WOODLAND HILLS, Calif. -- Zenith National Insurance Corp. announced today that its wholly owned subsidiary, Zenith Insurance Company began serving summons and complaints today upon a Santa Ana medical clinic, its owner and manager, accusing them of taking part in a large-scale scheme designed to defraud the company's policyholders. Zenith becomes the first workers' compensation insurance company in the state to sue under a statute that the California Legislature passed specifically to help combat workers' compensation fraud.

The lawsuit, filed in the Orange County Superior Court and which first became public today, details how these unscrupulous individuals in the medical profession have engaged in fraud, ranging from charging for services that were never rendered, to various fraudulent billing practices.

"Zenith has a zero tolerance for fraud," said Stanley R. Zax, Zenith's Chairman and President. "We will use every means available under the law to halt those who are taking advantage of a system that is designed to help injured workers. It is unfair for businesses and honest individuals to pay for the actions of a few dishonest people. Zenith has been committed for many years to taking the profit out of fraud."

The $8.5 million lawsuit seeks not only the return of the money wrongfully obtained by a doctor, his clinic and a former chiropractor, who had his license revoked, yet is running this clinic, but also treble damages permissible under the statute, penalties and an injunction preventing the defendants from defrauding Zenith or other insurance companies.

These individuals are accused of a pervasive scheme of upcoding and billing for treatment and examinations that were never rendered. The civil complaint details how the defendants allegedly attempted to justify excessive charges by misleading Zenith regarding the services performed. They are also alleged to have billed for a variety of medical services that were never performed at all.

Zenith began this investigation in March 2003, when its team of fraud investigators found indicators that the medical clinic and its owners knowingly and intentionally were submitting fraudulent medical reports and billings to Zenith. "Zenith has developed a statewide team that is designed to detect precisely this type of fraudulent activity," noted Stanley Zax. Once they investigate and confirm the improper activities, they then help to civilly and criminally prosecute the perpetrators. In addition to filing this civil action to recoup damages and obtain a court order forbidding this conduct in the future, Zenith has cooperated with state and local law enforcement and has offered its assistance in bringing these individuals to justice.


Source: Zenith National Insurance Corp.

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