Feels like a Fraud: Fifth Circuit Rules in Favor of Insurer; Awards $6M in Fraudulent Claims Case

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In Allstate Insurance Company et al. v. Michael Kent Plambeck, DC, et al. United States Court of Appeals for the Fifth Circuit, September 17, 2015, an insurer was awarded a $6 million verdict against a group of chiropractors, lawyers and telemarketers that coerced individuals into making fraudulent claims against the insurer. The District Court awarded the verdict based on the Racketeer Influenced and Corrupt Organizations Act (RICO). On September 17, 2015, the Fifth Circuit Court upheld the verdict.

The insurer accused the telemarketers of using aggressive telemarketing to recruit car accident victims and, with the help of the attorneys and chiropractors, helping them establish false claims and seek settlements from the insurer. The insurer alleged that the trio telemarketed to bring in car accident victims, convinced them to undergo treatment they did not need and then urged them to sign up with law firms that demanded settlements from the insurers of the at fault drivers.

The District Court jury found that the defendants violated the RICO Act and awarded approximately $6 million to the insurer based on the amounts the insurer paid. The defendants appealed, arguing that there was no evidence to back the RICO claims. The Fifth Circuit found the defendants’ arguments to be groundless and affirmed the award.