GEICO alleges a Brooklyn pharmacy billed more than $3 million for two topical pain products under New York’s No-Fault system.
The insurer filed the complaint on June 10, 2026, in the US District Court for the Eastern District of New York.
The complaint names Hatzlacha Rx Inc., which does business as Nostrand Avenue Chemists, as a defendant, and it also names the pharmacy’s owner, one prescribing doctor, and John Doe defendants.
According to GEICO, almost 100% of the pharmacy’s billing to it was for LidoReal 4%-1% Patches and Diclofenac Sodium 2% Solution.
The complaint says the diclofenac bills typically ranged from $2,686.88 to $4,299.01 per prescription, while the LidoReal patch bills were typically $2,751.84 per prescription.
GEICO alleges LidoReal is classified by the FDA as an over-the-counter drug, that New York No-Fault pharmacy benefits cover prescription drugs only, and that the patches were sourced from Forreal Pharmaceuticals LLC, which the complaint says was not registered with the New York State Education Department as a drug supplier, manufacturer, or wholesaler.
The lawsuit further alleges the pharmacy obtained prescriptions through referral arrangements involving prescribers and unlicensed clinic controllers, and that the prescriptions were issued under generic, preprinted, and boilerplate examination reports rather than individualized patient need.
As examples, the complaint alleges that people involved in the same crash repeatedly received the same two products and that some exam notes listed Lidocaine 5% Ointment, Diclofenac Sodium 2%, and Cyclobenzaprine, while the prescriptions sent to the pharmacy instead listed LidoReal patches and omitted Cyclobenzaprine.
GEICO says it paid about $432,000 on the challenged bills and seeks a declaration that it owes nothing on about $2.53 million in pending claims, along with other relief.
The complaint asserts seven causes of action, including declaratory judgment, RICO claims, fraud, unjust enrichment, a claim under New York Public Health Law § 238-a, and aiding and abetting fraud.
These allegations have not been tested in court and no court has ruled on GEICO’s claims.
