Allstate sues Texas chiropractic network over $25.9 million auto claims scheme
Allstate is going after a Texas chiropractic network, alleging a years-long scheme to inflate auto injury claims to the tune of nearly $26 million.
In a federal suit filed on March 5, 2026, five Allstate entities brought action against more than 20 defendants - including chiropractic clinics, medical offices, an imaging operation, and individual healthcare providers - in the US District Court for the Western District of Texas, Austin Division (Allstate Insurance Company, et al. v. Khit Chiropractic and Rehabilitation, PLLC, et al., Case No. 1:26-cv-00543).
At the center of the case are chiropractors Luis Khit, D.C. and Alejandra Khit, D.C., whom Allstate describes as the operators of what it calls a "personal injury mill" spanning Austin and the Rio Grande Valley. According to the filing, between July 2018 and December 2024, some 1,253 claims tied to the Khit entities were submitted to Allstate, with billed charges exceeding $22 million.
The alleged playbook, as laid out in court documents, worked like this: personal injury patients were treated almost exclusively under letters of protection - financial arrangements that gave the providers a direct stake in the outcome of each patient's claim. None of the Khit healthcare entities accepted insurance, according to the filing, and patients were allegedly required to waive their right to use any available coverage. That arrangement, Allstate contends, allowed the defendants to sidestep the requirement to establish that treatment was medically necessary before providing it, since providers treating patients under LOPs are not required to comply with the treatment guidelines and preauthorization requirements that apply to care covered by government programs or private health insurance.
From there, the filing alleges, patients were funneled through a standardized protocol of chiropractic visits, imaging, medical evaluations, and injection procedures - regardless of individual need. Allstate describes the treatment as "cookie-cutter," alleging that templated reports made patient records "nearly indistinguishable from each other." Most hands-on care was allegedly delivered by unlicensed chiropractic assistants with little or no oversight, billed at an average of $390 per visit. According to testimony cited in the filing, one clinic alone was handling around 100 patients a day by 2019.
The resulting records and bills were then allegedly handed off to claimants' personal injury attorneys, who packaged them into settlement demands sent to Allstate - in some cases pushing for amounts at or near policy limits.
Allstate is claiming $8,629,995.28 in damages and, invoking federal RICO treble damages provisions, is seeking $25,889,985.84, along with attorneys' fees and exemplary damages. The suit brings seven counts: two RICO violations under 18 U.S.C. Section 1962(c), one RICO conspiracy count under Section 1962(d), common law fraud, conspiracy, unjust enrichment, and money had and received.
No determination on the merits has been made, and the allegations have not been proven in court.
For insurers and claims professionals, though, the case already raises pointed questions about the risks embedded in letter-of-protection arrangements, the difficulty of spotting coordinated provider networks operating across multiple locations, and how templated medical records can be used to systematically drive up claim values at scale.
