Allstate Fights Fraudsters in Court and Wins

Fraudsters Must Pay RICO Damages
Post 5192

In Allstate Insurance Company, Allstate Indemnity Company, Allstate Property And Casualt Insurance Company, And Allstate Fire And Casualty Insurance Company v. Vladimir Geykhman, et al., No. 24 CV 4580 (PKC) (CLP), United States District Court, E.D. New York (September 7, 2025) Allstate Insurance Company, et al (together “plaintiffs” or “Allstate”), sued seeking damages that they  suffered from an insurance fraud scheme where defendants billed Allstate for medically unnecessary physical therapy services and collected insurance payments on fraudulent No-Fault claims.

Allstate accused several people of participating in an insurance fraud scheme. The scheme involved billing Allstate for medically unnecessary physical therapy services and collecting insurance payments on fraudulent No-Fault claims. The defendants are categorized into three groups:

Licensed physical therapists who nominally owned the PC Defendants but allowed their licenses to be used to create the false appearance of compliance with licensing requirements.

Non-licensed laypersons who controlled the No-Fault clinics and the medical providers they staffed. They orchestrated the fraud scheme and laundered the proceeds through shell companies.

The details of the allegations against the defendants, including the submission of fraudulent claims, the operation of the clinics by unlicensed individuals, and the involvement in unlawful referral and kickback arrangements.

The court recommended granting default judgment in part and denying it in part, based on the sufficiency of the allegations and the evidence provided by Allstate.

BACKGROUND

Defaulting Defendants carried out a scheme to exploit New York's No-Fault insurance laws, which provide for insurance coverage to claimants involved in automobile accidents. As the victim of the scheme, Allstate alleged that it was fraudulently billed for coverage for physical therapy services.

The fraud scheme was carried out through a network of fraudulently incorporated professional corporations (collectively, the “PC Defendants”). These clinics operated in several locations in the New York area and were implicated in one of the largest no-fault insurance frauds in New York history.

The second category of defendants consists of licensed physical therapists that nominally owned the PC Defendants.

The final category of defendants are non-licensed laypersons who were really in control of these No-Fault clinics and the medical providers they staffed.

Defaulting Defendants have failed to appear or contest Allstate's allegations. Allstate thereafter filed a motion for default judgment.

DISCUSSION
Default Judgment

The burden is on the plaintiff to establish his entitlement to recovery. The Court found that all three factors permit entry of default judgment against the Defaulting Defendants and respectfully recommends that they be deemed to have defaulted.

Substantive RICO Claims

Allstate alleges eight substantive RICO Claims that correspond with the fraudulently incorporated professional corporations that make up the PC Defendants. These RICO claims are alleged against all Defaulting Defendants, grouped by the different PC Defendant enterprises, and Geykhman, for his role as a Management Defendant in control of the PC Defendants.

To sustain a RICO claim under 18 U.S.C. § 1962(c), a plaintiff must show ‘(1) that the defendant (2) through the commission of two or more acts (3) constituting a ‘pattern' (4) of ‘racketeering activity' (5) directly or indirectly invests in, or maintains and interest in, or participates in (6) an ‘enterprise' (7) the activities of which affect interstate or foreign commerce.

The RICO Enterprises

There are eight RICO enterprises at issue in Allstate's motions for default judgment, each corresponding with a PC Defendant currently in default. Allstate has successfully pleaded that the PC Defendant enterprises are “enterprises” and that the other Defaulting Defendants and Geykhman are “persons” under RICO.

State Common Law Fraud

Allstate moved for default judgment on the state common law fraud claims it brings against each defendant in this action.  Allstate has established that Defaulting Defendants and Geykhman have made material misrepresentations or omissions of fact, that they made these material misrepresentations with knowledge of their falsity and with intent to defraud, and that Allstate's reasonable reliance on these representations led it to suffer damages.

Default Judgment should be granted as to Allstate's RICO claims.

ZALMA OPINION

Insurance fraud costs the insurance buying public over $308 billion every year. Insurers, like Allstate, are now fighting back by taking the profit out of the crime. In this case, Allstate will get money judgments against the doctors, chiropractors, health care providers for the money obtained by fraud and multiple extra damages under the RICO laws. They will probably have a difficult time collecting but they must do as much as they can to collect from the fraudsters.

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c) 2025 Barry Zalma & ClaimSchool, Inc.

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