Geico Lawsuit Alleges Car Insurance Fraud in NY

Published: Tue 15 Jun 2010

Wendy Blair

Geico Lawsuit Alleges Car Insurance Fraud in NY

Geico, a Berkshire Hathaway company, has filed suit in New York asking for millions of dollars in damages and restitution associated with a purported auto insurance scam.

The third-biggest private auto insurer in the United States, Geico is disputing the validity of thousands of no-fault claims asking for payment for radiological services.

The car insurance company did not divulge the defendants' names, but it argues that the claims were submitted through professional medical corporations from a Queens radiology center.

The company's lawsuit, filed in federal court in Brooklyn on Friday, requests recovery of $1.8 million in treble and compensatory damages in addition to punitive damages.

Geico said it became aware of the scheme after it noticed a systematic pattern of repeating bills for radiology services.

"Geico had adopted comprehensive antifraud programs to address New York no-fault abuses," explained Geico's VP, Nancy Pierce.

Geico said it is collaborating with the insurance department of New York and law enforcement authorities on the matter.

Steven Nachman, the deputy superintendent of frauds and consumer services for the New York State Insurance Department, commented that it "has worked closely with Geico and other auto insurers to aggressively combat no-fault fraud as part of a comprehensive strategy including criminal enforcement, regulatory reform and support for legislative reform."

In New York, fraudulent no-fault claims are over twice the average for the United States, according to the Insurance Information Institute.