What happened: GEICO alleges two DME suppliers billed millions for medically unnecessary devices through forged prescriptions and fabricated invoices
Who's involved: GEICO (plaintiff) and two New York DME supply companies operating from the same address
What's at stake: Approximately $1.05 million already paid and more than $1.9 million in pending claims, plus triple damages under RICO
Why it matters: The filing maps exactly how no-fault billing gaps around uncoded devices can be exploited at scale
Where it stands: Complaint filed October 29, 2026
The retail price of the infrared heating pad was $75. The invoice submitted to GEICO claimed the supplier paid $1,200 for it. The bill to GEICO was $1,800.
That chain of numbers - built on what the insurer calls a fabricated wholesale receipt - sits at the centre of a federal lawsuit GEICO filed on October 29, 2026, in the US District Court for the Eastern District of New York. The Berkshire Hathaway subsidiary alleges two durable medical equipment suppliers ran a years-long scheme to exploit the state's no-fault auto insurance system, billing for devices that were allegedly unnecessary, often never properly prescribed, and invoiced at wildly inflated prices.
The two companies at the heart of the complaint - CSO Supply Corp. and Rehab Essentials Corp. - share the same address in Oakland Gardens, Queens. CSO Supply was formed in 2016; Rehab Essentials was incorporated in February 2025. According to the filing, both are owned and controlled by a single individual who is not and has never been a licensed healthcare provider.
GEICO says it has already paid out approximately $1.05 million on the suppliers' claims and is asking the court to confirm it does not have to pay more than $1.9 million in outstanding bills.
The complaint's most detailed allegation involves infrared heating pad systems. According to the filing, the suppliers billed GEICO $1,800 per device, submitting invoices that claimed a wholesale cost of $1,200 per unit from a New Jersey company called Ram Basics Inc.
Ram Basics, however, sells the identical device to the public under its "Dr. Franklyn's" brand for $75, the complaint states.
The filing alleges the defendants paid no more than $75 per device and used "fraudulent wholesale invoices" to justify the $1,800 charge. For context, the Centers for Medicare and Medicaid Services has concluded in a national coverage determination that infrared therapy devices are "not reasonable and necessary."
GEICO's complaint lays out what it calls "predetermined fraudulent protocols" at clinics across the Bronx, Queens, Hempstead, Brooklyn, and Jamaica. The filing alleges that virtually all patients - regardless of age, physical condition, or the severity of their accident - received near-identical prescriptions for expensive devices. Iceless cold compression devices were typically billed at between $1,050 and $2,550 per patient; continuous passive motion machines were rented for weeks after routine arthroscopic procedures.
The insurer points to a pattern it says legitimate medicine cannot explain. In seven representative examples from the filing, every pair or group of patients involved in the same car accident received identical prescriptions filled by the same supplier, each billed at $2,100 or $2,550. Three people from a single April 2025 accident, the complaint says, were all dispensed the same device within two weeks of each other.
The prescriptions themselves raise questions, according to GEICO. The filing alleges they were often issued on preprinted forms, "using the exact same format, exact same print font, and exact same language." In multiple cases, the complaint states, the devices were dispensed without any prescription at all, or with prescriptions bearing what the insurer describes as "unauthorized or illegally duplicated" signatures.
A physician who previously worked at one of the clinics named in the filing stated under oath, according to the complaint, that his "name, license and signature were forged on preprinted prescription forms" and that he "never authorized anyone at the Clinic to sign his name or use a stamp with his signature to sign or authorize prescriptions."
The complaint alleges the suppliers deliberately targeted devices that sat in gaps in New York's fee schedules. Some had no specific billing code at all. Others had a code but no set reimbursement amount, leaving room for the supplier to set its own price.
Devices classified under a catch-all billing code meant for unusual, rarely prescribed items were instead dispensed in bulk to hundreds of patients, typically at charges between $2,000 and $3,750 per item, the filing states. The complaint says these items were chosen precisely because the lack of a fixed price made it easier to inflate charges.
The filing also alleges the suppliers entered into collusive financial arrangements, including payments exceeding $100,000 to what the complaint describes as a shell company, to steer large volumes of prescriptions to the two DME businesses.
GEICO brings nine causes of action: it is asking the court to void the pending bills, and has filed fraud and unjust-enrichment claims against each supplier. Four counts fall under the federal Racketeer Influenced and Corrupt Organizations Act, which allows triple the proven damages. On the CSO Supply claims, GEICO seeks at least $453,000 in compensation; for Rehab Essentials, at least $596,000.
The complaint describes a scheme that began in 2020 and, the insurer says, continues today - which may add to the string of no-fault DME fraud actions that major insurers have brought in this district in recent years.
The allegations in the complaint have not been tested, and no court has ruled on the merits of any of the claims.
