American Transit Insurance Co. (ATIC), a provider of taxi and for-hire vehicle insurance, has filed a $450 mn lawsuit, alleging extensive fraud involving hundreds of thousands of false claims each year.
The case, filed under the federal Racketeer Influenced and Corrupt Organizations Act (RICO), which allows recovery of three times incurred compensatory damages, and New York State common law, alleges that the defendants, including certain ambulatory surgery centers and related health care entities and individuals, engaged both individually and as part of a conspiracy to submit thousands of fraudulent insurance claims to ATIC.
The case is one of the largest insurance fraud RICO actions ever filed in New York State. The case is denominated American Transit Insurance Company v. All City Family Healthcare Center Inc., et. al., Case No. 24-cv-08606.
Filed under the federal RICO Act, the suit is New York’s largest RICO insurance fraud case. The company seeks $150 mn in damages, which could triple to $450 mn under RICO provisions.
The case targets over 180 defendants accused of exploiting New York’s no-fault auto insurance laws. These laws mandate carriers to reimburse policyholders for medical expenses up to $200,000 for taxi and for-hire vehicles. ATIC claims fraudulent practices included over-diagnosing, over-treating, and over-billing to maximize payouts.
The complaint seeks to recover funds ATIC paid to providers who are alleged to have unlawfully sought payments for services, including ambulatory surgical centers that the complaint alleges were improperly licensed. The complaint further alleges that the services were rendered as a result of improper kickbacks or patient referrals, services that were not provided as billed or were provided in a manner misrepresenting the services provided, were medically unnecessary, and were provided to maximize reimbursement pursuant to a pre-determined protocol irrespective of the actual medical condition and needs of patients.
Hundreds of thousands of fraudulent claims are submitted to commercial automobile insurance providers every year. In March 2024, New York’s Department of Financial Services (DFS), which oversees insurance companies operating in New York State, reported that no-fault fraud reports accounted for 94% of all healthcare fraud reports received in 2023.
Supporting its fraud allegations, ATIC referenced 2023 data from the New York Department of Financial Services, which reported no-fault fraud as 94% of all healthcare fraud cases
As estimated by ATIC, whose 75,000 policyholders include operators of taxis, Uber and Lyft dispatched cars, and other TLC-licensed vehicles, of the more than 250,000 claims it processes every year, 60-70% are fraudulent.
For over 50 years, ATIC has offered affordable commercial auto insurance in New York City and beyond. However, widespread fraud drives up commercial auto insurance costs and strains the financial health of no-fault insurers.
ATIC noted that the lawsuit aligns with its legal obligation under New York insurance laws to address fraud through civil actions, marking a significant step in combating this pervasive issue.
This lawsuit represents an important step in implementing ATIC’s statutory responsibility under New York Insurance Law § 409 to combat fraud through the initiation of civil actions.
ATIC hopes that this lawsuit, and ATIC’s other continuing efforts to fight fraud on behalf of its policyholders, will not only result in appropriate compensation to ATIC for the alleged fraudulent conduct but also serve as a deterrent to others engaged in or contemplating fraud.
ATIC also hopes that it will highlight the scope of the no-fault insurance fraud that occurs in New York so that lawmakers and regulators will consider new measures, including several proposed by ATIC, to combat this enormous problem.
ATIC maintains that there are many market influences beyond insurance rates contributing to the increasing costs associated with providing for-hire transportation services. As these services are essential to a healthy and vibrant NYC economy, it is incumbent upon city leaders to balance higher operating costs with more opportunities for the industry’s service providers to improve earnings.
