American Transit Insurance Co. has initiated a legal battle against over 180 healthcare providers, filing a lawsuit in the Eastern District of New York to seek $450 million in compensatory damages. The insurance company alleges that these providers have been involved in submitting fraudulent insurance claims. This case is among the largest insurance fraud actions under the Racketeer Influenced and Corrupt Organizations Act (RICO) in New York.
The alleged fraud involves claims related to Surgicore, LLC centers and their management and doctors, accused of being improperly licensed, billing for unrequired medical services, engaging in illegal kickbacks, and charging exorbitant bills under the New York’s no-fault law. According to the full complaint, American Transit—a company insuring taxis, livery cars, and ride-share vehicles in New York City—aims to address substantial no-fault fraud issues.
William J. Natbony from Cadwalader, Wickersham & Taft, representing the plaintiffs, emphasized that the lawsuit is a response to the statutory responsibility of tackling no-fault insurance fraud in the state. However, Steven Harfenist of Harfenist Kraut & Perlstein, suspecting the lawsuit as a tactic to force settlements, criticizes this strategy, especially since it targets numerous smaller medical practices. He argues these cases are often resolved not on merit but due to defendants’ inability to afford prolonged litigation.
This financial strain on defendants highlights a broader issue in insurance litigation, where larger companies leverage their resources to pressurize smaller entities into quick settlements, despite the underlying allegations lacking substantial merit. Harfenist advocates for regulatory changes to address these imbalances in how insurance carriers tackle no-fault claim disputes.