GEICO Proactive in Fight Against Millions of Dollars of Fraudulent No Fault Claims

No-Fault Insurance a Temptation to Fraudsters

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The plaintiffs (GEICO) sued accusing the defendants of submitting fraudulent insurance claims for expensive, medically unnecessary topical pain products prescribed to people with soft tissue injuries, whom the plaintiffs insured. The defendants filed approximately 467 individual arbitrations and 48 individual lawsuits.  In Government Employees Insurance Company, et al. v. SMK Pharmacy Corp, et al., No. 21-CV-3247 (AMD) (RLM), United States District Court, E.D. New York (February 23, 2022)

BACKGROUND

Beginning in 2017, the defendants allegedly participated in a scheme to submit fraudulent insurance claims for expensive topical pain products purportedly provided to patients involved in automobile accidents. 

To establish irreparable harm, a party seeking preliminary injunctive relief must show that there is a continuing harm which cannot be adequately redressed by final relief on the merits and for which money damages cannot provide adequate compensation.

The record as a whole establishes, at a minimum, a serious question going to the merits as to whether the defendants dispensed medically necessary products. 

GEICO’s motion was granted. Until this action is resolved, all No-Fault insurance collection arbitrations between SMK Pharmacy and the plaintiffs pending before the American Arbitration Association are stayed, and the defendants are enjoined from commencing any new No-Fault insurance collection arbitrations or state court collection lawsuits against the plaintiffs on behalf of SMK Pharmacy.

ZALMA OPINION

No-fault insurance was designed to save the public and insurers money. Since each claim is small it takes a stay to resolve the issues and the USDC recognized that the fraud needs to stop to protect the parties and the intent of the statute that established no fault claims. GEICO should be encouraged to keep going after the fraud perpetrators.

© 2022 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders.

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