GEICO just lost a major appeals court ruling that could limit how insurers fight no-fault fraud in New York.
The Second Circuit on March 10, 2026, vacated a lower court judgment that had allowed GEICO to deny no-fault insurance payments to a group of acupuncture businesses accused of running a patient referral kickback scheme. The decision, rooted in a pivotal answer from the New York Court of Appeals, narrows the grounds on which insurers can refuse to reimburse healthcare providers under the state's no-fault system.
The case traces back to a lawsuit GEICO filed against Igor Mayzenberg and several acupuncture businesses he owned, including Mingmen Acupuncture, P.C., Laogong Acupuncture, P.C., and Sanli Acupuncture, P.C. GEICO alleged that the defendants paid third parties to steer patients with no-fault insurance coverage to Mingmen, which then treated the patients and billed GEICO for the services. The insurer characterized the payments as kickbacks.
To justify denying reimbursement, GEICO pointed to a New York insurance regulation known as the Eligibility Regulation, codified at 11 N.Y.C.R.R. § 65-3.16(a)(12). That provision allows an insurer to withhold no-fault payments when a healthcare provider fails to meet any applicable state or local licensing requirement necessary to perform medical services in New York. GEICO's argument was straightforward: by paying for patient referrals in violation of New York's professional conduct rules, the Mayzenberg businesses had effectively failed to meet a licensing requirement, and GEICO should not have to pay.
A federal district court in the Eastern District of New York agreed and handed GEICO summary judgment on its claims for declaratory relief, common-law fraud, and racketeering under the federal RICO statute. The court found that a healthcare provider that improperly purchases patient referrals is generally disqualified from receiving no-fault reimbursements.
The Mayzenberg defendants appealed. On the factual question of whether the kickback payments actually happened, the Second Circuit sided with GEICO - the evidence was undisputed. But the legal question proved far trickier. The appeals court was not confident it could predict how New York's highest court would interpret the Eligibility Regulation in this context, so it took the unusual step of certifying the question directly to the New York Court of Appeals.
The answer came back on November 24, 2025, and it was not what GEICO was hoping for. The New York Court of Appeals held that the Eligibility Regulation does not permit an insurer to deny no-fault payments based on professional misconduct that falls short of ceding control of a professional services corporation to an unlicensed party. In plain terms, paying kickbacks for patient referrals is a violation of professional conduct rules, but it is not the kind of violation that strips a provider of its eligibility for no-fault reimbursement. Only something more drastic - handing over control of the business to someone without a license - would cross that line.
With that answer in hand, the Second Circuit vacated the district court's judgment in its entirety and sent the case back for further proceedings.
Both sides tried to get the appeals court to go further. GEICO urged the panel to affirm the judgment on an alternative theory, arguing that the kickback scheme was so pervasive that the defendants had effectively surrendered control of Mingmen to unlicensed parties. The Mayzenberg defendants, meanwhile, wanted the court to block GEICO from filing a new summary judgment motion raising arguments it had skipped the first time around. The Second Circuit declined both requests, leaving those questions for the district court to sort out on remand.
For insurers operating in New York's no-fault market, the ruling is a meaningful development. The state's no-fault system has long been a battleground between carriers and medical providers accused of billing abuse, and the Eligibility Regulation has been one of the key tools insurers use to deny claims from providers they suspect of fraud. This decision places a clear boundary on that tool.
Professional misconduct alone is not enough. Unless an insurer can demonstrate that a provider has gone so far as to hand the keys of its practice to someone without a license, the Eligibility Regulation will not support a denial.
The decision serves as a reminder that the rules governing no-fault reimbursement denials are narrower than some insurers may have assumed – and that New York's courts are prepared to enforce those limits.
