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GEICO sues Brooklyn equipment supplier over alleged $733,000 no-fault billing scheme

GEICO is seeking damages and the cancellation of pending claims from a Brooklyn medical equipment supplier accused of using improper prescriptions and clinic kickbacks.

Opal Keller

October 11, 20262 min read

Insurance Billing Dispute - illustration, Jake Team LLC

GEICO has sued a Brooklyn medical equipment supplier and the company's owner in federal court, accusing them of billing the insurer more than $733,000 for devices prescribed to people hurt in minor car crashes through what the complaint calls a kickback-driven scheme. Four GEICO entities filed the case Oct. 7 in federal court in the Eastern District of New York.

The disputed claims were submitted under New York's no-fault auto insurance system. According to the complaint, most of the patients had been in low-impact collisions and had sprains or strains, yet nearly all were prescribed the same equipment regardless of their age, accident or condition: laser therapy devices billed at about $3,750 each and cold compression units billed at $3,100 each.

GEICO alleges the prescriptions followed set protocols at clinics in the Bronx, Brooklyn and Yonkers rather than medical need. The complaint says unlicensed clinic operators sent prescriptions straight to the supplier instead of giving them to patients, and that the prescriptions were produced on pre-printed template forms, many with photocopied physician signatures. It also alleges some prescriptions were dated on days the named provider never treated the patient, while others carried no date at all.

One clinic location used more than 110 different health care providers, according to the filing. GEICO argues that routing the prescriptions through the supplier kept anyone from noticing how many patients were getting the same costly devices.

The insurer says it has paid out more than $200,000 on the claims. It is asking the court to return that money, to declare more than $450,000 in pending bills void and to award triple damages under the federal racketeering law known as RICO. GEICO is a wholly owned subsidiary of Berkshire Hathaway.

The complaint's allegations have not been tested in court, and no judge has ruled on the merits.

GEICO employs about 2,000 people in Richardson, according to the city's annual financial report.

Sources

insurancebusinessmag.com

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Opal Keller

Opal Keller reports on local business, new openings, and economic development in Richardson.

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