UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

STATE FARM MUTUAL AUTOMOBILE

INSURANCE COMPANY, 

Plaintiff,

vs

HARANATH POLICHERLA, M.D., 

HARANATH POLICHERLA, M.D., P.C., and

ADVANCED NEURO-REHAB SERVICES, P.C., 

Defendants.

____________________________________________/

COMPLAINT

State Farm Mutual Automobile Insurance Company (“State Farm”), for its complaint, 

alleges as follows:

I. NATURE OF THE ACTION

1. This action seeks to recover money fraudulently obtained from State Farm 

through the submission of hundreds of bills for neurological evaluations (“Evaluations”), 

diagnostic tests (“Tests”), and vestibular and physical therapy (collectively, “Therapies”) 

purportedly rendered by Haranath Policherla (“Dr. Policherla”) to individuals (“Insureds”) who 

were involved in automobile accidents and eligible for insurance coverage under State Farm’s 

insurance policies.

2. The Evaluations were part of a pre-determined fraudulent protocol designed by 

Dr. Policherla to support the purported need for the Tests, and the Tests either were not 

performed or were performed in a manner to support the diagnosis of serious medical conditions 

which did not, in fact, exist. The false diagnoses were then used to support Therapies which 

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were not medically necessary, if they were performed at all. Furthermore, the physical therapies 

were performed, if at all, by individuals who were not licensed physical therapists and were not 

supervised by licensed physical therapists. Physical therapy performed by individuals who are 

not licensed physical therapists or supervised by licensed physical therapists is, by definition, not 

medically necessary and not reimbursable.

3. Dr. Policherla’s pre-determined protocol was knowingly designed to support 

fraudulent charges to State Farm and other insurers for medical services that either were never 

performed or were not medically necessary, and were not designed to benefit the patients. In 

fact, patients were: (a) subjected to Evaluations, Tests and Therapies that they did not need, (b) 

falsely diagnosed with serious medical conditions that they did not have, (c) not properly 

evaluated and tested for serious medical conditions that they may have had, and (d) not properly 

treated for any such conditions.

4. To induce State Farm to pay for the Evaluations, Tests and Therapies, Dr. 

Policherla submitted, or caused to be submitted, to State Farm fraudulent charges through 

Haranath Policherla, M.D., P.C. (“Policherla PC”) and Advanced Neuro-Rehab Services, P.C. 

(“Advanced PC”). 

5. To support the fraudulent charges, Dr. Policherla submitted, or caused to be 

submitted, to State Farm through Policherla PC and Advanced PC false reports representing that 

the Evaluations, Tests and Therapies were medically necessary, false narrative reports regarding 

the Evaluations, false interpretive reports regarding the results of the Tests, false data supporting 

the results of the Tests, and false notes purporting to reflect the Therapies sessions. All of these 

documents were calculated to and necessary to induce State Farm to pay the fraudulent charges. 

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6. At all relevant times, the defendants knew that: (a) the Evaluations, Tests and 

Therapies were done pursuant to a fraudulent pre-determined protocol designed solely to support 

fraudulent charges to State Farm and other insurers, (b) the Evaluations, Tests and Therapies 

either were not medically necessary or were not performed, (c) the Tests were either not 

performed or were improperly performed in cookie-cutter fashion that was not tailored to the 

unique needs of each Insured, (d) the cookie-cutter approach to the Tests was designed to inflate 

the fraudulent charges by purporting to test excessive body parts and nerves, which in turn led to 

separate charges for each such body part and nerve subjected to the Tests (e) the results of the 

Tests were manipulated to support findings of serious medical conditions that did not exist, (f) 

the false findings of serious medical conditions were used to support the purported need for the 

Therapies, (g) false documents, including false narrative and interpretive reports regarding the 

Evaluations and Tests, false data sheets purporting to reflect results of the Tests, and false notes 

purporting to reflect the Therapies sessions, were submitted to State Farm and other insurers, and 

(h) all of these affirmative acts were done to induce State Farm and other insurers to pay the 

fraudulent charges, and to create the facade of an “objective manifestation” of injury to satisfy

the threshold under Michigan law to bring tort liability claims for non-economic losses, such as 

pain and suffering, against third parties who were insured by State Farm and other insurers. 

7. This action involves a claim for a declaratory judgment that State Farm does not 

owe any pending claims from the defendants for Evaluations, Tests and Therapies. This action 

also involves claims for common law fraud, as well as under 18 U.S.C. §§ 1962(c) and (d) 

(“RICO”), to recover actual damages of at least $1,000,000, treble damages and costs, including 

reasonable attorney’s fees. 

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8. The defendants’ scheme began as early as 2001 and has continued uninterrupted 

since that time. As a result of the defendants’ scheme, State Farm has incurred damages of more 

than $1,000,000.

9. Based upon the defendants’ affirmative misrepresentations and acts of 

concealment which are set forth below, State Farm did not discover and should not have 

reasonably discovered that its damages were attributable to fraud until shortly before this 

Complaint was filed.

II. JURISDICTION AND VENUE

10. Pursuant to 28 U.S.C. § 1332(a)(1), this Court has jurisdiction over all claims 

because the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and 

costs, and is between citizens of different states. Pursuant to 28 U.S.C. § 1331, this Court also 

has jurisdiction over the claims brought under 18 U.S.C. § 1961 et seq. (“RICO”) because they 

arise under the laws of the United States. This Court also has jurisdiction over the state law 

claims because they are so related to the RICO claims as to form part of the same case and 

controversy.

11. Pursuant to 28 U.S.C. § 1391(b), venue is proper in this district because a 

substantial part of the events or omissions giving rise to the claims occurred here. 

III. PARTIES

A. Plaintiff

12. State Farm Mutual Automobile Insurance Company is a corporation incorporated 

under the laws of the State of Illinois, with its principal place of business in Bloomington, 

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Illinois. It is licensed and engaged in the business of insurance in Michigan and virtually every 

state. 

B. Defendants

13. Dr. Policherla resides in and is a citizen of Michigan. At all times relevant, Dr. 

Policherla has been licensed by the State of Michigan to practice medicine, and has submitted, 

and caused to be submitted, the fraudulent charges at issue through Policherla PC and Advanced 

PC.

14. Policherla PC is a professional services corporation incorporated under the laws 

of the State of Michigan, with its principal place of business in Grosse Pointe Woods, Michigan. 

At all relevant times, Policherla PC has operated under the assumed names Pointe Neurology, 

Pointe Neuroscience Center, Pointe Medical Center, Neuro-Rehab Works and Michigan Center 

for Sleep Disorders. As set forth in the chart attached hereto as Exhibit A, Dr. Policherla, 

through and in conjunction with Policherla PC, submitted thousands of fraudulent bills to State 

Farm in at least 246 claims .

15. Advanced PC is a professional services corporation incorporated under the laws 

of the State of Michigan, with its principal place of business in Huntington Woods, Michigan. 

As set forth in the chart attached hereto as Exhibit A, Dr. Policherla, through and in conjunction 

with Advanced PC, submitted hundreds of fraudulent bills to State Farm in at least 54 claims. 

16. At all times relevant, Dr. Policherla has been the sole director, officer and 

shareholder of Policherla PC, and has been the Medical Director and primarily, if not solely, 

responsible for rendering and supervising the medical services purportedly provided through 

Advanced PC. In addition, at least two other individuals render services under the supervision of 

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Dr. Policherla at both Policherla PC and Advanced PC, and both Policherla PC and Advanced 

PC submit bills for services purportedly rendered by Dr. Policherla to the same Insureds.

IV. ALLEGATIONS COMMON TO ALL COUNTS

A. First-Party Claims For Payment Under The No-Fault Act

17. Under the Michigan No-Fault Act, insurers are required to pay personal protection 

insurance benefits, including “allowable expenses consisting of all reasonable charges incurred 

for reasonably necessary products, services and accommodations for an injured person’s care, 

recovery or rehabilitation,” when those benefits are causally connected to an “accidental bodily 

injury arising out of the ownership, operation, maintenance or use of a motor vehicle” 

(hereinafter “No-Fault Benefits”). MCL §§ 500.3105, 3107(1)(a).

18. Insureds can assign their right to No-Fault Benefits to providers of medically 

necessary services. Pursuant to such assignments, providers may submit claims directly to 

insurance companies and receive No-Fault Benefits for these services.

B. Third-Party Tort Claims For Non-Economic Loss Under The No-Fault Act

19. Under the Michigan No-Fault Act, individuals whose injuries arise out of the 

ownership, operation, maintenance or use of a motor vehicle are permitted to bring tort liability 

actions against third parties to recover non-economic losses, such as for pain and suffering, only 

in limited situations, including if the individual has suffered serious impairment of body 

function. MCL § 500.3135.

20. An individual has suffered serious impairment of body function when his general 

ability to conduct the course of his normal life has been affected as a result of his injury. A 

determination of whether this has occurred requires an analysis of the totality of the 

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circumstances, including; (a) the nature and extent of the impairment, (b) the type and length of 

treatment required, (c) the duration of the impairment, (d) the extent of any residual impairment, 

(e) the prognosis for eventual recovery, and (f) whether there is “objective manifestation” of the 

injury.

21. The majority of Insureds who have been referred to and purportedly treated by Dr. 

Policherla were represented by attorneys who frequently represent individuals who bring thirdparty tort liability claims for non-economic loss. The attorneys, in turn, have used 

Dr. Policherla’s false diagnoses and related documentation from the Evaluations, Tests and 

Therapies to establish an “objective manifestation” of serious impairment of body function,

which is required to satisfy the threshold for bringing tort liability claims for non-economic loss 

on behalf of the Insureds and their other clients. In fact, in many instances, Dr. Policherla’s false 

diagnoses and documentation was the only material evidence used by the attorneys to establish 

the “objective manifestation” of serious impairment of body function. Without such false 

diagnoses and documentation, there was no evidence to support any such finding and the 

attorneys and Insureds would have been precluded from commencing third-party tort liability 

claims and recovering non-economic losses. 

22. To illustrate, from at least 2002 through 2006, Dr. Policherla performed 

Evaluations, Tests and Therapies on at least 41 Insureds represented by attorney Kevin Geer, 

who frequently represents individuals in third-party tort liability claims for non-economic losses. 

Each of these 41 individuals were Insureds under State Farm auto insurance policies and/or 

purported to have third-party tort liability claims for non-economic losses against individuals 

who were insured under State Farm auto insurance policies. 

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23. In the vast majority of these instances, Dr. Policherla purportedly performed 

Evaluations and Tests which led to a diagnosis of serious medical conditions, including 

radiculopathies (i.e., pinched nerve roots) on both sides of the spine in both the upper and lower 

back, as well as vestibular disorders. Based upon these purported – albeit false – diagnoses, 

Dr. Policherla determined there was a need for the Therapies. Dr. Policherla then sought to 

profit by seeking and recovering reimbursement for the Evaluations, Tests and Therapies from 

State Farm and other insurers pursuant to assignments of No-Fault Benefits from these 

individuals. Simultaneously, the attorneys used the false diagnoses and documentation from 

Dr. Policherla’s Evaluations, Tests and Therapies to establish “objective manifestations” of 

serious impairment of bodily function which was necessary to satisfy the threshold for bringing

tort liability claims for non-economic loss on behalf of those individuals against others insured 

by State Farm and other insurers. 

C. The Evaluations

24. Insureds are typically referred to Dr. Policherla by either attorneys or 

chiropractors, and an Evaluation is the first step in Dr. Policherla’s pre-determined fraudulent 

protocol. 

25. In virtually every instance, Dr. Policherla purports to perform an Evaluation and 

concludes that the Insureds: (a) had pain in both the back and neck, and (b) were dizzy, 

lightheaded and/or had headaches. Sample evaluations are attached as Exhibit B. While it is 

common for some individuals who have auto accidents to have some of these symptoms, 

Dr. Policherla’s Evaluations typically lead to all of these findings. Based upon these findings, 

Dr. Policherla purports to conclude that a battery of diagnostic tests are medically necessary, 

including the Tests which are described at paragraphs 29-58 below. 

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26. As a result of the Tests, Dr. Policherla falsely purports to diagnose: (a)

radiculopathies on both sides of the spine in the upper and lower back, which allegedly require 

physical therapy, and (b) general vestibular disorders that allegedly require vestibular therapy. 

27. In addition to billing for physical therapy and vestibular therapy that is not 

medically necessary, as described further in paragraphs 59-67 below, Dr. Policherla purports to 

perform additional periodic Evaluations to support additional Tests and/or ongoing physical and 

vestibular Therapies.

28. To maximize the charges for the Evaluations and to exaggerate both the level of 

service and the seriousness of the Insureds’ medical conditions, Dr. Policherla virtually always 

uses billing codes which falsely represent that the Evaluations required comprehensive histories 

and examinations, medical decision-making of high complexity, and medical conditions of 

moderate to high severity. Those billing codes are Codes 99204, 99205, 99214, 99215, 99244 

and 99245 from the American Medical Association’s Current Procedural Terminology (“CPT”) 

guide. Sample bills are attached as Exhibit C, and instances in which Dr. Policherla has used 

those billing codes are identified in Exhibit A.

D. The Medically Unnecessary Tests

1. Electromyography And Nerve Conduction Velocity Tests

29. As a result of the Evaluations, Dr. Policherla routinely finds a need to perform

two Tests known as needle electromyography tests (“EMGs”) and nerve conduction velocity 

tests (“NCVs”).

30. EMGs and NCVs are forms of electrodiagnostic tests that can be used to diagnose 

the existence, nature, extent and specific location of nerve abnormalities, including peripheral 

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nerve injuries (e.g., injuries to the nerves in the arms and legs) and radiculopathies (pinched 

nerve roots that run along both sides of the spine).

31. EMGs involve the insertion of a needle into various muscles in the spinal area 

(“paraspinal muscles”) and in the arms and/or legs to measure electrical activity in each such 

muscle. The sound and appearance of the electrical activity in each muscle are compared with

well defined norms to identify the existence, nature, extent and specific location of any 

abnormalities in the muscles, peripheral nerves and nerve roots.

32. NCVs are non-invasive tests in which peripheral nerves in the arms and legs are 

stimulated with electrical currents. The velocity, amplitude and shape of the response are then 

recorded by electrodes attached to the surface of the skin, and are compared with well-defined 

normal responses to identify the existence, nature, extent and specific location of any 

abnormalities in the sensory and motor nerve fibers of peripheral nerves in the arms and legs.

33. There are many different muscles and nerves in the arms and legs which can be 

tested with EMGs and NCVs. The decision of how many limbs and which muscles and nerves to 

test in each limb should be tailored to each patient’s unique circumstances. In a legitimate 

clinical setting, this decision is determined based upon a history and physical examination of the 

individual patient as well as the real-time results obtained from the EMGs and NCVs as they are 

performed on each specific muscle, nerve, and nerve root. As a result, the number of limbs as 

well as the nature and number of the muscles, nerves and nerve roots tested through EMGs and 

NCVs should vary by patient. As set forth below, with Dr. Policherla they do not.

34. The American Association of Neuromuscular Electrodiagnostic Medicine 

(“AANEM”), which consists of thousands of neurologists and physiatrists and is dedicated solely 

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to the scientifically-based advancement of neuromuscular medicine, has adopted a 

Recommended Policy (“Recommended Policy”) regarding the optimal use of electrodiagnostic 

medicine to diagnose various forms of neuropathies, including radiculopathies. A copy of the

Recommended Policy is attached as Exhibit D. The Recommended Policy also has been 

endorsed by two other premier professional medical organizations, the American Academy of 

Neurology and the American Academy of Physical Medicine and Rehabilitation.

35. As explained below, the EMGs and NCVs conducted by Dr. Policherla, if they are 

performed at all, stand in marked contrast to the Recommended Policy.

36. Although the Recommended Policy appropriately recognizes that EMGs and 

NCVs have demonstrated usefulness in diagnosing radiculopathies, it explains that the decision 

of which, if any, of these Tests to perform should be individually tailored to address the unique 

circumstances of each patient, and that the maximum number of EMGs and NCVs which should 

be necessary to diagnose a radiculopathy in 90% of all patients is: (a) EMGs of two limbs, (b) 

NCVs of three motor nerves, and (c) NCVs of two sensory nerves.

37. The maximums set forth in the Recommended Policy are based on clinical 

experience spanning decades, and recognize that individuals who suffer radiculopathies virtually 

always incur those injuries in the nerves or nerve roots in the upper body or in the lower body, 

and rarely do those injuries occur simultaneously in both the upper and lower body. Therefore, 

the Recommended Policy recognizes that in 90% of cases no more than a two-limb EMG should 

be required to diagnose whether a patient has a radiculopathy. The two-limb EMGs should be 

adequate to test either: (a) both legs and the lower back if a radiculopathy is suspected in the 

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nerves or nerve roots in the legs or lower back, or (b) both arms and the upper back if a 

radiculopathy is suspected in the nerves or nerve roots of the arms or upper back.

38. Similarly, and again based upon clinical experience spanning decades, the 

Recommended Policy recognizes that in 90% of cases no more than three motor nerves and two 

sensory nerves need to be tested through NCVs to determine whether a patient has a 

radiculopathy. These NCVs should be adequate to test either: (a) three motor nerves and two 

sensory nerves in the arms if a radiculopathy is suspected in the nerves or nerve roots of the arms 

or upper back, or (b) three motor nerves and two sensory nerves in the legs if a radiculopathy is 

suspected in the legs or lower back. 

39. In marked contrast to the Recommended Policy and clinical experience regarding 

radiculopathies, for the vast majority of the Insureds, Dr. Policherla purports to conclude that 

there is a need to perform EMGs and NCVs on both the arms and upper back as well as the legs 

and lower back. As a result of this purported need, Dr. Policherla routinely purports to perform: 

(a) EMGs of all four limbs (both arms and both legs), (b) NCVs of twelve or more motor nerves, 

and (c) NCVs of eight or more sensory nerves. See Exhibit A. This is at least twice the 

maximum number of EMGs, and four times the number of NCVs, which should be necessary to 

diagnose a radiculopathy, if there is any such need at all. 

40. Furthermore, Dr. Policherla purports to perform these EMGs and NCVs in a 

cookie-cutter fashion, without tailoring them to the unique circumstances of each Insured. This 

pre-determined protocol is done solely to maximize the charges to State Farm and other insurers 

because a separate charge is permitted for each nerve tested with NCVs and for each limb tested 

with EMGs. Sample bills for NCVs and EMGs are attached as Exhibits E and F, respectively.

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Furthermore, as discussed below, he performs the EMGs and NCVs in a manner, if he performs 

them at all, which produces the same false diagnosis virtually every time. As explained next, the

pattern of these diagnoses is statistically impossible, and completely contrary to clinical 

experience.

41. Specifically, Dr. Policherla diagnosed the vast majority of the Insureds who 

received EMGs with one or more bilateral radiculopathies. See Exhibit A. A bilateral 

radiculopathy is a pinched nerve root on both sides of the spine at a particular level of the spine. 

For example, a bilateral radiculopathy at the C6 level of the spine would mean that the nerve 

roots on both sides of the spine at C6 were pinched. Individuals who are in auto accidents and 

have radiculopathies typically have them on one side of the spine, but rarely do these 

radiculopathies occur bilaterally. Therefore, Dr. Policherla’s pervasive pattern of diagnosing 

bilateral radiculopathies is virtually impossible and completely contrary to clinical experience.

42. Furthermore, Dr. Policherla diagnosed many of the Insureds who received EMGs

with bilateral radiculopathies at two or more levels of the spine. See Exhibit A. As explained 

above, it is rare for individuals who are in auto accidents to have bilateral radiculopathies at even 

one level of the spine. It is even rarer for such individuals to have bilateral radiculopathies at 

two or more levels of the spine. Therefore, Dr. Policherla’s pervasive pattern of diagnosing 

bilateral radiculopathies at two or more levels of the spine is statistically impossible and 

completely contrary to clinical experience. 

43. Furthermore, Dr. Policherla routinely diagnosed Insureds with bilateral

radiculopathies at the exact same levels of the spine, namely: (a) bilateral radiculopathies at the 

C5/C6 levels of the spine, and/or (b) bilateral radiculopathies at the L5/S1 levels of the spine.

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See Exhibit A. This pattern of diagnoses is patently absurd. As explained above, it is extremely 

rare that any individual would have bilateral radiculopathies at multiple levels of the spine 

resulting from an auto accident, let alone that those bilateral radiculopathies would occur

simultaneously in both the upper back (C5/C6) and lower back (L5/S1).

44. Even more absurd, Dr. Policherla virtually never diagnoses a radiculopathy at any 

level of the spine other than C5/C6 or L5/S1. See Exhibit A. This makes absolutely no sense. 

For example, although at least 45% of all radiculopathies in the cervical level of the spine occur 

at C7, of the hundreds of Insureds who Dr. Policherla diagnosed as having a radiculopathy, he 

diagnosed only three with a C7 level radiculopathy. See Exhibit A.

45. These diagnoses are remarkable and thoroughly unbelievable because virtually

every patient tested by Dr. Policherla has a radiculopathy on both sides of at least one level of 

the spine, and more often at two levels of the spine. Furthermore, those radiculopathies are 

always at the exact same levels of the spine. In other words, very few Insureds are diagnosed as: 

(a) not having a radiculopathy, (b) having a radiculopathy at any level of the spine other than C5-

C6 or L5-S1, or (c) having a radiculopathy on only one side of any level of the spine. See

Exhibit A.

46. Moreover, Dr. Policherla’s remarkable and thoroughly unbelievable diagnoses are 

based upon EMG results that are exactly the same in virtually every patient, which is 

physiologically impossible. Specifically, he purportedly performs EMGs on the same muscles in 

virtually every patient, and obtains exactly the same results from each muscle, which leads to the 

same diagnosis of radiculopathies on both sides of the spine at either C5-C6 or L5-S1, or at both

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of those levels of the spine. See representative examples of identical EMG results submitted by

Dr. Policherla, which are attached as Exhibit G.

47. These “objective manifestations” of serious medical conditions-radiculopathies on 

both sides of the spine, typically at two levels in both the upper and lower back--are then used by 

attorneys to support tort liability claims for non-economic loss, and by Dr. Policherla, as well as 

Policherla PC and Advanced PC to support bills to State Farm for physical therapy performed by

individuals who are neither licensed to provide physical therapy nor supervised by anyone 

licensed to provide physical therapy.

2. Evoked Potential Tests

48. Based upon the Evaluations, Dr. Policherla also routinely finds a need to perform 

three types of evoked potential tests (“EPs”). See Exhibit A.

49. EPs are non-invasive tests in which either visual nerves, auditory nerves, or 

peripheral nerves in the arms and legs are repeatedly stimulated. The “potentials”--brain waves--

evoked by this stimulation are then recorded by electrodes attached to the scalp, and compared 

with established norms to diagnose pathologies in the central nervous system. 

50. In general, visual evoked potentials (“VEPs”) assess visual function from the 

retina to the brain; brainstem auditory evoked potentials (“BAEPs”) assess hearing and its 

pathway through the brainstem; and somatosensory evoked potentials (“SSEPs”) assess sensory

pathways through the spinal cord and brain. The studies, although helpful in rare situations, are

non-specific in that they do not diagnose the nature, extent or specific location of any 

abnormality.

51. In the modern day, it would be extremely unusual to perform the full battery of 

evoked potentials (visual, brainstem auditory and somatosensory). Before MRI testing became 

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available in the 1980s, the evoked potentials were often done when assessing patients for 

possible multiple sclerosis. As MRI is very sensitive for multiple sclerosis, these studies are now 

seldom done. 

52. Despite the limited circumstances in which EPs could be legitimate, 

Dr. Policherla often concludes as a result of the Evaluations that it is medically necessary to 

perform all three types of EPs – VEPs, BAEPs, and SSEPs. See Exhibit A. Dr. Policherla, 

however, does not provide any reason to suspect that the Insureds have conditions that could be 

diagnosed by EPs, nor does he identify any diagnosis achieved as a result of the EPs after they 

are allegedly completed.

53. The EPs, therefore, were not medically necessary and did not generate any results 

that could assist in the diagnosis of the Insureds.

3. Electronystagmography Tests

54. Based upon the Evaluations, Dr. Policherla also frequently finds a purported need 

to test the Insureds’ vestibular functioning by performing electronystagmography tests 

(“ENGs”). See Exhibit A.

55. ENGs are diagnostic tests in which measurements of eye movement are used to 

assess vestibular function in patients with dizziness and balance disorders. They are performed 

by either: (a) attaching electrodes around the eye and measuring the movements of the eye in 

relation to the electrode; or (b) tracking and measuring movements of the pupil with a small 

video camera set in a swim-goggle type frame. There are typically three subparts of the ENGs

(oculomotor evaluation, positional testing, and caloric stimulation), and the results from these

three subparts can assist in determining whether a vestibular disorder exists and whether it is 

central or peripheral.

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56. Dr. Policherla routinely performs the ENGs without regard to the specifics of a 

patient’s history or examination, and in a manner which produces the same findings virtually 

every time as part of his pre-determined protocol to support the purported need for vestibular 

therapy. 

57. Indeed, for virtually every Insured who receives an ENG, Dr. Policherla finds 

abnormalities that purportedly are consistent with both central vestibular pathology and 

peripheral vestibular pathology on both the left and right sides. Notably, a finding of central 

vestibular pathology suggests damage to the parts of the brain that process vestibular 

information, yet there is no evidence in the patients’ histories or examinations to support this 

finding. Dr. Policherla’s findings of central and peripheral vestibular pathologies often either are 

based upon: (a) his findings that the results of certain aspects of the ENG are abnormal when, in 

fact, the results are normal even by his own criteria, and/or (b) his findings that the results of 

certain aspects of the ENGs are abnormal when, in fact, those results are based upon inaccurate 

and invalid data and waveforms produced through improper testing procedures. See Exhibit H

for samples of ENG results that were normal but were interpreted by Dr. Policherla as abnormal, 

and Exhibit I for samples of ENG results which were abnormal but were based upon inaccurate 

and invalid data and waveforms produced through improper testing procedures.

58. If an individual has a central or peripheral vestibular pathology, physicians should 

attempt to diagnose the condition or injury causing those pathologies. This is necessary in order 

to arrive at a treatment plan that will address the underlying cause of the pathologies. Yet, 

Dr. Policherla makes no effort to diagnose the condition or injury that may be creating the 

purported central and peripheral vestibular pathologies. Instead, he simply uses his purported 

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findings of pathologies as a basis to order two forms of medically unnecessary vestibular therapy

which are described in the next section of this complaint, Central Vestibular Therapy and Epley 

Maneuvers. Indeed, as described below, the Defendants have charged State Farm for these

medically unnecessary vestibular therapies over 6,000 times.

E. The Improper Therapy

59. After Dr. Policherla makes false findings and/or falsely diagnoses the Insureds as 

described above, Defendants charge State Farm for two types of therapy – vestibular therapy 

allegedly designed to eradicate dizziness and problems with balance, and physical therapy 

allegedly designed to treat the radiculopathies. 

60. Defendants charged State Farm for vestibular therapy over 6,000 times, allegedly 

performing this type of therapy on virtually every Insured.

61. Defendants frequently created one handwritten set of notes allegedly documenting 

the need for and administration of vestibular therapy, then copied those notes and inserted them 

in other files, changing only the patient name and date at the top and therapist’s signature at the 

bottom. Sample duplicate notes are attached as Exhibit J. There is, therefore, no legitimate 

documentation of the initial or ongoing medical necessity of the vestibular therapy, much less 

any evaluation of whether the therapy ever improved the condition of any Insured.

62. Defendants also routinely billed State Farm for the performance of medically 

unnecessary Epley Maneuvers on both the left and right sides. See Exhibit A. An Epley

Maneuver is a therapeutic procedure used to treat only one particular diagnosis, benign 

paroxysmal positional vertigo (“BPPV”), which is a specific type of dizziness caused by 

miscroscopic otoconia or stones (composed mostly of calcium carbonate) that have worked their 

way into the semicircular canals of the ear and stimulate the balance nerve inappropriately. If a 

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patient is experiencing dizziness for any reason other than the presence of these miscroscopic 

stones (i.e., BPPV), the Epley Maneuver is of no value whatsoever.

63. To support his orders for Epley Maneuvers of the Insureds, Dr. Policherla 

performs the Dix-Hallpike Test as part of the ENGs. To perform the Dix-Hallpike Test, the 

patient is brought from a sitting to supine position with his or her head turned 45 degrees to one 

side, eye movement is observed for nystagmus (involuntary eye movement) and recorded with 

the ENG, the patient is returned to a sitting position, and the test is repeated on the other side. 

For virtually every Insured who receives a Dix-Hallpike Test, Dr. Policherla makes a false 

finding that the results are abnormal and, on that basis, orders Epley Maneuvers for the Insureds.

These abnormal findings are false because the Dix-Hallpike Test results are actually normal, and 

therefore none of the Epley Maneuvers are of any value whatsoever. See Exhibit H for samples 

of reports in which Dr. Policherla finds the Dix-Hallpike Test results are abnormal even though 

the results are actually normal. 

64. Furthermore, to maximize the fraudulent charges for the medically unnecessary 

Epley Maneuvers, Dr. Policherla typically: (a) requires each Insured to receive Epley Maneuvers 

on both the right and left sides on two separate visits, each of which generates a separate charge, 

and (b) records the Epley Maneuvers with an ENG which is not medically necessary but which 

leads to an additional charge. Sample reports and bills are attached as Exhibit K. Moreover, the 

ENGs performed in conjunction with Epley Maneuvers consistently show that the Insured did 

not have BPPV, and that therefore, the Epley Maneuvers were not medically unnecessary.

65. For the reasons set forth above, the vestibular therapy was not medically 

necessary, but rather was designed solely to increase the fraudulent charges to State Farm.

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66. Defendants also charged State Farm for physical therapy over 4,000 times, but did 

not employ a single licensed physical therapist. Michigan law forbids the practice of physical 

therapy without a license. See MCL § 333.17820. Physical therapy performed by an unlicensed 

individual, if it was performed at all, is by definition not medically necessary.

67. State Farm, therefore, was and is not lawfully obligated to pay for any of the 

Therapies billed by defendants.

G. State Farm’s Justifiable Reliance

68. Defendants attested to the medical necessity of the Evaluations, Tests and 

Therapies, as well as the validity of the charges, and they are obligated legally and ethically to 

act honestly and with integrity.

69. State Farm is under statutory and contractual obligations to promptly and fairly 

process claims within 30 days. The facially valid documents submitted to State Farm in support 

of the fraudulent charges at issue, combined with the material misrepresentations described 

above, were designed to and did cause State Farm to justifiably rely on them. As a result, State 

Farm has incurred damages of more than $1,000,000 based upon the fraudulent charges.

70. Based upon the defendants’ material misrepresentations and other affirmative acts 

to conceal their fraud from State Farm, State Farm did not discover and should not have 

reasonably discovered that its damages were attributable to fraud until shortly before it filed this 

complaint.

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V. CAUSES OF ACTION

First Cause of Action Against Policherla PC and Advanced PC

(Under 28 U.S.C. § 2201)

71. State Farm incorporates, as though fully set forth herein, each and every 

allegation in paragraphs 1 through 70 above.

72. There is an actual case and controversy between State Farm and Policherla PC 

and Advanced PC as to all charges for the Evaluations, Tests and Therapies that have not been 

paid. State Farm contends that the defendants are not entitled to coverage for No-Fault Benefits 

for any of these charges.

73. Because the defendants have made false and fraudulent statements and otherwise 

engaged in the above-described fraudulent conduct with the intent to conceal and misrepresent 

material facts and circumstances regarding each claim that Policherla PC and Advanced PC have 

submitted to State Farm, they are not entitled to any coverage for No-Fault Benefits for any of 

the Evaluations, Tests or Therapies at issue.

74. Accordingly, State Farm seeks a judgment declaring that Policherla PC and 

Advanced PC are not entitled to collect No-Fault Benefits for any of the unpaid charges for the 

Evaluations, Tests or Therapies, as well as any other relief the Court deems just and proper.

Second Cause of Action Against All Defendants

(Violation of 18 U.S.C. 1962(c))

75. State Farm incorporates, as though fully set forth herein, each and every 

allegation in paragraphs 1 through 70 above.

76. Dr. Policherla, Policherla PC and Advanced PC are an association-in-fact 

“enterprise” (“the Fraudulent Billing Enterprise”) as that term is defined in 18 U.S.C. §1961(4), 

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that engages in, and the activities of which affect, interstate commerce. The members of the 

Fraudulent Billing Enterprise are and have been associated through time, joined in purpose and 

organized in a manner amenable to hierarchal and consensual decision making, with each 

member fulfilling a specific and necessary role to carry out and facilitate its common purpose. 

Specifically, Dr. Policherla falsely diagnoses Insureds with serious medical conditions (i.e.,

bilateral, multi-level radiculopathies, and vestibular disorders) based upon a pre-determined 

protocol of Evaluations and Tests that either were not medically necessary or were not 

performed, and falsely purports to provide Therapies which were not medically necessary or 

were not performed. Dr. Policherla did so to support fraudulent charges for these services, and 

to curry favor with his attorney referral sources to establish “objective manifestation” of serious 

impairment of body function which is necessary to support tort liability claims for non-economic 

loss. To support the fraudulent diagnoses, Dr. Policherla created false documentation from the 

Evaluations, Tests and Therapies, including false findings of symptoms in the Evaluation reports, 

false and physiologically impossible data from the Tests, false interpretive reports diagnosing 

serious medical conditions from the Tests, and photocopied therapy notes. Policherla PC and 

Advanced PC then used these false diagnoses and documents to support fraudulent charges to 

State Farm and other insurers. Although Policherla PC and Advanced PC have the facade of 

being independent entities with different names, addresses and taxpayer identification numbers, 

they are not. In fact, Policherla PC and Advanced PC share employees and patients, and 

virtually all of their fraudulent charges to State Farm and other insurers have been based upon 

services purportedly provided, or supervised by Dr. Policherla, including fraudulent charges for 

the Evaluations, Tests and Therapies. Dr. Policherla has used these seemingly independent 

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entities as the vehicles to accomplish a common purpose, namely the submission of fraudulent 

charges to State Farm and other insurance companies for Evaluations, Tests and Therapies that 

either were not medically necessary or were not performed at all. 

77. As set forth in paragraphs 13-16 and 76 above, Dr. Policherla, Policherla PC and 

Advanced PC are employed by and associated with the Fraudulent Billing Enterprise.

78. Dr. Policherla, Policherla PC and Advanced PC have knowingly conducted and/or 

participated, directly or indirectly, in the conduct of the Fraudulent Billing Enterprise’s affairs 

through a pattern of racketeering activity consisting of repeated violations of the federal mail 

fraud statute, 18 U.S.C. § 1341, based upon the use of the United States mails to submit to 

State Farm and other insurers hundreds of fraudulent bills for the Evaluations, Tests and 

Therapies which were medically unnecessary or were not performed. The fraudulent bills and 

corresponding mailings which comprise the pattern of racketeering activity identified through the 

date of this Complaint are described, in part, in Exhibit A attached hereto. 

79. State Farm has been injured in its business and property by reason of defendants’ 

above-described conduct in that it has paid more than $1,000,000 based upon the fraudulent 

charges.

80. By reason of this injury, State Farm is entitled to treble damages, costs and 

reasonable attorneys’ fees pursuant to 18 U.S.C. § 1964(c), and any other relief the Court deems 

just and proper.

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Third Cause of Action Against All Defendants

(Violation of 18 U.S.C. 1962(d))

81. State Farm incorporates, as though fully set forth herein, each and every 

allegation in paragraphs 1 through 70 above.

82. The Defendants have knowingly agreed and conspired to conduct and/or 

participate, directly or indirectly, in the conduct of the Fraudulent Billing Enterprise’s affairs 

through a pattern of racketeering activity consisting of repeated violations of the federal mail 

fraud statute, 18 U.S.C. § 1341, based upon the use of the United States mails to submit to 

State Farm and other insurers hundreds of fraudulent bills for the Evaluations, Tests and 

Therapies which were medically unnecessary or were not performed. The fraudulent bills and 

corresponding mailings which comprise the pattern of racketeering activity identified through the 

date of this Complaint are described, in part, in Exhibit A attached hereto.

83. Each defendant knew of, agreed to and acted in furtherance of the common and 

overall objective of the conspiracy by facilitating the submission to State Farm and other 

insurance companies of fraudulent bills for the Evaluations, Tests and Therapies which were 

medically unnecessary or were not performed.

84. State Farm has been injured in its business and property by reason of defendants’ 

above-described conduct in that it has paid more than $1,000,000 based upon the fraudulent 

charges.

85. By reason of this injury, State Farm is entitled to treble damages, costs and 

reasonable attorneys’ fees pursuant to 18 U.S.C. § 1964(d), and any other relief the Court deems 

just and proper.

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Fourth Cause of Action against All Defendants

(Common Law Fraud)

86. State Farm incorporates, as though fully set forth herein, each and every 

allegation in paragraphs 1 through 70 above.

87. The defendants Dr. Policherla, Policherla PC and Advanced PC intentionally and 

knowingly made false and fraudulent statements of material fact to State Farm by submitting, 

and causing to be submitted, hundreds of fraudulent bills which included charges for the 

performance and interpretation of Evaluations, Tests and Therapies that were medically

unnecessary or not performed.

88. The false and fraudulent statements of material fact include the representations in 

every claim that the Evaluations, Tests and Therapies were performed, were performed properly, 

and were medically necessary when, in fact, they were not, and that the diagnoses of 

radiculopathies and vestibular disorders were valid when, in fact, they were not, and that the 

physical therapy was performed by licensed physical therapists when, in fact, it was not. The 

date, the nature of the misrepresentations and the identity of the parties who made and caused 

these misrepresentations to be made in each and every claim are identified in the chart attached 

hereto as Exhibit A.

89. The defendants made these false and fraudulent statements to induce State Farm 

to pay charges for the performance and interpretation of the Evaluations, Tests and Therapies

which were not compensable under the No-Fault Laws.

90. State Farm justifiably relied on the defendants’ false and fraudulent 

representations, and as a proximate result have incurred damages of more than $1,000,000 based 

upon the fraudulent charges.

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91. The defendants’ extensive fraudulent conduct entitles State Farm to recover 

exemplary damages.

92. Accordingly, by virtue of the foregoing, State Farm is entitled to compensatory 

and exemplary damages, together with interest and costs, and any other relief the Court deems 

just and proper. 

WHEREFORE, State Farm demands that a Judgment be entered in its favor:

(a) on its First Cause of Action, declaring that neither Policherla PC nor Advanced 

PC has any right to receive payment for any pending bills for the Evaluations, 

Tests or Therapies;

(b) on its Second Cause of Action against all defendants, for compensatory damages 

in an amount of more than $1,000,000, together with treble damages, costs, and 

reasonable attorneys’ fees pursuant to 18 U.S.C. § 1964(c) plus interest; 

(c) on its Third Cause of Action against all defendants, for compensatory damages in 

an amount of more than $1,000,000, together with treble damages, costs, and 

reasonable attorneys’ fees pursuant to 18 U.S.C. § 1964(d) plus interest; 

(d) on its Fourth Cause of Action against all defendants, for more than $1,000,000 in 

compensatory damages, plus exemplary damages in an amount to be determined 

at trial and interest; and 

(e) awarding State Farm its costs including reasonable attorneys’ fees, and any other 

relief the Court deems just and proper.

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JURY DEMAND

Pursuant to Federal Rule of Civil Procedure 38(b), State Farm demands a trial by jury.

Respectfully submitted,

By:__/s/ Morley Witus______________________

One of the Attorneys for State Farm 

Mutual Automobile Insurance Company

Morley Witus (P30895)

BARRIS, SOTT, DENN & DRIKER, P.L.L.C.

211 W. Fort Street

15th Floor

Detroit, MI 48226-3281

(313) 965-9725

Ross O. Silverman 

Jenny Louise Johnson

Kathy P. Josephson

KATTEN MUCHIN ROSENMAN LLP

525 West Monroe Street

Chicago, IL 60661-3693

(312) 902-5200

Dated: September 11, 2008

::ODMA\PCDOCS\DOCS\362704\1

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