Facts

This action was filed on behalf of the state of California, ex. Rel. Allstate Insurance Company, against Paul Yan, D.C., and Paul Yan Chiropractic Corporation, alleging insurance fraud under California Insurance Code Section 1871.7.

Plaintiff ex. Rel Allstate Insurance Company alleged that defendants, Paul Yan, D.C. and Paul Yan Chiropractic Corporation submitted 117 claims to Allstate Insurance Company and that each claim contained improper and inflated billing codes and charges for services that were either never performed or not performed to the level reflected in the defendant’s billing statements.

Additionally, it was alleged that the defendants submitted bills and medical reports that reflected services that were unnecessary and unreasonable.

It was further alleged that the defendants knowingly and intentionally used improper Current Procedural Terminology (CPT) codes in their medical reports and billings to attempt to justify inflated compensation for services not actually rendered.

The suit alleged that the defendants violated California Insurance Code Section 1871.7, as well as California Penal Code Sections 549 and 550.

The defendants contended and admitted to using improper billing codes, but denied that the acts were intentional. The defendants also disputed the amounts of the claims.

Settlement Discussions

The plaintiff made a C.C.P. Section 998 demand of $250,000, which was rejected. This rejection will result in over $50,000 in interest in favor of the plaintiff. The defendant made a C.C.P. Section 998 offer of $75,000.

Result

Pursuant to the statute, the plaintiff is entitled to recover attorney fees, costs, fees and interest, and accordingly will be filing a memorandum of costs. Judgment was entered in favor of the plaintiff against defendants Paul Yan, D.C., and Paul Yan Chiropractic Corporation. The court found that the defendants submitted 117 false and fraudulent claims totaling $335,060. The court imposed a penalty of $5,000 for each of the 117 claims, totaling $585,000. Therefore, the judgment was in the amount of $920,000. The determination by the court as to whether the defendent Winnie Yan is a prevailing party was deferred and is to be presented to the court by way of a noticed motion.

Other Information

Plaintiff made a demand of $2,175,180 in his closing argument. Plaintiff also sued defendant's wife and dismissed her at the close of plaintiff's case-in-chief prior to motion for nonsuit. She is a prevailing party under the statute and is entitled to attorney fees and costs. Defendants are also filing a motion for new trial and intend to appeal the final verdict.