a chiropractic and physical therapy practice.  It ruled also that State Farm need not prove justifiable reliance on the bills at this stage of the case.

U.S. District  Judge J. Curtis Joyner of the Eastern District of Pennsylvania also found that State Farm’s  amended claims were both timely, and adequately alleged misrepresentation in the billing submitted by the defendants.

State Farm alleges that  Eastern Approach Rehabilitation LLC, Aquatic Therapy of Chinatown Inc., Leonard Stavropolskiy, P.T., D.C., and Joseph Wang, P.T., D.C., submitted false and fraudulent insurance claims on behalf the practice’s patients.  State Farm claims that the defendants  created a series of records for patients suffering from “moderate-to-severe joint dysfunctions, pain, and muscle spasms across multiple regions of the spine,”  and that these impressions from initial examinations were copied and pasted into subsequent treatment notes.  The amended complaint contends that planned treatments recorded in the notes were simply pre-determined, and not individually tailored to each patient.

State Farm also alleges claims that dating back to 2010, the practicioners took action to hide the nature of the fraudulent activity through the use of software to randomize and synonymize similar observations and diagnoses.  The amended complaint alleges that this conduct created the impression that diagnosis and treatment of patients was individualized when in fact it was not.

State Farm alleges damages in excess of $850,000.

On Feb. 17, Judge Joyner granted the motion to dismiss the original complaint,  but allowed State Farm to file an amended complaint.  He ruled that the amended complaint, however, sufficiently set forth misrepresentations allegedly made by the defendants, and that, at least at the pleading stage, the insurer need not show  justifiable reliance on the misrepresentations allegedly made in the billings.

State Farm Mutual Automobile Insurance Company v. Leonard Stavropolskiy, P.T., D.C., et al., No. 15-cv-5929, E.D. Pa.; 2016 U.S. Dist. LEXIS 65234

Author: CJ Haddick

C.J. Haddick is a Director with the law firm of Dickie, McCamey, & Chilcote, PC, based in Pittsburgh, Pa. He has advised and represented insurers in insurance coverage and bad faith litigation for more than three decades, and written and spoken throughout the United States on insurance coverage and bad faith prevention and litigation. He is Managing Director of the firm's Harrisburg, Pa. office. Reach him at chaddick@dmclaw.com or 717-731-4800. View all posts by CJ Haddick