GEICO says two medical-equipment suppliers billed it more than $1.2 million in fraudulent No-Fault claims for equipment patients never needed.
The auto insurer filed a federal complaint on September 1, 2026, in the US District Court for the Eastern District of New York. It targets two durable medical equipment (DME) companies and the three men who allegedly own and run them. The complaint brings 12 claims, six of them under the Racketeer Influenced and Corrupt Organizations Act, better known as RICO.
According to the complaint, the two companies were not the independent businesses they appeared to be. GEICO alleges they were two arms of a single scheme, set up to bill GEICO and other New York auto insurers for equipment that was either never needed, never properly supplied, or both. The filing says the scheme has run since 2019.
GEICO alleges it has already paid out more than $451,000 on fraudulent claims and is staring at another $588,000 in pending bills it says it should not have to pay. All told, the two companies billed GEICO more than $1.2 million, according to the filing.
The complaint lays out how it says the scheme worked. The DME companies, it alleges, got their prescriptions through “collusive arrangements” with unnamed operators of six clinics across the New York metropolitan area – people the filing calls “Clinic Controllers” – and with healthcare providers working out of those clinics. The clinics named in the complaint include locations in Middletown, Corona, Brooklyn, Yonkers, and Queens Village.
Rather than hand the prescriptions to patients, the filing says, the clinics routed them straight to the DME companies. GEICO alleges this cut patients out of the decision and kept the orders flowing – orders a legitimate retailer would likely have questioned. The complaint alleges that “kickbacks and other financial incentives were paid” so the companies would keep receiving large volumes of prescriptions.
None of the three individual defendants is a licensed healthcare provider, the complaint states. One of them allegedly owns and controls both companies; the other two co-own one of the companies alongside him.
At the heart of the case is what the complaint calls “predetermined fraudulent protocols.” GEICO alleges that nearly every patient – whatever their age, condition, or how bad their accident was – got the same package of gear: lumbar (lower-back) braces, cervical (neck) collars, and in some cases cervical traction units, cold therapy units, continuous passive motion machines, and deep vein thrombosis prevention devices. Most of these patients, the filing says, were in minor “fender-bender” crashes and either skipped the hospital or were seen briefly and sent home with a sprain or strain.
One of the sharper allegations is about billing codes. The complaint says the companies routinely billed GEICO under code L0631 for “custom-fitted” lower-back braces at roughly $800 each – when the braces actually handed out, if handed out at all, were off-the-shelf items a patient could adjust by tightening the straps. The complaint states that sworn testimony from one of the owners, given during questioning under oath about the two companies, confirmed the back braces billed under that code “were not custom-fitted and only required minimal self-adjustment.” In all, GEICO alleges the companies billed it more than $580,000 for these braces under code L0631.
The filing also alleges the companies padded their rental rates. GEICO says one of them billed cold therapy units, continuous passive motion machines, and clot-prevention devices under a catch-all “miscellaneous” code at $75 a day – when the proper codes carried far lower rates. Under the fee schedule, the complaint says, cold therapy units maxed out at $5.48 a week, and the passive motion machines at $132.16 a week, or $18.88 a day.
The complaint alleges one company also billed neck collars at $300 apiece under code L0172, when the fee schedule capped that item at $75.
GEICO further alleges the prescriptions behind the bills were often signed with “photocopied or otherwise forged” signatures, sometimes appearing on prescriptions from several clinics on dates the provider never saw the patient. In one instance, the filing says, a provider swore in an affidavit that he “did not sign numerous prescriptions” generated at clinics using his name, and that he “does not allow anyone to photocopy his signature nor does he permit anyone to sign prescriptions on his behalf.”
The companies had little real-world presence, the complaint alleges. One used a New Jersey address the filing describes as “essentially a mail-drop location”; the other allegedly ran out of “a garage at a residential house in Nassau County.” Neither advertised to the public, according to the filing.
On the medical-necessity question, the complaint points to a national coverage determination from the Centers for Medicare and Medicaid Services stating that continuous passive motion machines are only needed after a handful of serious procedures, such as total knee replacement or ACL repair. It adds that the American Academy of Orthopedic Surgeons has found the machines do not improve outcomes in knee-replacement surgery. The patients here, the filing says, got them after minor arthroscopic procedures while they were up and walking and already in physical therapy. GEICO makes similar arguments about the cold therapy units – unnecessary, it says, when a patient can use an ice pack – and the clot-prevention devices.
GEICO's complaint brings 12 claims in all. It asks the court to declare the insurer owes nothing on the $588,000 in pending bills. It brings six RICO claims – RICO is a federal law first aimed at organized crime that lets plaintiffs recover triple their losses – against the three owners and the unnamed clinic operators. It also brings fraud claims and claims that the companies and owners were unjustly enriched, meaning they kept money they had no right to. GEICO is seeking triple damages on the RICO claims, plus punitive damages, costs, and legal fees, and has asked for a jury trial.
The allegations in this complaint have not been proven, and no court has ruled on the claims.
