Auto and property insurance company Allstate says it was bilked of more than $1 million in claims for nearly 100 patients by Chicago pain management clinic Pain Net and its partner, Spine Centers Inc. In March 2009, the insurer filed a lawsuit against both companies in Chicago's U.S. District Court, alleging racketeering, fraud and violation of self-referral laws.

The defendants call Allstate's claims "patently absurd" and have asked that the case be dismissed. They say Allstate is responsible for challenging any medical fees that are not considered market rate prior to settling a case. They also say Allstate lacks the standing to sue for several of the claims, including self-referral, which is a matter properly administered by the Illinois Health Facilities Planning Board.

According to Allstate's lawsuit, after seeing patients in clinic, Pain Net physicians referred them to MRI facilities where they were administered an MRI without contrast in return for about $400 from Pain Net. Pain Net and SCI then billed the patients more than $2,100 for the MRI. Representatives from one of the MRI facilities testified in a different court case that the fee to an uninsured patient for the same service would be $350.

Similarly, according to the lawsuit, Pain Net referred patients to surgical facilities for epidural steroid injections. The company contracted to pay about $500 per hour for operative and perioperative services, but typically billed Allstate $4,998, the suit says. If more than 2 injections were given, the company would often bill $4,998 for each injection, even if both were performed in the same hour, Allstate's suit alleges.

One of the facilities was a surgical center co-owned by Chicago physician Roberto Diaz, MD, the sole owner of Pain Net and part owner of Spine Centers Inc., the suit says. An attorney for Dr. Diaz, who is currently on vacation, did not respond to a request for comment.

Allstate says the "grossly excess" charges resulted in higher settlements than it otherwise would have paid. It claims Dr. Diaz had "impermissible conflicts of interest" because he was financially enriched by referring patients to centers under contract. Allstate says Dr. Diaz never gave patients the option of going to a different facility for the MRI exams or injections. Charges against Dr. Diaz and the centers include mail fraud, racketeering, state insurance fraud, consumer fraud and unjust enrichment.

No discovery has taken place in the case and a trial date has not been set, says Allstate's attorney David Koppelman, who would not comment further on the case.

Outpatient Surgery Magazine staff