Allstate Insurance Company recently filed two federal lawsuits under the Racketeer Influenced and Corrupt Organizations Act (RICO), exposing how systemic fraud has driven New York auto insurance premiums to surge. These lawsuits target coordinated “medical mill” schemes and highlight the urgent need for Governor Kathy Hochul’s insurance reform plan to protect honest policyholders and prevent premiums from continuing to skyrocket.
The cases, Allstate Insurance Company et al v. FocalSupply Inc. and Allstate Insurance Company et al v. Peoples Choice Medical Supplies Inc., were filed this week in the U.S. District Court for the Eastern District of New York. The lawsuits accuse 10 durable medical equipment (DME) companies and nine individuals of organized fraud using New York’s no-fault insurance system through “medical mills.”
According to court documents, the alleged schemes include:
“These lawsuits are a textbook example of the ‘fraud tax’ every New York driver pays,” said José Bayona, spokesperson for the Citizens for Affordable Rates (CAR). “When fraud rings treat the no-fault insurance system as a personal ATM, charging $1,800 for a $300 device, they’re not just stealing from insurance companies—they’re taking money directly out of the pockets of hardworking New Yorkers who are already struggling with high monthly premiums. Governor Hochul’s reform plan is a crucial step in stopping these organized attacks on affordability.”
Bayona added, “The governor’s reform plan tackles these schemes at every stage—from recordkeeping, billing, and oversight to enforcement—giving New Yorkers real relief from premiums rather than relying on delayed enforcement after the fact.”
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