- GEICO filed a federal lawsuit against a Brooklyn medical equipment supplier and its owner, alleging more than $733,000 in fraudulent no-fault auto insurance billings involving laser and cold compression therapy devices.
- The insurer claims clinics used kickbacks, photocopied physician signatures and standardized prescriptions to supply expensive medical equipment to patients involved in minor car accidents.
- GEICO seeks reimbursement of more than $200,000 already paid, cancellation of over $450,000 in outstanding claims and treble damages under the federal Racketeer Influenced and Corrupt Organizations Act (RICO).
GEICO, a wholly owned subsidiary of Berkshire Hathaway, has filed a federal lawsuit against a Brooklyn-based durable medical equipment supplier and its owner, alleging a fraudulent billing operation involving more than $733,000 in claims for laser therapy devices and cold compression systems prescribed to victims of minor automobile accidents.
The complaint, filed in the US District Court for the Eastern District of New York, accuses the supplier of exploiting New York’s no-fault auto insurance system through allegedly unnecessary medical equipment prescriptions, kickbacks and falsified documentation.
GEICOclaims the company began submitting insurance bills just nine days after its incorporation.
The insurer alleges that the operation relied on a “fraudulent scheme” involving photocopied physician signatures, pre-printed prescription forms and arrangements with medical clinics to generate claims for equipment that patients did not medically require.
GEICO has already paid more than $200,000 on the disputed claims. The company is seeking reimbursement of those payments, a court declaration invalidating more than $450,000 in outstanding bills and treble damages under the federal RICO statute.
Most patients identified in the complaint were involved in relatively minor, low-impact collisions, described in the filing as “fender-bender” accidents. Their reported injuries generally consisted of sprains or strains, and many did not require hospital treatment.
Despite differences in their injuries, ages and medical conditions, nearly all allegedly received prescriptions for the same types of equipment. Laser therapy devices were billed at $3,750 or $3,756 each, while cold compression therapy systems carried charges of $3,100 per unit.
The supplier submitted these charges using a miscellaneous billing code intended for medical equipment without individually established prices under New York’s applicable fee schedule.
GEICO contends that the prescriptions followed “predetermined fraudulent protocols” rather than individualized clinical assessments. The complaint identifies several participating clinics across the Bronx, Brooklyn and Yonkers, where patients with different medical circumstances were allegedly prescribed virtually identical devices.
The lawsuit describes a system in which unlicensed individuals operating medical clinics, identified as “Clinic Controllers,” directed prescriptions to the supplier instead of providing them directly to patients.
GEICO alleges this arrangement was designed to avoid scrutiny that might arise if patients obtained equipment through conventional retail suppliers, where repeated prescriptions for expensive devices could prompt questions about medical necessity.
The complaint also challenges the authenticity of the prescription records. According to GEICO, many documents were prepared using standardized templates containing photocopied physician signatures.
The insurer submitted side-by-side comparisons of signatures appearing on separate prescriptions, alleging that the signatures were identical reproductions rather than independently executed authorizations.
Some prescriptions were allegedly dated on days when the listed healthcare provider had not treated the patient. Other documents contained no prescription date.
At one clinic, more than 110 different healthcare providers reportedly worked at the same location during the period examined. GEICO describes this turnover as a “revolving door,” alleging that the frequent changes were intended to complicate insurance investigations rather than reflect legitimate changes in medical practice ownership.
The complaint also identifies substantial delays between the issuance of prescriptions and delivery of the equipment. In one example, a laser therapy device prescribed in May 2024 was reportedly delivered more than three and a half months later.
The insurer alleges that the laser therapy devices were “not FDA cleared or approved.” The complaint also cites commercial insurance policy bulletins characterizing low-level light therapy as “experimental and investigational,” with “no legitimate body of evidence” supporting its effectiveness for back, neck or shoulder pain.
According to the filing, these devices “essentially provide compression and cold therapy to a part of the patient’s body, which is not more effective than using a standard ice pack and bandage.”
GEICO argues that cold therapy is generally most effective during the first several days following an acute injury, whereas the disputed equipment was frequently prescribed weeks after the patients’ automobile accidents.
The allegations form the basis of GEICO’s effort to recover previously paid claims, invalidate outstanding charges and pursue additional damages through federal racketeering litigation.
