What happened: GEICO alleges a Brooklyn pharmacy billed $3.7 million in no-fault claims for two pain products over 17 months through kickback-driven prescribing arrangements
Who’s involved: GEICO (plaintiff) and a Brooklyn pharmacy operating as 13th Avenue Chemists, its owner, and an associated physician
What’s at stake: approximately $1.855 million GEICO says it has already paid, plus $1.565 million in pending claims it says it should not have to pay
Why it matters: the complaint maps a specific no-fault pharmacy fraud playbook – product targeting, pricing manipulation, and piecemeal collection tactics – that claims and SIU teams across the auto insurance sector are likely to encounter
Where it stands: complaint filed November 3, 2026, in the US District Court for the Eastern District of New York
A Brooklyn pharmacy allegedly billed $2,751.84 per prescription for pain patches that sell over the counter for as little as $10.
That pricing gap sits at the center of a federal lawsuit filed November 3, 2026, in which GEICO alleges a pharmacy operating as 13th Avenue Chemists ran a scheme to exploit New York’s no-fault insurance system. The insurer says the pharmacy submitted more than $3.7 million in claims for products that were medically unnecessary and, in some cases, not even eligible for reimbursement.
GEICO filed the complaint in the US District Court for the Eastern District of New York. The suit names the pharmacy’s corporate entity, BHNV Exclusive Inc., its owner, and an associated physician, along with unidentified individuals the insurer says participated in the alleged scheme.
According to the complaint, approximately 96% of the pharmacy’s no-fault billing to GEICO was concentrated on just two topical pain products: Diclofenac Sodium 2% Solution, billed at $4,299.01 per prescription, and LidoReal 4%-1% Patches, billed at $2,751.84 per prescription.
The LidoReal patches contain 4% Lidocaine and 1% Menthol – essentially a numbing and cooling combination. The filing says the FDA classifies them as a “human OTC drug,” which would make them ineligible for reimbursement under New York’s no-fault laws, since those laws cover prescription drugs only. Comparable over-the-counter patches with the same active ingredients are “available for advertised prices in the range of $10 to $30,” according to the complaint.
The pharmacy was incorporated in September 2024 and registered with the state that December, the filing states. By January 2025, it was submitting claims to GEICO. Within its first four months of operation, the complaint alleges, the pharmacy billed GEICO more than $674,000. Over approximately 17 months – from January 2025 to May 2026 – total billing exceeded $3.7 million.
The filing offers a striking account of how the pharmacy came to exist. The owner allegedly told GEICO he began operating the business after “passing by” a pharmacy location, noticing it was stocked but vacant, and renting the space – all, according to the complaint, “without knowing who the prior owner was, without paying for the existing stock in the location, and without paying to purchase the old pharmacy.”
The owner is not a licensed pharmacist, the complaint states, and had no prior experience operating a pharmacy.
GEICO alleges that once the pharmacy opened, its owner joined what the complaint calls “a network of individuals and entities regularly involved in No-Fault insurance fraud.” From there, the filing says, prescriptions were steered to the pharmacy through kickback arrangements with prescribers at multidisciplinary medical clinics in Brooklyn.
The complaint details a pattern it says points to cookie-cutter prescribing rather than individualized patient care. According to the filing, multiple patients involved in the same car accident were routinely prescribed the identical set of products – regardless of their age, physical condition, or where they were sitting in the vehicle at the time of the crash.
In one example cited in the filing, three people involved in a single July 2025 accident all received prescriptions for the same two products. In another, two patients from the same August 2025 collision received identical prescriptions – even though their examination reports listed medications that did not match the prescriptions actually issued.
The complaint alleges that approximately 95% of the pharmacy’s billing to GEICO – roughly $3.5 million – came from practitioners connected to a single medical practice. Approximately 77%, or over $2.8 million, is attributed to one physician’s prescriptions alone. At just one of the three clinic locations, GEICO says it received billing from what the complaint describes as a “revolving door” of more than 20 purportedly different healthcare provider names.
In some instances, the filing states, prescriptions were allegedly written before the patient had even been examined. In others, weeks passed between the prescription date and the date the products were actually dispensed – a gap the complaint says is inconsistent with treating recent accident injuries.
GEICO says it has already paid approximately $1.855 million on the pharmacy’s claims. It is now asking the court to declare it does not owe an additional $1.565 million in pending claims.
The insurer has brought seven legal claims. Two are federal racketeering claims under RICO, which allows an insurer to seek triple damages when it can show a business was run through a pattern of fraud using the mail or electronic wires. If those claims succeed, the recovery could reach approximately $5.565 million.
The remaining claims include common law fraud, keeping money it should not have kept (unjust enrichment), and violation of a New York law that prohibits pharmacies from billing for prescriptions steered to them through financial arrangements with prescribers. GEICO is also seeking punitive damages on the fraud claims.
The complaint also names a law firm it says was engaged to chase payments from GEICO through dozens of individual lawsuits and arbitrations, filed in what the complaint calls “piecemeal fashion” to “obscure the fraud and monetize the scheme as quickly as possible.” Each case typically involved just one bill – making it nearly impossible for any single judge or arbitrator to see the broader pattern, the filing alleges.
The case maps a fraud playbook that no-fault claims departments increasingly encounter: a pharmacy targeting a narrow set of high-margin products, prescription steering through clinic networks, and aggressive piecemeal collection designed to make each individual bill look routine when viewed on its own.
The allegations in the complaint have not been tested, and no court has ruled on the merits.
