The enquiry, centred on Advanced Claims of Huddersfield, led to jail sentences following three separate trials involving 48 defendants at Leeds Crown Court in 2014.
Dr Rashid, who had carried out genuine medical claims for the firm, was never charged with any offence.
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He was arrested on suspicion of conspiracy to defraud in a dawn swoop involving 16 police officers at his address in the Bradford area.
He was released on bail and the Crown Prosecution Service dropped the case.
It is alleged that the police then contacted the General Medical Council accusing Dr Rashid of being involved with organised crime.
His barrister, Ian Pennock, told the court that Dr Rashid was exonerated after a lengthy and detailed investigation.
Dr Rashid’s case is being heard at Bradford Combined Court Centre in front of Recorder Ben Nolan QC.
The case is scheduled to last until next Thursday.
Mr Pennock was yesterday cross-examining Detective Inspector Mark Taylor, who was involved in Operation Thatcham and the investigation into Dr Rashid.
Det Insp Taylor said that the police asked expert witnesses to examine Dr Rashid’s handling of personal injury accident reports.
Doctors were shown “block bookings” in which suspicion was thrown on the volume and frequency of appointments and the alleged poor quality of the medico-legal reports, the court was told.
Det Insp Taylor said the police sought advice from two doctors before Dr Rashid was arrested.
They then sought advice from two more when he was on bail, Det Insp Taylor told the court.
Documents and audiotapes were seized as part of the investigation.
Mr Pennock suggested that the police focused on Dr Rashid because he was a high-profile doctor producing a high number of medico-legal documents.
“They thought he looked a bit dodgy because of the high volume of reports and what he charged,” Mr Pennock said.
He put it to Det Insp Taylor that he was told that Dr Rashid’s way of working, with a ten-minute slot per patient, was commonplace in the personal claims industry.
The court heard that Dr Rashid charged between £90 and £470 for his reports.
Mr Pennock suggested that the police thought the prosecution of a doctor in relation to alleged dodgy crash for cash claims might send enough of a “shockwave” to regulate the behaviour of other doctors.
Det Insp Taylor told the court: “Just because something is commonplace doesn’t mean it isn’t illegal.”
He said that Dr Rashid’s finances were investigated, and no offences had been uncovered in relation to that enquiry.
The case continues.