A Michigan no-fault insurer says a pharmacy operation billed it $2.29 million on inflated drug prices, including patches it says cost about 25 cents.
CURE Auto Insurance sued a pharmacy, a drug labeler, two clinics and several individuals in the US District Court for the Eastern District of Michigan on July 22, 2026, alleging they ran a single billing operation aimed at Michigan's no-fault auto system. The carrier brings civil racketeering claims and asks the court to declare it owes nothing on the disputed charges.
The mechanism is the part worth the attention of claims teams. Michigan caps what no-fault insurers pay for most post-accident care, but the complaint says it still ties prescription drugs to average wholesale price - a benchmark the filing says the rest of the health-care system dropped years ago. Average wholesale price, or AWP, is not a measured average of real sales, according to the complaint. It is a figure the drug's own labeler reports, and the filing alleges no one independently checks it.
That gap is what the operation exploited, CURE alleges. The complaint says a company can obtain a federal labeler code, have a factory make a product, put its own name on it and report whatever cost it chooses - and that reported figure becomes the price the pharmacy bills. Here, the filing alleges, the same person owned both ends: the labeler that set the price and the pharmacy that billed it.
The complaint says the labeler imported finished pain patches from China for $0.20 to $0.40 each, relabeled them and reported a far higher cost. The pharmacy then billed CURE about $32 a patch - $970.50 for a single 30-patch order - and as much as $57 a patch for other house-label versions, according to the filing, which puts the highest markup at more than 280 times what the patch cost. A separate patch the complaint describes as an ordinary medicated product, the kind a drugstore sells for about a dollar, was billed at $49.78, the filing says.
CURE also alleges the products rarely matched the injuries. The filing says the same six-drug cream appeared on more than 66% of the claims and a house-brand pain patch on roughly 83%, dispensed regardless of diagnosis - including, in the complaint's examples, a claimant whose nerve test came back normal and a claimant with a broken hip who received a sprain cream. Three of the labeler's products were ordinary over-the-counter items selling for $5 to $20, the filing says, yet were billed at $970 to $1,713 each across 29 dispensings totaling about $40,363.20.
The complaint describes the clinics as set up to generate prescriptions to be billed rather than to treat. It alleges the office notes were copied from a template, that the same neck-and-back sprain diagnosis recurred across unrelated patients, and that a physician's signature was stamped or photocopied onto blank order forms before any patient was seen. Every prescription, the filing says, went to the one pharmacy the operators owned.
CURE describes the people behind the operation as "a small group of insiders, several of them convicted health-care-fraud felons," and alleges they moved into auto-insurance billing because the federal anti-kickback law does not reach it. The complaint says one prescriber had pleaded guilty to a "knowingly medically unnecessary protocol" that included "opioid prescriptions" and promised a court he would not prescribe opioids or perform pain procedures if his license was restored. The filing alleges he broke that promise and prescribed on CURE's claims.
The exposure runs past what was paid. CURE says the defendants sent every claim across state lines by fax and wire - the filing counts at least 216 such transmissions - and are still pursuing collection lawsuits to force payment on charges the carrier disputes. So CURE asks not only to recover what it paid but for a declaration that it owes nothing further, plus triple damages under the federal racketeering statute.
The takeaway the filing draws is one for any carrier still reimbursing on AWP: when a benchmark is self-reported and unverified, and one owner controls both the reported price and the billing, the complaint argues, the price becomes whatever that owner decides. CURE says the harm reaches its policyholders too, arguing that every dollar diverted feeds the loss costs behind premiums for the lower-income Michigan drivers it insures.
The case is at the complaint stage. The allegations have not been tested in court, and no judge has ruled on any of the claims.
