Four Allstate insurance companies are pursuing federal racketeering claims against a Houston-area emergency medical center network in an appeal before the Fifth Circuit Court of Appeals. The case, *Allstate Indemnity Company v. Bhagat* (5th Cir. 2026), involves allegations of organized fraud targeting the Memorial Heights Emergency Center network and associated healthcare providers.
The plaintiffs include Allstate Indemnity Company, Allstate Property and Casualty Company, Allstate County Mutual Insurance Company, and Allstate Fire and Casualty Insurance Company. They filed suit against more than a dozen defendants, including emergency room physician Akash Bhagat, Emergency Healthcare Partners L.P., and multiple entities operating under the Memorial Heights Emergency Center brand.
According to court documents filed Jan. 14, 2026, Allstate's lawsuit asserts claims under the Racketeer Influenced and Corrupt Organizations Act. The insurance companies allege violations of 18 U.S.C. § 1962(c), which prohibits conducting enterprise affairs through racketeering activity, and 18 U.S.C. § 1962(d), which criminalizes conspiracy to violate RICO provisions. The racketeering allegations are predicated on mail fraud charges.
The case also includes state-law common-law claims, though the specific nature of these allegations was not detailed in the available court filing. The appeals court panel assigned to hear the case consists of Circuit Judges Barksdale, Willett, and Duncan, with Judge Stuart Kyle Duncan authoring the initial opinion excerpt.
The defendants represent a complex network of healthcare entities centered around the Memorial Heights Emergency Center system. Key defendants include Emergency Healthcare Partners L.P., which operates Memorial Heights Emergency Center and Memorial Heights Emergency Room. The lawsuit also targets specialized administrative entities, including Memorial Heights Emergency Center Motor Vehicle Accident Facility Administration L.L.C. and Memorial Heights Emergency Center Motor Vehicle Accident Professional Administration L.L.C.
Individual defendants named in the case include physicians and healthcare administrators: Ruben Veloz, Pedram Behzadi, Tarek Defrawi, Andrea Marconi, Sara Reader, Jason Masvero, and Leia England. The lawsuit also names Bhagat Investments Inc., Elizabeth Fair, and Southern Emergency Physicians Limited L.L.P.
The case originated in the U.S. District Court for the Southern District of Texas under case number 4:24-CV-2573. The timing suggests the district court issued a decision in 2024 that prompted Allstate's appeal to the Fifth Circuit.
RICO lawsuits in the healthcare context typically involve allegations of systematic fraudulent billing practices, kickback schemes, or other organized criminal activity affecting interstate commerce. The law requires plaintiffs to prove a pattern of racketeering activity conducted through an enterprise. Mail fraud predicates often involve allegations that defendants used postal services or electronic communications to further fraudulent schemes.
For Allstate, the case represents an effort to use federal racketeering laws to combat what the insurers apparently view as organized fraudulent billing practices. Insurance companies increasingly turn to RICO claims when pursuing healthcare providers they believe are engaged in systematic fraud, as the statute provides for treble damages and attorney's fees for successful plaintiffs.
The involvement of multiple Allstate entities suggests the alleged scheme may have affected numerous insurance policies across different Allstate subsidiaries. The specific inclusion of motor vehicle accident facility administration entities among the defendants indicates the alleged fraud may have targeted auto insurance claims related to emergency medical treatment.
Emergency room billing disputes have become increasingly common as healthcare costs rise and billing practices face scrutiny. Emergency departments often serve as the entry point for patients involved in motor vehicle accidents, creating potential conflicts between healthcare providers seeking payment and insurers questioning the necessity or cost of treatments.
The Fifth Circuit's eventual ruling in *Allstate v. Bhagat* could provide important guidance on the application of RICO statutes to healthcare billing disputes. The case may address questions about what constitutes an enterprise under RICO, the required showing of pattern racketeering activity, and the specific elements needed to prove mail fraud in the healthcare context.
The appeal is currently pending before the Fifth Circuit, which covers Texas, Louisiana, and Mississippi. No timeline has been established for oral arguments or a final decision in the case. The outcome could affect how insurance companies pursue fraud allegations against emergency healthcare providers and establish precedent for similar RICO claims in the healthcare industry.