Geico Alleges Insurance Fraud Scheme Against Medical Professional Cos.

On Monday in the Eastern District of New York, Geico, Geico Indemnity Co., Geico General Insurance Co., and Geico Casualty Co. filed a complaint against medical professional corporations and limited liability companies in New York and New Jersey, alleging that the entities have been operating a scheme that has billed Geico for thousands of no-fault claims for which the defendants purportedly were not eligible and those that were medically unnecessary and fraudulent.

New York’s no-fault laws require auto insurers to provide up to $50,000 in personal injury protection (PIP) benefits per beneficiary for expenses incurred through seeking medical care after an auto accident, the complaint explained. Once an insured person claims the PIP benefits through their health care provider, the health care provider submits the claim to the auto insurance company in question in order to receive payment; New Jersey has similar laws governing auto insurance companies’ responsibility for insureds’ medical care after auto accidents, the complaint added.

Geico claimed that the defendants — Shahid Mian, MD; Shahid Mian, MD PC (Mian NY PC); Shahid Mian, MD, Professional Corporation (Mian NJ PC); Surgery Center of Oradell LLC; Parkway Ambulatory Surgery Center LLC; Sadia Chaudhry; and Ata Chaudhry (also known as Danny Chaudhry) — submitted to Geico thousands of fraudulent no-fault claims for “unlawful, medically unnecessary, and otherwise non-reimbursable” services and procedures for individuals who purportedly were in auto accidents and thus eligible for New York or New Jersey no-fault coverage. The plaintiffs claimed that the defendants’ alleged scheme has been operating since 2014, with Mian and spouses A. Chaudhry and S. Chaudhry, using the PC defendants and LLC defendants as “a vehicle to submit fraudulent billing to GEICO and other insurers in New York and New Jersey,” the complaint said.

The patients that the individual physician defendants and the PC defendants treated, the plaintiffs argued, were “involved in relatively minor accidents, to the extent that they were involved in any actual accidents at all” and that “in most of the claims identified … the Insureds did not seek treatment at any hospital following their accidents.”

Further, the defendants were not eligible in the first place to seek reimbursement of no-fault claims, whether the claims in question were fraudulent or not, the plaintiffs argued — they allegedly were noncompliant with laws and regulations governing health care practice and licensing laws in the states in question.

The complaint noted that a November 2010 cease-and-desist order was entered against the Chaudhrys alleging, among other things, that they had been “falsely representing that an imaging facility they owned was licensed as an ambulatory care facility, when in fact it was not” and “submitting billing through another of the ambulatory care facilities they owned for healthcare services that they had not, in fact, provided.” A. Chaudhry also pleaded guilty in 2016 to participating in a kickback scheme in which he paid more than $850,000 t0 health care professionals and physicians so that they would refer patients to his ambulatory care facilities, according to the complaint.

Geico claimed the defendants have committed common law fraud, aiding and abetting fraud, unjust enrichment and violations of the New Jersey Insurance Fraud Prevention Act and Racketeer Influenced and Corrupt Organizations Act. Overall, Geico is seeking to recover more than $12,000,000 that the defendants purportedly obtained through its alleged scheme, among other relief.

The plaintiffs are represented by Rivkin Radler LLP.