Allstate filed two federal RICO lawsuits in the US District Court for the Eastern District of New York on February 19, 2026, alleging coordinated no-fault auto insurance fraud involving durable medical equipment suppliers.
The cases name ten DME companies and nine individuals. No court has issued a final determination.
The complaints describe parallel structures. The defendants established DME entities to submit claims tied to New York’s no-fault system, then entered referral and kickback arrangements with medical clinics in the metropolitan area.
Those clinics allegedly issued standardized prescriptions for high-cost rental devices to large volumes of patients, regardless of clinical necessity.
In case 26-CV-987, Allstate names FocalSupply, KEF Supply, Medrite Equipment, Pelle Supply, Rupes Supply, Scarlet Supply, and Yasmed, along with six operators.
The insurer alleges fraudulent submissions beginning April 2023 for EMTT devices, cryotherapy units, and ultrasound machines. Claimed losses exceed $975,000, with approximately $533,000 in unpaid claims pending.
Case 26-CV-988 targets People’s Choice Medical Supplies Inc., Rosa Lynn Supply Inc., and Willis Equipment Corporation, plus three operators.
The alleged scheme began July 2024 and involves Triad 3LT light therapy devices, PEMF units, and cold therapy equipment. Allstate reports more than $81,000 in paid losses and over $621,000 in outstanding claims.
Central to both suits is New York’s June 1, 2023 regulatory cap on monthly DME rentals. For non-fee-schedule equipment, the maximum monthly rental equals one-tenth of acquisition cost. The complaints allege defendants circumvented the cap by billing rentals as sales.
A device purchased for roughly $3,000 should yield a $300 monthly rental ceiling. Instead, filings state claims billed $1,800 per unit.
Allstate further alleges the defendants sourced low-cost equipment from wholesale suppliers and omitted make, model, and manufacturer details from claim submissions, limiting adjusters’ ability to validate pricing and compliance.
The insurer seeks relief under the federal RICO statute, alongside claims of common law fraud and unjust enrichment. It requests declarations eliminating obligation to pay pending or future claims tied to the defendants and seeks treble and punitive damages.
According to Beinsure analysts, DME billing remains a recurring vulnerability within New York’s no-fault framework due to rental pricing structures and high claim frequency.
The litigation signals continued carrier reliance on federal racketeering statutes to counter organized billing schemes in auto no-fault markets.
