Allstate has sued a cluster of medical-equipment companies in federal court, alleging they billed it for gear patients never needed.
Filed June 26, 2026, in the Eastern District of New York, the complaint names eight durable medical equipment (DME) companies - suppliers of braces, heating pads and similar devices - and the six people who own them. It alleges a "scheme to defraud" that fed off New York's No-Fault system, which gives anyone hurt in a car accident at least $50,000 in medical coverage.
The alleged playbook is tidy. Each company specialised in one type of device, the filing says, so a single prescription was split across several of them. The equipment - described in the complaint as "unlicensed and medically unnecessary" - included osteogenesis stimulators, infrared heating pads, neuromuscular stimulators, electromagnetic energy treatment devices and pain relief laser therapy devices.
According to the filing, the companies left tells that linked them. Several allegedly listed the same business phone number on delivery receipts; others allegedly shared operating addresses; and two, the complaint says, were owned by the same person.
The timing is what claims teams will linger on. Allstate alleges the companies billed in short, sequential bursts to "limit the amount of billing for each" - one entity active for a few months, then the next picking up, across a run that the filing dates from late 2023 to August 2025. Most entities, according to the complaint, operated six months or less.
Licensing is the heart of the case. New York City DME dealers need a license from the Department of Consumer and Worker Protection. The complaint alleges the companies "made material misrepresentations" on those applications, "rendering their licenses null and void." Under No-Fault rules, a provider that fails to meet licensing laws "in any respect" cannot collect - a point the complaint relies on to argue a bill can be challenged without litigating device by device.
Allstate also alleges the prescriptions were not about medical need. Claimants at two clinics got "identical prescriptions" under "predetermined treatment protocols," the filing says, obtained through "unlawful financial arrangements" with referring providers. Those referring providers are named in the complaint but are not defendants in this action.
On the devices, the complaint leans on federal standards. For the infrared heating pads, it says the Centers for Medicare & Medicaid Services found "no indications where these devices have demonstrated any therapeutic effect." Each device, it adds, "has an over the counter alternative that could be acquired at a significantly lower cost."
The numbers are modest by RICO standards but itemized. Allstate alleges the defendants were "unjustly enriched in an amount totaling in excess of $588,713.32," with the per-company sums "the exact amount to be determined at trial."
The legal vehicle is heavy. Allstate brings civil RICO claims under 18 U.S.C. § 1962(c) - pairing each company with its owner as a separate alleged enterprise - plus fraud, unjust enrichment, and a request that it owes nothing on pending, denied or future claims. RICO, if proven, opens the door to treble, or tripled, damages.
For carriers, the alleged structure is the lesson. A shared phone number, overlapping addresses, several licenses set to expire together and billing windows handed off like a relay are the patterns special investigations units exist to catch. And on the complaint's theory, if a provider is not lawfully licensed, the No-Fault bill can fail on eligibility alone.
These are allegations only. They have not been tested, and no court has ruled on any of the claims.
