Representatives Allege Kickback Schemes and Fraud are Growing Trend under Minnesota's No-Fault Insurance System

The outcome of a pending lawsuit in Minnesota may serve as a catalyst for reform for the state's current no-fault law. In the upcoming litigation that will likely draw additional attention and increase awareness of flaws within the existing system, Illinois Farmers Insurance and its subsidiaries filed a $1.9 million lawsuit against Mobile Diagnostic Imaging, Inc. (MDI), its owner, and 46 chiropractors. The diagnostic imaging company and the chiropractors are allegedly engaging in an elaborate kickback scheme to defraud the state of Minnesota's no-fault insurance system. Under the state's current system, the law requires insurance companies to pay a minimum of $20,000 for medical expenses, regardless of who is at fault in an auto accident.

While the goal may have been to provide personal injury protection for Minnesota motorists, according to local insurance representatives, there appears to be a growing trend in kickback schemes and staged accidents to commit fraud by taking advantage of the state's no-fault law.

The lawsuit filed against MDI alleges that the company's owner, Michael Appleman, paid 46 chiropractors kickbacks for ordering MRIs, many of which may not have been medically necessary. It is further alleged that MDI conducted its scans in a self-sufficient MRI trailer and that $221,800 in kickbacks were paid to the chiropractors between January and November of 2011.

Mark Kulda, a vice president of public affairs for the insurance federation, was quoted in the Star Tribune article regarding the case, "Today's filing of a federal lawsuit reaffirms what our industry has been saying for several years now – that insurance fraud is rampant in Minnesota."

NICB's Government Affairs department will be closely following the case as it progresses. As the legislative advocacy arm of the organization, the team promotes statutes, regulations and policies at all levels of government to help serve member interests in preventing, detecting and defeating insurance fraud and vehicle theft.

Tim Lynch, a director of government affairs at NICB, says "Unfortunately, Minnesota's no fault system has been hijacked by some dishonest medical providers, paid intermediaries and unscrupulous attorneys that have turned the system into their own personal treasury. NICB is actively working with the Minnesota Senate Working Group on Insurance Fraud to pursue some anti-fraud firewalls and controls to the current system."

To join the conversation on stopping fraud in Minnesota, check out the Stop Fraud MN Facebook page. For additional information on NICB, visit us online at www.nicb.org. To contact Tim Lynch, email him at tlynch@nicb.org.