Illinois Insurance

As automobile accidents go, it was not much: two teen-agers driving home from school in Southern California were bumped from behind. They later told investigators that they felt a little pain in their backs and necks.

The day after the crash they went first, not to a doctor, but to a lawyer. The lawyer sent them to a clinic and the bills started to mount up. After two months the bills for one boy, 19, came to $3,740. For his friend, 14 years old, the cost was $4,090.

As Allstate, the insurance company that covered the boys’ accident, sees it, the bills — including one for $250 for an initial exam that the boys said took a few minutes — were badly inflated.

The case is but one that Allstate plans to cite today, when it intends to notify about a dozen Southern California doctors and chiropractors and their assistants that they are being sued for $25 million for repeatedly overbilling or billing for services they never provided in hundreds of cases over the last several years.

Cases like the one involving the two teenagers, insurance industry executives say, are part of a widespread pattern of fraud across the country. The Insurance Research Council, an industry organization in Illinois, says that nearly 40 percent of the claims for auto accident injuries now involve fraud. And a fortune is at stake. Last year alone, insurers received claims for more than $42 billion for auto-accident injuries.

While insurance fraud is a problem as old as insurance itself, industry experts see a disturbing variation on the theme: rather than pre-meditated criminal activity involving supposed accident victims, insurers say some doctors and clinics are capitalizing on real accidents and real injuries by seeking reimbursement for procedures not required and never performed.

In fact, the Insurance Research Council says 90 percent of the offenses are not planned but are ”opportunistic fraud” in which professionals, and sometimes patients, seize a chance to profit with little apparent likelihood of being caught.

Now, Allstate, the country’s second-largest auto insurer, is starting to go after doctors and clinics across the country where they are finding evidence of such overbilling.

The California suits, which were filed under seal two months ago as required by that state’s law and will be served to the parties today, are the first of their kind by a major auto insurer. But they are not the last. Edward J. Moran, the chief of investigations for Allstate, said the company was developing cases against other doctors and clinics in San Francisco, Chicago, Memphis, Miami, Philadelphia and other cities.

”We want doctors to know there is a price to pay for committing insurance fraud,” Mr. Moran said.

Not everyone agrees about the magnitude of the problem. Leaders of the American Medical Association and the Association of Trial Lawyers of America, the leading organization of personal injury lawyers, say they believe the insurance industry is vastly overstating the extent of the fraud. They say they suspect that charges of fraud are a cynical tactic by insurers to limit the reimbursements they pay out.

But the problem is not simply a figment of the insurance industry’s imagination. In recent years there have been some stunning cases of respected hospital and health maintenance organization officals being charged by government investors with overbilling for Medicare and Medicaid services.

Until now, however, auto insurers have not systematically attacked the problem. In the past, they tried to deny suspicious claims — which they continue to do — or tried to discount them when they were negotiating settlements. But the problem has only grown worse, the insurers say.

The latest suits are an extension of earlier efforts by Allstate; State Farm, the largest auto insurer, and some of their competitors to file civil suits and help build criminal cases against gangs around the country that make a business of staging fake accidents.