Many Americans are struggling with high out-of-pocket costs for health care.
July 20--Allstate Insurance Co. is suing San Joaquin Valley doctors and several chiropractors in a multimillion-dollar lawsuit, alleging they falsely operated chiropractic clinics as medical groups to get insurance payments.
The lawsuit in Fresno County Superior Court also says that the doctors and chiropractors created sham professional medical corporations to illegally purchase and distribute prescription medication to chiropractic clinics and patients.
The lawsuit seeks damages in excess of $3 million as well as statutory penalties. And the insurance company seeks more than $1 million in damages, penalties, attorneys fees and costs for violations of California's Insurance Fraud Prevention Act.
The state of California also is a plaintiff. State law allows the insurance company to file on behalf of the state, said Allstate spokesman Jim Klapthor.
The lawsuit names more than a dozen defendants, including chiropractors Dolphus Dwayne Pierce II of Lemoore, John Brent Arakelian of Fresno and Drs. Tomas Ballesteros Rios of Bakersfield and Charles Orlando Lewis III of Hanford.
The allegations against the chiropractors and doctors are untrue, said James H. Wilkins, a Fresno lawyer representing Pierce, Arakelian and Lewis, who operate the San Joaquin Accident & Medical Group Inc. in Fresno. They were recently investigated by the California Medical Board, which "determined they are operating a legal medical corporation," he said.
Allstate said it filed the lawsuit after a lengthy investigation by its special investigations unit.
According to the lawsuit, Pierce established fake medical corporations for the purchase, storage, reselling and dispensing of prescription drugs. And he enlisted doctors to prescribe, deliver and dispense the drugs, the suit says.
Chiropractors licensed by the state of California are not allowed to prescribe or dispense prescription drugs.
The suit says Pierce knew the plan was illegal, but that having licensed doctors prescribe medication would increase the value of claims that could be filed with Allstate.
In 2003 and early 2004, the suit says Pierce and his wife, Cathy Aguilar Pierce, hired Rios to falsely appear as the majority owner of Pierce & Rios Med. Corp., Rios & Pierce Med. Corp. and P&R Med-Legal. All were "sham" medical corporations, according to the lawsuit.
Wilkins said the corporations listed in the lawsuit have not been in operation for several years. P&R, for example, has not been in operation for three years or more, he said.
The suit says Rios knew it was illegal when he agreed to pose as a "sham" owner of a medical corporation to circumvent the law.
Rios could not be reached for comment. Wilkins said he was not now representing Rios.
In 2004, the suit says, Rios entered into agreements with a number of chiropractors to appear as majority owner of multiple medical corporations in exchange for money, to give the false appearance that the corporations were in legal compliance.
According to the suit, Arakelian was one of those chiropractors; on June 29, 2005, he entered into an agreement with Rios in which Rios would pose as the majority owner of San Joaquin Accident & Medical Group Inc. The office is at Gettysburg and Cedar avenues in east-central Fresno.
When Rios pleaded guilty to a felony of making or subscribing to a false income tax return on May 25, 2007, Arakelian removed Rios as the owner of the medical group in mid-2007, the suit says. Rios was replaced by Lewis and Dr. Chan Woo Lee of South Gate in Los Angeles County, the suit says. Pierce became a part-owner.
San Joaquin Accident & Medical Group is the only entity currently in operation, and Pierce and Arakelian work there, Wilkins said.
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