Farmers Insurance is taking aim at what it says is a widespread billing fraud scheme that cost it over $274,000 in bogus no-fault payments.
In a complaint filed Sept. 5 in federal court in Brooklyn, a group of insurers under the Farmers umbrella accused more than 20 individuals and businesses of working together to exploit New York’s no-fault auto insurance system. The allegations center on claims for durable medical equipment – such as cold therapy units, PEMF devices, and infrared heating pads – that Farmers says were either not delivered, medically unnecessary, or billed using falsified documents.
At the heart of the case is a familiar issue for insurers: high-volume billing from DME suppliers under the no-fault system. In New York, the system allows up to $50,000 in personal injury protection (PIP) coverage per individual, and providers can bill insurers directly when a claimant assigns their benefits. But under New York law, those providers must be properly licensed – and services must be medically necessary – to qualify for payment. According to the complaint, those standards were routinely not met.
The companies named include Ortho Recovery Corp., Advanced DME Corp., BHDS Supply Inc., and several others. The complaint alleges that most lacked the required license from New York City’s Department of Consumer and Worker Protection, which is necessary to legally distribute durable medical equipment in the city.
The filing also outlines billing irregularities. Farmers says the suppliers submitted carbon-copy documents across different claims, including near-identical prescription forms, delivery receipts, and wholesale invoices. Some invoices listed shipment dates that came before the order date. In several instances, wholesalers named in the invoices either no longer existed or denied doing business with the DME companies.
In one example, GB Ortho World Corp. allegedly submitted invoices from a wholesaler that had ceased operating in 2013 - whose managing member, according to the complaint, passed away in 2019. Yet the documents were dated 2025. Another invoice came from a business name canceled in 2006, used to justify DME billed by Gamlev Ortho Supply Inc.
Farmers argues this wasn’t just sloppy paperwork. The complaint alleges a coordinated fraud involving knowingly false records, forged invoices, and the mailing of hundreds of claims in violation of federal and state laws. The insurers are pursuing civil racketeering claims under the RICO Act, alongside claims of common-law fraud and unjust enrichment.
The filing also cites statements from claimants during examinations under oath. Some reportedly denied receiving any of the billed items. One claimant, identified in the complaint as T.C., stated they did not receive a pulsed electromagnetic therapy device, a wearable PEMF device, or the infrared heating pad for which Farmers had been billed.
Farmers says the result of the scheme was $274,050.94 in wrongly paid claims. The company is asking the court for damages in that amount and a declaration that it has no obligation to pay any further related claims submitted by the defendants.
The case is 21st Century Centennial Insurance Company et al. v. Ortho Recovery Corp. et al., filed in the US District Court for the Eastern District of New York. As of the filing date, no responses had been submitted by the defendants.
While the case remains at an early stage and the allegations have yet to be tested in court, the filing offers a detailed look at the operational risks insurers face in New York’s No-Fault landscape. It’s a reminder that vigilance over provider licensing and billing documentation isn’t just a back-office concern – it’s a frontline defense.
