Yes it is allowed to request records, even all of them. The reason might vary, but basically the provider has been selected for an audit. The Health Plan can audit records based on a number of criteria such as billing patterns, reports of "suspicious" activity, repeatedly sending in a corrected claim, or any number of other criteria. I would recommend reaching out to the person/department requesting the records and asking questions. In my position I am the one requesting records and it only done for specific reasons. But Yes it is allowed and depending on the payer they can go back 3 years at least.
Some payers and providers do include limits on medical records requests in the contracts or network participation agreements. If you are in-network, you might want to review your contract and see whether or not this is the case. If it's not, you might want to consider having it added to the contract as a condition of renewing your participation.