USDC Holds Fraud in Abeyance

Court Restrains Health Care Providers Attempts at Fraud
Post 5080

Illegal Financial Arrangements Between Health Care Professionals Stopped

In Government Employees Insurance Company, GEICO Indemnity Company, GEICO General Insurance Company and GEICO Casualty Company v.  Akiva Imaging Inc., Rashbi Diagnostics Imaging Inc., et. al, No. 1:24-CV-6549 (FB) (JAM), United States District Court, E.D. New York (May 19, 2025)

Plaintiffs:

GEICO companies collectively referred to as "Plaintiffs" or "GEICO" .

Defendants:

Akiva Imaging Inc., Rashbi Diagnostics Imaging Inc., and other health care providers "Defendants."

Massiveness Of Fraudulent Scheme:

Defendants contend that the scheme here does not reach the size and complexity required by the Circuit in Tri-Borough to find serious questions going to the merits and to apply the exceptions to the FAA and AIA. Serious questions exist by virtue of the scheme's complexity the complaint “describes a web of interconnected relationships among the various Defendants, and illegal financial arrangements tying many of the Defendants together,” among other things.

Allegations:

GEICO alleges that Defendants committed civil violations under the Racketeer Influenced and Corrupt Organizations Act (RICO), common law fraud, unjust enrichment, and aiding and abetting fraud. GEICO sought a declaratory judgment that Defendants may not recover on any of the outstanding bills submitted to it .

Motions:

GEICO moved for a preliminary injunction to stay all of Defendants' pending No-Fault insurance collection arbitration and state-court collection lawsuits against GEICO, pending disposition of GEICO's declaratory judgment and RICO claims, and to enjoin Defendants from commencing new No-Fault insurance collection arbitration or state-court collection lawsuits against GEICO, pending resolution of this action . Defendants have moved to stay this action pending resolution of the arbitrable claims or, alternatively, to dismiss it.

Court's Decision:

GEICO's motion was granted and Defendants' motions are denied. The court found irreparable harm that warrants injunctive relief given the global and intertwined nature of the fraud. The balance of hardships tipped decidedly in GEICO’S favor and the injunction is in the public interest because it would prevent fraud and preserve GEICO's ability to prove its allegations of a complex fraudulent scheme involving insurance benefits .

Defendants' Arguments:

Defendants argued that the underlying proceedings do not have potential preclusive effect, GEICO misrepresents the rules regulating radiologists and MRI facilities. The scheme is not sufficiently massive to constitute unusual circumstances warranting the sought injunction, and the effective vindication exception to the FAA does not apply here as damages are not clear and definite. The court did not find these arguments persuasive .

Bond:

The court waives the Rule 65(c) bond requirement .

Defendants' Motion to Dismiss:

Defendants alternatively ask the court to dismiss GEICO's complaint for lack of RICO statutory ripeness, failure to plead fraud with sufficient particularly under Federal Rule of Civil Procedure 9(b), and asserting claims already decided by the underlying arbitrations and state-court suits and thus precluded by res judicata. The court was not persuaded.

Conclusion:

Plaintiffs' motion was granted and Defendants' motions were denied. Defendants were enjoined from initiating new or proceeding with ongoing collections arbitrations and state-court suits.

ZALMA OPINION

This is a man bites dog story. GEICO as the victim of no fault insurance fraud by various health care providers scheming to present fraudulent health insurance claims to no fault auto insurers when, in fact, the patients were neither injured nor were they treated, just billed. The court stopped the bleeding. The trial would be very interesting where the victim of a fraud seeks indemnity from the alleged fraudsters.

(c) 2025 Barry Zalma & ClaimSchool, Inc.

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