A sweeping federal lawsuit accuses two Brooklyn medical supply companies of orchestrating a multimillion-dollar insurance fraud scheme that targeted GEICO with bogus claims for unnecessary medical equipment.
Filed on October 3, 2025, in the United States District Court for the Eastern District of New York, the complaint by Government Employees Insurance Company and its affiliates alleges that Droz Medical Supply Inc., GB Medical Supply Inc., their listed owners Daniel M. Drozdov and Gennadiy Bortnikov, and a cast of unnamed conspirators, masterminded a complex operation to siphon more than $835,000 from GEICO through fraudulent no-fault insurance claims. The insurer is also seeking a court declaration that it is not responsible for an additional $1.2 million in pending claims it believes are tainted by the same scheme.
According to the complaint, the alleged fraud was anything but subtle. The companies are accused of submitting hundreds of claims for durable medical equipment - such as powered pressure-reducing air mattresses, osteogenesis bone stimulators, and pneumatic compression devices - purportedly prescribed to individuals who claimed to have been involved in automobile accidents in New York and were eligible for coverage under no-fault insurance policies issued by GEICO. The lawsuit claims these devices were medically unnecessary, illusory, or otherwise non-reimbursable, and in some instances, may not have been provided at all.
The heart of the scheme, GEICO alleges, was a network of collusive relationships between the supply companies, their so-called “paper” owners, and a group of unnamed “John Doe” defendants. The complaint describes a system where prescriptions were secured through kickbacks and financial incentives, with the operators and managers of various No-Fault medical clinics - referred to as clinic controllers - allegedly involved. The companies, the suit claims, would then submit inflated bills to GEICO, using Healthcare Common Procedure Coding System (HCPCS) codes that did not accurately represent the equipment provided and grossly inflated the permissible reimbursement rate.
The complaint details how the two companies, both based in Brooklyn, operated in tandem. When scrutiny on one company increased, the billing would shift to the other. The companies allegedly used virtually identical delivery receipts and prescription templates, and even engaged the same collection law firm to pursue payment on disputed claims. The operation, GEICO claims, was designed to evade detection and maximize the amount of No-Fault benefits collected.
A key allegation is that neither Droz Medical Supply nor GB Medical Supply obtained the Dealer in Products for the Disabled License required by the City of New York’s Department of Consumer and Worker Protection. Under city law, such a license is mandatory for any business substantially involved in selling, renting, repairing, or adjusting products for the disabled. The absence of these licenses, GEICO argues, made the companies ineligible to collect No-Fault benefits.
The complaint also accuses the defendants of misrepresenting the type and quality of equipment provided. For example, the companies allegedly billed for custom-fabricated or custom-fitted orthotic devices while providing, if anything, only off-the-shelf products. In some cases, the codes used on the bills corresponded to equipment with significantly higher reimbursement rates than what was actually supplied.
GEICO’s lawsuit references New York’s No-Fault insurance laws, which require that only medically necessary DME prescribed by licensed providers is reimbursable, and that providers comply with all state and local licensing requirements. The insurer claims that the fraudulent activity has been ongoing since at least December 2023 and continues, with the defendants still seeking payment on pending charges.
The legal action seeks to recover more than $835,000 already paid, punitive damages, and a declaration that GEICO is not obligated to pay over $1.2 million in pending claims. The complaint includes causes of action for declaratory judgment, violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act, common law fraud, unjust enrichment, and aiding and abetting fraud.
It is important to note that these are allegations at this stage. No court has yet ruled on the merits of GEICO’s claims, and the defendants have not been found liable.
