What happened: GEICO alleges four New York pharmacies operated as a single fraud ring, billing $10.8 million in topical pain creams to no-fault auto policies.
Who's involved: GEICO (plaintiff) and four pharmacy entities and their owners (defendants).
What's at stake: Approximately $4.02 million in damages already paid, $4.69 million in pending claims, plus triple damages under RICO.
Why it matters: The case maps a referral-steering playbook that SIU and claims teams across no-fault states should watch for.
Where it stands: Complaint filed October 21, 2026, in the Eastern District of New York.
One of the drugs billed was approved only to treat a pre-cancerous skin condition. According to GEICO's complaint, the pharmacies dispensed it to car accident patients in volume.
That detail sits at the centre of a federal lawsuit filed by GEICO on October 21, accusing four New York pharmacies and their owners of running what the complaint calls "a single, integrated large-scale fraud scheme." The insurer says the pharmacies billed more than $10.8 million for topical pain products under the state's no-fault auto system. GEICO is a subsidiary of Berkshire Hathaway.
The complaint, filed in the US District Court for the Eastern District of New York, names Medline Plus Pharmacy, 135 Jericho Pharmacy, Foremost Pharmacy, and Wellness Worx Pharmacy as defendants, along with four individual owners. The insurer is pursuing twelve causes of action, including federal racketeering claims against each owner, fraud, and a violation of New York's anti-kickback referral law.
According to the filing, the pharmacies focused almost exclusively on three products: Lidocaine 5% Ointment, Diclofenac Sodium 2% Solution, and Diclofenac Sodium Gel 3%. These topical pain products allegedly made up between 69% and 88% of each pharmacy's billing to GEICO, with individual prescriptions priced at up to $1,787.50 for lidocaine and $2,149.15 for diclofenac.
The complaint notes that over-the-counter lidocaine products with similar efficacy, such as Icy Hot Lidocaine and Aspercreme, are available at major retailers for around $10 to $20. Prescribers allegedly never recommended patients try those first.
Then there is the diclofenac. According to the complaint, Diclofenac Sodium Gel 3% is "only FDA-approved to treat a precancerous skin condition known as actinic keratosis" and "does not have any proven efficacy or safety in the treatment of musculoskeletal injuries." The filing states the pharmacies dispensed it to patients with no documented history of that condition. A separate form of the drug, Diclofenac Sodium 2% Solution, is approved only for knee osteoarthritis pain, according to the complaint, yet the pharmacies allegedly dispensed it broadly to car accident patients.
GEICO alleges the scheme was driven not just by pricing but by a pipeline of steered prescriptions. The complaint describes arrangements between the pharmacies and prescribers at several no-fault medical clinics, where unlicensed clinic operators allegedly directed prescriptions to the four pharmacies regardless of where the patients lived. Approximately 95% of one pharmacy's patients allegedly lived outside the county where it operated.
The filing outlines what GEICO says were cookie-cutter treatment patterns. In one example, four people were involved in a single car accident on September 15, 2024. Despite being "in different physical conditions" and sitting "in different positions in the vehicle," according to the complaint, all four were prescribed the same drugs by the same prescriber on the same day. All four prescriptions went to the same pharmacy.
The complaint also describes patients being rotated through different pharmacies over time. One month a patient might fill their prescription at Medline Plus, the next month at Foremost, the next at 135 Jericho. GEICO says this was designed to "obscure the total volume of fraudulent billing submitted for each Insured across the separately named Pharmacy Providers."
The pharmacies were nominally owned by different people. But the complaint lays out a series of connections suggesting they operated as one business.
A licensing renewal for 135 Jericho Pharmacy was allegedly paid by a cheque from Medline Plus Pharmacy. A window-film invoice for Foremost Pharmacy was addressed to the owner of Medline Plus. Two of the pharmacies shared the same supervising pharmacist, according to the filing. All four used the same billing company and delivery service. And the licensing applications for three of the pharmacies were filed by the same person, the complaint states.
The filing also notes that Liberty Mutual previously sued the same defendants in 2025 over substantially similar allegations involving the same drugs and the same prescriber network.
GEICO says it has already paid approximately $4.02 million on what it calls fraudulent claims. It is asking the court to declare it owes nothing on roughly $4.69 million in pending bills. The racketeering claims carry the possibility of triple damages, and GEICO is also seeking punitive damages on the fraud count.
The scheme allegedly ran from late 2021 through the date of filing. GEICO says it is still ongoing.
The case adds to a growing wave of insurer-led lawsuits targeting pharmacy billing networks in the New York no-fault system, with the racketeering claims signalling that carriers are increasingly willing to pursue these disputes as organised fraud rather than routine billing disagreements.
The allegations in the complaint have not been tested, and no court has made any ruling on the merits.
