Allstate hits Houston clinics with RICO suit over alleged $1.4m fraud

Insurance Business Mag, By Tez Romero, October 28, 2025

Allstate alleges that a Houston medical network orchestrated a $1.4 million fraud scheme using forged records and phantom treatments.

A sprawling fraud operation targeting auto insurance claims has prompted Allstate to file federal racketeering charges against a Houston medical network, alleging providers systematically bilked the insurer through fabricated patient signatures, unnecessary injections, and a predetermined treatment protocol designed to maximize billing rather than heal patients.

The lawsuit, filed Oct. 27 in the Southern District of Texas, paints a damning picture of alleged healthcare fraud: chiropractors masquerading as medical directors, claimants billed for treatments they never received, and a network of clinics operating as a well-oiled machine to extract payments from insurers.

At the center sits Jose Sebastian Magbag Jr., a chiropractor who Allstate alleges controlled Greater Houston Healthcare Solutions and related facilities while unlawfully practicing medicine without a license. According to the complaint, Magbag ran the operation almost daily, dictating medical decisions and administering procedures far beyond his scope of practice – all while a licensed physician served as little more than window dressing to create an illusion of legitimacy.

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