Government Employees Insurance Company (GEICO) and its affiliates have filed a lawsuit accusing R Family Pharmacy Inc., Jack Kabariti, and unnamed defendants of a fraudulent scheme involving over $2 million in deceptive pharmaceutical billing.
According to the complaint, the defendants orchestrated a large-scale fraud operation exploiting GEICO's "No-Fault" insurance system by submitting inflated claims for expensive topical prescription drugs like Diclofenac Gel 3% and Lidocaine 5% Ointment. These medications were allegedly dispensed without genuine patient care considerations to individuals involved in automobile accidents covered by GEICO policies. The scheme reportedly began in 2022 when Kabariti partnered with various entities involved in No-Fault insurance fraud to steer unnecessary prescriptions to R Family Pharmacy.
The complaint further alleges that illegal collusive arrangements were made with healthcare providers and unlicensed individuals controlling multidisciplinary medical clinics. These clinics predominantly treated No-Fault patients and directed large volumes of prescriptions for the targeted pharmaceuticals to R Family Pharmacy. The pharmacy is accused of inflating charges submitted to GEICO by acquiring these products at low cost but billing them at exorbitant prices. Nearly 97% of the pharmacy's billing was for these specific products, with charges reaching $2,359 per prescription for Diclofenac Gel 3% and $1,904.75 per prescription for Lidocaine 5% Ointment.
GEICO seeks restitution of approximately $105,844 already paid out due to this alleged fraud and a declaration that it is not obligated to pay over $1.7 million in pending claims submitted through R Family Pharmacy. The insurer argues that these claims are fraudulent as they were billed under predetermined protocols aimed at financial exploitation rather than patient care. Additionally, GEICO asserts that the defendants engaged in illegal relationships involving kickbacks and financial incentives to ensure prescriptions were steered their way.
The case highlights broader issues within New York's No-Fault insurance laws designed to facilitate quick payment for necessary medical services following car accidents. However, as noted in the complaint, pharmacies can be held liable for medically unnecessary services billed under such systems if found complicit in fraudulent activities.
GEICO is represented by attorneys Michael A. Sirignano and Barry I. Levy from Rivkin Radler LLP. The case was filed in the United States District Court for the Eastern District of New York under Case ID 1:25-cv-01217 and is being overseen by Judge Nicholas G. Garaufis.