Liberty Mutual and nine affiliated insurers are suing a network of New York clinics over an alleged $1.5 million no-fault billing scheme.
The complaint was filed on July 23, 2026, in the US District Court for the Eastern District of New York. According to the filing, Liberty Mutual is seeking to recover more than $743,000 it says it already paid on the disputed claims, along with a court declaration that it owes nothing on more than $500,000 in claims still pending.
The suit targets a group of medical, chiropractic, acupuncture, physical therapy and massage corporations operating out of four clinics. Each practice, the complaint says, was owned on paper by a licensed professional. Liberty Mutual alleges that ownership was not real.
The insurer alleges the practices were controlled by unlicensed operators who "secretly owned, operated, and/or controlled the Clinics and the Provider Defendants in violation of New York law." The licensed owners, according to the complaint, were "nothing more than 'paper' owners" who allegedly agreed to "sell" the use of their professional licenses in exchange for a salary or other compensation and then ceded control of the practices.
That distinction is central to the case, and it is one no-fault claims handlers will recognize. New York's no-fault rules allow auto insurers to pay up to $50,000 per injured person for necessary care, but a provider that fails to meet licensing requirements, or that lets unlicensed laypeople control the practice, is not eligible to collect. The complaint quotes the governing regulation, 11 N.Y.C.R.R. § 65-3.16(a)(12): "A provider of health care services is not eligible for reimbursement under section 5102(a)(1) of the Insurance Law if the provider fails to meet any applicable New York State or local licensing requirement necessary to perform such service." It also points to two New York Court of Appeals decisions, which hold that lay-owned medical practices cannot collect no-fault benefits.
The filing also describes how the treatment itself was allegedly handled. It claims the operators set "fraudulent, predetermined treatment protocols," so that patients received a standard set of services regardless of their symptoms, including initial and follow-up examinations, outcome assessment testing, chiropractic and acupuncture treatment, massage therapy, physical therapy and trigger point injections. Initial examinations, the complaint alleges, functioned as a "gateway" to further billable services and equipment referrals. It also alleges the defendants used billing codes that "misrepresented and exaggerated the level of services" in order to inflate the charges.
The complaint further alleges that money moved through arrangements presented as ordinary business costs. It claims some revenue was "disguised as legitimate 'rent' payments which in actuality were kickback payments," and points to transportation and cleaning companies said to be linked to the alleged operators.
Liberty Mutual brings 49 causes of action, including federal civil RICO claims under 18 U.S.C. § 1962(c) and (d), common law fraud, unjust enrichment and a declaratory judgment count. The declaratory count lists the disputed unpaid billing practice by practice, ranging from $1,000 to $123,000 for a single provider.
For carriers, the case turns on corporate structure as much as on the treatment itself. Under the theory Liberty Mutual is advancing, if a practice is unlawfully owned, its bills are not payable regardless of what took place during treatment.
None of the allegations has been tested in court, and no judge has ruled on the claims.
