GEICO initiated a federal lawsuit on July 14 against nine New York durable medical equipment companies and six associated individuals, alleging a coordinated fraud scheme within the state's No-Fault auto insurance program. The insurer seeks the return of more than $1.3 million it has already paid and asks a court to dismiss over $5.2 million in pending bills.
The complaint, filed in the Eastern District of New York, describes a system where providers bill insurers directly for injured drivers who are entitled to up to $50,000 in benefits. GEICO alleges the nine companies were nominally owned by six people but were actually controlled by an unidentified "Secret Owner." The suit claims the listed paper owners were never licensed healthcare providers.
According to the filing, the alleged scheme began in November 2023 and continues to the present. The insurer states the operators obtained prescriptions for medically unnecessary equipment through kickbacks and financial incentives. Some prescriptions were reportedly fabricated and lacked authorization from the referring provider whose name and signature appeared on the documents.
The equipment in question included osteogenesis bone stimulators, powered pressure-reducing air mattresses, neuromuscular stimulators, infrared heat pads, and handheld laser devices. GEICO alleges that patients received inexpensive, low-quality items that did not match the HCPCS codes listed on the bills. By billing cheap items under costlier codes, the operators allegedly increased payments.
Charges for non-fee-schedule items were also claimed to have exceeded the legal cap of 150% of the provider's cost.
To avoid detection, the complaint describes a "quick hit" pattern where billing shifted among the various entities over several months. Unpaid bills were reportedly pursued by collection law firms that sued the insurers.