What happened: GEICO alleges three DME companies ran a coordinated no-fault fraud scheme, billing $1.9 million in eight months for medically unnecessary equipment
Who's involved: GEICO (plaintiff) and three New York DME supply companies (defendants)
What's at stake: More than $850,000 in recovery, roughly $590,000 in pending claims GEICO wants voided, and treble damages under RICO
Why it matters: The complaint maps a "quick-hit" entity-cycling playbook and specific HCPCS code mismatches that SIU teams and claims adjusters can use as detection benchmarks
Where it stands: Filed November 11, 2026 in federal court
A $22 cushion billed as a $282 wheelchair seat. A foam mattress topper charged at nearly eight times the correct code's price. And a specialty car seat - designed for people with special orthopedic needs such as cerebral palsy - prescribed to fender-bender victims with minor sprains.
Those are some of the billing mismatches at the heart of a federal RICO lawsuit GEICO filed on November 11, 2026, in the US District Court for the Eastern District of New York. The insurer says it wants back more than $850,000 it has already paid out and is asking the court to declare it owes nothing on roughly $590,000 in pending claims.
The targets are three durable medical equipment companies - Darmesh DME Corp., Exit142 Medical Supply Corp., and Sabali DME Corp. - along with the individuals listed as their owners and unnamed "John Doe" defendants the complaint describes as the scheme's hidden controllers.
According to the complaint, the three companies billed GEICO more than $1.9 million between August 2025 and March 2026 for items the filing calls "Fraudulent Equipment" - lumbar supports, orthopedic pillows, massagers, electronic heating pads, and egg-crate mattresses dispensed to people claiming injuries from car accidents.
The filing's most striking allegations concern how those items were coded. GEICO alleges the defendants billed egg-crate mattress toppers under HCPCS code E0184 - a code for a full dry-pressure mattress - at $153.13 each. The correct code for a mattress pad, E0199, carries a maximum reimbursement of $19.48, according to the complaint.
The pattern allegedly repeated across product categories. Items the complaint describes as basic positioning cushions were billed under code E2611 - a wheelchair cushion code - at $282.40 each. The fee schedule's code for a positioning cushion, E0190, caps reimbursement at $22.04.
Then there were the car seats. The complaint alleges defendants billed GEICO for "car seats" under HCPCS code T5001, defined as a positioning seat for people - "primarily children" - with special orthopedic needs such as cerebral palsy. The charges ranged from $405.00 to $756.03 per unit. GEICO says the items actually provided, to the extent any were provided at all, were positioning cushions worth $22.04 under the correct code.
The complaint describes a "quick hit" strategy in which the three companies operated one after another with limited overlap, cycling billing from one entity to the next to keep individual totals below detection thresholds. Exit142 Supply billed GEICO for dates of service between August 19 and November 20, 2025. Sabali DME picked up between October 22, 2025, and February 12, 2026. Darmesh DME ran from December 15, 2025, through March 4, 2026.
All three companies allegedly used virtually identical delivery receipts, billed from Brooklyn addresses, and submitted claims using the same HCPCS codes in response to the same generic prescriptions. The complaint says none of the companies had a genuine retail location or made any effort to attract legitimate patients or prescribers.
The speed of the operation is one detail the filing highlights. Exit142 Supply allegedly began receiving prescriptions and billing GEICO five days after incorporation. Sabali DME followed eight days after. Darmesh DME, twelve days.
GEICO alleges all three entities were secretly controlled by a single unidentified individual the complaint calls the "Secret Owner," with the listed owners serving as "straw" or "paper" owners. None of the listed owners are licensed healthcare providers, according to the filing.
One of the filing's more pointed allegations concerns the prescriptions themselves. GEICO alleges the equipment was prescribed through "predetermined fraudulent protocols" at clinics in the New York metropolitan area, primarily in Brooklyn. The filing says virtually every patient received the same bundle of equipment - cervical collar, cervical pillow, egg-crate mattress, bed board, cushion, positioning cushion, thermophore, and a transcutaneous electrical joint stimulation device - regardless of age, physical condition, or accident severity.
The complaint calls that uniformity "medically implausible." It alleges the prescriptions were deliberately written in "generic, vague, nondescript" language so the DME companies could select whichever product carried the highest reimbursement code.
When a prescription simply said "Lumbar Sacral Support," for example, the filing says defendants could have billed under more than twenty different HCPCS codes, ranging from $43.27 for a basic flexible brace to $1,150.00 for a custom-fabricated rigid device. According to the complaint, the defendants "virtually always" chose codes at or near the top of that range.
The filing also alleges prescriptions were issued on dates when providers did not examine or treat patients, and that nurse practitioners were repeatedly misidentified as physicians on prescription forms.
The complaint brings twelve causes of action: a declaratory judgment to void all pending claims, two RICO counts alleging mail fraud as the predicate offense, and separate common-law fraud and unjust-enrichment claims broken out by entity. The insurer is seeking treble damages on the RICO counts and punitive damages on the fraud claims. GEICO has demanded a jury trial.
The suit is the latest in a series of federal no-fault DME fraud actions GEICO has filed in New York's Eastern District, several targeting similar entity-cycling and HCPCS code-mismatch schemes. For SIU teams and claims adjusters working the no-fault channel, the filing reads as a catalog of the billing patterns worth flagging: sequential company formation, identical prescription bundles across patients, and billing codes that do not match the product category actually dispensed.
The allegations have not been tested, and no court has made any ruling on the merits.
