GEICO says nine medical-supply companies exploited New York's No-Fault system - and it wants more than $1.3 million back.
The auto insurer sued nine New York durable medical equipment companies and six people on July 14 in federal court in the Eastern District of New York, alleging what it calls a "fraudulent scheme" built on the state's No-Fault program. No-Fault gives injured drivers up to $50,000 in benefits each, with providers billing the insurer directly.
The nine companies are owned "on paper" by six individuals but were really run by an unidentified "Secret Owner," according to the complaint, which alleges the paper owners are not and never have been licensed healthcare providers.
GEICO says the companies billed it more than $7.4 million as part of a scheme it dates to November 2023 and says continues today. It says it has already paid out more than $1.3 million and wants that money back, and it is asking the court to wipe out more than $5.2 million in bills still pending.
The alleged playbook: obtain prescriptions for medically unnecessary equipment through "the payment of kickbacks and other financial incentives," sometimes using "fabricated prescriptions that were unauthorized by the Referring Provider whose name and purported signature were on the prescriptions." The gear ranged from osteogenesis bone stimulators to "Powered Pressure-Reducing Air Mattresses," neuromuscular stimulators, infrared heat pads and hand-held laser devices.
The coding allegations will matter most to claims teams. GEICO says patients who got anything at all received "inexpensive and poor-quality" items that "did not match the HCPCS Codes identified in the bills" - the standardized codes that set reimbursement. Bill a cheap item under a costlier code, and the payment jumps. The insurer says charges on non-fee-schedule items were also pushed past the legal cap of 150% of the provider's cost.
To stay hidden, the complaint says, the operators ran a "quick hit" pattern - a burst of bills, then a shift of the billing "from one DME Entity to the next over the course of several months," so no single company drew scrutiny. Unpaid bills, it adds, were chased by collection law firms that sued the insurers.
GEICO brings claims under the federal RICO statute plus common-law fraud and unjust enrichment, and seeks triple damages and attorneys' fees, along with a declaration that it owes nothing on the pending bills.
This is a complaint, which lays out only GEICO's allegations. They have not been tested in court, and no judge has ruled on them or made any findings against the defendants. The people named in the suit are described by GEICO as owners "on paper," and the claims against them remain unproven.
