December 8, 2025 | JacobiJournal.com — GEICO has filed a federal lawsuit in New York, accusing multiple medical supply companies of orchestrating a $2.7 million billing fraud scheme involving durable medical equipment (DME). The insurer alleges the suppliers submitted claims for equipment that was unnecessary, misrepresented, or never delivered.
The lawsuit was filed in the U.S. District Court for the Eastern District of New York and names several New York–based medical supply companies, along with individuals involved in the alleged scheme.
How the Alleged Fraud Operated
The lawsuit claims that the defendants took advantage of New York’s no-fault auto insurance system, which is designed to ensure accident victims receive medically necessary care without delay. GEICO alleges that, instead of following the system’s intent, the suppliers exploited loopholes to submit fraudulent claims and collect payments for equipment that was either unnecessary or misrepresented.
Specifically, the complaint details that the suppliers:
- Billed for high-cost or custom-fitted DME when generic or off-the-shelf products were provided.
- Submitted false documentation to support claims.
- Attempted to collect payments for equipment that was never delivered to patients.
This approach, GEICO contends, allowed the suppliers to unlawfully extract millions of dollars from the insurer while undermining the integrity of New York’s no-fault insurance system.
Why GEICO Says This Lawsuit Is Important
GEICO emphasizes that fraudulent billing schemes like the one alleged in this case have far-reaching consequences for both insurers and policyholders. The company argues that these practices not only strain the insurance system but also affect legitimate accident victims who rely on no-fault coverage.
According to the lawsuit, this type of fraud:
- Inflates insurance costs and premiums for policyholders.
- Threatens the integrity of the no-fault system.
- Reduces available benefits for legitimate accident victims.
As part of the legal action, GEICO is seeking restitution for payments it claims were improperly made and a court order to block payment of any pending suspicious claims, aiming to prevent further abuse of the system.
What This Means for the Insurance and Healthcare Industry
If GEICO prevails in this lawsuit, it could set an important precedent for how insurers handle suspected fraud in the medical supply sector. A successful outcome may:
- Deter other suppliers from submitting fraudulent claims.
- Prompt stricter oversight of durable medical equipment (DME) billing under New York’s no-fault insurance system.
- Encourage insurers to increase scrutiny of medical supply claims and pursue legal action against suspected fraud.
Beyond the immediate legal implications, the case underscores the need for continued vigilance in the healthcare and insurance industries. Strengthening oversight and enforcing accountability can help ensure that patients receive medically necessary care while preventing the exploitation of the no-fault system.
For more detailed insights on DME fraud and industry responses, visit Insurance Business America.
FAQs: GEICO Medical Device Fraud Case Explained
What is GEICO accusing the suppliers of?
GEICO alleges the companies submitted false or inflated claims for durable medical equipment, billing for items that were unnecessary, misrepresented, or never delivered.
How much money does GEICO say was lost?
The insurer claims over $2.7 million in improper payments were made.
What laws does the lawsuit reference?
The complaint cites common-law fraud, unjust enrichment, and federal racketeering laws, seeking restitution and declaratory relief.
What types of equipment are involved?
The case involves durable medical equipment such as orthotics, positioning cushions, air mattresses, and other items reimbursable under New York no-fault insurance.
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