Liberty Mutual Insurance has filed a lawsuit against a group of individuals and entities, accusing them of orchestrating a fraudulent insurance scheme.
The complaint, filed on December 5, 2024, in the U.S. District Court for the Eastern District of New York, targets Psychology 21, P.C., and several individuals, including Sara Malagold, Dana T. Savidge Carr, and Richard Ray Miller, among others.
The lawsuit alleges that the defendants submitted false ‘No-Fault’ insurance claims to Liberty Mutual for excessive and unnecessary healthcare services. According to the complaint, these services were either not provided or were medically unnecessary, and were billed under fraudulent pretenses through various clinics across New York.
The defendants are accused of using unlicensed non-physicians to perform the services, then submitting inflated claims using legitimate medical providers' credentials.
Liberty Mutual claims that the defendants exploited loopholes in New York’s ‘No-Fault’ insurance laws. The insurer says it was defrauded out of approximately $253,470.99 through the fraudulent claims and is seeking recovery of that amount.
Additionally, Liberty Mutual is seeking a court declaration stating that it is not obligated to pay over $1.3 million in pending charges submitted by the defendants due to their fraudulent nature.
The lawsuit also accuses the defendants of violating federal laws under the Racketeer Influenced and Corrupt Organizations (RICO) Act.
The plaintiffs argue that the defendants conducted their operations as part of an organized enterprise aimed at defrauding insurers like Liberty Mutual, constituting racketeering activity under federal law due to mail fraud affecting interstate commerce.
Liberty Mutual’s legal team is pursuing compensatory damages for the amounts already paid out on fraudulent claims, as well as treble damages under RICO provisions due to the intentional nature of the fraud. The insurer also seeks injunctive relief to prevent further fraudulent activities.
The legal team representing Liberty Mutual is led by Michael A. Callinan, Jennifer B. Strong, and Melanie Rosen of Callinan & Smith LLP. The case is being heard under Case ID 2:24-cv-08351.