GEICO is going after an alleged $2.9 million no-fault fraud operation run through 12 DME companies and 10 individuals in New York.
In a civil action filed on March 27, 2026, in the US District Court for the Eastern District of New York, the insurer alleges a coordinated network of durable medical equipment providers systematically submitted thousands of fraudulent no-fault claims, billing for medically unnecessary devices while cycling through a rotating cast of corporate entities to stay under the radar.
According to the filing, the DME providers - including Carbon Supply Inc., Gate Supply Inc., Strad NYC Supply Inc., Tara Supply Inc., Sunlight DME Inc., and seven others - were all controlled behind the scenes by an unidentified individual referred to as the "Secret Owner". The 10 named individual defendants allegedly served as straw owners, lending their names to incorporation documents while the Secret Owner ran the operation and collected the proceeds.
The alleged scheme worked like this: the defendants obtained prescriptions for medically unnecessary equipment - millimeter wave therapy devices, low level electromagnetic therapy devices, and low red light therapy devices - through kickbacks and collusive arrangements with clinic operators and referring providers. They then billed GEICO under the "Miscellaneous" HCPCS Code E1399, a billing category for non-fee-schedule items. Under New York's no-fault laws, those items are reimbursable at the lesser of 150% of the provider's legitimate acquisition cost or the cost to the general public. GEICO alleges the defendants grossly inflated those rates and backed them up with fabricated wholesale invoices — purportedly issued by a company called Daytona Recovery Devices in Ontario, Canada, and another called Wave Industries in Poland. Both were allegedly listed at residential addresses.
To avoid detection, the defendants allegedly rotated billing across the twelve providers in what the filing describes as a "quick hit" pattern - ramping up claims through one entity, then shifting to the next. GEICO says total billing through the scheme exceeded $2.9 million, of which it paid out more than $1.4 million. The insurer is also seeking a court declaration that it has no obligation to pay more than $700,000 in pending claims still in the pipeline.
The case raises familiar but persistent concerns for the no-fault insurance sector: how organized fraud operations continue to exploit DME billing channels, particularly through non-fee-schedule codes and fabricated cost documentation. For claims teams and SIU professionals, the rotating-entity model described in this filing is a reminder that pattern detection across affiliated providers remains a critical line of defense.
GEICO is pursuing claims under RICO, common law fraud, and unjust enrichment, and has demanded a jury trial. No determination on the merits has been made. The case remains in its earliest stages.
