Farmers Insurance is taking aim at what it says is a widespread billing fraud scheme that cost it over $274,000 in bogus no-fault payments.
In a complaint filed Sept. 5 in federal court in Brooklyn, a group of insurers under the Farmers umbrella accused more than 20 individuals and businesses of working together to exploit New York’s no-fault auto insurance system. The allegations center on claims for durable medical equipment – such as cold therapy units, PEMF devices, and infrared heating pads – that Farmers says were either not delivered, medically unnecessary, or billed using falsified documents.
At the heart of the case is a familiar issue for insurers: high-volume billing from DME suppliers under the no-fault system. In New York, the system allows up to $50,000 in personal injury protection (PIP) coverage per individual, and providers can bill insurers directly when a claimant assigns their benefits. But under New York law, those providers must be properly licensed – and services must be medically necessary – to qualify for payment. According to the complaint, those standards were routinely not met…