Geico Alleges NYRX Pharmacy Part of Insurance Fraud Scheme

On Tuesday, in the Eastern District of New York, Government Employees Insurance Company (Geico) along with various subsidiaries filed a complaint against NYRX Pharmacy Inc., Yuriy Avulov, and a set of unknown individual defendants, alleging that the defendants were involved and continue to be involved in a scheme of fraudulent billing of more than $4.6 million through No-Fault claims for “medically unnecessary pharmaceuticals” for individuals who were in car accidents.

The plaintiffs purported that in 2018, NYRX owner Avulov and the pharmacy itself “entered into illegal, collusive agreements with prescribing healthcare providers (collectively, the ‘Prescribing Providers’) and unlicensed laypersons (the ‘Clinic Controllers’) who work at or are associated with various multidisciplinary medical clinic that almost exclusively treat No-Fault patients (the ‘No-Fault Clinics’)” in order to direct the prescribing providers and clinic controllers to prescribe — at heightened volumes and heightened prices — topical pain prescription drugs, oral pain relievers, and muscle relaxants. The defendants allegedly chose these drugs because over-the-counter versions of them would not be covered under No-Fault laws, thus giving them the ability to file “exorbitant” reimbursement claims to Geico.

Of the $4.6 million NYRX billed to Geico, allegedly $4 million had been submitted within the first year of NYX operating as a pharmacy; the plaintiffs acknowledged Geico being among many other auto insurance companies in New York and alleged broader implications that NYRX “likely billed the New York automobile industry in excess of $10 million for the Fraudulent Pharmaceuticals.” Although NYRX is no longer operating, the complaint claimed that the defendants continue to litigate in pursuit of collecting from Geico on the allegedly fraudulent claims.

At stake in the prescription of these treatments was the health of the patients, as the drugs were being given to patients in “predetermined fashion, without regard to genuine patient care,” the complaint said. The prescribing providers did not keep detailed medical histories of the patients receiving the drugs in question, which “demonstrates a gross indifference to patient health and safety,” given the prescribing providers would not have known if each patient was taking any other medication or had any condition that may interfere with a certain prescription drug, the plaintiffs alleged. However, regardless of medical history, the complaint claimed, the prescribing providers also often prescribed medications in the same therapeutic class, called therapeutic duplication, which can put patients at risk of “adverse events” while experiencing no added benefit.

Regarding the drugs themselves, the plaintiffs said many have similar over-the-counter versions that were never recommended to any patients to manage pain or symptoms, and the prescribing providers would instead faithfully prescribe a drug such as Lidocaine 5% ointment when there exist cheaper over-the-counter options, such as Icy Hot Lidocaine or Aspercreme with Lidocaine that both contain 4% lidocaine. Only dispensing prescription drugs to patients allowed the defendants to bill Geico at “egregiously” high rates, according to the complaint.

All of this was made possible through collusion among the pharmacy defendants, prescribing providers, clinic controllers, and No-Fault clinics, the complaint alleged, that involved the pharmacy defendants directing the providers to prescribe the “fraudulent pharmaceuticals” to patients being treated at the No-Fault clinics to have their prescriptions filled at NYRX, which gave NYRX the ability to bill Geico. The plaintiffs purported that the prescribing providers and clinic controllers “virtually never” gave any other option for a pharmacy other than NYRX, despite many of the No-Fault clinics and patients not being located near NYRX.

Geico requested a declaratory judgment that NYRX has no entitlement to receive payment for any pending billing; damages, costs, and relief deemed reasonable by the court; compensatory and punitive damages; among other monetary relief.

The plaintiffs are represented by Rivkin Radler LLP.