The lawsuit alleges a group of medical-professional corporations were fraudulently incorporated using the names of licensed medical physicians and chiropractors, when in reality a group of unlicensed physicians actually owned and controlled the operations.

The insurer has pushed for “meaningful insurance reform that puts the citizens of New Yorkfirst,” says Krista Conte, Allstate spokeswoman, in a statement. Fraud in the system has resulted in a “fraud tax” onNew York drivers via higher premiums insurers seek because of the fraud, she adds.

Several studies point to the existence of rampant PIP fraud in New York. A study released last year by the Insurance Research Council (IRC) reports 20 percent of no-fault claims in the Big Apple in 2010 had elements of fraud, and as many as one-third of claims appeared to be inflated.

The Insurance Information Institute estimated last year that insured drivers in the state annually made more than $200 million of excess premium payments because of fraud.

These observations have led to a new regulation, which the Department of Financial Services is issuing under the direction of Gov. Andrew M. Cuomo.

The order implements a 2005 law that affords DFS the power to regulate doctor participation in the no-fault system. Doctors found to be abusing the system by billing for unnecessary services or treatment that was never rendered to auto-accident victims would be banned from the PIP system altogether and possibly stripped of certification.

The announcement came on the heels of an indictment against 36 people allegedly involved in creating clinics that habitually billed auto insurers for treatments that were either medically unnecessary or never rendered in and around New York City.

The indictment says this network of clinics, within origins as far back as 2007, cheated auto insurers out of more than $275 million.