Liberty Mutual and its affiliates have filed a federal lawsuit, accusing a network of New York medical supply companies and individuals of orchestrating a fraudulent billing scheme targeting the insurer.
Filed in the United States District Court for the Eastern District of New York, the complaint by Liberty Mutual Insurance Company and related entities names more than a dozen medical supply firms and a roster of individuals as defendants. The lawsuit alleges that these defendants carried out a coordinated plan to submit fraudulent claims for durable medical equipment (DME) under Liberty Mutual’s insurance policies.
According to the complaint, the defendants – collectively referred to as the DME Entities – allegedly billed Liberty Mutual for equipment that was not provided, not medically necessary, or not eligible for reimbursement. The scheme, as described in the filing, relied on the use of “paper owners” to conceal the true ownership and control of the supply companies.
The plaintiffs claim that these actions resulted in Liberty Mutual making payments to the defendants, which constituted a benefit that the defendants voluntarily accepted, notwithstanding what is described as an improper, unlawful, and unjust billing scheme.
The complaint states that the alleged scheme involved not only the submission of false claims but also the manipulation of corporate structures and the use of consulting entities. The defendants include both corporate entities and individuals alleged to have played roles in the operation and management of the scheme.
Liberty Mutual is seeking to recover the amounts paid and to prevent further fraudulent activity.
While the complaint references Liberty Mutual’s insurance policies as the basis for the improper claims, there is no discussion of specific policy clauses or exclusions in the sections reviewed. The focus remains on the alleged fraudulent conduct and the resulting financial impact on Liberty Mutual.
It is important to note that these are allegations only, and no findings of fact or liability have been made. The plaintiffs have demanded a trial by jury, and the case is in its early stages.
The case, Liberty Mutual Insurance Company v. Liberty Mutual Fire Insurance Company et al., highlights the ongoing risks of organized fraud facing the insurance industry. For insurers, claims managers, and fraud investigators, the complaint is a reminder of the complexity of fraud schemes and the vigilance needed to protect against them.
