Allstate sues imaging centers, physicians seeking $5M from alleged insurance scam
Correction: An earlier version of this story erroneously identified MRI Centers of Texas as a defendant. Radiology Business regrets this error.
Allstate insurance is suing multiple imaging centers and affiliated physicians in Texas seeking some $5 million stemming from an alleged auto-injury fraud scam.
Filed Nov. 3 in a federal district court, the complaint names Dallas pain management firm Foundation Physicians Group (FPG) as a defendant alongside affiliated entities Prime Imaging Partners and Memorial MRI & Diagnostic.
Between mid-2019 and 2023, FPG would allegedly convert “otherwise soft-tissue bodily injury claims” into major medical ones. Allstate says Foundation Physicians Group would refer patients to a small number of MRI facilities—including some in which it held an ownership stake, such as Prime Imaging Partners—for sham scans.
“Imaging used as a supposed basis for injection procedures was often performed at the Prime offices,” attorneys wrote in the complaint, with alleged unnecessary interventional procedures including epidural steroid injections of the lumbar spine.
Before 2019, physicians such as orthopedic surgeons and neurologists saw patients at Foundation Physicians Group. However, by mid-year, it was mostly only a limited number of part-time docs, with nurse practitioners performing most exams and making recommendations for injections. The patient population became more limited to auto accident victims, and the types of treatments also dwindled, Allstate attorneys claim. Texas state requirements for NP practices were frequently not followed to back up the need for these pain procedures, attorneys also charge.
Patients were typically referred to Foundation Physician Group from Prime Imaging Partners, sometimes without ever undergoing the supporting MRI. They then would receive injections under general anesthesia at the main Prime Imaging location. Those involved would additionally issue billings for the unnecessary procedures, “further increasing the costs,” attorneys wrote, “by utilizing numerous improper facility fees as unbundled medical charges.”
Purportedly, no physician ever evaluated medically necessity nor approved the injections ordered by NPs, Allstate alleges. In previous testimony for another insurance scam case, multiple witnesses claimed patients’ personal injury attorneys had to authorize all procedures recommended by FPG before they were performed. One nurse practitioner witness in that case further charged that NPs ordered many of the unnecessary MRIs and other diagnostic tests.
“As a result of defendants’ conduct, [Allstate and its related entities] have been damaged by the payment of sums related to the claims at issue,” plaintiff attorneys wrote.
Questionable conduct continues after merger
Memorial MRI & Diagnostics was formed in 2001, while another company allegedly involved in the scheme, Complete Pain Solutions (CPS), launched in 2015. At that time, CPS began seeing patients at Memorial MRI facilities around the Houston area, where the pain group is based. By September 2019, both companies filed certificates changing to PLLCs (professional limited liability companies), with Memorial MRI 100% owned by Complete Pain Solutions since then.
In July 2020, State Farm insurance sued Complete Pain, alleging violations of the RICO (Racketeer Influenced and Corrupt Organizations) statutes. Testimony from Memorial MRI officers and employees charged that Complete Pain Solutions was a branch of Memorial MRI formed to provide services for personal auto-injury claimants.
Around September 2021, Memorial MRI acquired both Foundation Physicians Group and Prime Imaging Partners, the complaint states. Complete Pain also around the same period filed a certificate to do business as Foundation Physicians Group, and Memorial MRI filed another certificate to begin operating as Prime Diagnostic Imaging, according to witness Kim Tran, who testified in the State Farm case and said she had signed both certificates.
“However, this acquisition did not signal a change in what was by then Foundation’s personal injury business model,” the lawsuit charges.
In her deposition testimony presented in State Farm’s case in December 2023, Tran said personal attorneys often would request certain radiologists to read their clients’ scans. These individuals would then evaluate their MRIs, which were fulfilled as “customer service” tickets. Tran testified she viewed these personal injury attorneys as clients of Complete Pain Solutions, more so than the patients treated.
The personal injury scam purportedly continued after the 2021 acquisition of FPG and Prime Imaging. Patients were routinely funneled elsewhere for MRIs, with referrals made soon after auto-accident victims presented at the pain clinics. At times, MRI scans were performed within weeks of an accident.
“Interestingly, in a 2024 deposition, [co-defendant and anesthesiologist Bradley Eames, DO] opined MRIs should not be ordered until after the patient had unresolved pain for 6 to 8 weeks. Dr. Eames noted ‘a lot’ of accident patients get [imaging] earlier but ‘that’s usually attorney-driven and not medical driven,’” the complaint states, noting these MRI referrals often were steered to Prime Imaging Partners.
Before the acquisition by Memorial MRI, Nicholas Iwasko, MD, in Dallas and R. Craig Platenberg, MD, in Virginia were the primary radiologists reviewing these MRIs. After the ownership change, Rodolfo Garcia, MD, of Edinburg, Texas, and Michael Davis, MD, of San Antonio, Texas, reviewed the scans (none of the 4 radiologists are named as defendants in the latest lawsuit). Other times, the imaging referrals were sent to additional outpatient radiology centers not named as defendants. MRI reports were issued, generally finding spinal herniations, protrusions or bulges.
Foundation providers then would look only at the summary MRI reports recommending injections. Orthopedic neurosurgeon Eric Gioia, MD, (another defendant in the case), meanwhile, stated he would look at the medical images, too, in addition to the finding summaries.
“Interestingly, Dr. Gioia testified he did not trust the MRI reports and therefore reviewed the images. In a 2022 deposition, he stated ‘the radiology reports are often misleading,’” the Allstate lawsuit claims. “‘A lot of radiologists over-read stuff,’ and ‘the radiologists often find things that they report that, for me, as a surgeon, don’t fit with what’s going on,’” Gioia later said in a 2023 State Farm deposition.
Attorneys are seeking over $5 million in damages and a jury trial to decide the matter. Foundation Physicians Group and Memorial MRI & Diagnostic did not immediately respond to requests for comment Wednesday. Insurance Business first reported news of the lawsuit earlier this month. State Farm filed its suit in 2020, with federal court records indicating the case was still ongoing as of late last month.
“No specific insurance policy clauses are at issue; the case focuses on alleged fraudulent inflation of bodily injury claims and related billing practices, not on coverage disputes,” the trade publication noted. “While no final determination has been made and these remain allegations, the case highlights the insurance industry’s ongoing challenges in addressing alleged organized medical billing fraud and the relationships between medical providers, attorneys and insurers in automobile injury claims.”
Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.