GEICO has accused a Queens-based medical supply company of orchestrating a sweeping insurance fraud scheme, seeking to claw back over $500,000 in federal court.
In a civil complaint filed September 11 in the Eastern District of New York, Government Employees Insurance Company (GEICO) and its affiliates allege that Grandview Supply Inc., its owner Rakhmin Izgelov, and a network of unnamed associates systematically exploited New York’s “no-fault” insurance system. The suit, brought under the Racketeer Influenced and Corrupt Organizations Act (RICO), claims the defendants billed GEICO for more than $1 million in purportedly medically unnecessary or illusory medical equipment and orthotic devices, using collusive arrangements and kickbacks to drive up profits.
According to the 70-page complaint, the alleged fraud began in 2023, shortly after Grandview Supply was incorporated in Queens. GEICO contends that Izgelov and his company worked with operators and managers of various medical clinics and healthcare providers, steering large volumes of prescriptions for durable medical equipment (DME) and orthotic devices to Grandview Supply. These prescriptions, the insurer claims, were often vague or generic, allowing the defendants to select and bill for items with high reimbursement rates, regardless of actual patient need.
The complaint describes a coordinated operation. Clinic operators, referred to as “Clinic Controllers,” allegedly received kickbacks or other financial incentives in exchange for funneling prescriptions to Grandview Supply. In many cases, the prescriptions were routed directly to the company, bypassing legitimate DME retailers. The document details how, in some instances, prescriptions contained photocopied signatures or were issued on dates when the purported provider had not seen the patient.
GEICO alleges that the defendants submitted, or caused to be submitted, hundreds of fraudulent no-fault insurance charges, billing for equipment that was not medically necessary, not properly prescribed, or misrepresented in type and value. The complaint states that Grandview Supply, which is not a licensed healthcare provider, made unauthorized decisions about what equipment to dispense and typically billed for items with the highest reimbursement rates. For example, the company allegedly billed for custom-fitted or custom-fabricated devices when only off-the-shelf products were provided. In another example, it submitted charges for “egg crate mattresses” using codes for full-size foam rubber mattresses, increasing the reimbursement from $19.48 to $155.52 per item.
The insurer claims it has already paid out more than $512,000 on these allegedly fraudulent claims and is facing an additional $395,000 in pending bills. GEICO is asking the court to declare that it is not obligated to pay the outstanding claims and to award damages under RICO, as well as for common law fraud and unjust enrichment.
The complaint also highlights the regulatory framework that governs New York’s “No-Fault” system. Under state law, insurers are required to provide up to $50,000 per insured for medically necessary expenses following an automobile accident. Providers must comply with licensing requirements and use billing codes tied to the New York Workers’ Compensation Fee Schedule. GEICO alleges that Grandview Supply and its associates routinely violated these rules, submitting claims for equipment that did not meet required standards or was not supported by valid prescriptions.
The suit further alleges that the defendants took steps to conceal their activities, using collusive arrangements and fraudulent documentation to avoid detection. The complaint describes a “revolving door” of healthcare providers at certain clinics, with frequent changes in provider names and little continuity of care - tactics that GEICO claims were designed to circumvent insurance company investigations and continue the fraudulent exploitation of the system.
The case is at the complaint stage, all allegations remain unproven and the case is ongoing. Grandview Supply, Izgelov, and the other defendants have not yet responded in court.
