Allstate awarded $6.3M in Spina health care fraud case

A federal judge has awarded $6.3 million to Allstate Insurance Co. in its health care fraud case against imprisoned Middletown chiropractor James A. Spina.

U.S. District Judge Kenneth M. Karas had previously ordered Spina to pay nearly $9.8 million in restitution in a criminal case and sentenced him to 9 years in prison.

Allstate’s Sept. 23 civil award was charged against several Middletown medical businesses Spina operated.

The gist of the case, according to an amended complaint filed last year, is that Spina created a “multi-disciplinary fraudulent behemoth” to exploit New York’s no-fault insurance laws.

Dolson Avenue Medical in Middletown was the primary business, according to court records, but Spina secretly set up several phony corporations that were used to bill Medicare and health care insurers for unnecessary medical procedures, previously billed procedures and services never provided.

The scheme, Allstate argued, allowed Spina and his family to “achieve their goal of reaping as much profit as possible from no-fault insurers.”

Spina personally pocketed $9.3 million from 2011 through 2017, according to criminal court records.

Judge Karas awarded Allstate $6.3 million for establishing that the Spina companies were liable for racketeering, fraud and unjust enrichment.

How the $16.1 million in criminal and civil judgments will be paid is an open question. Spina, 63, is imprisoned at the Federal Correctional Institution in Danbury, Connecticut. He is scheduled to be released in 2029.

A preliminary forfeiture notice in the criminal case noted that “proceeds traceable to the offense … cannot be located.”